In a year marked by drastic cost-cutting measures — from ending experimental projects to pausing grocery store growth to cutting 18,000 jobs — Amazon lost $2.7 billion in 2022, the company reported Thursday.
Amazon attributes part of that loss to its investment in Rivian, an electric vehicle startup that has struggled with production delays and market upheaval. The startup made its own job cuts Wednesday, trimming 6% of its workforce.
Chief Financial Officer Brian Olsavsky noted Amazon’s financial data for the fourth quarter — between October and December — includes $640 million in costs related to employee severance and $720 million related to the company’s evaluation of its physical grocery stores.
Amazon has paused growth for its Amazon Go and Amazon Fresh stores, and plans to close some stores as it works to refine the format, both Olsavsky and CEO Andy Jassy said Thursday. In addition to Amazon’s Go and Fresh stores, the company acquired Whole Foods in 2017.
The company also said Thursday it had notified the 18,000 workers who lost their jobs as part of the recent cuts, confirming the latest round of layoffs was essentially done.
It entered the fourth quarter of 2022 “with labor more appropriately matched to demand” compared to the same time period in 2021, Olsavsky said, “allowing us to have the right labor in the right place at the right time to drive productivity gains.”
In the fourth quarter , Amazon’s reported net income decreased to $300 million, or $0.03 per diluted share. That’s compared with net income of $14.3 billion, or $1.39 per diluted share, for the same quarter in 2021.
During the fourth quarter, Amazon said it faced a pretax valuation loss of $2.3 billion from its investment in Rivian. In the fourth quarter of 2021, it saw a $11.8 billion valuation gain from its investment.
For the full year, Amazon said it saw a valuation loss of $12.7 billion from its investment in Rivian. That’s compared with a gain of $11.8 billion in 2021.
Amazon’s net loss of $2.7 billion, or $0.27 per diluted share, for 2022 compared to a net income of $33.4 billion, or $3.24 per diluted share in 2021.
Amazon’s net sales for 2022 increased 9% to $514 billion, compared with $469.8 billion in 2021. Excluding changes in foreign exchange rates, Amazon says net sales increased 13% year over year. Amazon Web Services sales increased 29% year over year to $80.1 billion.
Fourth-quarter net sales also increased 9% to $149.2 billion, compared to $137.4 billion in the fourth quarter of 2021. AWS sales increased 20% to $21.4 billion.
Amazon’s operating income decreased to $2.7 billion in the fourth quarter of 2022, compared with $3.5 billion in the fourth quarter of 2021.
Jassy told investors Thursday the company realized at the start of last year “we just had more capacity than we needed.” That realization kicked off an evaluation of all parts of the sprawling business, with a search for areas that might not be “big needle movers” for Amazon.
It started in March when Amazon closed its physical bookstores and 4-Star shops, where customers could find electronics, toys and home goods.
In October it implemented a corporate hiring freeze for its stores business, the retail division that includes online and physical stores, its marketplace for third-party sellers and Amazon’s Prime subscription service. About a month later, it froze corporate hiring almost across the board. That hiring freeze remains in place today.
Last fall, Amazon also began cutting back on several projects, including delivery robots, a virtual travel experience and a video device for kids. Amazon also parked its Treasure Truck, a fleet of roving vans that offer daily discounts, and ended AmazonSmile, a decade-old charitable program that let customers pick a charity to receive a donation from the company.
In November, it began job cuts that affected roughly 18,000 people.
The first wave largely affected employees in the company’s Devices organization, which includes Amazon’s voice assistant, Alexa, as well as Kindle, smart home products, Echo speakers, health device Halo and home robot Astro.
The most recent round of layoffs in January affected its human resources and stores divisions. Amazon’s Worldwide Stores business, led by Doug Herrington, is the retail arm of the tech and e-commerce giant. It includes Amazon’s online and physical stores, marketplace for third-party sellers, and Amazon’s Prime subscription service.
The job cuts impacted 2,300 workers from Amazon’s Puget Sound-region headquarters — 1,852 people in Seattle and 448 in Bellevue.
The cost-cutting measures were “all done with an eye toward trying to streamline our costs but still invest in things we think really matter in the long term,” Jassy said, pointing to Amazon’s investments in streaming, entertainment, health care and broadband satellite connectivity.
“Do I think every one of our new investments will be successful? History would say that would be a longshot,” he continued. “However it only takes one or two of them becoming the fourth pillar for us to be a very different company over time.”