Amazon Shutting Down Dozens of Warehouses in US, Shares Fall Over 25 Percent

An Amazon employee grabs boxes off the conveyor belt to load in a truck at its Fernley, Nev., warehouse, on Dec., 1, 2008. AP Photo/Scott Sady, File

E-commerce giant Amazon has decided to put a halt to some of its planned facilities in the United States, according to estimates by a consulting firm.

Amazon has either shuttered or done away with plans to open 42 facilities in the country, totaling around 25 million square feet of usable space, MWPVL International Inc., which tracks the e-commerce company’s real-estate footprint, told Bloomberg. The planned opening of an extra 21 facilities, totaling almost 28 million square feet, have been delayed. Multiple European projects, most of them in Spain, also are now canceled, it stated.

In April, Amazon reported its slowest growth in roughly two decades. The firm’s revenue from its online store fell by 3 percent, the worst performance since 2016. The company’s product sales remained flat. It registered a loss of $3.8 billion, the first quarterly loss in seven years.

Following the results, Brian Osavsky, Amazon’s chief financial officer, had stated that the firm’s capacity exceeded demand. Amazon reported a second consecutive quarterly loss of $2 billion in the second quarter. The company’s shares have fallen by more than 25 percent this year, as of Sept. 2.

Amazon had recently announced the closure of two delivery stations in October near Baltimore that collectively employ more than 300 workers.

“There remains some serious cutting to do before year-end—in North America and the rest of the world,” said Marc Wulfraat, MWPVL’s founder and president, according to Bloomberg.

However, just as Amazon is abandoning some of its planned facilities, it is also moving ahead with expansion wherever needed. “They continue to go live with new facilities this year at an astonishing pace,” Wulfraat pointed out.

MWPVL calculates that Amazon might open 250 more facilities in 2022. While some will be massive like those planned in Colorado, California, and New York, others will be on a smaller scale, close to 100,000 square feet. Amazon is also planning to open 21 large multistory facilities this year.

Subleasing, Warehouse Investigation

There is talk about Amazon attempting to sublease some of its warehouse space. When questioned by Bloomberg, Amazon spokesperson Alisa Carroll stated that subleasing is a common tactic.

“It allows us to relieve the financial obligations associated with an existing building that no longer meets our needs. Subleasing is something many established corporations do to help manage their real estate portfolio,” she said.

In July, Amazon came under investigation over alleged unsafe workplace conditions in three states. The inquiry will look into injuries at Amazon’s warehouses that are the result of workplace hazards, the pace of work, and whether the company has appropriately reported injuries suffered by workers at its sites.

A labor official recently dealt a blow to Amazon by dismissing the company’s attempt to overturn the results of a labor union election at its JFK8 site in New York. Workers across Amazon’s U.S. warehouses have been attempting to unionize in recent months amid complaints of overwork and safety issues.