Amazon founder and CEO Jeff Bezos has warned the company’s investors “to take a seat”, after the tech giant revealed a hit in profits as a result of the coronavirus pandemic.
While sales during the first financial quarter leapt as had been anticipated because of so many people being forced to stay at home, Wall Street had not foreseen how much responding to the virus would cost the corporation.
As a result, while sales increased by 26 per cent, net income fell 31 per cent to $2.5bn. Shares fell by around 5 per cent after the Seattle-based company announced the results.
“If you’re a share owner in Amazon, you may want to take a seat, because we’re not thinking small. Under normal circumstances, in this coming Q2, we’d expect to make some $4bn or more in operating profit,” said Mr Bezos, 56, the world’s richest man.
“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.”
In a statement, he 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.”
Because of the lockdown – not just in the US but around the world – industry analysts had expected the company would receive more orders, sell more items and stream more videos.
Yet in order to do all this, the company had to hire another 175,000 people, and address costs such as operating its warehouses and delivery teams amid the conditions imposed by the pandemic.
It was those costs that observers of the company, which had 800,000 employees before the recent news hires, had not been able to assess.
“We are inspired by all the essential workers we see doing their jobs – nurses and doctors, grocery store cashiers, police officers, and our own extraordinary frontline employees,” said Mr Bezos.
“The service we provide has never been more critical, and the people doing the frontline work – our employees and all the contractors throughout our supply chain – are counting on us to keep them safe as they do that work.”
He added: “We’re not going to let them down. Providing for customers and protecting employees as this crisis continues for more months is going to take skill, humility, invention, and money.”
