Amazon Sales Surge Amid Pandemic-Driven Online Shopping
October 29 2020 - 5:31PM
Dow Jones News
By Dana Mattioli
Amazon.com Inc. online orders continue to surge during the
Covid-19 pandemic, with the e-retail giant projecting a bumper end
to the year as it posted strong third-quarter earnings.
Amazon on Thursday said third-quarter sales in the period rose
37% to a record $96.2 billion to generate a $6.3 billion profit, or
$12.37 a share. Profit roughly tripled from the year-ago period
when the company's bottom line was weighed down by heavy investment
in its push to one-day shipping for customers.
Wall Street expected sales of $92.8 billion and a net profit of
$3.8 billion for the latest quarter, according to analysts surveyed
by FactSet.
The scale of online shopping during the pandemic at times has
strained Amazon, driving up staffing and costs to get goods to
customers. The company said it would add 100,000 seasonal workers
in the U.S. and Canada heading into the Thanksgiving and Christmas
holidays ahead of an expected increase in online orders.
"We're seeing more customers than ever shopping early for their
holiday gifts, which is just one of the signs that this is going to
be an unprecedented holiday season," Amazon Chief Executive Jeff
Bezos said in a statement.
Amazon achieved the lofty sales figures even without its annual
shopping event, called Prime Day, that is typically held in July
and helps the company sign up new Prime subscriptions by offering
members steep sales discounts. This year, the event was delayed
until October as the Seattle company worked through the summer's
jump in orders.
Even ahead of the typically busy year-end shopping season,
Amazon has enjoyed an unusually strong order surge. Sales for the
July through September period increased another 8% from the record
set in the prior three-month period.
In another sign of how the pandemic is changing shopping
patterns, Amazon said its physical stores segment, which includes
Whole Foods, saw a 10% decrease in sales from the year-earlier
period.
Amazon shares, up 1.52% ahead of the results, retreated around
1% in after-hours trading Thursday. Before the late-afternoon
report, the stock was up more than 70% this year, giving the
company a market value of around $1.6 trillion.
Amazon Web Services, the company's cloud-computing operation and
its main profit center, posted $11.6 billion in sales in the
quarter ended September 30, rising 29% from a year earlier.
Operating income for AWS, which rents computing power to companies
and the government, rose 56% to $3.5 billion. Cloud services have
been in hot demand during the work-from-home era as companies
accelerate their adoption of the kind of digital tools.
Earlier this week, cloud competitor Microsoft Corp., the No. 2
behind Amazon, reported that revenue from its Azure cloud-computing
operations increased 48% from the year-ago period.
And Amazon's effort to drive earnings growth through advertising
sales also showed success. The business had sales of $5.4 billion
in the quarter, a 51% increase from the year-earlier period. The
unit, which sells advertising space in the form of sponsored
products in search and display ads, has become another cash cow for
the company.
The company Thursday forecast $112 billion to $121 billion in
sales in the current quarter, bolstered by the delayed Prime Day
event. During the two-day period, overall spending on Amazon's site
increased by 36% in the U.S. over the two days compared with last
year, according to research firm Edison Trends, though that was
lower than the 42% increase the company saw in 2019. Wall Street
has been forecasting sales of around $112.7 billion for the final
quarter of this year.
Amazon expects operating income in the fourth quarter to be
between $1 billion and $4.5 billion, from $3.9 billion a year ago.
This year's figure would include about $4 billion in
Covid-19-related costs.
Sebastian Herrera contributed to this article.
Write to Dana Mattioli at dana.mattioli@wsj.com
(END) Dow Jones Newswires
October 29, 2020 17:16 ET (21:16 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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