Despite losing billions in Q2, Amazon expects big sales growth in Q3

Seattle – Amazon’s bottom line took a shellacking in the second quarter, but the e-comm giant said revenues are revving up.

While Amazon CEO Andy Jassy acknowledged the very difficult macroeconomic state, he pointed out that the recent record sales results from Prime Day will be reflected favorably in the third quarter earnings.

Amazon is the 3^rd largest seller of home textiles in the U.S., with 2021 soft home sales of more than $2.8 billion, according to HTT’s Top 50 Retail Giants report.

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The company expects Q3 net sales to come in between $125 billion and $130 billion, or to grow between 13% and 17% compared with third quarter 2021. The company’s operating income is expected to be between $0 and $3.5 billion, compared with $4.9 billion in the third quarter of 2021.

“Despite continued inflationary pressures in fuel, energy and transportation costs, we’re making progress on the more controllable costs we referenced last quarter, particularly improving the productivity of our fulfillment network,” said Jassy. “We’re also seeing revenue accelerate as we continue to make Prime even better for members.”

On the quarterly earnings call with investors, CFO Brian Olsavsky said ongoing issues include inflationary pressures, which remained elevated, along with higher fuel, trucking, air and ocean rates.

“One new thing is the additional pressure on energy electricity rates because of the ramp up in natural gas prices,” he added.

“Regarding the Prime fee increase earlier in the year, we are happy with the results we are seeing in the Prime program,” Olsavsky added on the call. “Prime member membership and retention is still strong. That change has been above our expectations positively. I think the benefits of the program continue to get better and better, in-stock has never been higher, (and) delivery speed is increasing.”

Amazon lost $2 billion in the quarter ended June 30, compared with a net income of $7.8 billion in last year’s Q2.

Net sales increased 7% to $121.2 billion, compared with $113.1 billion in second quarter 2021. Earnings per share came in at a loss of 20 cents per diluted share this quarter compared with a gain of 76 cents per diluted share in the first quarter of last year.

Amazon’s investment in electric automaker Rivian Automotive, whose shares have declined about 68% to date, also contributed to the income loss.

Amazon added 14,000 workers in the first quarter, due to the omicron variant, Olsavsky said to investors on the call.  “We were left with a higher head count position, and it has come down to adjusting hiring levels and with normal attrition, the issue was resolved by the end of April,” he said.

“That is dominating the quarter-over-quarter reduction in head count. I would note that we are still up 188,000 year-over-year and nearly double of what we had heading into the pandemic in the early part of 2020. Right now, we see a stabilization in the workforce and good hiring rates.”