Worse than anticipated earnings for Amazon on Thursday, amid difficulties after pandemic boom and 18,000 job losses
Amazon has posted its worst annual loss in years, as the e-commerce retailing giant’s latest financials reveals the challenge it currently faces.
That said Amazon did exceed its guidance for net sales growth in the fourth quarter, but overall the results made for tough reading for investors on Wall Street.
Amazon is not alone though. Apple also on Thursday disappointed with its results, and Google parent Alphabet was also impacted by declining advertising sales.
Image credit: Amazon
Amazon financials
Amazon did manage to grow its revenues during 2022, but profits have been badly impacted, and it posted an annual net loss for the year.
For the fourth quarter ending 31 December, Amazon posted a net profit of $278m, which is well down from a net profit of $14.3bn in the same year-ago quarter.
However quarterly revenues rose 9 percent to $149.2bn, compared to $137.4bn in the fourth quarter of 2021.
And the year-end financial did not make for better reading.
Amazon recorded a full year net loss of $2.72bn, compared to a net profit of $33.4bn in 2021.
This was Amazon’s worst annual loss since 2014, and it reverses the trends of rising annual profits and impressive growth during the Covid-19 pandemic.
The company’s most reliable division, Amazon Web Services (AWS), reported quarterly sales of $21.4bn, an increase of 20 percent from a year earlier but below analysts’ estimates.
Holiday sales
“Our relentless focus on providing the broadest selection, exceptional value, and fast delivery drove customer demand in our Stores business during the fourth quarter that exceeded our expectations – and we’re appreciative of all our customers who turned to Amazon this past holiday season,” said Andy Jassy, Amazon CEO.
Amazon chief executive Andy Jassy. Image credit: Amazon
“We’re also encouraged by the continued progress we’re making in reducing our cost to serve in the operations part of our Stores business,” Jassy added. “In the short term, we face an uncertain economy, but we remain quite optimistic about the long-term opportunities for Amazon.”
“The vast majority of total market segment share in both Global Retail and IT still reside in physical stores and on-premises data centres; and as this equation steadily flips, we believe our leading customer experiences in these areas along with the results of our continued hard work and invention to improve every day, will lead to significant growth in the coming years,” Jassy said.
“When you also factor in our investments and innovation in several other broad customer experiences (e.g. streaming entertainment, customer-first healthcare, broadband satellite connectivity for more communities globally), there’s additional reason to feel optimistic about what the future holds,” said Jassy.
Job losses
Despite the holiday sales success, Amazon fourth quarter marked the start of a large-scale job losses.
In November reports began surfacing that Amazon was planning large scale job losses, and then it emerged the firm would axe 10,000 jobs – with most of the job losses impacting Amazon’s devices organisation responsible for its Echo devices, its retail division, and ironically its human resources department.
The majority of the layoffs hit the Amazon Stores and People, Experience, and Technology organisations, but CNBC has reported that employees in robotics, Zappos, payments, Prime Air, have also been affected.
