Tags: Amazon | revenue | holiday | sales

Amazon Revenue Rises 22% on Strong Holiday Sales

Tuesday, 29 Jan 2013 04:21 PM

By REUTERS

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Amazon.com Inc., the world’s largest Internet retailer, reported fourth-quarter sales that rose 22 percent as more shoppers turned to its broad product selection and speedy shipping for holiday gifts. The company's shares jumped after the news Tuesday.

Sales climbed to $21.3 billion, the Seattle-based company said in a statement. Analysts on average had projected $22.2 billion, according to data compiled by Bloomberg.

Chief Executive Officer Jeff Bezos is pumping money into new warehouses, seeking to give consumers a reason to choose Amazon over going to the mall by offering two-day delivery. The company announced 19 shipment hubs in the third quarter alone, a move that meant a 35 percent increase in fulfillment costs from a year earlier. While the investment weighs on margins, it helped Amazon grab a bigger share of the record $42.3 billion spent online over the holidays, according to researcher ComScore Inc.

Amazon is the only company “that is able to leverage a global fulfillment network to drive disruption of traditional offline retail sales,” Scott Devitt, an analyst at Morgan Stanley, wrote in a note to clients. “The market is underestimating the long-term international sales opportunity and the cost leverage that will occur as fulfillment investments drive lower unit-variable shipping costs.”

In aftermarket trading, Amazon shares were up 9.5 percent at $285.11. They had fallen 5.7 percent to $260.35 at the close in New York. The stock jumped 45 percent in 2012.

Operating Income

Net income in the fourth quarter fell to $97 million, or 21 cents a share, from $177 million, or 38 cents, a year earlier, the company said.

First-quarter operating income will range from a loss of $285 million to profit of $65 million, Amazon said, while analysts on average had projected operating profit of $261.4 million. Sales will rise to $15 billion to $16.6 billion, compared with an average analyst estimate of $16.8 billion.

Amazon’s spending on fulfillment may help it gain share in a worldwide e-commerce market that Devitt estimated will reach $1 trillion by 2016, up from $512 billion last year. By then, Amazon’s share will be 23.5 percent, pushing the company’s total sales to $166 billion, he projected in a Jan. 6 note.

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