Amazon posts record $96.2BILLION in sales for the third quarter as online orders continue to surge in the pandemic – and Jeff Bezos predicts an ‘unprecedented holiday season’
- Amazon on Thursday reported record sales and profits for the third quarter
- Retail giant has surge in demand for online shopping during the pandemic
- CEO Bezos predicted an ‘unprecedented holiday season’ for online shopping
- But shares slumped after Amazon forecast $4 billion in COVID-19 costs for Q4
Amazon has reported record sales and profits for the quarter ended in September, reflecting a surge in online shopping during the coronavirus pandemic.
The company said on Thursday that sales surged rose 37 percent for the quarter to a record $96.2 billion, generating a $6.3 billion profit, roughly three times its profits from the same period last year.
Amazon shares initially rose 2 percent in after-hours trading, but then slumped 1 percent as the company forecast $4 billion in COVID-19 related costs for the current quarter, potentially denting profits.
Since the start of the virus outbreak in the United States eight months ago, consumers have turned increasingly to Amazon for delivery of groceries, home goods and medical supplies.
Amazon CEO Jeff Bezos is seen in a file photo. The company on Thursday reported record sales and profits for the quarter ended in September
Amazon shares initially rose 2 percent in after-hours trading, but then slumped 1 percent as the company forecast $4 billion in COVID-19 related costs for the fourth quarter
As brick-and-mortar shops closed their doors under lockdown orders, Amazon moved to recruit over 400,000 more workers and earned the largest profits in its 26-year history.
It has kept the world’s largest online retailer at the center of workplace and political tumult. Democratic politicians this month accused Amazon of holding ‘monopoly power’ over merchants on its platform, which the company disputes.
Meanwhile, more than 19,000 of Amazon’s U.S. employees contracted COVID-19, and some staff protested for site closures.
Amazon has responded with an array of precautions and a virus testing program for employees that have helped the company stay operational.
An Amazon delivery van departs an Amazon Warehouse location earlier this month in Massachusetts. Logistics costs have been rising as Amazon worked to cut delivery times
Jeff Bezos, Amazon’s chief executive and richest person in the world, said in a press release, ‘We’re seeing more customers than ever shopping early for their holiday gifts, which is just one of the signs that this is going to be an unprecedented holiday season.’
At the same time, logistics costs have been rising in recent months as Amazon worked to cut standard delivery times for Prime loyalty club customers — and the pandemic has only added to its challenges.
Amazon Chief Financial Officer Brian Olsavsky said on a conference call that the company incurred $2.5 billion in COVID-19 related costs in the third quarter.
Rather than one-day shipping, customers earlier this year reported weeks-long wait times, even driving some shoppers to make purchases elsewhere.
Amazon forecast operating profit for the current quarter to be between $1.0 billion and $4.5 billion, short of $5.8 billion analysts expected, according to research firm FactSet.
An Amazon distribution center is seen in North Las Vegas, Nevada in a file photo
Amazon Web Services (AWS) has traditionally been a bright spot. The cloud computing division has seen sales rise with demand for gaming and remote work. The unit increased revenue 29 percent to $11.6 billion, roughly in line with estimates.
The question for some analysts has been whether Amazon’s consumer division can keep up with still-growing purchases during a pandemic and peak holiday shopping season.
The company has long worked to avoid a repeat of the 2013 season when delays left some without presents on Christmas Day.
Amazon now handles more deliveries in house, and this year it moved its marketing event Prime Day – usually in July – to October, letting customers place holiday orders early.
Amazon said it expects net sales of $112 billion to $121 billion for the fourth quarter. That would mark the company’s first quarter over $100 billion and is ahead of analysts’ expectations of $112.3 billion.