By Dana Mattioli
Amazon.com Inc. online orders continue to surge during the Covid-19 pandemic, with the e-retail giant projecting a bumper end to the year as it posted strong third-quarter earnings.
Amazon on Thursday said third-quarter sales in the period rose 37% to a record $96.2 billion to generate a $6.3 billion profit, or $12.37 a share. Profit roughly tripled from the year-ago period when the company's bottom line was weighed down by heavy investment in its push to one-day shipping for customers.
Wall Street expected sales of $92.8 billion and a net profit of $3.8 billion for the latest quarter, according to analysts surveyed by FactSet.
The scale of online shopping during the pandemic at times has strained Amazon, driving up staffing and costs to get goods to customers. The company said it would add 100,000 seasonal workers in the U.S. and Canada heading into the Thanksgiving and Christmas holidays ahead of an expected increase in online orders.
"We're seeing more customers than ever shopping early for their holiday gifts, which is just one of the signs that this is going to be an unprecedented holiday season," Amazon Chief Executive Jeff Bezos said in a statement.
Amazon achieved the lofty sales figures even without its annual shopping event, called Prime Day, that is typically held in July and helps the company sign up new Prime subscriptions by offering members steep sales discounts. This year, the event was delayed until October as the Seattle company worked through the summer's jump in orders.
Even ahead of the typically busy year-end shopping season, Amazon has enjoyed an unusually strong order surge. Sales for the July through September period increased another 8% from the record set in the prior three-month period.
In another sign of how the pandemic is changing shopping patterns, Amazon said its physical stores segment, which includes Whole Foods, saw a 10% decrease in sales from the year-earlier period.
Amazon shares, up 1.52% ahead of the results, retreated around 1% in after-hours trading Thursday. Before the late-afternoon report, the stock was up more than 70% this year, giving the company a market value of around $1.6 trillion.
Amazon Web Services, the company's cloud-computing operation and its main profit center, posted $11.6 billion in sales in the quarter ended September 30, rising 29% from a year earlier. Operating income for AWS, which rents computing power to companies and the government, rose 56% to $3.5 billion. Cloud services have been in hot demand during the work-from-home era as companies accelerate their adoption of the kind of digital tools.
Earlier this week, cloud competitor Microsoft Corp., the No. 2 behind Amazon, reported that revenue from its Azure cloud-computing operations increased 48% from the year-ago period.
And Amazon's effort to drive earnings growth through advertising sales also showed success. The business had sales of $5.4 billion in the quarter, a 51% increase from the year-earlier period. The unit, which sells advertising space in the form of sponsored products in search and display ads, has become another cash cow for the company.
The company Thursday forecast $112 billion to $121 billion in sales in the current quarter, bolstered by the delayed Prime Day event. During the two-day period, overall spending on Amazon's site increased by 36% in the U.S. over the two days compared with last year, according to research firm Edison Trends, though that was lower than the 42% increase the company saw in 2019. Wall Street has been forecasting sales of around $112.7 billion for the final quarter of this year.
Amazon expects operating income in the fourth quarter to be between $1 billion and $4.5 billion, from $3.9 billion a year ago. This year's figure would include about $4 billion in Covid-19-related costs.
Sebastian Herrera contributed to this article.
Write to Dana Mattioli at firstname.lastname@example.org
(END) Dow Jones Newswires
October 29, 2020 17:16 ET (21:16 GMT)Copyright (c) 2020 Dow Jones & Company, Inc.