Amazon so far has weathered the recession better than most retailers, although a recent slowdown in sales growth suggests it's not immune. Amazon's fourth-quarter sales rose 18 percent to $6.7 billion, down from an average year-over-year increase of 36 percent for the previous three quarters.
Amazon.com is closing order-fulfillment centers in Indiana, Nevada and Pennsylvania, a possible sign that one of the few bright spots in the U.S. retail sector is adopting a more-cautious economic outlook.
Spokeswoman Patty Smith said the three distribution centers will close by the end of May, affecting 210 employees.
All told, Amazon is shuttering 805,000 square feet of distribution space, or roughly 7 percent of its North American total.
Amazon so far has weathered the recession better than most retailers, although a recent slowdown in sales growth suggests it’s not immune. Amazon’s fourth-quarter sales rose 18 percent to $6.7 billion, down from an average year-over-year increase of 36 percent for the previous three quarters.
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“There’s no question they’re feeling the effects of the economy,” said Dan Geiman, a retail analyst for McAdams Wright Ragen in Seattle. “They’ve been on a huge growth spurt and had to add distribution centers at a pretty rapid pace, but it’s a different environment now.”
One of the centers slated for closure opened less than a year and a half ago, in Munster, Ind. The others are in Red Rock, Nev., and Chambersburg, Pa.; they have been open since 2001 and 2003, respectively.
This year, Amazon plans to add about 300,000 square feet of space to a distribution center in Arizona, where it will focus on fulfilling orders in the Western U.S. for large items, such as patio furniture, flat-screen TVs and barbecue grills.
Rather than characterize the closures as a sign of the economic downturn, Smith suggested that Amazon’s expansion in Arizona made the 330,000-square-foot Red Rock center, which specializes in the same types of orders, no longer necessary.
She also noted that Amazon will still have three distribution centers in Pennsylvania, two in Indiana and one in Nevada. The two in Indiana opened last year.
“We feel those facilities, in addition to the other buildings we brought on line in 2008, will allow us to serve customers effectively,” Smith said.
Employees affected by the closures will receive up to eight weeks of severance pay plus the opportunity to transfer to another distribution center nearby, she said.
The company has set April 23 as the tentative release date for its first-quarter financial results.
For the fourth quarter, Amazon made a profit of $225 million, or 52 cents a share, up from $207 million, or 48 cents a share, a year ago. Amazon fared much better than the U.S. retail sector as a whole, which described the 2008 holiday sales season as the worst in several decades.
Amazon stock closed at $73.69 a share, up $1.29 for the day. It has traded as high as $91.75 in the last year.
Amy Martinez: 206-464-2923 or email@example.com