Amazon sales fail to deliver

The 'Everything Store' isn't getting everything its way, as sales miss estimates.

by Rachel Savage
Last Updated: 30 Jul 2015

Amazon may be putting bookshops and HMV out of business like there’s no tomorrow, but it’s still got to impress investors, who weren’t best pleased to find out that the online mega-retailer had missed its earnings forecasts.

Sales rose 20% year on year to $25.6bn (£15.5bn) in the three months to the end of 2013. However, analysts surveyed by Bloomberg had expected Amazon to rake in $26.1bn in the Christmas period.

Even profit more than doubling to $239m, compared with $97m the year before, didn’t stop shares sliding as much as 10% in after-hours trading in New York.

‘It’s a good time to be an Amazon customer,’ Amazon boss Jeff Bezos said, choosing to skate around the figures. ‘We believe we’re just scratching the surface of what world-class customer service can be.’

Amazon has probably been feeling a bit too generous to customers lately though. Operating costs jumped 20% to £25.1bn, fuelled by higher delivery expenses. The Seattle-based company said it was considering upping the price of its $79 per year Prime service, which includes two-day shipping and unlimited video streaming, by as much as $40, the first increase since it was introduced nine years ago.

Bezos might also want to stop messing around with delivery drones/flying barbecues – ‘technology and content’ costs, which includes R&D, climbed 38% to $1.8bn.

Amazon said first quarter sales will be between $18.2bn and $19.9bn, which analysts had expected would be towards the top of that range. The company forecasted operating profit could be as high as $200m, or could be a loss of that much. Just some ballpark figures then.

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