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Amazon Third-Quarter Sales Beat Estimates, Shares Rise 8 Percent

The company's third-quarter results reassured investors that it can integrate its biggest-ever acquisition of Whole Foods without disrupting its dominating e-commerce performance.
Amazon delivery boxes | Source: Shutterstock
By
  • Bloomberg

SEATTLE, United States — Amazon.com Inc. showed investors it can run grocery stores, churn out gadgets, expand its cloud-computing business and invest in new markets, all while selling more products online and managing expenses.

The company reported third-quarter sales and profit that topped analysts’ estimates. The results reassured investors that the company can integrate its biggest-ever acquisition of Whole Foods Market Inc. without disrupting its dominating e-commerce performance. Shares rose as much as 8.2 percent in extended trading. The stock closed at $972.43 in New York and has gained 30 percent this year.

Whole Foods generated $21 million of operating income in the period, which included about a month of sales. Revenue from “physical stores”, primarily Whole Foods locations, was $1.28 billion.

Amazon consistently delivers big sales gains and plows most of the money back into the company. It regularly hires thousands of workers, equips warehouses with robots, builds new data centres and invents and updates products like its voice-activated Echo digital assistant, which the company sees as key to getting a foothold in customers’ homes and vehicles.

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The e-commerce giant expanded its ambitions when it spent $13.4 billion on the 460-store Whole Foods grocery chain, becoming a serious player in the $800 billion grocery market and entering the brick-and-mortar retail space dominated by Wal-Mart Stores Inc. And Amazon continues to spread its international reach, with operations in India, Australia and Latin America.

Net income increased to $256 million from $252 million a year earlier, the Seattle-based company said Thursday in a statement. Sales gained 34 percent to $43.7 billion. Analysts estimated earnings of 4 cents per share on sales of $42.2 billion.

The Seattle-based company projected operating income in the current quarter of $300 million to $1.65 billion on revenue of $56 billion to $60.5 billion. Analysts on average estimated profit of $1.55 billion on sales of $58.8 billion.

The question for investors is always how quickly will Bezos spend his company’s money. Third-quarter expenses rose 35 percent, barely faster than revenue growth in the quarter ended September 30.

Amazon dominates e-commerce in the US with its $99-a-year Amazon Prime subscription, which includes delivery discounts, music and video streaming and is intended to keep shoppers engaged with the website. Amazon’s subscription services revenue, which is mostly from Prime memberships, increased 59 percent to $2.4 billion in the third quarter. Second-quarter growth was 53 percent. The company doesn’t disclose the number of Prime subscribers.

Revenue from Amazon Web Services, its profitable cloud-computing division, increased 42 percent to $4.6 billion. Second-quarter growth was 42 percent.

By Spencer Soper; editors: Jillian Ward, Andrew Pollack and Molly Schuetz.

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