Amazon Reports Successful Q2 Earnings Despite Pandemic, Propped up by Increase in Online Shopping
Amazon has reported a successful second quarter. The company saw an increase in top-line growth and double-digit revenue growth year-on-year during the second quarter, despite the hurdles associated with the pandemic crisis.
According to CNBC, Amazon shot past Refinitiv analyst projections. When it came to earnings, Amazon shares rose to $10.30/share, blowing past what analysts projected would be $1.46/share. In terms of revenue, the company earned $88.91 billion during the second quarter. Refinitiv analysts expected that number to fall around $81.56 billion. Upon reporting its earnings, Amazon stock rose 5.3 percent within hours.
In a statement, Amazon CEO Jeff Bezos touched on the unprecedented challenges during the second quarter of the year. “This was another highly unusual quarter, and I couldn’t be more proud of and grateful to our employees around the globe,” Bezos said.
Amazon, like many other businesses, could not fathom the impact COVID-19 would have. The company experienced high demand in online orders as customers from around the world acclimated to a new life. This caused brief hurdles for Amazon as one and two-day shipping faced delays. Online shopping orders of all kinds grew during this period. Amazon reported that grocery sales tripled year-over-year, with grocery delivery capacity increasing to a staggering 160 percent.
Though, as time went on, one and two-day shipping did begin to recover. Amazon CFO Brian Olsavsky said that while shipping times and capacity have been recovering, it’s “probably considerably behind the going in rate before any of this happened.”
The company was able to increase capacity through its fulfilment centres. Such capacity Amazon did not expect to “need until 2021”, Olsavsky said. Preparing for the remaining months of the year, Amazon has made an effort to create space within its fulfillment centres for the holiday season. This year, Amazon has shifted its Prime Day event to the fourth quarter.
While Q2 was a successful quarter, there are still challenges that await Amazon moving forward. Amazon must place quantity limits for its third-party product shipments that use its US warehouses in order to make sure it has enough space. Additionally, Amazon is facing tensions boiling over with its warehouse staff, citing claims from employees suggesting the company isn’t doing enough to keep them safe during the pandemic.
During the months between April and June, Amazon said it spent all of its $4 billion profit on countermeasures towards the virus. This included deep cleaning its facilities, wage increases, and obtaining protective equipment for staff. It’s expected that Amazon will spend another $2 billion during the third quarter.
Amazon expects its net sales to fall between $87 billion and $93 billion in the third quarter, with an operating income ranging from $2 billion to $5 billion.