Online giant Amazon underlined the problems facing the UK high street yesterday after reporting strong sales over the festive season.
The Seattle-based retailer said international sales, including the UK, jumped 20% to $9.09 billion in the fourth quarter.
However, despite sales growth, the company reported a significant drop in income, with profits for the quarter coming in at $97 million dollars, down from $177m the previous year.
Total group revenues in the period rose to $21.27bn up 22% on the $17.43 bn in the same quarter in 2011 a figure buoyed by continuing strong demand for the firm’s range of house tablet computers and e-readers.
“We’re now seeing the transition we’ve been expecting,” said Jeff Bezos, CEO and founder of Amazon.
“After five years, electronic books is a multi-billion-dollar category for us and growing fast up approximately 70% last year.
“In contrast, our physical books sales experience the lowest December growth rate in our 17 years as a bookseller.”
Amazon’s sales performance chimes with a general trend among the shopping public to do their bargain hunting online.
The figures come in the same month as HMV, Blockbuster and Jessops have all collapsed after failing to recognise or move swiftly enough to embrace the concept of digital retailing.
In the current quarter, Amazon said it expected to achieve revenues of $15bn to $16.6bn, shy of analyst expectations of $16.86bn.
Despite lower profits in the quarter just gone and concerns over future sales, investors have not been put off and the company’s stock has leapt in recent days.
“It boggles the mind,” said BGC Financial analyst Colin Gillis, who attributed the stock price jump to slightly stronger-than-expected operating income.
“A lot of people scratch their head at the valuation given to Amazon and the support the stock has.”
Morningstar equity analyst RJ Hottovy said operating income had grown more than expected in the fourth-quarter up 56% to $405m.
He said: “This supports the bull case that Amazon can monetise its growth over the longer term.”
Amazon has a major presence in Fife through its Dunfermline fulfilment centre, which handled millions of items during the height of the Christmas peak.
The company announced last week it had decided to upgrade 300 temporary positions at the centre to permanent posts, taking the overall full-time workforce to 640.
Amazon also said it would continue to recruit for the facility, with the number of permanent roles expected to rise to at least 750 as operations at the centre increased.