Amazon emerged as the essential store for homebound shoppers during the coronavirus pandemic, propelling its sales and profits to new highs. Now, the rush online is slowing down as vaccinated consumers peel away from computers and smartphones and revert to old habits like travelling and dining out.
The world’s biggest e-commerce retailer on Thursday reported sales and gave a forecast that fell short of expectations. The shares declined 8 per cent at 9.34am EST, for the biggest drop since May 1, 2020, the first time Amazon missed quarterly sales estimates since 2018.
The Seattle-based company invested billions to operate through the pandemic while minimising the spread of Covid-19 through its sites and hiring hundreds of thousands of workers to meet crushing demand.
The company's new chief executive, Andy Jassy, who took the helm from founder Jeff Bezos on July 5, has to convince investors that Amazon continues to be a good long-term bet even though revenue growth is slowing and the company faces heightened scrutiny from regulators in the US and Europe, its biggest markets.
“They just don’t have the tailwinds they had last year,” said Brian Yarbrough, an analyst at Edward D Jones & Co. “It just becomes the law of large numbers. There’s just no way it can be sustained.”
Investors overlooked better-than-predicted profits and a strong performance in the quarter from the company’s advertising business and Amazon Web Services cloud unit. Instead they focused on slowing growth for the company’s core e-commerce business, which the company's chief financial officer, Brian Olsavsky, said would continue through the year.
Higher expenses also will linger as Amazon keeps adding capacity and hiring workers to meet demand that has jumped in the past two years, he said. Some sites are handling double the package volume they did two years ago, he added, and Amazon must compete in the labour market for employees as more and more businesses reopen, which will add to costs.
Amazon is working to have more of its employees vaccinated and hopes the Delta variant of the virus can be controlled even if that means “people are getting out more and doing other things besides shopping,” Mr Olsavsky said. “It’s a good phenomenon.”
Revenue will be $106bn to $112bn in the period ending in September, Amazon said, while operating profit will be $2.5bn to $6bn. Analysts, on average, projected $8.11bn in profit on sales of $118.7bn, data compiled by Bloomberg showed.
Second-quarter sales increased 27 per cent to $113.1bn, missing estimates of $115bn. Profit was $15.12 a share in the period ended June 30, compared with the average estimate of $12.28.
Mr Bezos remains executive chairman and the exact nature of his new role is a work in progress.
He has said he wants to focus his attention on new initiatives, which suggests Mr Jassy will oversee the day-to-day of Amazon’s business. Mr Jassy previously ran the cloud unit.
Amazon Web Services revenue jumped 37 per cent in the quarter to $14.8bn — the biggest year-over-year sales jump in two years. The company’s “other” revenue category, primarily advertising sales, gained 87 per cent to $7.92bn, with both units topping analysts’ estimates.
Amazon’s gains during the pandemic came from adding more Prime members, who pay monthly or annual fees in exchange for shipping discounts and other perks. Amazon had 153 million Prime members in the US at the end of June, up 25 per cent from a year earlier, Consumer Intelligence Research Partners reported.
Prime members shop more frequently on Amazon and spend about twice as much on the site as non-Prime members.
Despite big e-commerce investments by competitors that include Walmart, Target and Best Buy, Amazon remains the unrivalled e-commerce leader in the US, its biggest market.
US shoppers will spend $367bn on Amazon this year, up 15.3 per cent from 2020, eMarketer Inc said. Amazon’s 40.4 per cent share of all online spending in the US is bigger than its next nine competitors combined.
The company continues to expand its workforce. It had almost 1.34 million employees worldwide as of June 30, up 52 per cent from a year earlier. Mr Olsavsky said Amazon is recruiting workers in a tight labour market by offering competitive wages and benefits.
The specs
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Torque: 580Nm at 1,900-4,800rpm
Transmission: Eight-speed auto
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Price: From Dh330,000 (estimate)
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Advocate at Al Bahar & Associate Advocates and Legal Consultants, established in 1994
Education: Mr Al Bahar was born in 1979 and graduated in 2008 from the Judicial Institute. He took after his father, who was one of the first Emirati lawyers
Coal Black Mornings
Brett Anderson
Little Brown Book Group
Key facilities
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The specs
Engine: 2-litre or 3-litre 4Motion all-wheel-drive Power: 250Nm (2-litre); 340 (3-litre) Torque: 450Nm Transmission: 8-speed automatic Starting price: From Dh212,000 On sale: Now
Expert advice
“Join in with a group like Cycle Safe Dubai or TrainYAS, where you’ll meet like-minded people and always have support on hand.”
