Amazon said Thursday's profits have taken a hit in the past quarter because of the global pandemic and that coronavirus-related costs would completely wipe out its earnings in the current cycle.
The technology and e-commerce giant said their sales increased 26 percent in the first three months of this year, as people hunkered down at home because of the ongoing health crisis that force them to turn to supplies and entertainment.
Amazon founder and chief executive officer Jeff Bezos said the company is expected to spend at least $4 billion in the second quarter to improve delivery times and purchase workers' masks and other safety equipment in its warehouses and Whole Foods supermarkets.
Amazon.com Inc.'s stock dropped around 5 percent in Thursday's after-hours sessions after posting of the earnings report. In the first quarter, the Seattle-based corporation registered net sales of $2.54 billion, compared to $3.56 billion a year earlier. According to FactSet, earnings per share hit $5.01, below the $6.23 analysts predicted.
Amazon posted big growth in sales for the first quarter but a miss on earnings, Thursday. The mixed results demonstrate how the pandemic leads to more people to Amazon, but at an elevated expense because the company is grappling with a variety of expensive improvements, including supply chain lockdowns and security upgrades in warehouses.
In March, the tech giant became an important shopping destination after the coronavirus outbreak incited stay-at-home orders across nations. But Bezos cautioned investors that over the next few months, the company's income would suffer as it spent billions on health and other coronavirus-related measures.
The $4 billion also reflects productivity losses caused by improvements Amazon is making to its warehouses, including spreading out employees. The company is also working on creating its own Covid-19 research facility, and said it would begin by evaluating some of its front-line staff.
In the next three months, the research program would cost Amazon about $300 million and, if successful, nearly $1 billion for the year, Amazon Chief Financial Officer Brian Olsavsky said on a call with reporters.
Amazon has become a lifeline for shoppers around the world who face lockdowns and constraints and the company is in the process of hiring around 175,000 new workers to cope with increasing demand.
Nevertheless, the company has faced complaints from warehouse staff and others who say that the company has not done enough to make them safe.
Amazon has been trying to keep up with supply and product demand, particularly from its Whole Foods supermarket chain, in the midst of the pressures involved in the purchasing and delivery of products.
