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Amazon Q1 CE Segment Sales Rise 32%

4/25/2003 08:19:00 AM Eastern

Seattle - Boosted by free shipping and deeper discounts, sales in the consumer electronics segment at Amazon.com climbed 32 percent in North America during the first quarter, reaching $168.1 million, up from $127.6 million in the year-ago period.

Consolidated sales of consumer electronics, including international shipments, moved up 37 percent, hitting $191 million in the first three months, ended March 31, compared with $139 million in the same quarter in 2002.

First quarter sales in Amazon's media segment, which includes DVD/video and video games, moved up 10 percent in North America, hitting $517.3 million, compared with $471.3 million in the same quarter a year ago.

Consolidated first quarter media sales saw a 27 percent increase, to $873 million, up from $685.6 million in the same three months a year earlier.

Amazon sales to North America overall increased 13 percent, to $704.7 million in the first quarter, up from $621.3 million year-on-year.

Operating income for Amazon's overall North American business rose 46 percent, reaching $52 million in the first quarter, up from $35 million in the same quarter last year. However, gross margin in North America dropped 100 basis points, to 27 percent, compared with 28 percent in the year-ago three months.

Consolidated Amazon.com sales in its first reporting period soared 28 percent year over year, to $1.1 billion, up from $847 million in the first quarter of 2002. The online retailer narrowed its consolidated net loss, to $10.1 million in the first three months, compared with a net loss of $24 million in the first quarter a year earlier. In its pro forma first quarter calculations, which exclude certain non-cash charges, Amazon reported net income of $40.3 million, compared with a pro forma $4.8 million net loss the previous year.

In a conference call with analysts, Amazon founder/CEO Jeff Bezos reported the company's strong unit growth in the first quarter can be attributed to its efforts to cut prices, increase product selection and make its merchandise easier for consumers to find. Amazon said it helped its first quarter bottom line by cutting marketing, technology and content costs.

Free shipping cost the retailer more than $27 million in the first quarter, but Bezos said this would continue for orders over $25. What had started as an experiment, has become an ongoing marketing tool, he said.

Rapidly increasing international sales contributed to the overall three-month revenue rise. International segment sales increased 68 percent, to $379 million in the first quarter, compared with $226 million year over year. Operating income for the international segment in the period was $16 million, compared with an operating loss of $11 million in the same quarter in 2002.

Looking ahead to the second quarter, Amazon expects to post net sales between $1 billion and $1.05 billion, or 24 percent to 30 percent above the same period in 2002. Consolidated segment income in the second three months is anticipated between $45 million and $60 million.

Full-year expectations put net sales at $4.7 billion, or more, over 19 percent above the previous year. Consolidated segment operating income is expected at $275 million, or more, for the 12 months. This would top the second three months of 2002 by over 50 percent.

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