By this time next week, we will know how Amazon performed in the second quarter, as the eCommerce leader is set to report its latest earnings results Thursday (July 28).
At this time last year, however, shares of Amazon were trading above $180 and were on the cusp of what would prove to be a long, painful year of declines that has seen the Seattle-based tech giant shed 30% — or about $700 billion in market value — over the past 12 months.
Back then, Amazon’s 27% Q2 ‘21 revenue growth marked the first time in two years that it had fallen short of Wall Street’s sales expectations, an unusual disappointment that it has since repeated three consecutive times with topline misses on its Q3, Q4 and Q1 results.
Whether that unprecedented streak of disappointments continues next week or not remains to be seen but Seeking Alpha shows that in the past three months Amazon has seen a total of 33 downward earnings per share revisions, and 39 revenue estimate reductions, but not one single increase of either.
That kind of wholesale markdown suggests that maybe — just maybe — the 5% Q2 revenue growth “expectations bar” has been sufficiently lowered at this point for Amazon to clear it.
Either way, investors and industry watchers will be paying close attention.
Brutal Climate, Challenging Environment
One thing that is known for sure, however, is that the business climate of July 2022 is every bit as precarious as it was in July 2021, with Amazon and Walmart — and the entire dot-com and retail patch for that matter — toiling in the midst of what many observers feel is the most complicated, murky business environment in a generation.
While the high-stakes, short-term focus of quarterly earnings reports has been the subject of criticism for years, a sum total of nothing has been done to change the SEC-mandated process of updating investors every 90 days.
With that in mind, it was notable this past hot week to see the top two retailers both laying out significant long-term plans attached to the literal climate and environment, rather than the economic variety.
For starters, Amazon CEO Andy Jassy’s latest update took on planetary proportions via a joint interview with electric truckmaker Rivian’s CEO RJ Scaringe to mark the rollout of the first EV delivery vans to 100 U.S. cities this year — en route to a goal of deploying 100,000 by the year 2030 — which is a full 32 quarters from now.
“This is part of a much bigger initiative for us,” Jassy said, noting both the short-term progress of already delivering nearly half a million packages via electric vehicles, alongside the company’s long-term goal of becoming carbon neutral by 2040 as part of its commitment to “The Climate Pledge,” a sweeping program of investment and tech innovations that Amazon 320 other major global corporations have signed on to.
As much as Amazon is known for its ecommerce and retail prowess, at its core, it is a transportation, delivery and logistics business with an outsized reliance on technology. To underestimate the bottom-line benefits and financial commitment of Amazon’s sustainability movement would be as short-sighted as overestimating its quarterly profits and sales.
Walmart’s Worldview
Not to be outdone, Walmart released its own long-term planetary plans this week via a blog from its chief sustainability officer titled, “The World Changes, So Do We,” highlighting its annual progress towards its environmental, social and governance (ESG) goals.
Interestingly, Walmart’s list of ESG issues has grown to include 17 different areas of focus, ranging from climate change to supply chain, and human rights to animal welfare.
“We believe that we maximize the value of our company for our customers and other stakeholders by tackling relevant, pressing societal issues through business,” Walmart CSO Kathleen McLaughlin said in the blog post, which also stressed that there were no simple solutions or consensus on how to achieve a widely embraced set of increasingly complex ambitions.
“Debates have intensified about terminology — ESG, stakeholder capitalism, inclusive capitalism, shared value, etc. — and whether all of this is just a passing fad,” McLaughlin said. “Our view is simple: A company’s long-term success depends on its performance on the societal issues most relevant to its business and stakeholders,” she added, noting that these changing fundamentals are here to stay, “every day in a million ways.”
Adapting to the Environment
Amid this backdrop, both retailers were busy this week adding to the portfolio of services and refining their business processes to better compete in the current inflationary and competitive environment.
One such move involved Amazon’s latest $4 billion bet on healthcare via its announced acquisition of One Medical and its fleet of nearly 200 primary care locations and roster of 750,000 patients.
While the deal still faces regular closing and regulatory approvals, it has already served as a reminder to Walmart and others of the growing battle for market share that exists within one of the economy’s largest and most lucrative sectors.
It’s not as if Walmart is standing still, as the operator or 4,700 retail locations grows the health, dental and prescription services available in its clinics and in-store pharmacies, it is also doing its own acquisitions, including last month’s purchase of Memomi, a California tech startup that makes virtual optical try-on tools.
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