Amazon profits plummet 50% year over year

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Amazon’s earnings fell nearly 50% to $ 3.2 billion in the third quarter of this year compared to the same period in 2020, driven by higher wage and shipping costs and a massive warehouse expansion to meet continued demand for online goods. Satisfy shopping.

At billions in costs, the company has almost doubled the size of its fulfillment network since the pandemic began, Amazon CFO Brian Olsavsky said in a phone call to reporters on Thursday. For the first time since the beginning of the pandemic, he added: “We are no longer tied to capacity in our physical network.”

Blockages in the supply chain and the nationwide shortage of workers willing to fill low-wage, hourly-wage positions in sectors such as retail and inventory shortages are Amazon’s main pressure points, Olsavsky said: Wage increases and productivity losses cost Amazon an additional US $ 2 billion between July and July Dollar September.

The company has chosen to bear those costs and will continue to spend heavily on recruiting and shipping, Olsavsky said in order to continue serving its customers – a recall of Amazon founder Jeff Bezos’ long-standing insistence on pursuing growth over profit.

Amazon expects to spend an additional $ 4 billion in the last three months of this year on incentives to attract new warehouse workers and workarounds to the global shipping problem, Olsavsky added.

“It will be expensive for us in the short term, but it is the right prioritization for our customers and partners,” said Andy Jassy, ​​CEO of Amazon.

The company may not make a profit in the next quarter, warned Amazon, issuing projections that operating income will be between $ 0 billion and $ 3 billion for the last three months of the year.

According to analysts surveyed by Refinitiv, Amazon posted earnings per share of $ 6.12, falling short of analysts’ expectations of $ 8.92.

However, revenue remains stable, suggesting continued demand for e-commerce as well as strong growth in the company’s cloud computing and advertising segments.

The retail giant posted quarterly revenue of $ 110 billion for the last quarter, up 15% over the same period last year, and is in line with analysts’ expectations. Revenue from Amazon Web Services, the company’s cloud computing division, increased 39% year over year. In Amazon’s “Other” category, which also includes advertising, sales increased by 49% compared to the previous year.

Amazon announced earlier this month that it would be hiring 150,000 seasonal workers in the US to cope with the vacation rush. The company has offered lucrative freebies to potential employees, including signing up to $ 3,000 in bonuses, free tuition for college and technical programs, and wages in excess of $ 20 an hour in some locations.

These benefits seem to work in attracting new employees, Olsavsky told reporters. The company has hired 133,000 people in the past three months, suggesting that “in a competitive job market, we’re getting more than our share”. Amazon now employs approximately 1.47 million people, a 30% increase from last year, and plans to continue expanding. In addition to its temporary, seasonal hiring, the company is targeting 125,000 full-time employees per hour and has 55,000 corporate and technical staff worldwide.

Amazon also faced a resurgent labor movement over the past year seeking to mobilize workers in its warehouses. A resounding loss to a union initiative earlier this year at an Amazon warehouse in Alabama appears to have fueled efforts elsewhere. Workers in a group of warehouses on Staten Island, New York, petitioned to hold union elections this week. The Teamsters are trying to unionize Amazon employees in a handful of locations in Canada.

Amazon shares fell nearly 4% to $ 3,312 after the market closed.

Workers are employed at the Amazon Fulfillment Center in San Bernardino, California on October 29, 2013.

And there is more pain

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