Amazon said it had a net loss of $3.8 billion on March 31. It was a sharp drop in revenue from the same period last year when it posted a profit of $8.1 billion. With dropped shares, a big loss from the $4.4 billion profit to Amazon, analysts surveyed by Refinitiv had forecast was also reported.
After-hours trading, Amazon ( AMZN )reported that shares loss and dropped about 10% following the results.
Amazon CEO Andy Jassy said that the pandemic and subsequent war in Ukraine had brought unusual growth and challenges.
The overall revenue of Amazon grew 7% from the same period last year to $116.4 billion, slightly beating analyst forecasts but slower than the 9% growth in the final months of last year. Amazon forecast that revenue growth would slow further next quarter, anticipating a growth rate between 3% and 7%.
Jassy referenced the breakneck growth of Amazon in its consumer business during the pandemic and the doubling down of its fulfillment network in the past two years.
He added that as they no longer chase physical or headcount capacity, their teams fully focused on improving productivity and cost efficiency across our fulfillment network. It may take some time, particularly as we work through the ongoing supply chain and inflationary pressures. Still, we see encouraging progress across several customer experience dimensions.
The company also announced that Prime Day, its annual sales bonanza, will occur this July in more than 20 countries.
Amazon Chief Financial Officer Brian Olsavsky said that higher inflation, fuel prices, and labor restrictions added $2 billion to costs compared to last year.
He said that the cost of shipping a container abroad has more than doubled compared to pre-pandemic rates. The fuel cost is about one and a half times higher than it was a year ago.
Olsavsky said the emergence of the Omicron variant towards the end of 2021 caused a substantial increase in the number of employees going on leave, prompting Amazon to ramp up hiring to make up for the absences. He added that we quickly went from understaffed to overstaffed, as workers returned when variances dwindled. He said that resulted in lower productivity which added another $2 billion in costs.
The shock to Amazon’s earnings comes as the company faces pressure from its warehouse employees over issues like pay and working conditions. Workers at a Staten Island, New York, warehouse voted earlier this month to form the first US union, an e-commerce giant. Amazon has since filed an appeal, asking for the total vote to be repeated.
Amazon’s separate union election in Bessemer, Alabama, also recently completed with results too close to announce.
Both union efforts grew out of worker frustrations with Amazon’s workers’ treatment amid the pandemic. They were also motivated by increased national attention to racial justice and labor rights issues.
Amazon subsequently announced that former US Attorney General Loretta Lynch would lead to conducting a racial equity audit.