Online shopping behemoth Amazon has come out relatively unscathed from the past years supply chain issues reporting an increase in sales and income for its annual earnings, but still felt the pinch with its quarterly results.
Amazon’s fourth quarter net operating income decreased from US$6.9 billion to $3.5 billion with CEO Andy Jassy acknowledged the impact of the pandemic and the supply chains.
He said, “As expected over the holidays, we saw higher costs driven by labor supply shortages and inflationary pressures, and these issues persisted into the first quarter due to Omicron.”
For the year, the company’s sales increased 22 percent to US$469.8 billion, operating income came in at US$24.9 billion, and its net income increased to US$33.4 billion.
For the rest of the fourth quarter results, its revenue increased 9 percent to US$137.4 billion and profit increased to US$14.3 billion in the fourth quarter compared with $7.2 billion in the year prior.
Amazon explained its fourth quarter profit includes a pre-tax valuation gain of US$11.8 billion included in non-operating income from its common stock investment in Rivian Automotive which completed an initial public offering in November.
The retail giant also raised the annual price of its Prime shipping club from US$119 to US$139, to compensate for the increased costs. This is the first time since 2018 that Amazon has upped its prices for Prime.
Jassy thanked his employees who “overcame another quarter of COVID-related challenges and delivered for customers this holiday season”.
He said, “Given the extraordinary growth we saw in 2020 when customers predominantly stayed home, and the fact that we’ve continued to grow on top of that in 2021, our retail teammates have effectively operated in peak mode for almost two years.
Despite these short-term challenges, Jassy said the company will continue to feel” optimistic and excited” about the business as we emerge from the pandemic.
“When you combine how we’re staffing and scaling our fulfillment network to bring even faster delivery to more customers, the extraordinary growth of AWS with 40 percent year-over-year growth (and now a $71 billion revenue run rate),” he said.