Black Ink at Amazon for Second Successive Quarter

27 January 2003

After non-stop immersion in red ink since opening its virtual doors in July 1995,, the globe’s largest internet retailer, stayed in the black for the final quarter of 2002 - the second successive period it has achieved this feat.

Proforma profit, which allows for interest but excludes certain other costs, for Q4 2002 rose from $35m, or 9 cents a share, to $75 million (€69.11m; £45.92m) – at 19 cents a share, comfortably bettering analysts’ consensus forecasts of 15 cents.

But Amazon’s proforma performance was insufficient to prevent yet another substantial full-year net loss of $149m, albeit far healthier than 2001’s loss of $567m. By proforma criteria, this equates to $66m profit against $157m loss in 2001.

According to ceo Jeff Bezos, the turnround owes much to his strategy of price-cutting on items above a certain value and the group’s new policy of reducing its order-value threshold for free delivery. “Customers are now shopping at as much for our lower prices as for our selection and convenience,” Bezos claimed.

Another key success factor is the recent addition to Amazon’s offering of clothing from a range of retailers including Gap and Eddie Bauer – its most successful new business segment since launch nearly six years ago.

Formal guidance for 2003 full-year sales growth predicts Amazon revenues up by between 10%-15%, with first-quarter sales soaring as much as 27% to $1.08bn.

Data sourced from: Financial Times; additional content by WARC staff