Festive sales boom for Amazon as shoppers go online

THERE were further signs shoppers are shunning the high street today as the world’s biggest online retailer reported soaring Christmas sales.
Amazon reported soaring Christmas sales.Amazon reported soaring Christmas sales.
Amazon reported soaring Christmas sales.

Seattle-based Amazon said international sales, which includes the UK, jumped 20% to 9.09 billion US dollars (£5.8 billion) in its fourth quarter and demand for its own-brand tablet computer - the Kindle Fire - took its total revenues for the crucial holiday quarter up 22% to 21.27 billion US dollars (£13.5 billion).

The strong sales performance will heap further pressure on the group over its tax affairs.

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Amazon public policy director Andrew Cecil was hauled before MPs, along with executives from coffee chain Starbucks and internet giant Google, in November to explain how their companies manage to pay little or no corporation tax on their UK operations.

Net income at the group was 45% lower at 97 million US dollars (£61.6 million), pushed down by investment in the group’s distribution network and its Kindle business in the three months to December 31.

The group said its best selling item was its own-brand tablet computer - the Kindle Fire - which has a touch-screen and can stream films from the internet.

It also said its selection of TV shows, songs, magazines, books and audiobooks and popular apps had risen from 19 million in 2011 to 23 million in 2012.

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Amazon founder and chief executive Jeff Bezos said: “We’re now seeing the transition we’ve been expecting. After five years, electronic books is a multibillion dollar category for us and growing fast - up approximately 70% last year.”

For the current quarter, Amazon expects revenues of 15 billion US dollars to 16.6 billion US dollars (£9.5 billion-£10.5 billion). Analysts had forecast revenues of 16.86 billion US dollars (£10.7 billion).

Revenues, along with guidance for the current quarter, missed Wall Street’s expectations but investors still sent the world’s top online retailer’s stock up more than 10 % in after-hours trading.

“It boggles the mind,” said BGC Financial analyst Colin Gillis, who attributed the stock price jump to slightly stronger-than-expected operating income.

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“A lot of people scratch their head at the valuation given to Amazon and the support the stock has.”

The strong performance from Amazon comes as January trading updates and official figures have already shown that retailers with a strong internet offering had the strongest Christmas as people turned to smartphones and tablets and used click and collect services.

Traditional high street businesses which were not as successful at adapting - including HMV, Blockbuster and Jessops - were all forced to call in the administrators this month.