The highlight of Amazon’s (NASDAQ: AMZN) final quarterly report for FY2020 was no doubt the CEO transition. Come Q3 2021, Jeff Bezos will hand over the reins to Andy Jassy and turn his focus to other important matters, marking the beginning of a new era at Amazon.
Amazon witnessed significant gains across its business through most of 2020 due to the COVID-19 pandemic and a strong holiday season concluded the year on a positive note. Net sales rose 44% year-over-year in the fourth quarter of 2020 to $125.6 billion while profits more than doubled to $7.2 billion from $3.3 billion last year. EPS totaled $14.09 versus $6.47 last year.
Shares of Amazon have gained 65% over the past 12 months.
Amazon’s founder and CEO Jeff Bezos will step down from his current position and take over the role of Executive Chair in the third quarter of 2021. Andy Jassy will replace him as Chief Executive Officer at that time. In an email to employees, Mr. Bezos said he would focus his energies and attention on new products and early initiatives. On its quarterly conference call, Amazon said Mr. Bezos would be involved in matters like acquisitions and strategies.
During the 2020 holiday season, Amazon saw worldwide sales grow over 50% versus the same period in 2019. From Black Friday through Cyber Monday, sellers exceeded $4.8 billion in worldwide sales, reflecting a growth of around 60% from last year.
The company held its Prime Day this year in October as opposed to the third quarter and also witnessed strong seasonal holiday demand through the fourth quarter. Order volumes remained strong throughout the holiday period.
Pandemic gains and losses
Amazon has witnessed strong demand trends since the onset of the COVID-19 pandemic as people have largely stayed at home and turned to ecommerce to purchase household staples and other home products. During the pandemic, Prime members shopped with more frequency and across more product categories. The usage of Prime Video also increased during this time.
The company incurred approx. $4 billion in COVID-related operating costs during the fourth quarter which included additional pay for employees during the holidays. For the year, total COVID-related costs amounted to more than $11.5 billion.
During the quarter, Amazon Web Services recorded a sales growth of 28% compared to the same period last year. Profits increased 40% year-over-year. Amazon saw strong usage growth in its cloud computing segment, which is now a $51 billion annualized run rate business.
For the first quarter of 2021, Amazon expects net sales to range between $100-106 billion and operating income to range between $3.0-6.5 billion.
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