SEATTLE — Amazon is planning to cut some of its private-label clothing brands, amid broad cost-saving efforts and a looming antitrust lawsuit from the Federal Trade Commission.
Seattle-based Amazon confirmed Thursday it had decided to streamline some of its private-brand offerings and rebrand some popular items.
The cuts may hit 27 of the 30 private-label clothing brands Amazon currently operates, such as Lark & Ro, Daily Ritual and Goodthreads, according to a report from The Wall Street Journal that cited people familiar with the matter. Amazon will continue to sell items from those brands while it depletes its inventory but will not restock, said the report.
At the end of the cuts, Amazon will have three private-label clothing brands, according to the report: Amazon Essentials, Amazon Collection and Amazon Aware.
“We always make decisions based on what our customers want, and we’ve learned that customers seek out our biggest brands — like Amazon Basics and Amazon Essentials — for great value with high quality products at great price points,” said Matt Taddy, vice president of Amazon Private Brands, in a statement Thursday.
“If there are products that aren’t resonating with customers we deprecate those items and look for other opportunities,” Taddy said.
Amazon has spent the past 18 months evaluating each part of its sprawling business and looking for places to trim costs. Those cost-cutting efforts have led to the end of several projects — from experimental robotics ventures to the Amazon Treasure Truck, which offered customers daily retail deals. The company has cut 27,000 jobs since November.
Chief Financial Officer Brian Olsavsky told investors this month Amazon is “still mindful of our cost structure,” and will be until it gets to a “level of profitability and return on investment that we’re used to.”
Amazon reported $6.7 billion in profits for the second quarter of 2023, reversing a period of net loss for the same quarter last year. Net sales increased 11% in the second quarter this year to $134.4 billion.
Last month, the company recorded its largest sales day on the first day of its 48-hour annual Prime Day sales event. During the two-day span, Prime Day spending in the U.S. clocked in at $12.7 billion, according to data from Adobe Analytics.
Amazon has been considering cuts to its private-label brands since 2022, according to another report from WSJ. People familiar with the matter told WSJ at the time Amazon had discussed doing so in order to “alleviate regulatory pressure.”
The Federal Trade Commission has been investigating Amazon’s business practices on its online marketplace in recent years, as the company faces criticism that it gives advantage to its own brands over products from other sellers, and may have used data from third-party sellers to develop its own competing products. The FTC also recently accused Amazon of enrolling customers in its Prime subscription service without their consent.
The FTC may be close to bringing an antitrust lawsuit against Amazon. Representatives from Amazon are set to meet with FTC officials this month in what could be one of the final steps before a lawsuit or settlement is filed, according to The Wall Street Journal.
