The pandemic-driven e-commerce surge is expected to drive document gross sales and revenue for Amazon as the corporate stories its holiday quarter earnings on Tuesday.
Amazon beforehand set steering of fourth quarter income between $112 and $121 billion. That could be a year-over-year improve of 28% to 38%, and the primary $100 billion-plus quarter for Amazon. It’s additionally effectively previous the earlier document ($96.1 billion) that was simply set within the third quarter. Annual gross sales may eclipse $350 billion, setting one other document.
Wall Street estimates earnings per share of $7.20, up 11% year-over-year, and income of $119.6 billion.
Consumers have turned to on-line procuring amid the pandemic with social distancing mandates and bodily retailers restricted in operation. U.S. e-commerce gross sales grew 47.2% year-over-year from Nov. 1 to Dec. 24, based on Mastercard SpendingPulse. Online gross sales accounted for 19.7% of general retail, up from 13.4% final 12 months.
That development has been a boon for Amazon, which mentioned it delivered billions of merchandise globally through the holiday season. Amazon additionally pushed its annual Prime Day procuring bonanza to October this 12 months, offering one other enhance for its This autumn gross sales.
“Amazon continues to be the go-to company during the pandemic to source all kinds of goods from groceries to hard goods,” mentioned analyst Patrick Moorhead of Moor Insights & Strategy.
But the Seattle tech big can be spending closely to extend its supply capability and for pandemic-related prices.
Amazon’s COVID-19 expense was already at $7.5 billion by way of the third quarter and it expected to incur one other $4 billion in COVID-19-related prices through the fourth quarter. The price calculation consists of cash spent to assist preserve staff secure; extra pay for employees; and extra. It additionally components in misplaced productiveness from modifications in Amazon’s course of, akin to ramping up extra new staff, or implementing social distancing guidelines inside warehouses.
Amazon CFO Brian Olsavsky mentioned in October that the corporate would develop its success capability by 50% in 2020 because it opens extra warehouses and supply stations. Amazon additionally just lately purchased extra planes. The firm’s worldwide transport prices rose 57% within the third quarter to greater than $15 billion.
Amazon may present an replace on Prime membership totals; a 12 months in the past it reported 150 million world members. Prime membership sign-ups spiked through the holiday quarter, based on a latest report from CIRP.
To assist meet demand, Amazon has been on a hiring spree, including not less than 400,000 full- and part-time jobs final 12 months and 100,000 in October alone. It eclipsed the 1 million worker mark for the primary time within the third quarter and employed 1.13 million individuals worldwide as of Sept. 30, up 50%. It is inching nearer to retail rival Walmart, the nation’s largest employer with greater than 2.2 million individuals.
Analysts can even be watching income progress for Amazon Web Services, which continues to assist drive Amazon’s profits. Last week Microsoft reported a 50% improve in income for its Azure cloud computing platform and associated companies.
Moorhead mentioned he expects good numbers from AWS as extra companies depend on the cloud platform to scale and meet buyer wants as firms speed up their adoption of digital companies through the pandemic.
Amazon’s inventory worth remained secure within the fourth quarter but is up greater than 60% over the previous 12 months. Wedbush has a 12-month worth goal of $3,900.
“Amazon should expand profitability by growing spending more slowly than revenues. Amazon Web Services, Fulfillment by Amazon, and ads should drive steady margin expansion, with Prime memberships driving overall retail revenue growth,” Wedbush wrote in a latest analysis word for the This autumn earnings.
Other key information from Amazon through the holiday quarter embody the launch of Amazon Pharmacy, a part of the corporate’s rising healthcare ambitions; its acquisition of podcast platform Wondery; and its shutdown of Crucible, Amazon’s try at breaking into the online game market that didn’t catch on with customers.
Amazon’s headquarters campus in Seattle, in the meantime, has was a COVID-19 vaccination web site in latest weeks. Amazon final month additionally despatched a letter to President Joe Biden, providing to assist with the nation’s vaccination efforts.
Conditions for Amazon warehouse employees have been the topic of scrutiny and criticism from worker activists and politicians. Amazon has carried out security measures in warehouses and success facilities to assist handle COVID-19 instances, and is conducting 1000’s of exams per day. The firm has achieved greater than 1 million exams up to now.