Dave Clark, Amazon CEO of Worldwide Consumer and a critical player in the company’s operational expansion during the COVID-19 pandemic, is leaving the company to pursue other interests, the company reported.
The move comes as Amazon is addressing overcapacity and over-employment issues.
In a rough first quarter, Amazon conceded that it hadn’t properly estimated its physical capacity and employment needs. In the company’s first-quarter conference call, Brian Olsavsky, Amazon CFO, said the company had lowered its capital expenditures for the year after overcapacity, coupled with the extraordinary leverage gained in the year-prior first quarter, resulted in $2 billion of additional costs year over year in Q1. At the same time, the company hit an employment peak of 1.7 million in the period, although it began and ended the quarter with 1.6 million workers. As such, Amazon found itself with more employees than it needed and had to scale back its workforce to improve its cost position. Now, Olsavsky said, Amazon is working to harmonize its operations network to reach a more productive balance of capacity and staff.
In analyzing the first-quarter results, Pulse Ratings noted that Amazon’s online sales slipped 1%. Increased shipping and fulfillment costs, partly due to investments in the fulfillment network, higher wages, additional transportation costs and fulfillment network inefficiencies, as well as growth in certain operating expenses, lowered the company’s quarterly EBITDA margin to 13.7% from 17.2% a year ago. The retail ratings research firm added that, although Amazon management anticipates the incremental costs from overstaffing, overcapacity and inflationary pressures to lessen from the first quarter’s $6 billion, it still anticipates the figure to come in at a sizable $4 billion in the second quarter.
Amazon has circulated a dual message to its employees from CEO Andrew Jassy and Clark, whose last day will be July 1.
Jassy’s part stated:
Dave joined our Operations Pathways Program in May 1999 — just a day after graduating from his MBA program — and he took the leap from teaching music to helping us build and scale our consumer operations. Dave has had an increasingly large impact across the company, starting as an operations manager in Kentucky, growing to a GM in the Northeast, stepping up to lead worldwide operations, and then eventually leading all of worldwide consumer. He’s led teams who’ve designed several generations of fulfillment centers, built out Amazon’s transportation network from scratch, and has developed significant talent throughout the organization.
Please join me in thanking Dave for his many accomplishments over the years at Amazon and especially for what he’s delivered for customers. The past few years have been among the most challenging and unpredictable we’ve faced in the history of Amazon’s consumer business, and I’m particularly appreciative of Dave’s leadership during that time.
As we shared last week during our annual shareholder meeting, we still have more work in front of us to get to where we ultimately want to be in our consumer business. To that end, we’re trying to be thoughtful in our plans for Dave’s succession and any changes we make. I expect to be ready with an update for you over the next few weeks.
While change is never easy, I’m optimistic about the plan that the consumer team has built and have confidence that if we stay focused on executing it, we’ll deliver the right experiences for customers and results for the business.
For his part, Clark related, in part:
I am a builder at heart. It’s what drives me. For me there has been no greater company to hone those skills than here at Amazon. As much as I have loved the ride, it is time for me to say goodbye to start a new journey. For some time, I have discussed my intent to transition out of Amazon with my family and others close to me, but I wanted to ensure the teams were set up for success. I feel confident that time is now. We have a great leadership team across the consumer business that is ready to take on more as the company evolves past the customer experience challenges we took on during the COVID-19 pandemic. We also have a solid multi-year plan to fight the inflationary challenges we are facing in 2022. I leave knowing that the leaders in the consumer business are world class and will take the next phase of Amazon to remarkable levels of success.