Amazon.com (NASDAQ:AMZN) has been warned of a formal investigation in the U.K. in case the company fails to improve its approach to grocery suppliers. The warning came after a survey by the Groceries Code Adjudicator (GCA), a regulator overseeing relationships between grocery retailers and suppliers in Britain, revealed disappointing results.
The survey indicated that many suppliers do not believe Amazon is adhering to the code. The regulator reported that Amazon’s compliance score with its code of practice dropped to 47% in this year’s survey, down from 59% the previous year. As a result, Amazon has been ranked last among 14 retailers.
GCA Demands Improvement
Mark White, head of the GCA, expressed his disappointment with the survey’s findings. He urged Amazon to improve its compliance with the code and ensure clear communication with suppliers about any changes.
It is worth noting that AMZN acknowledged the low score and revealed its plans to implement new processes to improve its relations with suppliers. The company also committed to speeding up the resolution of financial disputes and improving support for smaller suppliers.
Is Amazon a Buy, Sell, or Hold?
Amazon remains under the constant scrutiny of regulators due to its dominant global market position. Nevertheless, the company’s focus on cost-cutting initiatives and efforts to grow its cloud business keep analysts optimistic about the stock.
Turning to Wall Street, analysts have a Strong Buy consensus rating on AMZN stock based on 42 Buys assigned in the past three months. After a year-to-date rally of over 28%, the analysts’ average price target on Amazon stock of $222.45 per share implies a further upside potential of 14.05%.