Stewart Howison, co-founder of Cycle Safe Dubai and owner of Revolution Cycles
“When you sweat a lot, you lose a lot of salt and other electrolytes from your body. If your electrolytes drop enough, you will be at risk of cramping. To prevent salt deficiency, simply add an electrolyte mix to your water.”
Cornelia Gloor, head of RAK Hospital’s Rehabilitation and Physiotherapy Centre
“Don’t make the mistake of thinking you can ride as fast or as far during the summer as you do in cooler weather. The heat will make you expend more energy to maintain a speed that might normally be comfortable, so pace yourself when riding during the hotter parts of the day.”
Chandrashekar Nandi, physiotherapist at Burjeel Hospital in Dubai
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SPECS
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Gothia Cup 2025
4,872 matches
1,942 teams
116 pitches
76 nations
26 UAE teams
15 Lebanese teams
2 Kuwaiti teams
Pad Man
Dir: R Balki
Starring: Akshay Kumar, Sonam Kapoor, Radhika Apte
Three-and-a-half stars
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No more lice
Defining head lice
Pediculus humanus capitis are tiny wingless insects that feed on blood from the human scalp. The adult head louse is up to 3mm long, has six legs, and is tan to greyish-white in colour. The female lives up to four weeks and, once mature, can lay up to 10 eggs per day. These tiny nits firmly attach to the base of the hair shaft, get incubated by body heat and hatch in eight days or so.
Identifying lice
Lice can be identified by itching or a tickling sensation of something moving within the hair. One can confirm that a person has lice by looking closely through the hair and scalp for nits, nymphs or lice. Head lice are most frequently located behind the ears and near the neckline.
Treating lice at home
Head lice must be treated as soon as they are spotted. Start by checking everyone in the family for them, then follow these steps. Remove and wash all clothing and bedding with hot water. Apply medicine according to the label instructions. If some live lice are still found eight to 12 hours after treatment, but are moving more slowly than before, do not re-treat. Comb dead and remaining live lice out of the hair using a fine-toothed comb.
After the initial treatment, check for, comb and remove nits and lice from hair every two to three days. Soak combs and brushes in hot water for 10 minutes.Vacuum the floor and furniture, particularly where the infested person sat or lay.
Courtesy Dr Vishal Rajmal Mehta, specialist paediatrics, RAK Hospital
RESULTS
Dubai Kahayla Classic – Group 1 (PA) $750,000 (Dirt) 2,000m
Winner: Deryan, Ioritz Mendizabal (jockey), Didier Guillemin (trainer).
Godolphin Mile – Group 2 (TB) $750,000 (D) 1,600m
Winner: Secret Ambition, Tadhg O’Shea, Satish Seemar
Dubai Gold Cup – Group 2 (TB) $750,000 (Turf) 3,200m
Winner: Subjectivist, Joe Fanning, Mark Johnston
Al Quoz Sprint – Group 1 (TB) $1million (T) 1,200m
Winner: Extravagant Kid, Ryan Moore, Brendan Walsh
UAE Derby – Group 2 (TB) $750,000 (D) 1,900m
Winner: Rebel’s Romance, William Buick, Charlie Appleby
Dubai Golden Shaheen – Group 1 (TB) $1.5million (D) 1,200m
Winner: Zenden, Antonio Fresu, Carlos David
Dubai Turf – Group 1 (TB) $4million (T) 1,800m
Winner: Lord North, Frankie Dettori, John Gosden
Dubai Sheema Classic – Group 1 (TB) $5million (T) 2,410m
Winner: Mishriff, John Egan, John Gosden
RESULT
Los Angeles Galaxy 2 Manchester United 5
Galaxy: Dos Santos (79', 88')
United: Rashford (2', 20'), Fellaini (26'), Mkhitaryan (67'), Martial (72')
Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
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