Amazon Posts Profits Jump on Robust Growth
The recession may mean consumers are cutting discretionary spending, but Amazon.com didn’t seem to feel much of a pinch in its first quarter.
The Seattle-based online retailer said Thursday that during the first three months of the year, earnings and revenue climbed thanks to strong sales of products such as books, DVDs and electronics.
The results were much better than the decline analysts were anticipating and indicate that the online retailer is faring well despite the ongoing recession.
Amazon.com Inc. said earnings climbed 24 percent to $177 million, or 41 cents per share, compared with $143 million, or 34 cents per share, in the year-ago quarter. That easily beat the 31 cents per share that analysts polled by Thomson Reuters expected.
The company said revenue rose 18 percent to $4.89 billion, slightly higher than analysts’ expectations of $4.76 billion.
Amazon expects second-quarter sales of $4.3 billion to $4.75 billion, which would represent growth of 6 to 17 percent over the $4.06 billion it reported in the second quarter of 2008. Analysts have predicted sales of $4.6 billion, which is within that range.
In the first quarter, sales of items such as books, CDs and DVDs rose 7 percent to $2.72 billion, while sales of electronics and other general merchandise rose nearly 39 percent to $2.05 billion.
Amazon Chief Financial Officer Tom Szkutak said during a conference call with reporters that in this latter category — which also includes items like sporting goods, apparel and shoes — sales were strong among many different types of products.
By region, Amazon’s North America sales rose 21 percent to $2.58 billion, while international sales rose 15 percent to $2.31 billion.
Amazon said revenue from shipping — which includes revenue it brings in through its membership-based two-day shipping program, Amazon Prime, as well as its third-party shipping program, Fulfillment by Amazon — declined 1 percent to $190 million.
Net shipping costs rose 31 percent year-over-year, however, to $168 million.
Nevertheless, the company’s gross margin rose to 23.5 percent in the first quarter from 23.1 percent in the year-ago period. This metric had declined in the fourth quarter in a move the company attributed partly to price cuts.
In a conference call with analysts, Szkutak said that active customer accounts rose 16 percent in the quarter to more than 91 million.
In February, Amazon launched the latest version of its $359 electronic reading device, Kindle 2. The company, which started selling the Kindle in late 2007 and has not released any sales figures to date, said Thursday that the online Kindle Store now includes more than 270,000 books and other reading material.
A report released this week by research firm iSuppli determined that the Kindle costs about $185 to build, but when speaking with reporters, Szkutak said that what Amazon is paying for Kindle materials and manufacturing is “significantly higher.”
Amazon ended the quarter with 20,600 employees, compared with 20,700 employees at the end of the fourth quarter of 2008.
Dan Geiman, an analyst with McAdams Wright Ragen, said the quarter was strong across the board.
“I think they really haven’t disappointed in a while now, and just continue to post some really strong numbers, especially relative to expectations and relative to other retailers,” he said.
Geiman does think Amazon is feeling the impact of the weakened consumer environment, though, noting that while it posted revenue growth, this growth has slowed “significantly” from what it has reported in the past. In the year-ago quarter, for example, revenue had risen 37 percent.
He called Amazon’s outlook conservative, and said it reflects the overall economic environment.
“I think everybody is going to be watching to see how the consumer is doing on a broader scale and how that might translate to Amazon as well,” he said.
Amazon shares rose $1.98 or more than 2 percent in after-hours trading, after finishing regular trading Thursday up $1.41 at $80.61.
4/23/2009 7:07 PM RACHEL METZ AP Technology Writer NEW YORK