Amazon CEO Andy Jassy says he’s confident company can get high costs in check

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  • Amazon CEO Andy Jesse said the company is working “harder” to manage higher costs related to inflation, the pandemic and other factors.
  • Jesse spoke Wednesday at Amazon’s annual shareholder meeting, his first since succeeding Jeff Bezos as CEO in July.
  • “I’m very confident that we’ll be back on track doing the incredibly unusual last two years,” Jesse said.

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Amazon CEO Andy Jesse said the company is focused on returning to “healthy levels of profit” after slowing retail sales and rising costs in its latest quarterly earnings.

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At Amazon’s annual shareholder meeting, Jesse said Wednesday, “We’ve effectively reduced our cost structure before and I have high confidence that we’ll be back on track as we work through these incredibly unusual past two years.” We do.” Founder Jeff Bezos in July.

Jesse initially took office during a turbulent period in the Amazon caused by Covid-19, and then inflation, rising rates and the war in Ukraine began to take its toll on the economy.
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Amazon took on billions of dollars in costs tied to the pandemic as it ramped up testing and cleaning and other safeguards for frontline workers. The company also doubled its physical footprint and increased recruitment to manage the increase in online orders.

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As 2021 comes to an end, Amazon faces higher costs from inflationary pressures as well as supply chain and labor shortages. Then, in February, Russia invaded Ukraine, which pushed up the price of gasoline, and coincided with the rising cost of all kinds of goods around the world.

Last month, Jesse said in an interview with CNBC that the cost of inflation, the coronavirus pandemic and the war in Ukraine had become too high for the company to absorb.

“Over the years we’ve seen some unusual things, some out of our control,” Jesse said on Wednesday. “External factors that were probably a little less within our control are really related to inflation, where line haulage, and trucking, and ocean and air and fuel costs have gone up a lot. We work hard to bring those costs down. We are doing it. Wherever we can.”

Amazon in April imposed a 5% fee to US third-party sellers who use its shipping and warehousing services in an effort to offset some of those costs.

The company has also struggled to utilize all the warehouse capacity added during the pandemic. And after months of staff shortages, its fulfillment network is now overstaffed, as with e-commerce sales cooling it hasn’t needed as many employees lately. In its first-quarter results, Amazon CFO Brian Olsavsky said overstaffing resulted in “low productivity,” which added nearly $2 billion in costs over the past year.

Jassi confirmed a report on Wednesday bloomberg That Amazon intends to spare some of its warehouse space to address this issue with additional capacity.

“We have a number of steps that we are taking right now,” Jassi said. “We are trying to suspend construction activity on properties where we don’t need the capacity right now and we’re going to end some leases. But I’m sure we’ll grow in this footprint.”

watch: Watch CNBC’s full interview with Amazon CEO Andy Jesse on the first annual letter to shareholders

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