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Amazon again posts record sales and profit amid rising pandemic costs

By Benjamin Romano, The Seattle Times on

Published in Business News

SEATTLE — Amazon posted record sales and profit for the second consecutive quarter, as it continues to capitalize on a pandemic-driven surge in online shopping.

Heavy spending on hiring, expansion and the costs of operating amid COVID-19 may eat into profitability in the fourth quarter, however, as the company gears up for quarterly sales expected to exceed $100 billion for the first time.

Amazon said Thursday that its third-quarter revenue was $96.1 billion, up 37.4% from a year earlier, well ahead of the expectations of the company and Wall Street analysts. Profit surged 197% to $6.3 billion, or $12.37 a share, also blowing past forecasts.

The company sees no slowdown in the current quarter, which this year included its Prime Day sale, previously held in the third quarter, along with the holiday shopping that typically drives Amazon's annual peak of activity. Amazon executives expect sales in the current quarter of between $112 billion and $121 billion, up 28% to 38%.

Amazon finance chief Brian Olsavsky said costs related to COVID-19 were $2.5 billion during the third quarter, up from the $2 billion the company expected, bringing the total through the first three quarters to more than $7.5 billion. The costs stem from lost productivity due to social distancing requirements, facilities cleaning, hiring and other safety measures.

Amazon has also built its own coronavirus testing system and by November will be able to perform 50,000 tests a day at more than 650 sites. Olsavsky said the company had hoped not to need such measures by now.

 

"But of course the pandemic's still raging and is still very real," he said during a conference call Thursday.

Asked whether the company plans to extend testing beyond Amazon's own work force, Olsavsky said "it's premature to speculate on that."

Some 20,000 front-line Amazon employees had confirmed cases of COVID-19 during the pandemic, the company said in September.

Amazon expects another $4 billion in COVID-19 related costs during the current quarter, with the increase due mainly to increased employment — the company added 350,000 employees between July and October — and the continued expansion of its operations network.

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