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July 28, 2022 4:54 PM, EDT

Amazon Reports Strong Sales That Ease Fears of Slowdown

Amazon packages on a New York City sidewalkAmazon packages on a sidewalk in New York City. (Jeenah Moon/Bloomberg News)

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Amazon.com Inc. reported revenue that topped estimates and gave a strong sales forecast for the current quarter, allaying investor concerns about potential belt-tightening by inflation-rattled consumers. Shares jumped more than 10% in extended trading.

Sales increased 7.2% to $121.2 billion in the period ended June 30, the Seattle-based company said July 28 in a statement. Analysts, on average, estimated $119.5 billion.

Operating income in the current quarter will range from break-even to $3.5 billion on sales of as much as $130 billion, the company said July 29. Analysts, on average, projected a profit of $3.83 billion on sales of $127 billion, according to data compiled by Bloomberg.

Jassy

Jassy

CEO Andy Jassy, who succeeded founder Jeff Bezos in the role last year, is trying to unwind a pandemic-era expansion that saddled Amazon with a surfeit of warehouse space and too many employees. The company has been seeking to sublease at least 10 million square feet of space, Bloomberg reported in May.

With costs rising, Amazon in February raised the price of a Prime membership in the U.S., then followed this week with similar increases in Europe. Fulfillment expenses increased 14% in the second quarter to $20.3 billion, less than analysts projected.

“It’s important for Jassy to reinforce their commitment to retail and acknowledge that they need to get spending to be more correlated to revenue growth,” said Michael Pachter, an analyst at Wedbush Securities Inc.

As part of its effort to cut costs, the company added full- and part-time jobs at the slowest rate since 2019. Total employment was more than 1.52 million as of June 30, which was a 14% increase from a year ago, but about 100,000 fewer than the previous quarter. Most of the reduction came from attrition in the warehouse and delivery network, and Amazon will continue to hire selectively for its cloud computing and advertising businesses, Chief Financial Officer Brian Olsavsky said on a call with reporters after the results.

“We will continue to add headcount, but are also mindful of the economic conditions,” Olsavsky said.

Amazon Web Services, the profitable cloud-computing division, generated sales of $19.7 billion in the quarter, topping analysts’ average estimate of $19.4 billion. Advertising services, another cash cow, increased 14% to $8.76 billion.

Shares rose to a high of $137.20 in extended trading after closing at $122.28 in New York. Amazon shares have dropped almost 27% this year amid a broader market downturn.

Amazon.com Inc. ranks No. 22 on the Transport Topics Top 100 list of the largest private carriers in North America.

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