The rising inflation is bringing some good news at least for Apple and Amazon.
Amazon and Apple Report an Increase in Sales despite Rising Inflation. The tech and e-commerce giant posted a better performance of sales than was expected during troubled markets. The figures indicated that both companies are financially solid so much that they can withstand the current market turmoil and global economic slowdowns. Amazon just reaped amazing results in the selling of its main product, the Prime membership. The company presented a forecast indicating that higher fees for Prime membership will boost its overall sales. While the smartphone giant, Apple reported that the demand for its products, especially for iPhone, remained consistent and strong.
Both companies shared their secret for success. They are controlling their running costs by taking hold of their supply chain operations and removing any additional costs. They are trying to keep these costs low, despite soaring prices of all raw materials. Being the leading companies in their industry, the stock prices and quarterly reports are being closely watched by investors and market experts. These numbers indicate the consumer behavior regarding the purchase of these products in the current economic climate.
Increase in Sales despite Rising Inflation
Last week’s figures revealed the US economy is facing a decreasing trend for the second consecutive quarter. This might be considered an ongoing recession according to normal market standards, but in the US, additional market data is also taken into consideration before a recession is declared.
Luca Maestri, Chief Operating Officer of Apple, stated in a statement that the company is expected to show further growth in the months ahead. He continued to state the results of the June quarter demonstrated Apple’s ability to manage its business operations effectively despite the economic crunch and a challenging business environment. However, both Amazon and Apple have displayed a slower growth rate and a fall in the total profit when compared to the same period last year. Amazon’s profits dropped by $ 2 billion by the changes to the investment value of its electric car maker, Rivian Automotive. While Apple witnessed a profit drop of around 11% from last year to $19.4 billion mostly due to fighting operation battles due to the COVID-19 lockdown and restrictions in China.
Tim Cook, CEO of Apple Inc., said that the company is expecting a “mixed bag” of signals from the economic conditions with the demand for its iPhones remaining steady. But areas, like digital advertising, are the ones that have and will continue to witness a decline in the coming days. Overall, the captain of the ship feels they have been able to hold up strong against the market turbulence with keeping a steady performance, as far as the numbers are concerned.
Quarterly Performance of Apple
Apple further released its performance in the quarterly statement indicating that the sales of Apple’s products and services witnessed an increase of 2% year on year between April and June to a whopping amount of $83 billion. Sales of the iPhone have continued to rise and contribute to the company’s profits as the demand for other products declined. The service side of the company showed a promising trend. Apple Pay and music streaming, along with television services, grew at a rate of 12%.
On the other side, amazon reported its revenue increased up to 7% to $121.2 billion, even though the e-commerce industry had declined in the past couple of months. Online sales dropped by 4% in the second quarter, experiencing a consecutive decline. But the company managed to stay afloat due to the strength of its cloud computing division, AWS, which saw an increase of 33%. In the spring, Amazon surprised its investors, as its online sales division continued to decline. The management warned the investors about the heavy investment it made for massive hiring and strengthening its warehouse structure owing to the pandemic months as the shopping patterns shifted to the online structure. The company expected to see its growth in the coming months as well.
The company had a more optimistic outlook at that time and continued to invest more in the structure. Despite the increasing pressure from the rising costs of fuel, energy, and transportation, Amazon continued to make progress on the costs it could control compared to the last quarter. Particularly the company focused on increasing its productivity and making its networks more efficient.
Quarterly Performance of Amazon
Amazon reported that its e-commerce sales continued to decline and looked particularly weak, mainly due to the rising inflation and specifically due to Prime Day, when the discounts drive a large buying flow moving from June to July. The company termed it a “Mixed bag”. For the tech giants, this season has been kind of a mixed bag experience but Amazon came out to be a tough player surviving in the challenging environment. Apple and are Amazon too big which is not too affected by the recession in the economy. Due to the magnitude of their size, the companies seem to have a unique power to be able to navigate through the tough times, particularly when it comes to negotiating their prices to control their running costs.
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Apple seems to have done an excellent job of managing these costs considering the fact they are one of the biggest purchasers. Amazon, however, experienced some pressure while managing the costs mostly due to the impact of rising prices. A consumer has much less money on his hand to make any purchase.
