Amazon suffered a huge loss in the first quarter of 2022, you also know what is the news …


New Delhi. Amazon delivered a disappointing quarter and outlook on Thursday as the e-commerce giant was battered by higher costs to run its warehouses and deliver packages to customers.

Shares were down 9% in after-hours trading. After a long-running jump in sales during the COVID-19 pandemic, Amazon is facing challenges. Company expenses soared as did higher pay offers to attract workers. A fulfillment center in New York City voted to make Amazon the first US union, resulting in the retailer contesting. And the higher fuel price reduces consumers’ disposable income, just as it is making delivery more expensive for Amazon, the world’s largest online retailer.

Amazon’s forecast suggests the price hike of its fast-shipping Club Prime may not be enough to prop up its profit last quarter. The company is expected to lose $1 billion (about Rs 7,650 crore) in operating income this quarter, or up to $3 billion (about Rs 22,950 crore). This is lower than the operating profit of $7.7 billion (about Rs 58,900 crore) in the same period last year.

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“It was a tough quarter for Amazon, with trends in the wrong direction in every major area of ​​the business and a weak outlook for the second quarter,” said Andrew Lipsman, principal analyst at Insider Intelligence.

Still, there were bright spots like Amazon Web Services, which was attended by new CEO Andy Jesse before taking the company’s top job last year. The unit posted revenue up 37 per cent to $18.4 billion (about Rs 1,40,750 crore), slightly ahead of analysts’ estimates.

Jassi said the company has finally met its warehouse staffing and capacity requirements, but there is still work to be done to improve productivity.

He said in a press release, “This may take some time, especially as we work through ongoing inflation and supply chain pressures. We see encouraging progress on several customer experience dimensions, including delivery speed performance, as we now move through levels.” The early 2020s have not been seen since the months just before the pandemic.”

Inflation hit Amazon:
Amazon’s results called consumer demand into question. While online store sales declined and the number of products sold was flat in the first quarter, the retailer’s chief financial officer Brian Olsavsky said the company was pleased with the pace of purchases from buyers. He added that inflation has not dampened down to the normal ordering pattern so far.

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Net sales in the first quarter stood at $116.4 billion (about Rs 8,90,390 crore), in line with analysts’ expectations, according to IBES data from Refinitiv.

Amazon reported a loss of $3.8 billion (approximately Rs 29,070 crore), or $7.56 (approximately Rs 580 crore) per share, compared to a profit of $8.1 billion (approximately Rs 61,960 crore), or 15.79 (approximately Rs 1,200 crore). Shares, a year ago. This partly reflects the $7.6 billion (about Rs 58,140 crore) drop in the value of its stake in electric vehicle maker Rivian.

In the company’s largest market, North America, sales grew 8 percent, while operating expenses rose 16 percent to $71 billion (about Rs 5,43,185 crore).

Olsavsky told reporters that the company’s costs were about $6 billion higher than a year ago, including inflationary pressures of $2 billion (about Rs 15,300 crore). These range from higher salaries – although the company has largely pulled back on its signing bonus – to fuel costs 1.5 times more than it did a year ago. Olsavsky told analysts that Russia’s invasion of Ukraine contributed to the higher prices.

Amazon aims to optimize transfers between warehouses to rein in expenses. It is also in an unusual state of spare warehousing and transportation capacity – costing it around $2 billion (about Rs 15,300 crore) in the first quarter.

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That means Amazon needs to fulfill more orders to justify the space, said Scott Mushkin, founder of research firm R5 Capital. The potential will likely come in handy on Prime Day, Amazon’s annual sales blitz. The company announced on Thursday that the event will take place in July.

“Now they have a huge amount of distribution and logistics infrastructure. To take advantage of that, they need volume,” Mushkin said.

The e-commerce giant’s results in brick-and-mortar retail have been mixed. In March Amazon said it planned to close all 68 of its bookstores, pop-ups and other home goods stores, as well as focusing more on groceries. For example, it recently automated two Whole Foods locations to make them cashierless. The company’s physical store sales grew 17 percent to $4.6 billion (about Rs 35,170 crore).

Amazon’s outlook reflects broader industry challenges. This week, United Parcel Service, one of Amazon’s partners, said it expects e-commerce delivery growth to slow.

Amazon’s estimated net sales for the second quarter will be between $116 billion (approximately Rs 8,86,860 crore) and $121 billion (approximately Rs 9,25,080 crore). Analysts were expecting $125.5 billion (about Rs 9,59,490 crore).

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