Retail giant Walmart (WMT 0.30%) had a fabulous fiscal first quarter, with sales rising 9%, and online sales up 74%. Probably the biggest revelation from Walmart's report, however, was this: Racking up all those sales in the midst of a pandemic cost Walmart $900 million in cash bonuses and pay raises, safety equipment costs, and expenses related to sanitizing and otherwise making its stores safe to shop in.
In a recent earnings call, Walmart CFO Brett Biggs said it was a "reasonable assumption" that Walmart would spend another $900 million on COVID-19-related expenses this quarter as well.
If you think $900 million is a lot of money, though, then get a load of this: This quarter, Amazon.com (AMZN 1.98%) is warning investors that its COVID-19-related costs will be $4 billion, more than four times what Walmart is paying.
Image source: Amazon.com.
Amazon let slip this bit of non-trivia in a "Day One" blog post Tuesday, noting that it has "invested heavily in safety since this crisis began and expect[s] to invest approximately $4 billion from April to June on COVID-related initiatives."
As at Walmart, higher wages for employees are just the start. There's also added expense from hiring more than 100,000 temporary workers to help handle the surge in online ordering from customers stuck at home under the Great Lockdown. Plexiglass barriers that separate cashiers and customers in Whole Foods stores, personal protective gear for employees and customers, and extra cleaning costs don't come cheap, either: Amazon spent about about $800 million through the year's first half. In its warehouses, Amazon says it will absorb incur cost from adopting "less efficient process paths that better allow for effective social distancing."
The good news: Having doubled its operating profit margin in the past two years, Amazon at least has some wiggle room to absorb additional costs and still remain profitable.
