Amazon.com Inc. is raising the annual fee for its Prime subscription service in the U.S. by $20 to $139, the first such increase since 2018. The company reported profit that topped expectations, led by its cloud-computing division, calming investor concerns about slowing online sales growth and rising fulfillment costs.
For new Prime members, the price change will go into effect on Feb. 18 and will apply to current subscribers who renew after March 25, the company said Thursday in a statement as it reported fourth-quarter results. Amazon also raised its Prime monthly subscription to $14.99 from $12.99.
The increases were widely expected because the Seattle-based company has incurred billions in margin-eating costs to ensure packages get to customers amid supply-chain bottlenecks and an acute labor shortage.
Fourth-quarter sales increased 9.4% to $137.4 billion, the Seattle-based company said Thursday in a statement. Profit was $27.75 a share, aided largely by a pretax gain from the company’s investment in Rivian Automotive Inc. which went public in November. Analysts, on average, projected revenue of $137.8 billion and earnings of $3.77 a share, according to data compiled by Bloomberg.
Amazon in October had warned investors it would spend big in the holiday period to deliver for customers in the face of global supply chain bottlenecks and staffing shortages tied to the pandemic. It offered hiring bonuses and overtime at many warehouses to keep them adequately staffed and secured space on any ship it could find to bring in inventory and meet demand. Fulfillment expenses were $22.4 billion, just less than estimates.
“As expected over the holidays, we saw higher costs driven by labor supply shortages and inflationary pressures, and these issues persisted into the first quarter due to omicron,” CEO Andy Jassy said in the statement. “Despite these short-term challenges, we continue to feel optimistic and excited about the business as we emerge from the pandemic.”
