Amazon's earnings have nearly doubled as the business raises the cost of Prime membership.Amazon's earnings have nearly doubled as the business raises the cost of Prime membership.

Amazon’s Christmas shopping season in 2021 was predicted to be a letdown after a record-breaking year the year before. Consumers didn’t put the brakes on spending as much as expected in the fourth quarter, despite supply chain concerns weighing on retail, according to the company’s fourth-quarter earnings released on Thursday. The corporation outperformed analysts’ projections and forecasts, earning $14.3 billion in profits.

In October, Amazon forecasted a drop in earnings, citing higher labor and logistical expenses as a reason for the company’s promise of quick delivery. Instead, according to Yahoo, net sales increased 9% to $137.4 billion in the October-December quarter, narrowly missing the average of $137.56 billion projected by experts. From $14.09 the previous year, earnings per share quadrupled to $27.75. This outperformed analysts’ expectations of $3.48 per share in profits per share.

In a conference call with reporters, Amazon Chief Financial Officer Brian Olsavsky credited the IPO of Rivian, an electric car manufacturer in which Amazon had invested, with a significant increase in net income. However, operating income decreased to $3.5 billion in the fourth quarter from $6.9 billion the year before, according to Olsavsky, due to higher labor and logistical expenses, which Amazon had projected to eat into its earnings in the final three months of the year.

The business also announced on Thursday that the price of Amazon Prime membership will increase. According to Olsavsky, the decision to boost the price in the first half of 2022 will offset potential labor and logistical expenses increases. The monthly cost will increase from $12.99 to $14.99, and the yearly price will increase from $119 to $139. Increased investment in Prime Video programming, including an impending Lord of the Rings prequel series and a Thursday Night Football partnership with the NFL, was also mentioned by Olsavsky.

In October, the e-commerce behemoth had warned that the fourth quarter would be challenging due to a tightening labor market. Since the outbreak began, Amazon has dramatically expanded its warehouse capacity, but it claims it hasn’t adequately staffed those locations. As a result, it provides workers with higher beginning salaries and hiring incentives. It also costs extra to shift orders to fully staffed warehouses to deliver them on time to clients.

While the problem didn’t have the expected impact on profitability, Amazon is still dealing with labor concerns. Amazon employees are fighting back against expectations that they claim force them to work too hard without giving them adequate time to recover. The profit announcement comes just one day before workers at an Alabama warehouse vote on whether or not to become a union. New York warehouse workers are likewise attempting to form a union.

After a string of poor results, Amazon’s earnings release is a step forward. For the same labor and logistics issues, profits were half in the third quarter. In addition, sales dipped a quarter early despite relocating its Prime Day discount holiday to June last year.

The earnings release comes a year after Jeff Bezos announced that veteran Amazon insider Andy Jassy, who was running the company’s cloud computing operations at the time, would take over as CEO. Jassy took over in July, just as Amazon’s sales and profitability declined.

Like other Big Tech corporations, Amazon is being scrutinized by regulators for labor and antitrust violations.

Leave a Reply

Your email address will not be published. Required fields are marked *