Amazon sales surge after Whole foods acquisition

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Amazon.com Inc on Thursday said its sales surged over the summer and profit trounced expectations, as shoppers jumped at summer promotion events and bought groceries at its newly acquired chain of Whole Foods Market stores.

Shares rose more than 7 percent in after-hours trade.

Amazon is winning business from older, big box rivals by delivering virtually any product to customers at a low cost, and at times faster than it takes to buy goods from a physical store. It acquired Whole Foods for 13.7 billion US dollars in August to help it deliver groceries to shoppers’ doorsteps.

The world’s largest online retailer said net income rose to $256 million, or 52 cents per share in the quarter ended Sept. 30, defying analyst expectations that earnings would be near 3 cents per share.

Prime Day, a summer marketing event Amazon has created to replicate the shopping frenzy that is more typical of the winter holiday season, fared better this year and helped boost sales.

Revenue jumped 34 percent to $43.7 billion in the third quarter, including $1.3 billion in sales from the upscale grocer. Analysts had expected $42.1 billion.

This was “another strong performance, with top-line growth accelerating in the core retail segment,” Baird Equity Research analyst Colin Sebastian said.

In a first, Amazon broke out sales for its online retail business and for its physical bookstores and Whole Foods locations. Revenue from its online stores jumped 22 percent to $26.4 billion, the fastest growth Amazon has seen in the segment in more than a year.

Key to its success has been signing more people up for Amazon Prime, its fast-shipping and video-streaming club, whose members tend to buy more from the company. Revenue from subscription fees such as Prime showed unusually strong growth of 59 percent, to $2.4 billion.

And Amazon Web Services (AWS), the company’s most profitable unit, which handles data and computing for large enterprises, posted a 41.9-percent rise in sales to $4.58 billion, beating the average estimate of $4.52 billion, according to analytics firm FactSet.

Amazon expects an operating profit in the current quarter between $300 million and $1.65 billion. Analysts are expecting $930.78 million for this critical holiday sales period, according to Thomson Reuters I/B/E/S.

Source(s): Reuters