Amazon’s CEO tells investors ‘you may want to take a seat,’ as he explains why the company will spend ‘entirety’ of $4 billion profit
Published: May 3, 2020 at 1:41 p.m. ET By
Jeff Bezos: ‘We are inspired by all the essential workers we see doing their jobs — nurses and doctors, grocery store cashiers, police officers, and our own extraordinary frontline employees’
Amazon.com Inc. unsurprisingly topped expectations for quarterly sales amid the COVID-19 pandemic, but it was comments from CEO Jeff Bezos, in a written statement accompanying the retailer’s earnings report, that really drew the focus on Wall Street Thursday evening.
‘If you’re a shareowner in Amazon, you may want to take a seat, because we’re not thinking small.’ — Jeff Bezos
The remarks constituted arguably the lengthiest such statement from the world’s richest man in a quarterly report and underscored the magnitude of the deadly disease that has left much of the world struggling to emerge from forced business shutdowns and a temporary cessation of normalcy to help limit the contagion’s spread.
In that environment, Amazon AMZN, -7.59% has prospered, serving as the go-to online delivery service, one that had previously managed to crush competitors through the sheer might of a $1.2 trillion behemoth. Some rivals, indeed, have buckled under the strain of the current environment even as Amazon’s shares have soared 34% so far in 2020.
However, Bezos shied away from how decisively the cloud-computing and consumer-services company has distanced itself from competitors, including long-established retailers like Macy’s M, -8.53% and J.C. Penney Co. Inc. JCP, -5.15%, who find themselves on the ropes.
Instead, the Amazon boss focused on the road ahead.
Bezos’s statement highlights the costs that companies that survive this public health crisis will face in the coming weeks, months and years as they take steps to ensure the safety of workers and customers alike.
“We are inspired by all the essential workers we see doing their jobs — nurses and doctors, grocery store cashiers, police officers, and our own extraordinary frontline employees,” he wrote.
“The service we provide has never been more critical, and the people doing the frontline work — our employees and all the contractors throughout our supply chain — are counting on us to keep them safe as they do that work,” wrote Bezos. “We’re not going to let them down.”
Amazon reported $75 billion in sales in the first quarter, but its profit declined.
Amazon’s expected expenditures going forward also could deliver a hit to the company in the coming quarters. Shares of Amazon were down 5.5% in after-hours trades following gains during Thursday’s regular trading session.
The company’s stock has climbed 25% so far this year after a 6.6% decline on Friday, still a remarkable feat for the first three months of any year but one that comes with the Dow Jones Industrial Average DJIA, -2.55%, the S&P 500 index SPX, -2.80% down 15% and 10%, respectively, in 2020, as of Thursday’s close. The Nasdaq Composite Index COMP, -3.20% was off just 0.9%, at that point.
As Wall Street has been split into haves and have-nots amid the coronavirus pandemic, Amazon has only strengthened its position among the former.
On Friday, the U.S. House Judiciary Committee asked Bezos to testify about an April 23 report in the Wall Street Journal that alleges that the on-line retailer used data to develop products to compete against sellers on its platform. after Democratic leaders accused his deputies of perjury in past congressional testimony. The Journal report would contradict testimony by Amazon at a House Antitrust Subcommittee last year, reports CNBC.
Bezos’s fortune, meanwhile, has surged by more than $24 billion since the pandemic took the broader market for a roller-coaster ride, according to Fortune. That rise has lifted his net worth to a stunning $148.6 billion, according to Forbes, making him by far the richest person in the world, even after relinquishing much of his wealth to his partner in divorce proceedings back in July.
Check out Bezos’s full statement below:
|From online shopping to AWS to Prime Video and Fire TV, the current crisis is demonstrating the adaptability and durability of Amazon’s business as never before, but it’s also the hardest time we’ve ever faced,” said Jeff Bezos, Amazon founder and CEO. “We are inspired by all the essential workers we see doing their jobs—nurses and doctors, grocery store cashiers, police officers, and our own extraordinary frontline employees. The service we provide has never been more critical, and the people doing the frontline work—our employees and all the contractors throughout our supply chain—are counting on us to keep them safe as they do that work. We’re not going to let them down. Providing for customers and protecting employees as this crisis continues for more months is going to take skill, humility, invention, and money. If you’re a shareowner in Amazon, you may want to take a seat, because we’re not thinking small. Under normal circumstances, in this coming Q2, we’d expect to make some $4 billion or more in operating profit. But these aren’t normal circumstances. Instead, we expect to spend the entirety of that $4 billion, and perhaps a bit more, on COVID-related expenses getting products to customers and keeping employees safe. This includes investments in personal protective equipment, enhanced cleaning of our facilities, less efficient process paths that better allow for effective social distancing, higher wages for hourly teams, and hundreds of millions to develop our own COVID-19 testing capabilities. There is a lot of uncertainty in the world right now, and the best investment we can make is in the safety and well-being of our hundreds of thousands of employees. I’m confident that our long-term oriented shareowners will understand and embrace our approach, and that in fact they would expect no less.|