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- Amazon CEO Jeff Bezos told investors to ‘take a seat’ as he told them that he’s dedicating the entire current quarter’s $4 billion profit and then some to COVID-19 related expenses.
- He said that much of those expenses relate to how the company has been protecting warehouse workers.
- COVID-19-related worker protection expenses include the creation of its own COVID-19 test, which Amazon’s CFO says will cost $1 billion this year.
- It’s worth pointing out that the $4 billion in expenses isn’t solely dedicated to worker safety. It includes lots of other items such as hiring 175,000 new warehouse workers and some charitable donations to the community.
- Meanwhile, some unhappy front line workers across Amazon, Whole Foods as well as Walmart, FedEx, Target and Instacart, are planning to strike on Friday over working conditions.
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The big news with Amazon’s quarterly earnings is not how much money the company has reaped thanks to the COVID-19 epidemic that has made the company an essential source of supplies for millions of homebound citizens: $41.8 billion in net product sales this quarter compared to $34.3 billion in the year-ago quarter.
It is how big an expense COVID-19 has been for Amazon — and how big it will continue to be. It’s a glass-half-empty, glass-half-full kind of scenario.
CEO Jeff Bezos put it this way in the company’s first-quarter earnings press release on Thursday. “If you’re a shareowner in Amazon, you may want to take a seat, because we’re not thinking small. Under normal circumstances, in this coming Q2, we’d expect to make some $4 billion or more in operating profit. But these aren’t normal circumstances. Instead, we expect to spend the entirety of that $4 billion, and perhaps a bit more, on COVID-related expenses.”
Bezos listed among those current-quarter expenses a boatload of initiatives to keep employees safe such as enhanced cleaning of facilities and “less efficient process paths that better allow for effective social distancing” which means each warehouse may use less workers and will therefore not be able to fill orders at their typical high-intensity levels.
Bezos also says it is offering higher wages for hourly teams, increasing pay by $2 an hour and increasing overtime pay from time and a half to double time.
And the $4 billion includes “hundreds of millions to develop our own COVID-19 testing capabilities,” he said.
Amazon CFO Brian Olsavsky told CNBC the development of this test is expected to cost Amazon $1 billion over the full-year 2020. Amazon is paying for a dedicated team of researchers, engineers and program managers, procurement specialists, as well as building a lab. The company has already begun a pilot test on front-line employees, he said.
Many of these worker protection items that Bezos is touting have been the subject of complaints by warehouse workers on the front lines of the epidemic. On Friday, a coalition of workers from Amazon, Walmart, FedEx, Target, Instacart, and Whole Foods is set to go on strike to protest working conditions during the coronavirus pandemic.
Warehouse workers still don’t trust that the company is telling them about every COVID-19 infection that occurs among employees, as Business Insider reported. Meanwhile, there are new infections confirmed among the workforce weekly, and the tally could be as high as 600 among warehouse workers, according to a list of confirmed infections kept by an Amazon insider.
Of course, not all of that $4 billion in operating profit has been spent on worker protections.
Amazon says it has also hired an additional 175,000 employees in March and April as part of that money. Those additional workers give the company manpower to keep up with sky-high demand, and to replace warehouse workers who quit or are terminated.
Amazon also listed a number of other COVID-19 related expenses beyond its workers including pausing loan payments and other fees for its third-party sellers; doing pro-bono grocery deliveries, donating laptops to students; and donating $15 million to Seattle relief charities.
- Now read:
- Over 600 Amazon warehouse workers at 148 facilities could have gotten COVID-19, but total numbers are hard to determine because Amazon hasn’t been telling its warehouse workers about all cases, multiple employees say
- Amazon’s Q1 profit misses Wall Street estimates even as sales jump on a surge in consumer demand
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