Amazon Q2 sales up 40% and profit doubled

Date: 31/07/2020 Comments: 0
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Amazon Q2 sales up 40% and profit doubled
Amazon beat expectations with sales of $88.9bn in Q2, an increase of 40% year-on-year (YoY), with its North America business up 43%, and the international business up 38%.
 
Amazon had expected sales of between $75bn and $81bn for the quarter. Its first-party online sales were up 49% YoY, and its third-party sales were up 53%. Its advertising business remained strong with growth at 41%, in line with previous quarters. In contrast with the rest of the business, sales from physical stores were (13)%, versus Q1’s 8%. Amazon has used stores to fulfil online grocery orders, even using Whole Foods Market stores as dark stores, in order to increase online order capacity. Amazon stated that grocery delivery capacity had increased by over 160% and that it had tripled grocery pickup locations. These online order capacity increases helped Amazon triple its online grocery sales YoY in Q2.
 
Net income was $5.2bn, versus $2.6bn last year, an increase of 99%. Amazon’s fulfilment expenses increased by 49% to $13.8bn, accounting for 17% of total operating expenses. It spent $4bn on protective equipment for staff and other expenses relating to COVID-19 (including a $500m thank-you bonus to delivery and fulfilment workers). However, Amazon benefited from the shift to online without having to invest in marketing, as marketing expenses only increased by 1%, to $4.3bn. In contrast to previous years, the international business delivered a profit, with operating income at $345m, whilst the North American business hit $2.1bn.
 
In Q2, Amazon continued to make long-term investments and Jeff Bezos, Amazon founder and CEO, said: “even in this unpredictable time, we injected significant money into the economy this quarter, investing over $9bn in capital projects, including fulfilment, transportation and AWS”.
 
In Q3 Amazon is expecting sales of between $87bn and $93bn, or to grow between 24% and 33% YoY. It also confirmed that Prime Day will be pushed back into Q4 (excluding its business in India).
 

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