Amazon recorded its slowest-ever revenue growth in the first quarter due to a drop in online retail sales and heavy costs, sending its stock down around 10 per cent in after-hours trading.
Sales at Amazon’s online stores segment came in at $51.1bn in the January-March period, down from $52.9bn in the same period last year.
Operating income of $3.7bn in the first quarter compared with $8.9bn last year, falling short of analysts’ expectations of $5.3bn. The company recorded overall revenue of $116.4bn for the quarter, 7 per cent higher than last year. For the current quarter, Amazon forecast similarly low revenue growth of between 3 to 7 per cent.
The worse than expected performance comes as the company grapples with supply chain issues, elevated staffing costs and inflation.
Overall, the company recorded a $3.8bn net loss in the quarter, including a $7.6bn loss in relation to the value of its stake in electric vehicle maker Rivian.
“The pandemic and subsequent war in Ukraine have brought unusual growth and challenges,” said Andy Jassy, Amazon’s chief executive, though he said the company was now on top of its challenges in adding staffing and capacity to its warehouse network.
“Today, as we’re no longer chasing physical or staffing capacity, our teams are squarely focused on improving productivity and cost efficiencies throughout our fulfilment network. We know how to do this and have done it before,” he said.
Jassy added that delivery speeds and consistency were “approaching levels not seen since the months immediately preceding the pandemic in early 2020”.
Despite the rapidly rising operating costs in its ecommerce business, Amazon’s balance sheet had been propped up this year by strong cloud computing growth.
In the first quarter, AWS’s revenue was $18.4bn, up 37 per cent on last year. Operating income in the cloud division was $6.5bn, compared to a $2.8bn loss for Amazon’s retail business in the US and internationally. Cloud revenues beat analysts’ expectations of $18.27bn, according to data from FactSet.