- There has been no significant increase in the average selling price of retail items, highlighting steady sales growth in essential, lower-cost products, CEO says.
Amazon reported strong first-quarter earnings, with earnings per share (EPS) of $1.59 on revenue of $155.7 billion, marking a notable improvement from the previous year’s first-quarter results, when Amazon posted $0.98 EPS and $143.3 billion in revenue. Amazon Web Services (AWS) revenue met expectations at $29.3 billion.
However, the company’s outlook for the second quarter was less optimistic. Amazon projected operating income between $13 billion and $17.5 billion, falling short of the $17.8 billion anticipated by analysts, despite having posted $14.7 billion in operating income in second quarter of 2024.
The firm also noted a 10-basis-point adverse impact on second-quarter sales. Following this guidance, Amazon’s stock declined by over four percent.
AWS posted $29.3 billion in revenue, with segment operating income climbing to $11.5 billion — suggesting that demand for cloud and AI workloads remains strong while Amazon’s ad sales also surpassed estimates, rising 19 per cent year-over-year to $13.9 billion, beyond the $13.7 billion analysts expected.
Political controversy
The quarterly results were overshadowed by a political controversy involving the Trump administration. Reports surfaced that Amazon was considering listing tariffs directly on product prices on its platform, prompting a negative response from White House officials, including President Trump.
Amazon quickly denied implementing such a plan, clarifying that the proposal was limited to its low-cost Amazon Haul store and was never approved.
This incident underscores the challenges technology firms face amid ongoing trade tensions and tariff policies. With tariffs reaching up to 145 per cent on goods imported from China and a general 10 per cent tariff on other countries, analysts predict substantial price increases on many Amazon products.
In a call with analysts, Amazon CEO Andy Jassy addressed concerns regarding the impact of upcoming tariffs on retail prices. He reassured stakeholders by noting that demand has remained robust, with some categories experiencing increased purchasing as consumers potentially stockpile ahead of tariff-related price changes.
Shifting inventory to US
Despite these concerns, Jassy emphasised that there has been no significant increase in the average selling price of retail items, highlighting steady sales growth in essential, lower-cost products.
Jassy also pointed out that revenue growth from third-party seller services slowed considerably in the first quarter, dropping to seven per cent when excluding foreign exchange effects.
Nevertheless, Amazon’s optimistic forecast for second-quarter sales surpassed expectations, signaling confidence in its ability to manage the uncertainties posed by tariffs.
The CEO affirmed the company’s intense focus on maintaining low retail prices, citing efforts to encourage sellers to shift inventory to the US before tariffs take full effect, though detailed strategies were not disclosed.