728 x 90

Amazon sales outlook disappoints after record holiday quarter

Amazon sales outlook disappoints after record holiday quarter

(Reuters) – Amazon.com Inc on Thursday forecast first-quarter sales below Wall Street estimates as new regulations in India created uncertainty around one of its key growth markets, dimming the online retailer’s report of record holiday season profit. Shares of the company fell 1.7 percent to $1,690 after the bell. Amazon posted a 63 percent jump

(Reuters) – Amazon.com Inc on Thursday forecast first-quarter sales below Wall Street estimates as new regulations in India created uncertainty around one of its key growth markets, dimming the online retailer’s report of record holiday season profit.

Shares of the company fell 1.7 percent to $1,690 after the bell.

Amazon posted a 63 percent jump in net income to $3.03 billion (£2.31 billion) for the fourth quarter, ahead of analysts’ estimates.

The company has used fast shipping and streaming video to attract shoppers, creating an e-commerce powerhouse. Fees merchants pay Amazon to ship and advertise their products have fattened the company’s once-thin profit margins.

Yet investors turned their attention abroad where Amazon has long lost money in the hopes of future profit. Though its operating loss shrunk to $642 million from $919 million in the quarter, rules in India created concern. These disallow companies from selling products via vendors in which they have an equity interest.

Brian Olsavsky, Amazon’s chief financial officer, said on a call with reporters, the “situation in India is a bit fluid right now.”

“There’s a bit of uncertainty,” he said, adding that Amazon’s goal is to minimize the impact on its customers and sellers. “India remains a good long-term opportunity,” he said.

A worker sorts parcels at Amazon’s fulfilment centre in Peterborough, Britain November 15, 2017. REUTERS/Darren Staples

The company began removing a wide array of products from its India website late on Thursday to comply with the new foreign investment curbs that kick in on Feb. 1, Reuters reported.

The company forecast net sales of between $56 billion and $60 billion for the first quarter, missing the analyst average estimate of $60.77 billion, according to IBES data from Refinitiv.

Olsavsky said the guidance includes two percentage points of negative impact from changes in currency exchange rates.

Overall, net sales for the fourth quarter rose 19.7 percent to $72.38 billion and beat the analyst average estimate of $71.87 billion on the back of a strong holiday season, which includes the major U.S. shopping event Black Friday.

“Amazon continued its relentless assault on the high street over Christmas,” Nicholas Hyett, Equity Analyst at Hargreaves Lansdown said.

Net sales in North America, its biggest market, jumped 18.3 percent to $44.12 billion in the reported quarter. International revenue came in a touch above expectations, too.

Amazon said tens of millions of shoppers signed up for Prime during the season, helping boost revenue from subscription fees 25 percent to $4.0 billion. The company has more than 100 million Prime members globally.

FILE PHOTO: The logo of Amazon is pictured inside the company’s office in Bengaluru, India, April 20, 2018. REUTERS/Abhishek N. Chinnappa/File Photo

This expansive customer base has lured merchants to sell goods on the company’s marketplace, to the point where more than half of products sold on Amazon came from third parties earlier last year.

Making Amazon more profitable still are ad sales. The company now ranks alongside Alphabet Inc’s Google and Facebook Inc as titans in marketing, letting these same merchants pay for high placement in Amazon’s search results.

Ad sales and “other” revenue jumped 95 percent to $3.4 billion in the fourth quarter.

Reporting by Arjun Panchadar in Bengaluru and Jeffrey Dastin in San Francisco; Editing by Arun Koyyur and Lisa Shumaker

[ad_2]

Source link

Susan E. Lopez
ADMINISTRATOR
PROFILE

Posts Carousel

Leave a Comment

Your email address will not be published. Required fields are marked with *

Latest Posts

Top Authors

Most Commented

Featured Videos