Amazon Financials Strong Despite Economy, Free Shipping
Amazon.com pulled in $4.89 billion in net sales during first-quarter 2009, compared with $4.14 billion in first-quarter 2008. Its net income rose from $143 million to $177 million during the same period.
Even more impressive, the company’s margin increased as well. Net income was 3.62% of sales during the quarter just ended, compared with 3.45% a year ago. The quarter ended March 31.
Sales of the newest iteration of its electronic reading device, the Kindle 2, “have exceeded our most optimistic expectations,” said Jeff Bezos, the company’s president and CEO, in a statement.
And Amazon is not feeling the impact of the recession the way other companies are: North American sales rose 21% from first-quarter 2008’s level, to $2.58 billion
In response to an earnings teleconference question about Amazon Prime, the company’s program which offers free shipping on all items ordered for a single annual fee, Thomas Szkutak, senior VP and CFO said “We’re seeing customers do a lot more cross shopping than they have previously and so it’s a very good experience for customers. It’s certainly impacting the growth rates that you’re seeing not only this quarter but the last several quarters.”
“In terms of the shipping revenue, there’s no question that we’re seeing a good adoption of Prime and certainly free shipping and that’s certainly impacting that revenue line item,” Bezos said during the call, adding “And that’s a trend that you’ve been seeing back to our prior quarters.”
While Amazon did not break out its operations based on geography, during the earnings call Bezos said the company was “very pleased with the business we have in China. It’s growing nicely and we think it’s an interesting long-term opportunity for us.”
