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Record sales and lower profits at Amazon, Bezos tells investors ‘take a back seat’

Amazon (NASDAQ: AMZN) reported record first-quarter net sales of $75.5bn as the coronavirus lockdown boosted demand for the firm’s groceries, online marketplace and cloud computing services.

But the hiring of 100,000 extra workers and new social distancing measures to protect staff helped swell operating costs at the world’s largest e-commerce retailer to $71.5bn, up from $55.3bn a year ago. Net income for the quarter was down 30 per cent to $2.5bn compared to a year ago.

The report, released on Thursday, after the closing bell sent the Seatle-based firm’s earnings down from an all-time high of $2,474 to trade 4.4% down in pre-market trading on Friday.

But founder and chief executive Jeff Bezos (pictured) said that the health emergency meant more high costs are to come. He said the firm would spend a further $4bn on coronavirus measures in the three months to June.

He said: “If you’re a shareowner in Amazon, you may want to take a seat, because we’re not thinking small.”

Bezos added: “Under normal circumstances, in this coming second quarter we’d expect to make some $4bn  or more in operating profit. But these aren’t normal circumstances. Instead, we expect to spend the entirety of that $4bn, and perhaps a bit more, on COVID-related expenses getting products to customers and keeping employees safe.”

Amazon

The group’s first-quarter net income dropped to $5.01 per share from $7.09 per share in the year-ago period. Wall Street was expecting earnings per share in the range of $6.11 for the first quarter.

Amazon

The company expects second-quarter revenue in the range of $75bn to $81bn while the consensus estimate is around $77.9bn. It had reported revenue of $63bn in the second quarter last year.

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Based in Saudi Arabia, Siraj has a strong understanding of and passion for accounting and finance. He has worked for international clients for many years on several projects related to the stock market, equity research and other business, accounting and finance related projects. Siraj is a published financial analyst on the world's leading websites including SeekingAlpha, TheStreet, MSN, and others.