Amazon.com Inc on Thursday said sales growth would slow in the next few quarters as customers venture more outside the home, a tepid start to CEO Andy Jassy’s reign after 27 years with Jeff Bezos at the retailer’s helm.
Spending growth by Prime members, Amazon.com’s most valuable customers, has eased as well, the company said, according to a Reuters report.
More than a year into the COVID-19 pandemic, Amazon’s financial luster is fading slightly. When brick-and-mortar stores closed, Amazon posted record profits, drew more than 200 million Prime loyalty subscribers, and recruited over 500,000 workers to keep up with surging demand.
Now, the company is facing the tough task of climbing higher still. While revenue surged 44 percent in the first quarter of this year, that figure dropped to 27 percent for the period ended June 30. Sales may only rise as much as 16 percent in the third quarter, Amazon said.
Brian Olsavsky, Amazon’s chief financial officer, attributed this to a difficult comparison to last year, when consumers stayed more indoors and relied on e-commerce for their everyday needs.
In the United States and Europe, customers are now out and about.
They are “doing other things besides shopping,” he said.
Revenue was $113 billion for the second quarter, shy of analysts’ average estimate of $115 billion, according to IBES data from Refinitiv. Profit rose 48 percent to $7.8 billion, the second-largest Amazon ever announced.
Amazon expects this lower growth to continue for the next few quarters, Olsavsky told reporters.
The outlook comes just after Jassy on July 5 inherited Amazon’s top job, which has never been bigger or more complex. Last quarter Amazon announced a deal to buy the film studio MGM for $8.5 billion, expanding in Hollywood at the same time as it is running a grocery chain, building a healthcare business and facing scrutiny from regulators worldwide.
Olsavsky said the company hopes COVID-19 will subside and that the economy will continue to bounce back. While peers Alphabet Inc. and Facebook Inc. said they will require vaccines for workers returning to offices, Amazon has made no such announcement.
Amazon Web Services has fared better. The cloud computing division that Jassy long ran grew revenue 37 percent to $14.8 billion, ahead of estimates of more than $14.1 billion. Though AWS has lowered prices, it has signed new multi-year agreements with large customers, Olsavsky said.