Amazon on Thursday soared past Wall Street expectations as it reported 34 percent growth in sales and stable profits in the company’s first quarterly earnings report since purchasing Austin-based Whole Foods Market in August.
For its third quarter that ended on Sept. 30, the online retailer recorded a profit of $256 million, or 52 cents per diluted share, compared to a profit of $252 million, or 52 cents per diluted share in the company’s 2016 third quarter earnings.
Amazon also recorded $43.7 billion in sales, compared to $32.7 billion in sales from last year’s third quarter results.
Market analysts polled by Thomson Reuters had projected Amazon to only have a third quarter profit at 3 cents per share and sales of about $41.6 billion.
“We had a very strong (Amazon) Prime day that really carried into the (third) quarter," Amazon's Chief Financial Officer Brian Olsavsky said in a conference call with analysts after the earnings release. Additionally, Amazon said in its report that performance was boosted by the release of new Echo home devices, and the company highlighted other major company news in the third quarter such as the announcement in September that the company is going to build a $5 billion second headquarters in North America.
Because Amazon posted its surprising results after markets closed for the day, its stock was down 0.05 percent to $972.43 per share from the previous day’s close. But it was trading up 8 percent in after-hour trading as of Thursday evening.
Amazon had recorded lower profits in other recent earnings reports, but stockholders remained confident in the e-commerce giant because of its strong sales growth and constant hype that surrounds the company. Amazon’s profits are also projected to see an uptick in the company’s fourth quarter, which ends in December.
"We are really excited to have (Whole Foods) as part of the team," Olsavsky said. "We've had busy months since we joined forces. Lots of activity and lots of energy, and we are dedicated to show customers what's possible when we join forces."
Olsavsky mentioned some of the changes at Whole Foods since the merger, such as the addition of Amazon lockers to some Whole Foods stores and the integration of some Whole Foods products into Amazon's website. He also said more integration between the two entities could be expected in the future through services such as Amazon Prime and the AmazonFresh online grocery market.
Amazon said in its report that Whole Foods added $1.3 billion to the company’s net sales and $21 million in operating income. Amazon also briefly highlighted its purchase of the grocer.
The company’s headcount has grown about 77 percent during the past year to more than 540,000 full and part-time workers, Olsavsky said, making the company the second biggest in that figure behind Walmart. Part of that growth has come via the roughly 87,000 employees Amazon added through its purchase of Whole Foods.
When asked about Amazon possibly expanding its pharmaceutical presence through Whole Foods, Olsavsky did not answer directly but said the company sees "a lot of opportunity with Whole Foods." On Thursday, the St. Louis Post-Dispatch reported that Amazon had been approved by several state pharmaceutical boards to become a wholesale distributor.
Olsavsky also reported that Amazon would be expanding Whole Foods' presence beyond its roughly 470 current stores but did not provide further details.
Amazon closed on its $13.7 billion purchase of Whole Foods on Aug. 28. Since then, Amazon has lowered prices on some popular Whole Foods items such as avocados, bananas and eggs, but a recent report by research firm Gordon Haskett found that overall prices had only been lowered by about 1 percent.
Now that Whole Foods is part of the online retailer, its sales and profits go into Amazon’s overall figures, so Amazon is not required to single out Whole Foods’ earnings.
In its final earnings report as a public company in July, Whole Foods saw a dip in profit and same-store sales while only increasing revenue by less than 1 percent year-over-year. That followed seven previous quarters of declining same store sales and an overall struggling brand before the deal with Amazon, which boosted the company’s hopes as analysts expect Amazon to improve the grocer’s operations.
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