So far, Amazon.com appears to be weathering the economic downturn better than most. The Seattle retailer said Wednesday its first-quarter...
So far, Amazon.com appears to be weathering the economic downturn better than most.
The Seattle retailer said Wednesday its first-quarter profit rose 29 percent as consumers continued to spend online despite mounting concerns about a possible U.S. recession.
Although the profit report beat Wall Street’s expectation, shares of Amazon fell more than $4 to below $77 in after-hours trading. Amazon released its results after the end of regular trading. Earlier Wednesday, shares rose $1.40 to close at $81.
Some analysts expressed disappointment with Amazon’s outlook for the rest of the year.
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The company predicted that its 2008 operating income would be between $740 million and $940 million, roughly the same as before. It also projected sales of between $19.1 billion and $20.0 billion, somewhat better than the $18.75 billion to $19.75 billion that it had been expecting.
“I would have liked to have seen a little stronger guidance, but it’s all relative to expectations,” said Dan Geiman, an analyst at McAdams Wright Ragen in Seattle. “Expectations are high.”
Chief Financial Officer Tom Szkutak said in a conference call that he did not see evidence in Amazon’s results that U.S. shoppers had changed their buying behavior.
“We don’t have a lot of data points about the economy specifically, but what we’re seeing in our business is, it’s very solid,” he said.
The retailer reported a 37 percent increase in sales to $4.13 billion for the three months that ended March 31, while its profit rose to $143 million, or 34 cents a share, from $111 million, or 26 cents a share, a year ago.
Domenic LaCava, an analyst at Canaccord Adams in Boston, described Amazon’s first quarter as “pretty impressive.” He said Amazon likely will continue to benefit in a down economy from its popularity with bargain hunters.
“It would be irresponsible for me to say they’re recession-proof, but they do have the lowest pricing,” LaCava said. “They’re the first place a lot of people go to comparison-shop.”
Geiman said Amazon’s outlook for the full year suggests “maybe they’re viewing that trends are softening a little bit. With that said, it’s hard to argue that it was a weak quarter for them. Certainly the sky is not falling from their point of view.”
During the quarter, Amazon completed its purchase of audiobook retailer Audible, approved a plan to buy back up to $1 billion in stock, and added a fourth major music label, Sony BMG, to its MP3 digital music store.
Sales outside the U.S. were particularly strong. Amazon’s international segment, representing U.K., German, Japanese, French and Chinese Web sites, recorded $2.01 billion in sales, up 44 percent from a year ago. International sales now account for 49 percent of Amazon’s business.
A weak U.S. dollar propped up Amazon’s total sales figure by about $185 million. That’s because sales made in stronger foreign currencies revise upward when translated to U.S. dollars.
The North American segment, representing Amazon’s U.S. and Canadian sites, had sales of $2.13 billion, up 31 percent from the same period last year.
Worldwide sales of books, music and movies rose 28 percent to $2.54 billion. Sales of electronics and other general merchandise increased 56 percent to $1.48 billion.
The company said little about its Kindle e-book reader, other than that it’s in stock after supplies ran out earlier this year. Investors may learn more when Amazon holds its annual shareholders meeting in Seattle on May 29.
Its stock has been trading between $101.49 and $44.61 a share during the last 52 weeks.
The Associated Press contributed to this story.
Amy Martinez: 206-464-2923 or firstname.lastname@example.org