Amazon quarterly profit skyrockets 80%

Amazon tax
// Amazon’s operating profits for the 4th quarter shoots up by 80%
// Sales up 20% for the quarter, which includes Black Friday and Christmas periods
// On a full-year basis, profits more than triples

Amazon has posted record revenue and profit for both its Christmas quarter and full-year, but shares in the online retail giant slumped after it forecast lower-than-expected sales for the current quarter.

For the fourth quarter period covering three months ending December 31 – which covered the crucial Black Friday and Christmas sales periods – Amazon said operating profits skyrocketed 80 per cent year-on-year from $2.1 billion to $3.8 billion (£2.9 billion).

Net sales were up by 20 per cent year-on-year, rising from $60.5 billion (£46.1 billion) to $72.4 billion, while net profit reached $3 billion (£2.2 billion), compared to $1.9 billion during the same period the year before.

While the quarterly results were better than analysts had expected, it was still the slowest sales growth for Amazon since the start of 2015.

On a full-year basis, Amazon’s operating profit more than tripled from $4.1 billion to $12.4 billion (£9.45 billion). Full-year net profit also more than tripled from $3 billion to $10.1 billion (£7.7 billion).

Meanwhile, full-year net sales increased 31 per cent to $232.9 billion (£177.66 billion), compared with $177.9 billion in 2017, making it the first time the company smashed the $200 billion sales mark.

Amazon prompted fears of slowing growth among investors after it forecast lower-than-expected sales for the first three months of the year, with shares falling by five per cent in after-hours trading.

The tech giant said it expected sales to grow between 10 per cent and 18 per cent in the first quarter, which it partly blamed on currency exchange rates.

The forecast was also slightly below analyst forecasts.

Neil Saunders, analyst at data analytics firm GlobalData, said growth among competitors had dented growth in Amazon’s retail division.

“In our view, the gap between Amazon and the rest is now narrowing,” he said.

“Amazon will now need to work doubly hard to achieve any future sales gains.”

Nonetheless, Amazon founder and chief executive Jeff Bezos hailed virtual assistant Alexa as a key performer in driving the ecommerce giant’s growth.

“Alexa was very busy during her holiday season,” he said.

“Echo Dot was the best-selling item across all products on Amazon globally, and customers purchased millions more devices from the Echo family compared to last year.

“The number of research scientists working on Alexa has more than doubled in the past year, and the results of the team’s hard work are clear.

“In 2018, we improved Alexa’s ability to understand requests and answer questions by more than 20 per cent through advances in machine learning, we added billions of facts making Alexa more knowledgeable than ever, developers doubled the number of Alexa skills to over 80,000, and customers spoke to Alexa tens of billions more times in 2018 compared to 2017.

“We’re energised by and grateful for the response, and you can count on us to keep working hard to bring even more invention to customers.”

In the UK, Amazon said it has continued to invest in the products and services offered to customers, small businesses and content creators, as well as support local community organisations and grow its 27,500-strong workforce.

Earlier this month, it announced plans to open a new corporate office in Manchester this year and increase the capacity of its Scotland and Cambridge development centres.

Amazon said the new investment would provide additional capacity for over 1000 new highly-skilled roles in the UK and is in addition to the £9.3 billion the company has already invested in its UK operations since 2010.

The company also said it would increase in its minimum wage to £10.50 for the London area and £9.50 for the rest of the UK for all full-time, part-time, temporary and seasonal employees.

Amazon said this would benefit more than 17,000 employees, as well as over 20,000 seasonal employees.

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