$4bn in Amazon profits to be wiped out by COVID-19 despite record sales

Amazon said that the coronavirus pandemic will cost it a whopping $4 billion (£3.19 billion) over the next three months, all but wiping out its profits.

In its first quarter results, the online giant said that despite a spike in demand creating conditions akin to an extended Black Friday, the virus has massively impacted its profits dropping 29 per cent year-on-year to $2.5 billion (£1.99 billion).

This was despite Amazon reporting record sales, rising 26 per cent to $75.5 billion (£60.1 billion), comfortably above Wall Street estimates of $71.5 billion (£56.94 billion), equating to around $33 million (£26.28 million) an hour.

Net sales in the three months to March 31 rose from $35.8 billion (£28.51 billion) in 2019 to $46 billion (£36.63 billion).

Its Amazon Web Services arm also provided a $10.3 billion (£8.2 billion) boost during the first quarter.

READ MORE: Amazon expected to post 25% boost in revenues as it’s accused of potentially violating safety laws

Looking ahead Amazon said it expected to make “$4 billion or more in operating profit” during the second quarter, however chief executive Jeff Bezos told investors to “take a seat” as he warned this would be wiped out by new coronavirus expenses.

He said: “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.”

To meet increased demand Amazon has hired 175,000 new staff across its global logistics network, and has been paying a large portion of its employees 15 per cent above their usual rates.

Alongside this massive increase in staff expenses Amazon said it has purchased 100 million face masks for employees, 1000 thermal cameras and 31,000 thermometers to conduct daily checks for its workers.

It has also reportedly built a team of research scientists, programme managers, procurement specialists and software engineers to help expand its testing capabilities.

Bezos, who has seen his personal fortune grow $13 billion this month alone, added: “This includes investments in personal protective equipment, enhanced cleaning of our facilities, less efficient process paths that better allow for effective social distancing, higher wages for hourly teams, and hundreds of millions to develop our own Covid-19 testing capabilities.”

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