The CFO of Amazon is bracing for an economic downturn
Not every company is created equal; by extension, neither is every CFO. Few CFOs have access to as many economic indicators and data insights as the CFO of Amazon. Given the reach of Amazon’s operations from access to supply chain, e-commerce, and ultimately detailed data regarding consumer confidence and behavior, if Amazon shares an indicator, we listen.
Taylor Soper recently posted an article on GeekWire regarding Brian Olsavsky, Amazon’s CFO, sentiments toward an expected downturn.
The article is based on an analyst call with Brian.
Taylor provides this summary:
Here are some takeaways from the call with Olsavsky:
- The company saw moderating growth rates from its consumer business as the third quarter progressed, particularly in Europe, as well as increased foreign currency headwinds. That was on top of continued impacts of broad-scale inflation, heightened fuel prices, and higher energy costs.
- Companies are cutting their spend with Amazon’s cloud and advertising businesses to save money, Olsavsky said.
- To help mitigate slowing sales and rising expenses, Olsavsky said Amazon is “taking actions to tighten our belt,” including pausing hiring in certain businesses and shutting down products and services. “We’re going to be very careful on our hiring,” he said. Amazon added 21,000 employees in the third quarter — it added 133,000 in the same period last year, and 248,500 in the same period in 2020.
- Amazon added warehouse space faster than it ultimately needed in response to the challenges of the pandemic. It made improvements in productivity of its fulfillment and transportation networks during the third quarter, but “not quite as much as we planned,” Olsavsky said.
As a bonus, the article also provides Jeff Bezos’ most recent opinion on the economy.