Amazon’s growth is slowing as the company adjusts to a new economic environment.
Get to know quickly: Net sales rose to $121.2 billion in the second quarter, or 7% — the same pace as the first three months of the year, the company reported Thursday.
- The company also saw a net loss — for the second quarter in a row — of $2 billion.
Context: The results were better than expected as the digital and logistics conglomerate comes off a period of heavy investment in logistics and the Internet, the online shopping frenzy subsides and inflation rises.
- CEO Andy Jassy recently marked his first year as Jeff Bezos’ successor and has been under pressure to show investors he can restore strength to the company’s core retail business, notes CNBC.
A picture: Online sales, in particular, fell 4% year over year in the second quarter to nearly $51 billion from about $53 billion.
- Physical stores, on the other hand, grew 12% over the past year to about $4.7 billion from nearly $4.2 billion.
Our thought bubble: Amazon must master the art of brick-and-mortar to set the stage for the next phase of growth as online sales falter.
- Physical stores not only provide a new growth channel, they also increase online sales, as shoppers increasingly prefer to move between the two.
The big picture: When asked about the slowdown in consumer spending that Walmart says it’s seeing, CFO Brian Olsavsky said the company “didn’t see a downturn in June.”
What to see: The bright spots within Amazon remain its AWS business and advertising units, which grew 33% and 18% year-over-year, respectively, beating analysts’ estimates.
- Unlike social media competitors in the digital ad space like Twitter and Snap, Amazon continued to grow its ad business significantly last quarter, bringing in $8.8 billion.
- Amazon shares rose nearly 13% after hours.