The retailer anticipates strong profits throughout the year, even with increasing interest rates and a return of customers to physical stores
In the most recent quarter, Amazon saw profits nearly triple, driven by consumers’ continued high spending, despite significant interest rate increases. The global retail giant expects strong sales growth throughout the remainder of the year, although growth was initially impacted by rising prices and a return of customers to physical stores.
The group’s revenue for the three months ending September 30 increased by 13% to $143.1 billion, surpassing Wall Street’s projections. Profits soared to $9.9 billion, a significant rise from the $2.9 billion recorded a year ago.
Amazon, renowned as the world’s largest retailer, has expanded its extensive digital ecosystem beyond e-commerce. This expansion encompasses a wide range of products and services, including smart speakers, sports broadcasting, and its dominant position in the lucrative cloud computing sector through Amazon Web Services (AWS).
Andy Jassy, who assumed the role of CEO from founder Jeff Bezos two years ago, noted that Amazon’s retail division made significant progress this summer. He highlighted the exceptional success of dividing Amazon’s US fulfillment network into eight distinct regions, surpassing their optimistic projections.
Amazon’s shares have surged by nearly 40% this year, marking a recovery from the tech industry’s downturn last year. In after-hours trading, the company’s stock saw a 3.6% increase, and it currently boasts a market capitalization exceeding $1.2 trillion.
Although online shopping flourished during the peak of the pandemic, Amazon’s primary retail segment faced challenges due to the highest inflation in a generation, burdening its customer base. In response to investor demands for cost reductions and a stronger focus on profitability, the company implemented layoffs, affecting 27,000 employees.
However, for the current quarter, Amazon anticipates total net sales ranging from $160 billion to $167 billion, reflecting a potential increase of up to 12% compared to the previous year.
Amazon’s workforce, which expanded significantly in response to the COVID-19 outbreak through a global hiring initiative, reached its peak of 1.62 million employees at the beginning of last year. It has since decreased to 1.5 million.
Last spring, employees in Staten Island, New York, successfully established the first union in an Amazon US warehouse after a highly competitive campaign. This development raised hopes for similar unions in other locations, although such efforts have yet to yield results.
In the preceding month, the Federal Trade Commission, along with 17 state attorneys general, filed a lawsuit against Amazon. They alleged that the company had leveraged its marketplace influence to raise prices on other platforms, overcharge sellers, and hinder competition. Amazon contested the lawsuit, characterizing it as misguided and cautioned that it could negatively impact consumers by causing higher prices and delayed deliveries.
