Amazon.com posted higher fourth quarter earnings on robust holiday sales, outshining results from other retailers, and forecast first-quarter sales above expectations, pushing its shares 13 per cent higher.
Amazon's upbeat outlook and sales performance signalled at least temporary relief for investors who have endured a stream of disappointing forecasts from major consumer companies in past weeks, from Wal-Mart Stores to eBay.
Amazon's 18-per cent revenue jump in the fourth quarter came in at the high end of the online retailer's own expectations, and Chief Executive Jeff Bezos cited "unusually strong demand" for its "Kindle" electronic reader.
Seattle-based Amazon acknowledged a gloomy economic environment that has hurt its brick-and-mortar and online rivals - and eroded its own profit margins - and declined to provide a full-year outlook due to the uncertainty.
"On the one hand, Amazon is doing incredibly well, but on the other, sentiment was very negative going into results," said Cowen & Co analyst Jim Friedland, explaining the rise in shares.
"The reality is that even though growth is slowing and Amazon is being impacted by the economy, particularly in the US, things are not as dire as expectations were."
Analysts have crowned Amazon the online winner of the holiday spending season, at a time when consumers dramatically cut back purchases. Executives cited its lowered prices and discount shipping program, Amazon Prime, that helped boost sales and encourage repeat purchases.
"It looks like they took a lot of market share and made substantial gains," said Jeffrey Lindsay of Sanford C. Bernstein. "The good thing is that Amazon hasn't had to discount to the extent that people feared to achieve this."
Still, profit margins stood below year-ago levels, due to a hyper-competitive environment that spurred discounts.
Gross profit margins were 20.1 per cent of total sales compared with 20.6 per cent of sales a year earlier, while operating margins fell to 4.1 per cent from 4.8 per cent.
"Gross margin wasn't as great as we would have liked it, but it was still decent enough and you can't dispute that the company did very well on the top line," said Hamed Khorsand, an analyst at BWS Financial.
Friedland said that while some analysts will be raising their revenue expectations for the company, the pressure on margins could mean that profit expectations remain unchanged.
Reuters