// Despite Amazon posting better-than-expected sales, it warns that operating profit could fall to zero in the current quarter
// The business is closing some Fresh supermarkets and Go convenience stores as it looks to curtail expenses
Amazon full-year profits more than halved to $12.2bn as international sales, including the UK, fell 8%.
Amazon has embarked on extensive cost-cutting, which has seen it axe 18,000 jobs, has “decided to exit certain stores with low-growth potential”, according to CFO Brian Olsavsky.
The retailer took a $720m impairment charge in its fourth quarter as a result.
Amazon will also temporarily halt the expansion of Fresh grocery stores until it can find a format that differentiates from other retailers.
CEO Andy Jassy told analysts that Amazon’s stores need to resonate with customers and the company needs to be in a position “where we like the economics”.
International demand hit
Losses swelled at the online giant’s international division from $900m in 2021 to $7.7bn last year.
Demand in Europe and the UK was hurt by high inflation and the Ukraine war, lowering international growth rates, Olsavsky said.
Despite online giant’s global sales over Christmas beating analyst expectations, international was once again its poorest performer with sales down 8% over the quarter to $34.5 billion. However, excluding changes in foreign exchance rates, this amounted to a 5% increase.
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Amazon forecast it would earn between $0 and $4 billion in operating income this quarter, compared with $3.7 billion in the same period a year ago.
Although Olsavsky attributed this to sales growth easing in the cloud and Amazon ads, he also said retail demand was a factor.
“We remain nervous as everyone else is about the consumer spending and how people will prioritise their budgets moving forward,” he said.
Consumer spending shifted more to value brands in some categories and home essentials in its last quarter.
Jassy said: “Our relentless focus on providing the broadest selection, exceptional value, and fast delivery drove customer demand in our stores business during the fourth quarter that exceeded our expectations – and we’re appreciative of all our customers who turned to Amazon this past holiday season.”.
“We’re also encouraged by the continued progress we’re making in reducing our cost to serve in the operations part of our stores business.”
“In the short term, we face an uncertain economy, but we remain quite optimistic about the long-term opportunities for Amazon.”
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