Amazon.com Inc. on Thursday warned that it could post a loss in the second quarter as it tacked on about US$4 billion in costs related to the COVID-19 pandemic, sending its shares down 5 per cent in extended trade.
The e-commerce giant has been spending heavily to keep up with a surge in online orders. The company had earlier said it would hire about 175,000 workers and raise wages by US$2 for hourly workers as well as overtime pay, which would increase expenses by nearly US$700 million.
“Under normal circumstances, in this coming Q2, we’d expect to make some US$4 billion or more in operating profit. But these aren’t normal circumstances. Instead, we expect to spend the entirety of that US$4 billion, and perhaps a bit more, on COVID-related expenses getting products to customers and keeping employees safe,” Chief Executive Officer Jeff Bezos said in a statement.
Amazon forecast operating income in the range of a loss of US$1.5 billion and profit of US$1.5 billion for the second quarter. Analysts were expecting operating income of US$3.80 billion, according to research firm FactSet.
The company forecast net sales in the range of US$75 billion to US$81 billion for the second quarter. Analysts were expecting revenue of US$77.99 billion, according to IBES data from Refinitiv.
Net sales rose to US$75.45 billion from US$59.70 billion in the first quarter ended March 31, as the retail giant recorded a surge in demand for online orders of essential goods during the COVID-19 pandemic.
Analysts had expected revenue of US$73.61 billion, according to IBES data from Refinitiv.
© Thomson Reuters 2020