Sales in December
increased by 22% compared with a year earlier, a result that helped send
Amazon shares to a record level. Photograph: Matt Cardy/Getty Images
Amazon's shares rose to an all-time high after the leading online retailer unveiled record Christmas takings of $21bn (£13bn).
The
business that began trading as a bookstore and now stocks everything
from cameras to nappies increased worldwide sales by 22% since December
2011. Amazon continued to grab market share from both high street
retailers and online rivals, a performance which helped swell its cash
pile to $12.4bn.
Profits were boosted by a major investment in 20
new distribution centres last year, three of them in the UK, allowing
the retailer to reduce transport costs.
"The growth rate shows not
only are they taking share from bricks and mortar but also other online
channels," said RJ Hottovy, an analyst at research firm Morningstar.
"You are seeing a consolidation of where people are going to for digital
content. Apple's iTunes and Amazon are the stand-out destinations."
Amazon's
selection of films, TV shows, songs, books, apps and games has grown to
23m titles. The retailer gave no sales figures for its tablets but they
held the four top spots on its sales charts over Christmas, with the
touch screen, full colour Kindle Fire HD in first position.
As
Amazon reported larger than expected profits for its December quarter,
the shares jumped 11% to $288 in after-hours trading, capping a year in
which its stock market value has risen by 50%.
The Seattle-based
company said operating income jumped 56% to $405m in the fourth quarter,
compared with $260m in the same quarter of 2011.
Amazon's
mounting reserves are likely to fuel demands for reform of UK tax laws.
The retailer generates an estimated 10% of its worldwide revenues here,
but paid just £2.3m in tax in the most recent three years for which
figures are known.
The company's cash savings ballooned from $3bn
at the beginning of the quarter to $8bn by 31 December, boosted by a
£3bn fundraising in November. Money held in short term investments
increased to $3.4bn.
Like other US technology companies, Amazon
has put this money out of reach of the tax authorities by managing its
European operations from Luxembourg. Profits collected in the UK and
other major markets are funnelled out via a network of subsidiaries, in
the form of royalty payments for intangibles such as use of the brand or
technology developed inhouse.
With politicians in recession-hit
economies looking to balance the books, Amazon's savings could take a
hit. The British prime minister David Cameron took to the stage at the
Davos summit to call for companies to pay "proper taxes", and the French
and American governments are pursuing Amazon directly.
France
served notice in September for unpaid tax totalling $252m, while Amazon
has declared the US taxman could come after as much as $1.5bn of its
takings.
Worldwide, media sales grew by 8% to $6.5bn , at half the
rate seen last Christmas. By contrast, sales of electronics and other
wares were up 28% to $14bn.
Founder and chief executive Jeff Bezos
said book sales had reached a tipping point, with ebooks beginning to
take over from printed volumes. "We're now seeing the transition we've
been expecting," said Bezos. "After five years, ebooks is a
multi-billion dollar category for us and growing fast – up approximately
70% on last year. In contrast, our physical book sales experienced the
lowest December growth rate in our 17 years as a book seller, up just
5%."
The fastest growing business line, still small at $820m,
includes services such as web hosting, with Amazon investing heavily in
servers which it rents out to other businesses to store their data.
Annual
revenues across the group reached $177m, up from $97m in 2011. Amazon's
growth is in sharp contrast to the fortunes of the high street
retailers. This month, disappointing Christmas sales drove music store
HMV, camera shop Jessops and the UK arm of video rental chain
Blockbuster into administration.
Amazon is the only company "that
is able to leverage a global fulfilment network to drive disruption of
traditional offline retail sales", Morgan Stanley analyst Scott Devitt
said in a note. He forecasts the worldwide
e-commerce
market will reach $1tn by 2016, up from $512bn last year. By then,
Amazon's market share will be 23.5%, pushing total sales to $166bn.
Email
No comments:
Post a Comment