Amazon has posted record profits and a second straight quarter of $100bn-plus sales as it continued to benefit from home-bound consumers doing more shopping online and using its other products such as video streaming and smart tech devices.
With many bricks & mortar non-essential stores closed for much of the last year, Amazon has now posted four consecutive record periods and attracted more than 200 million Prime subscribers.
In the first three months of this year, the company’s net sales jumped 44% to $108.5bn, with all its main divisions experiencing robust growth. Net income more than tripled to $8.1bn, whilst operating profit rose from $4bn to $8.9bn.
Despite some markets starting to return to more normal trading conditions, Amazon expects online demand to remain high as pandemic-related trends such as homeworking stick around. The group’s operating income for the second-quarter is expected to be between $4.5bn and $8bn, compared with $5.8bn in the same period in 2020, whilst sales are forecast to grow between 24% and 30%.
A jump in Prime subscriptions, consumers’ embracing grocery delivery, and an improving economy are likely to continue working in Amazon’s favour, although the group will face tough sales comparatives as the year progresses.
Adding to Amazon’s second-quarter revenue will be Prime Day, the company’s huge annual sale event. Amazon disclosed it will take place in June rather than July, as is more typical, to reach customers before they head on holiday.
Nicholas Hyett, Equity Analyst at Hargreaves Lansdown, described Amazon’s results as “stellar” particularly given the extra costs associated with doing business during the pandemic.
“Amazon’s modus operandi has always been to pour internally generated cash into new investment opportunities wherever possible – but at present, it seems to be struggling to find homes for its embarrassment of riches,” he said.
“This could be a golden age for the group. With high streets shut, Amazon is a natural home for consumers’ spare cash, AWS services remote working, which has suddenly become the norm, and tech wizardry is all the more useful when we can’t see friends and family in person.”
Daniel Newman, an analyst at Futurum Research, added: “There is little to indicate a slowdown in Amazon’s growth. Its businesses across the board, e-commerce, cloud, advertising, devices, are all seeing growth and I expect this to continue into the next quarter.”
Amazon’s founder and Chief Executive Jeff Bezos Bezos is stepping down this summer, although he will remain in the less hands-on role of Executive Chairman. He will be succeeded Andy Jassy, the Chief Executive of the group’s successful AWS cloud computing unit.