In the conference call with analysts discussing Amazon's first quarter results, CFO Brian Olsavsky confirmed that Amazon had “dampened demand” for non-essential items by cutting back on marketing after orders started to surge in early March once the Covid-19 pandemic began to spread in the U.S.
Shipping times for essential items—household staples, medical supplies, and other critical products—have run from one to four days, with longer times for other items, Olsvasky said. Amazon is working to get back to a more normal delivery schedule for non-essential products, Olsvasky said, but he could not provide a time frame when shipping will return to pre-pandemic levels.
Olsvasky's remarks came as the giant company released results for the first quarter of 2020 that showed a 26% increase in revenue, to $75.5 billion, and a 31% decline in net earnings, to $2.5 billion. Sales through Amazon’s online store rose 24% in the first quarter over the comparable period in 2019, rising to $36.6 billion. Third-party sales jumped 30%, to $14.5 billion, and subscription services revenue rose 28%, to $5.5 billion.
In prepared remarks, Amazon founder and CEO Jeff Bezos vowed to spend at least $4 billion in the current quarter on Covid-related upgrades that have the dual goal of “getting products to customers and keeping employees safe.” Among the investments Amazon will make, Bezos said, are buying personal protective equipment, enhanced cleaning of facilities, instituting more effective social distancing, raising wages for hourly teams, and spending hundreds of millions of dollars to develop Amazon’s own Covid-19 testing capabilities.
The extra spending on Covid-19 measures will drop profits in the second quarter, with the company forecasting that the bottomline in the quarter will be between earnings of $1.5 billion to a loss of $1.5 billion. Sales are expected to increase 18% to 28%