Print 52 comment(s) - last by jay401.. on Feb 2 at 9:22 AM

The holiday season treated very well

Both online and B&M retail sales plunged over the holiday season.  Layoffs abounded and there was no definite sign of an end in sight.  However, amid all these financial woes, a few lone stars did brighten the picture for the retail market.

One of the brightest stars was online retailer Amazon, who continued to post strong growth.  It made good on its claims of a seemingly implausible "best ever" holiday season when it posted its quarterly earnings this Thursday. 

Amazon posted a $225M USD profit, a growth of over 9 percent from the same quarter a year before.  Revenue climbed a whopping 18 percent to $6.70B USD.  The revenue handsomely surpassed analyst predictions which called for a more paltry $6.44B USD.  Amazon's electronics division was one of the greatest successes, growing to $2.89B USD, up 31 percent from the previous year.

Jeff Bezos, founder and chief executive of Amazon, states, "We remain relentlessly focused on serving customers with low prices, great selection and free shipping offers, including Amazon Prime."

Mr. Bezos cited the strong demand for Amazon's eBook reader Kindle as one reason why Amazon profits rose when overall the online community sunk.  On February 9, 2009 Amazon will introduce a new version of the best-selling gadget at a New York news conference.

Innovative products aren't the most important factor in Amazon's success believe some analysts.  They say it benefits from customers with reduced budgets looking for bargains, with Amazon's prices often being lower than retail stores.  Describes Mark Mahaney, an analyst at Citigroup, "Amazon may be enjoying a Wal-Mart effect, with people trading down to Amazon to get better prices over the holiday.  Amazon must have dramatically taken market share (from other retailers)."

The lone trouble sign for Amazon was its operating margin, a measure of real earnings left after expenses such as employee wages, discount costs, and other operating costs.  Amazon saw this margin sink from 4.79 percent the year before to 4.09 percent.  This was partly due to heavy discounting.  While it’s good that this raised sales, it’s a bit of a concern for Amazon when it looks at its bottom line. 

Amazon also had the misfortune of losing a key suit which allowed the state of New York to charge tax on its sales and possibly destroying the previous legal precedent of nexus protections.  As more states adopt such provisions, Amazon may see its revenue after taxes take an even bigger hit.

Many challenges await this year for Amazon, however, it certainly seems better prepared to handle them than most retailers given its strong performance over the holiday season.

Comments     Threshold

This article is over a month old, voting and posting comments is disabled

RE: Taxes, my 2 cents, Kindle 2
By TomZ on 1/30/2009 10:49:12 AM , Rating: 3
I'll best if you did a survey, most people don't know they are supposed to pay sales tax for online purchases. And of the people that know, I'll best that most simply don't pay it. That only leaves a tiny fraction IMO that actually pay sales tax on online purchases.

RE: Taxes, my 2 cents, Kindle 2
By theapparition on 1/30/2009 12:27:04 PM , Rating: 2
You are absolutely correct Tom. Most don't know this. That is why I'm so vocal on the matter. Call it a pet-pieve of mine.

I hear over and over about not paying taxes for online or catalog purchases. Even the media jumps on the tax-free bandwagon. Local radio stations advertise coming across state lines to a neighbooring state with "tax free shoping".

RE: Taxes, my 2 cents, Kindle 2
By Blight AC on 1/30/2009 1:41:16 PM , Rating: 2
I had been paying the ~$20 get-out-of-jail-free at the end of each year, since all my purchases were under $1000 each. Course, now it doesn't matter because the online retailers I use charge for taxes anyhow.

However, I think the biggest people at fault for the online tax-free ignorance are the professional tax preparers for not making their customers aware.

RE: Taxes, my 2 cents, Kindle 2
By Oregonian2 on 1/31/2009 2:33:48 AM , Rating: 2
If the interstate purchase was made from a seller in a state w/o sales taxes, does the buyer still have to pay the sales tax for it in their home-state? Even if they were visiting (say on vacation) in person and bought stuff from the hotel gift store? I suspect so, but see below as to why I ask.

Reason I ask is that there used to be a major national seller of photographic stuff (no longer there I think, they got bought out by a chain store and "dissolved" into them). Huge many-paged ads in the back of Pop Photography every month (not as big as B&H's now, but big). Anyway, they advertised "No sales tax! We're in Oregon, a state with no sales tax". Now, to me it didn't matter, I'd buy from them in their retail store with no taxes, but I'm curious if there was any actual legal benefit to others or was it just creative marketting. :-)

RE: Taxes, my 2 cents, Kindle 2
By consumerwhore on 1/30/2009 1:27:14 PM , Rating: 2
And just in case some people are reading this and wonder: "I didn't know" is not a defense against the IRS. Never has, never will be.

RE: Taxes, my 2 cents, Kindle 2
By KC7SWH on 1/30/2009 6:42:08 PM , Rating: 5
Since when does the IRS collect STATE sales tax???

"So, I think the same thing of the music industry. They can't say that they're losing money, you know what I'm saying. They just probably don't have the same surplus that they had." -- Wu-Tang Clan founder RZA
Related Articles
Layoffs Get Worse in Silicon Valley
January 27, 2009, 8:50 AM
No Amazon Kindles Until February
December 8, 2008, 4:47 PM

Most Popular Articles5 Cases for iPhone 7 and 7 iPhone Plus
September 18, 2016, 10:08 AM
No More Turtlenecks - Try Snakables
September 19, 2016, 7:44 AM
ADHD Diagnosis and Treatment in Children: Problem or Paranoia?
September 19, 2016, 5:30 AM
Walmart may get "Robot Shopping Carts?"
September 17, 2016, 6:01 AM
Automaker Porsche may expand range of Panamera Coupe design.
September 18, 2016, 11:00 AM

Copyright 2016 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki