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Amazon growth slows in Q1

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Pure play e-tail giant Amazon has announced today a revenue rise of 22 per cent to $16.07 billion (10.4 billion), disappointing expectations as it struggled to grow in the Chinese market.

Operating income declined six per cent to $181 million for the first quarter ended March 31st 2013 while net income fell to $82 million, a 37 per cent decrease on the same period last year.

Internationally, revenue rose 16 per cent though Amazon’s Chief Financial Officer Tom Szkutak told analysts that the company remained in “investment mode” in China as growth remains stunted, according to Reuters.

Year-on-year unit growth has also slowed, growing by 30 per cent over the period compared with 49 per cent growth in Q1 2012.

However, the e-tailer remained upbeat about the affect of ongoing initiatives, highlighting the expansion of its TV and video offers and Founder and CEO OF Amazon Jeff Bezos said he hoped that its Amazon Originals line will become “yet another way for us to create value for Prime members.”

Such schemes bring hope for the e-tailer’s position in an increasingly competitive market, believes Dan Coen, Director at advisory and restructuring firm Zolfo Cooper

He commented: “While Amazon’s results are superficially disappointing, we believe they reflect the effects of its long term growth strategy.

“Amazon’s revenue growth has slowed in the first quarter, but the internet giant’s move into areas beyond retail has helped increase profitability.

“Its margins jumped on lower shipping expenses and the expansion of more profitable new businesses.

“Also, increasing sales of digital content helped boost the retailer’s revenue in the first three months of the year.

“With its new TV venture, Amazon is clearly not afraid to step outside its comfort zone and be more than just an online retailer.”

Published on Friday 26 April by Editorial Assistant

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