Amazon to spend $4 billion on Covid-19 expenses

This includes investments in personal protective equipment, enhanced cleaning of facilities, less efficient process paths that better allow for effective social distancing, higher wages for hourly teams, and hundreds of millions to develop its own COVID-19 testing capabilities.

Amazon net sales increased 26% to $75.5 billion. (REUTERS)

Buoyed by the surge in demand as people stayed home owing to the pandemic globally, net sales increased 26% to $75.5 billion for Amazon in the first quarter of 2020, compared with $59.7 billion in the first quarter last year.

Net income, however, decreased to $2.5 billion in the first quarter, compared with net income of $3.6 billion in the year-ago quarter

Amazon Founder and CEO Jeff Bezos said the company expects to spend $4 billion or more on COVID-19-related expenses in the second quarter.

"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 getting products to customers and keeping employees safe," Bezos said in a statement late Thursday.

This includes investments in personal protective equipment, enhanced cleaning of facilities, less efficient process paths that better allow for effective social distancing, higher wages for hourly teams, and hundreds of millions to develop its own COVID-19 testing capabilities.

"There is a lot of uncertainty in the world right now, and the best investment we can make is in the safety and well-being of our hundreds of thousands of employees," said Bezos.

Amazon's Q1 performance fell in line with its guidance, with $4 billion in operating income. Its Cloud computing service AWS logged $10.2 billion in sales this quarter, up from $7.7 billion from the year-ago quarter.

"From online shopping to AWS to Prime Video and Fire TV, the current crisis is demonstrating the adaptability and durability of Amazon's business as never before, but it's also the hardest time we've ever faced," said Bezos.

Amazon announced that more than 15,000 small and medium-sized businesses selling in Amazon's stores in the US surpassed $1 million in sales in 2019.

Additionally, third-party sellers sold more than 700 million items that shipped with Prime Free One-Day Delivery or faster in the US in 2019.

AWS announced the opening of the AWS Europe (Milan) and AWS Africa (Cape Town) Regions. AWS now spans 76 Availability Zones within 24 geographic regions, with announced plans for nine more Availability Zones and three more AWS Regions in Indonesia, Japan, and Spain.