Amazon celebrates second profit

The e-tailing giant Amazon.com has reported its second ever quarterly net profit.

Outside the US, the company's international arm, which includes the UK site, reported its first ever quarterly operating profit.

We almost achieved full-year profitability

Robin Terrell
Amazon.co.uk

Full of confidence, the company predicted that its overall sales would grow by 15% this year, which would translate into 2003 revenues of at least $4.5bn (£2.8bn).

"I think it's going to be a very good year," said Jeff Bezos, chairman and chief executive.

The e-tailer also announced free shipping for orders in the US over $25 and orders in the UK over £39.

Previously, the free shipping offer, which has been credited with boosting sales, was promoted as a short-term measure.

In the black

Robust sales over the holiday season helped the company achieve a net profit of $3m, compared with a net profit of $5m in the same quarter a year ago.

This year was our eighth holiday, and in terms of customer experience it was the best ever

Jeff Bezos
Amazon

However, by excluding some charges, such as the expensing of stock options, Amazon reported a fourth quarter profit of $75m, compared with $35m a year earlier.

It achieved its profits on revenues of $1.43bn, slightly above analyst expectations and beating sales of $1.12bn in the fourth quarter of 2001.

"This year was our eighth holiday, and in terms of customer experience it was the best ever," said Mr Bezos.

The company also generated cash flow of $135m for fiscal 2002, compared with negative cash flow of $170m for 2001.

Outside the US

On the international side, the company achieved an operating profit of $20m in the fourth quarter, excluding non-operational charges.

We really caught that DVD wave

Robin Terrell
Amazon.co.uk

In the preceding quarter, the international arm had only managed to break even.

"We almost achieved full-year profitability," Robin Terrell, Amazon.co.uk's managing director, told BBC News Online.

The international arm missed out with a full-year operating loss of $600,000.

Year-on-year, the international arm has seen revenue growth of 76%, with the UK site growing more than 60%.

Amazon shares closed up almost 3% at $21.79 on the Nasdaq technology index, before the results were released.

Share fears

Analysts, however, remain concerned that the company is over-valued on the stock market, relative to its profits - its shares increased by 75% in 2002.

Mr Terrell told BBC News Online: "We don't focus on the value of the company on a day-to-day basis, we are more concerned with improving the selection on the site and lowering prices."

He also brushed aside reports of delivery problems over the Christmas period, saying that "contacts per order" were decreasing compared with the previous year.

These "contacts" are usually customers checking up to see where their goods are.

UK BEST SELLERS

Robbie Williams' Escapology CD

Jamie Oliver cook books

DVD players

This Christmas was Amazon.co.uk's biggest and most successful - it shipped 6.2 million items between 1 November and 25 December.

Its biggest sellers were the Robbie Williams CD, Escapology, Jamie Oliver cook books and DVD players.

"We really caught that DVD wave," he said.

Meanwhile, pre-orders for the latest Harry Potter book have been "phenomenal".

On the first day alone, the site took 30,000 pre-orders, compared with a total of 65,000 for the fourth Harry Potter book.

Bumper online Christmas

Recent research has shown that online shopping in the UK over the Christmas period was 79% higher than a year ago.

Shoppers were "deluging" e-tailers with £949m worth of orders in the three available Christmas shopping weeks, said the industry group for e-tailers, IMRG.

This compared with year-on-year growth on the High Street of 4.1%, according to British Retail Consortium figures.

Another report on Monday found that 60% of the online population in the UK visited an internet retailing site in the run-up to Christmas.

This was the equivalent of 12 million people, said online analyst Nielsen.