The tech giant said Thursday that it incurred a net loss of $3.8 billion in the quarter ended March 31, a sharp drop in income from the same period last year, when it posted a profit of $8.1 billion. It was also a big mistake from the $4.4 billion earnings that analysts had expected in a Refinitiv poll.
“The pandemic and subsequent war in Ukraine have brought extraordinary growth and challenges,” Andy Gacy, Amazon CEO, said in a statement.
Amazon’s total revenue grew 7% from the same period last year to $116.4 billion, slightly exceeding analyst expectations but slower than the 9% growth in the final months of last year. The company has forecast revenue growth to slow further in the next quarter, and expects a growth rate of between 3% and 7%.
Gacy noted Amazon’s rapid growth in its consumer business during the pandemic, and the “doubling” of the company’s order fulfillment network in the past two years.
“Today, because we no longer chase physical capabilities or employees, our teams are directly focused on improving productivity and cost effectiveness across our fulfillment network,” he added. “This may take some time, particularly as we operate through ongoing inflationary pressures and the supply chain, but we are seeing encouraging progress in a number of customer experience dimensions.”
The company also announced that Prime Day, its annual sales miner, will take place in July in more than 20 countries.
On an earnings call, Amazon Chief Financial Officer Brian Olsavsky said high inflation, fuel prices and labor restrictions added $2 billion to costs compared to last year.
“The cost of shipping a container overseas has more than doubled compared to pre-pandemic rates,” he said. “The cost of fuel is about one and a half times higher than it was a year ago.”
Olsavsky said the rise of the Omicron variant at the end of 2021 led to a “significant increase” in employees going on vacation, prompting Amazon to ramp up hiring to make up for absences. But with workers returning when the variables subsided, “we moved quickly from understaffing to overstaffing,” he added. This led to a “low productivity,” he said, adding $2 billion in costs.
A separate Amazon Consortium election in Bessemer, Alabama also recently concluded and the results are too close to predict.
The union effort grew out of worker frustration with Amazon’s treatment of workers amid the pandemic and was also driven by increased national interest in issues of racial justice and workers’ rights.