Despite some headwinds from the pandemic, Amazon charted record sales and profit in 2020 and doesn’t expect a slowdown in the coming months — though the results were overshadowed by news that founder Jeff Bezos would step aside as CEO by the third quarter of this year.
Amazon spent $11.5 billion on hiring, expansion and other costs related to COVID-19 last year — but the pandemic-driven surge in online shopping, as well as continued strength from its cloud-computing division, more than made up for those outlays, the company said Tuesday. Its 2020 sales surged 38% to $386.1 billion from a year earlier while profit roughly doubled to $21.3 billion, or $41.83 a share.
Amazon’s fourth-quarter performance outstripped the company’s forecasts and analysts’ projections. Revenue jumped 44% from a year earlier to $125.6 billion, surpassing analysts’ average estimate of $119.7 billion. Profit more than doubled to $7.2 billion, or $14.09 a share, compared with analysts’ projections of $7.34.
For the first quarter of 2021, Amazon anticipates sales between $100 billion and $106 billion, up 33% to 40% compared with a year earlier, and profit of between $3 billion and $6.5 billion.
Amazon sees its pandemic-related outlays declining in the early months of this year, Chief Financial Officer Brian Olsavsky told analysts on a call. The company expects to spend $2 billion between January and March addressing the impact of the coronavirus on its core business, according to Amazon’s earnings release — substantially less than its COVID-19 spending in the previous three-month period.
Amazon in 2020 plowed much of its profits into meeting pandemic-juiced demand, spending $4 billion on COVID-19 measures in the fourth quarter alone, including to hire 170,000 new employees to work during the frenetic holiday shopping season.
Over the course of the last year, Amazon also expanded its logistics footprint by 50% and boosted compensation for some warehouse employees working during the pandemic. Simultaneously, the company faced productivity losses as it implemented safety measures to slow the spread of the coronavirus at its facilities.
“Hopefully the vaccine gets going, hopefully everyone gets vaccinated,” Olsavsky said during the earnings call. “If not, there will be a continuation of some of these costs.” Amazon has asked federal, state and local officials to prioritize its essential workers for vaccination “at the earliest appropriate time.”
The end of the pandemic, though, will likely lead to a drop-off in consumer demand for online commerce, Olsavsky acknowledged.
“We’ll probably never repeat the number of gloves and hand wipes we sold, or computer monitors, as people set up their home offices,” he said.
Amazon anticipates “lasting benefits” from the growth in its Prime subscriber base during the pandemic, Olsavsky said. Prime customers pay $119 each year for access to benefits that include one-day shipping and video streaming services. Subscription service revenue, which includes Prime fees, grew 35% in 2020 compared with the previous year, to top $25 billion.