Amazon.com Inc. (NASDAQ: AMZN) moved up 0.23% in pre trading session on Tuesday as CEO Andy Jassy announced Thursday that the company’s Amazon Fresh grocery expansion has been halted. He revealed the information during Amazon’s quarterly earnings call, during which the company reported a $300 million profit in the fourth quarter but its largest annual loss in its history as a public company.
Amazon has been experimenting with the store format and expects to continue working on it in the future, according to Jassy, but it has decided in the last year that it will not open any more Fresh stores until “we have that equation with differentiation and economic value that we like, but we’re optimistic that we’ll find that in 2023.”
Jassy’s mixed signals about Amazon’s grocery business are consistent with the company’s earnings report as a whole. During the call, Amazon CFO Brian Olsavsky stated that the company took a $720 million impairment charge in the fourth quarter due to existing leases and other costs associated with closing Fresh and Go stores across its portfolio.
Olsavsky said, “We’re constantly refining our store formats in order to find those that will resonate with customers, build our grocery brand, and allow us to scale meaningfully over time.” “As a result, we review our store portfolio on a regular basis and have decided to exit certain stores with low growth potential.”
Amazon’s revenue from physical stores increased to more than $18 billion last year, despite the fact that it closed all of its Books and 4 Star stores nationwide, leaving only its Fresh, Go, and apparel-focused Style stores. Amazon has not stated how many stores will close or be delayed. Last year, the company closed a Go store in downtown Seattle, citing public safety concerns. Amazon continues to operate five additional Go locations in or near downtown.
In addition to three Fresh locations in Seattle, the company also has locations in Federal Way and Bellevue. Amazon has not announced plans to open additional locations in the Puget Sound region. However, the company is still working on new Go locations in the area. In the last year, the Business Journal has discovered permits for four Amazon Go projects.
Amazon confirmed in September that it will open a Go store at the base of its Grace tower in downtown Bellevue. The store’s exterior signage had already been installed at the time, but it had yet to open, and the company had not provided an opening date.
Amazon filed plans in October 2021 to place Go signage inside a retail space in downtown Seattle’s Harbor Steps complex. At the time, Amazon declined to comment. Permit filings in Pierce County revealed plans for Go stores in Frederickson and South Hill to be built in the same suburban format that the company debuted with its Go store in Mill Creek last year.
In response to a Business Journal inquiry about the four projects, Amazon acknowledged the Frederickson location on Friday and stated that the 2,500-square-foot store would open soon. According to its 2022 fiscal year filing, Amazon leases over 22.8 million square feet of physical store space and owns another 662,000 square feet.
Amazon (NASDAQ: AMZN) Will Cut 67,000 Jobs in First Time in 20 Years
Amazon.com Inc. (AMZN) had a terrible year in 2022, with the e-commerce and cloud giant posting its largest loss ever and its stock suffering a yearly loss. Its employees had a difficult year as well: The Company reduced its workforce for the first time in 20 years.
Amazon had 1,541,000 full- and part-time employees as of December 31, 2022, according to the company’s 2022 annual report, which was released late Thursday. This represents a 6.7% decrease from the 1,608,000 employees Amazon had at the end of 2021.