Amazon’s growth is plateauing as the company adjusts to a new economic environment.
Catch up quick: Net sales rose to $121.2 billion in the second quarter, or by 7% — the same pace as the first three months of the year, the company reported on Thursday.
- The company also saw a net loss — for a second consecutive quarter — of $2 billion.
Context: The results were better than feared as the digital and logistics conglomerate comes off a period of huge investments in logistics and online, online shopping fevers recede and inflation rages.
- 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, CNBC notes.
A snapshot: Online sales, notably, declined 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 last year to about $4.7 billion from nearly $4.2 billion.
Our thought bubble: Amazon needs to master the art of brick-and-mortar to set the stage for the next phase of growth, as online sales falter.
- Physical stores don’t just offer a new growth channel, they also boost sales online, as shoppers increasingly prefer to float between the two.
The big picture: When asked about the consumer spending slowdown that Walmart says it’s seeing, CFO Brian Olsavsky said the company “did not notice a step down in June.”
What to watch: Bright spots within Amazon remain its AWS business and advertising unit, which grew 33% and 18% year over year respectively, beating analyst estimates.
- Unlike social media competitors in the digital ad space like Twitter and Snap, Amazon continued to meaningfully grow its ads business last quarter, bringing in $8.8 billion.
- Shares of Amazon shot up nearly 13% after hours.