Amazon.com Inc. is freezing its Amazon Fresh grocery expansion, CEO Andy Jassy said last week.
He shared the news in Amazon's quarterly earnings call, during which the company reported eking out a $300 million profit in the fourth quarter but suffering its largest annual loss in its history as a public company.
Amazon (Nasdaq: AMZN) has been experimenting with the grocery store format and expects to continue to work on it in the future, Jassy said, but it decided over the past year it won't open any more Fresh stores "until we have that equation with differentiation and economic value that we like, but we're optimistic that we're going to find that in 2023."
In the Sacramento area, at least two Amazon Fresh projects are waiting for the retail giant to make the next move.
Last year, the company applied for alcohol licenses for its planned Amazon Fresh store at 7530 Elk Grove Blvd. in Elk Grove's The Ridge retail center. Construction of the building that will be occupied by Amazon Fresh has been completed.
Filings indicate an Amazon Fresh store is also proposed for a former Toys R Us store space at 6780 Stanford Ranch Road in Roseville. Since filing a sign application for Amazon Fresh at the location last January, additional building plans have been submitted for things like fire sprinklers and new hood and duct systems, though the plans refer to the project generically.
Sacramento County records have shown an unnamed grocery store is also planned at Country Club Centre at Watt and El Camino avenues in Arden-Arcade, with a term that Amazon has used as a code name appearing on records associated with that store.
In addition, an unnamed grocery store is planned as part of the redevelopment of the Sunrise Village retail center in Citrus Heights. A rendering of the planned grocery store on Sunrise Village's leasing website shows a design similar to Amazon Fresh stores.
Jassy's mixed signals on Amazon's grocery business mirror Amazon's earnings report as a whole.
Amazon Chief Financial Officer Brian Olsavsky said during the call that Amazon took a $720 million impairment charge during the fourth quarter due to exiting leases and other costs associated with closing Fresh and Go stores throughout its portfolio. (Amazon Go is the company's cashierless mini-mart format.)
"We're continuously refining our store formats to find the ones that will resonate with customers, will build our grocery brand and will allow us to scale meaningfully over time," Olsavsky said. "As such, we periodically access our portfolio of stores and decided to exit certain stores with low growth potential."
Amazon's revenue from physical stores increased last year to over $18 billion, even after it shuttered all of its Books and 4 Star stores nationwide, leaving only its Fresh, Go and apparel-focused Style stores.
Amazon hasn't disclosed how many stores were closing or being delayed.
Amazon leases over 22.8 million square feet of space for its physical stores and owns another 662,000 square feet, according to its 2022 fiscal year filing.
