Amazon shrugs off bad results with more jobs and sales surge

Amazon narrowed losses in the three months to September, after action to turn around its fortunes paid off with a better than expected surge in sales.

The Seattle-based group posted losses of $41m (£25.3m) for the third quarter, down sharply on the $274m (£169m) seen a year earlier as sales leapt 24 per cent

The world’s largest online retailer, which has more than 6,000 permanent staff across its UK operations, has now posted three quarters in a row of losses after ramping up investment, but cheered investors as it said it expected fourth quarter sales to rise by another 10 per cent to 25 per cent.

Last month, Amazon announced that it will hire more than 15,000 people across the UK to meet customer demand before Christmas. Amazon is creating jobs in a variety of roles across its eight UK “fulfilment centres” and at its Edinburgh customer service centre.

An Amazon UK spokesman said that the company had hundreds of permanent employees at its centre in Doncaster, and it expects to create more than 100 temporary roles at the centre this Christmas

Lucy Robertson, the site leader at the Doncaster fulfilment centre, said yesterday: “We are the UK site that specialises in delivering larger items to customers, so if you ordered a garden ornament or a giant cuddly toy its likely to have come from us.”

Last year, Amazon created more than 10,000 seasonal jobs in the run up to Christmas.

Amazon boss Jeff Bezos said it had been a “busy few months” for the group after it launched new Kindle ereaders and tablets.

The company also expanded its warehouse network to reduce shipping costs and added robots to boost efficiency in delivering orders.

The group gave no break-down on figures for the UK, but Amazon.co.uk managing director Christopher North moved to defend the firm against criticism over taxes paid in Britain and the threat to high street rivals.

In an interview, he said that the group’s growth was “really good for the UK”, with more than £1bn invested in Britain and £1bn handed to delivery firms in the past five years.

He said Amazon had paid more than £500m in VAT to the Treasury over the past year.

The group, which launched in the UK 15 years ago, said its top sellers in Britain over the third quarter were the video game releases Grand Theft Auto 5 and FIFA 14, joined by Kindle ebook best-sellers such as Single Woman Seeks Revenge by author Tracy Bloom.

At least 15 brokerages raised price targets on Amazon shares after the company recorded better-than-expected sales growth.

Brokerage Raymond James raised its rating on the stock to “strong buy” from “market perform”.

Most other brokerages maintained the equivalent of “buy” or “hold” ratings.

“We’re increasingly positive on Amazon shares, given strong revenue growth with accelerations in media and EGM (electronics and general merchandise), both in North America and international,” JP Morgan analysts said in a research note, while sticking to their “neutral” rating.

“We see consistent margin expansion, continuing through to at least 2014, helping support Amazon’s seemingly lofty valuation,” said Benchmark analyst Daniel Kurnos, who has a price target of $400 on the stock.

Many analysts characterised the company’s holiday-quarter sales forecast of $23.5bn to $26.5bn as conservative.

“Amazon appears to be gaining share at a more rapid pace while still investing heavily in tech and content, fulfilment capacity and international market development,” Stifel Nicolaus analysts said in a note.

Analysts at RBC Markets, who have an “outperform” rating on the stock, said Amazon’s strong mobile positioning and infrastructure advantages, which allow for fast delivery, should help the company to build on the 20 percent market share they estimated it already has in the United States.

Deutsche Bank analyst Ross Sandler said Amazon shares were “a core must-own” in internet firms with large-capitalization.

“It remains our top idea in e-commerce sector,” he wrote, reiterating a “buy” rating.

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