Amazon has been one of the biggest names synonymous with how the consumer masses are experiencing life under lockdown: it’s site is a way to buy anything from soup to nuts, and to stay entertained; but also a source of major frustration, when you find yourself unable to book slots for deliveries, or are facing an army of sellers trying to price gouge you for hot items like masks or toilet paper. Today, the company reported first quarter earnings that bore out the first of these in spades, but at a cost to profitability.

The company reported net sales of $75.5 billion, up 26% on a year ago, a huge boost on the $59.7 billion it made in net sales in the first quarter a year ago, with $41 billion of that attributable to product sales and $33 billion to services (which includes AWS, but also streaming and other non-physical goods).

But earnings per share took a hit, with basic EPS at $5.09 and diluted EPS at $5.01, and net income declining down to $2.535 billion versus $3.561 billion a year ago.

Operating income was also down to $4 billion versus operating income of $4.4 billion in the same quarter a year ago.

Analysts on average were expecting EPS of $6.25 on revenues of $73.61 billion in sales.

Jeff Bezos, the colourful founder and CEO of the company, acknowledged the challenges even the mighty Amazon is facing, and said that the company will be doubling down on spending its profits to face up to serving people during the COVID-19 pandemic, whatever it might bring.

“From online shopping to AWS to Prime Video and Fire TV, the current crisis is demonstrating the adaptability and durability of Amazon’s business as never before, but it’s also the hardest time we’ve ever faced,” he said in a statement. “We are inspired by all the essential workers we see doing their jobs — nurses and doctors, grocery store cashiers, police officers, and our own extraordinary frontline employees. The service we provide has never been more critical, and the people doing the frontline work — our employees and all the contractors throughout our supply chain — are counting on us to keep them safe as they do that work. We’re not going to let them down. Providing for customers and protecting employees as this crisis continues for more months is going to take skill, humility, invention, and money. If you’re a shareowner in Amazon, you may want to take a seat, because we’re not thinking small.

“Under normal circumstances, in this coming Q2, we’d expect to make some $4 billion or more in operating profit. But these aren’t normal circumstances. Instead, we expect to spend the entirety of that $4 billion, and perhaps a bit more, on COVID-related expenses getting products to customers and keeping employees safe. This includes investments in personal protective equipment, enhanced cleaning of our facilities, less efficient process paths that better allow for effective social distancing, higher wages for hourly teams, and hundreds of millions to develop our own COVID-19 testing capabilities. There is a lot of uncertainty in the world right now, and the best investment we can make is in the safety and well-being of our hundreds of thousands of employees. I’m confident that our long-term oriented shareowners will understand and embrace our approach, and that in fact they would expect no less.”

Amazon Web Services accounted for $10.2 billion in sales, up 33% on the same quarter a year ago. North America accounts for about $44 billion of the company’s net sales, versus $19 billion for the international segment.

At a time when we’ve seen tens of thousands of people laid off across the technology sector, Amazon has been one of the few companies to hire, specifically to staff up with 100,000 extra workers across warehouses and its logistics network to meet surging demand from buyers. That has not always been smooth sailing however, with accusations of poor and potentially health-threatening working conditions.

More to come.

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