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Amazon triples income over 2018

Online marketplace Amazon saw net income grow 236.6 per cent in FY18, up from $4.13 billion (US$3 billion) in 2017 to $13.8 billion (US$10.1 billion), representing $27.7 per diluted share (US$20.14).

Net sales grew 31 per cent over the same period to $320.2 billion (US$232.9 billion), compared to the $244.6 billion (US$177.9 billion) in 2017.

Despite these strong results, the business’s forecasted first-quarter sales of between $77 billion and $82 billion (US$56 and US$60 billion) landed below analyst estimates, according to Reuters, driving shares in the company down 1.7 per cent to $2323.9 per share (US$1690).

Amazon also showed its results for the three months to 31 December, which produced a net income of $4.13 billion (US$3 billion), or $8.31 per diluted share (US$6.04), compared with the $2.61 billion (US$1.9 billion) achieved the holiday quarter prior – a 57.8 per cent increase.

“On the profit front, Amazon’s results are impressive… [however] the sales line presents a mixed bag,” GlobalData Retail managing director Neil Saunders said.

“In our view there are several dynamics at play here. First, is the maturity of Amazon’s operation: Amazon is not a massive retailer and it is simply unrealistic to expect it to keep on growing at its historic pace. However, more concerningly, this maturity is also coinciding with a period of rising competition.”

Saunders points to retailers such as Walmart and Target, which have been investing heavily into online operations in an effort to go toe-to-toe with Amazon, and have narrowed the gap between themselves and the marketplace considerably.

Whole Foods presents another problem for the business, said Saunders, with falling sales at physical stores being a result of the grocers proposition being “simply not up to scratch.”

“Basics and commodity products still cost way more than at rivals like Target, and this is one of the reasons perceptions that Whole Foods is needlessly expensive have persisted,” Saunders said.

“Such expense is not justified by store experience nor by customer service, both of which remain lacklustre.”

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