New Amazon CEO facing cooling sales, complex challenges
Amazon.com Inc on Thursday said sales growth would decelerate in the third quarter, a slow start to the reign of CEO Andy Jassy as investors weigh if he can steer the retailer as deftly as Jeff Bezos did for 27 years.
Shares fell five per cent in after-hours trade.
The top job Jassy inherited on July 5 has never been bigger and more complex. Last quarter Amazon announced a deal to buy the film studio MGM for US$8.5 billion, expanding in Hollywood while running a grocery chain, building a health-care business and facing scrutiny from regulators worldwide.
During the COVID -19 pandemic, shoppers turned to Amazon while 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's breakneck growth is starting to subside. Revenue climbed 27 per cent to US$113 billion for the second quarter ended June 30, shy of analysts' average estimate of US$115 billion, according to IBES data from Refinitiv. For the third quarter, Amazon expects sales will grow at most 16 per cent.
The world's biggest online retailer had moved its annual marketing blitz, Prime Day, to June this year, hoping to peddle more goods before shoppers left town on summer vacations. While it said the event was the biggest two-day sales period ever for merchants on its platform, analysts have witnessed signs of slowing demand.
North America, Amazon's largest market, saw sales increase only 22 per cent in the second quarter, versus 43 per cent in the same period a year earlier.
Amazon Web Services was a bright spot, however. The cloud computing division that Jassy formerly ran grew revenue 37 per cent to US$14.8 billion, ahead of estimates of more than US$14.1 billion. Among the deals it signed in the just-ended quarter was an agreement with Canada's BMO Financial Group.
Profit rose 48 per cent to US$7.8 billion, the second-largest quarterly result Amazon ever announced.