It’s not booming in the US retail industry at the moment. The industry is struggling with challenges linked to high and rising inflation, slowing economic growth and bottlenecks in global supply chains.
Challenges related to earnings and increased costs have therefore characterized the profitability of American companies so far this year, and thus contributed to weighing on the companies’ share prices.
The technology-heavy Nasdaq index is down around 20 per cent so far this year, while the broader S&P 500 index has slimmed down around 13 per cent over the same period.
As a result, American companies have cut and cut their workforce recently.
Technology giants with drastic cuts
The technology giant Amazon cut the number of employees by as many as 100,000 wage earners in the second quarter, corresponding to a reduction in the workforce of around 6 percent. This is by far the company’s biggest cut in a single quarter.
Amazon is not alone in reducing its workforce.
Tech giants Microsoft, Netflix and Spotify have all recently revealed major job cuts, while Alphabet and Meta Platforms have slowed hiring.
Online shopping giant Shopify laid off 10 percent of its global workforce earlier in July, according to Wall Street Journal.
Recoil after revenue growth
Amazon reported in the first quarter an online turnover reduction of 3 percent. In the second quarter, however, the online shopping giant showed an increase in revenue of over 7 percent.
This was in the upper tier of the company’s guidance for the quarter.
The big question now is whether the rising inflation can actually be beneficial for the e-commerce giants, as it leads to higher prices towards the customers. The downside of increasing price growth, however, is that it directly affects consumers’ trading opportunities, and therefore also the volume of goods and services that are in demand.
The Amazon share is down more than 20 percent so far this year, but the share price suffered a sharp setback after the results from the second quarter were announced.
–
