eCommerce giant Amazon’s (NASDAQ:AMZN) relentless focus on scale and efficiency may be about to pay off, with the company’s international unit on track to notch annual profitability. Amazon is slated to report its second-quarter results later this month.
A Boost to Amazon’s Fortunes
The promising development comes amid Amazon’s continued focus on efficiency. The company has, in recent times, reorganized its warehousing and delivery operations in its key overseas markets, including the U.K. and Germany. The effort resulted in lower delivery times and lower costs in its local operations.
While Amazon launched its international stores nearly 26 years ago, its international efforts have struggled to stay consistently profitable. Back in 2000, AMZN’s founder Jeff Bezos had exclaimed that Amazon was a famously unprofitable company. However, the company gradually achieved overall profitability thanks to its continued global expansion and diversification in new areas such as data centers.
Lessons from Amazon’s Domestic Market
However, a combination of lessons from its domestic market and competition from younger names such as Shein and Temu may have set Amazon on the right path. Amazon reshuffled its North American logistics operations to keep its products closer to customers. This results in lower delivery costs and timings. The experience is helping Amazon make its international operations more efficient. Gains from warehouse automation could help the company further improve its performance.
Amazon’s Upcoming Q2 Results
According to Refinitiv, Amazon’s international unit is expected to clock $1.6 billion in operating profits this year. It had incurred an operating loss of $2.7 billion last year. Meanwhile, Amazon’s second-quarter results are coming up on July 25. Analysts expect the company to post an EPS of $1.03 on $148.63 billion in revenue for the quarter. In the comparable year-ago period, Amazon’s EPS of $0.65 had smashed estimates by a wide margin of $0.30.
Is AMZN a Buy, Sell, or Hold?
Amazon’s share price has rallied by nearly 51% over the past year. Overall, the Street has a Strong Buy consensus rating on the stock, alongside an average AMZN price target of $221.70.
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