Amazon recently reported their financial results from Q1, which included earnings of $2.5 billion. This is down from last year, where the brand had $3.56 billion in sales at this same time. Amazon has recently experienced an all-time high in demand during the current pandemic, so it comes off as a surprise that the brand ranked below expectations for Q1.
Amazon is projecting healthier Q2 numbers, however their current infrastructure will demand that $4 billion or more in operating profit will be spent on expenses related to COVID-19.
“Under normal circumstances, in this coming Q2, we’d expect to make some $4 billion or more in operating profit. But these aren’t normal circumstances. Instead, we expect to spend the entirety of that $4 billion, and perhaps a bit more, on COVID-related expenses getting products to customers and keeping employees safe,” said Jeff Bezos, Chief Executive Officer of Amazon.
The projected $4 billion from the next quarter will be used for expenses such as:
- Personal protective equipment
- Enhanced cleaning of facilities
- Process paths that allow for more effective social distancing
- Higher wages for hourly team members
- A large investment to develop Amazon’s own COVID-19 testing capabilities
Along with using their operating profits from Q2 on COVID-related expenses, Amazon’s reported earnings for Q1 included stats that serve an unpredictable vision of the future:
- Net income decreased to $2.5 billion
- Operating income decreased to $4.0 billion
Amazon is navigating this unprecedented time as best as they can. However, this period of life is taking a toll on the e-commerce site and indicates unfavorable projections for the brand.
Source: Amazon Q1 Results – Press Release 4/30/20
Photo Credit: Amazon Press Center
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