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Amazon N.A. CE Sales Increase 29%

2/03/2006 09:18:00 AM Eastern

Seattle — Sales for the North American electronics and other general merchandise business at Amazon.com jumped 29 percent in the fourth quarter, hitting $580 million, compared with $449 million in the same period last year.

Consolidated electronics sales for the three months moved up 31 percent, as Amazon posted $901 million worldwide for sales of consumer electronics, office products and cameras, among others, compared with $686 million in the fourth quarter of 2004.

Consolidated North American sales for the quarter ended Dec. 31 increased 21 percent, reaching $1.7 billion, up from $1.4 billion in the same three months the prior year.

North American media sales surpassed $1 billion in the fourth quarter, a first-time event for the segment, which includes sales of DVD rentals and retail sales of books, music, DVD/video, software, video games and video-game consoles. Sales were up 16 percent over the $885 million reported in the fourth quarter the previous year.

Consolidated media sales reached $2 billion for the quarter, an 11 percent rise over the $1.8 billion reported year-on-year.

Operating income for Amazon’s North American business dropped 24 percent in the fourth quarter, down to $92 million, from $122 million in the same quarter in 2004. Gross margin as a percent of North American net sales slipped to 24.8 percent in the quarter, down from 25.5 percent in the same three months the prior year.

Consolidated Amazon net sales climbed 17 percent to nearly $3 billion in the fourth quarter, up from $2.5 billion year-over-year. Operating income edged upward 1 percent to $165 million from $162 million, while net income was $199, down from $347 million the previous year. The retailer added a $38 million income tax benefit to net income in the fourth quarter, compared with $239 million in the same period in 2004.

The Amazon earnings decline can be attributed for the most part to an increase in operating expenses and the rise in cost of sales. The online retailer took a large hit from the ongoing cost of its discount shipping program, which translated into increased sales but shrinking profit margin. The company also has been bumping up costs as it makes heavy investments in marketing and technology.

For the 12 months, North American electronics business sales rose to $1.4 billion from $1.1 billion, while media sales climbed to $3 billion, from $2.6 billion the prior year. Consolidated 12-month electronics sales reached $2.3 billion, up from $1.7 billion in 2004, while media sales jumped to $5.9 billion from a year-on-year $5.1 billion.

In the 12 months, consolidated company sales grew 23 percent to $8.5 billion from $6.9 billion. Operating income was $432 million, down from $440 million in 2004. Net income slipped to $359 million, from $588 million the prior year.

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