Online retailer Amazon's profit jumps on strong Q1 sales

The recession may mean consumers are cutting discretionary spending, but Amazon.com didn't seem to feel much of a pinch in its first quarter.

The Seattle-based online retailer said Thursday that during the first three months of the year, earnings and revenue climbed thanks to strong sales of products such as books, DVDs and electronics.

The results were much better than the decline analysts were anticipating, and indicate the online retailer is faring well despite the ongoing recession.

Amazon.com Inc. said earnings climbed 24 per cent to $177 million US, or 41 cents per share, comparedto $143 million, or 34 cents per share, in the year-ago quarter. That easily beat the 31 cents per share that analysts polled by Thomson Reuters expected.

The company said revenue rose 18 per cent to $4.89 billion, slightly higher than analysts' expectations of $4.76 billion.

Amazon expects second-quarter sales of $4.3 billion to $4.75 billion, which would represent growth of six to 17 per cent over the $4.06 billion sales it reported in the second quarter of 2008.

In the first quarter, sales of items such as books, CDs and DVDs rose seven percent to $2.72 billion, while sales of electronics and other general merchandise rose nearly 39 per cent to $2.05 billion.

Amazon chief financial officer Tom Szkutak said during a conference call with reporters that in this latter category which also includes items like sporting goods, apparel and shoes sales were strong among many different types of products.

Customers rose to over 91 million

Amazon said revenue from shipping which includes revenue it brings in through its membership-based two-day shipping program, Amazon Prime, as well as its third-party shipping program, Fulfillment by Amazon declined one per cent to $190 million.

Net shipping costs rose 31 per cent year over year, however, to $168 million.

Nevertheless, the company's gross margin rose to 23.5 per cent in the first quarter from 23.1 per cent in the year-ago period. This metric had declined in the fourth quarter in a move the company attributed partly to price cuts.

In a conference call with analysts, Szkutak said active customer accounts rose 16 per cent in the quarter to more than 91 million.

In February, Amazon launched the latest version of its $359 US electronic reading device, Kindle 2. The company, which started selling the Kindle in late 2007 and has not released any sales figures to date, said Thursday that the online Kindle Store now includes more than 270,000 books and other reading material.

Amazon shares rose $1.98 or more than two per cent in after-hours trading, after finishing regular trading Thursday up $1.41 at $80.61.