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Amazon.com Q2 CE Segment Sales Soar

8/06/2001 02:00:00 AM Eastern

Amazon.com reported a 21 percent hike in sales for its Electronics, Toys and Kitchen segment (ETK) in the second quarter.

While the company does not break out CE sales, it said that the category remains its fastest-growing business and its second largest behind books.

By contrast, it reported relatively flat sales for its more mature Books, Music and DVD/Video segment in the second quarter, reaching $389.7 million, about a 1 percent hike, compared with $385.3 million in the same quarter in 2000. Gross profit for the segment climbed 28 percent to $110.8 million, compared with $86.9 million in the same quarter last year.

However, pro forma income from operations for this segment did better than a threefold jump to $39 million in the second quarter ended June 30, up from $10.1 million in the same three months last year. Gross margin for the second quarter was 28 percent, 500 basis points above the 23 percent reported in the year-ago period.

For the six months, Amazon.com recorded sales in its Books, Music and DVD/Video segment of $799.3 million, a 2 percent increase over the $786.7 million recorded in the year-ago six months. Gross profit hit $220 million, a 30 percent increase over the $169.7 million reported in the year-ago second half.

Pro forma income from operations for the segment was $66.6 million, compared with $7.6 million in the second half of 2000. Gross margin in the second half was 28 percent, 400 basis points better than the 22 percent reported in the year-ago six months.

Overall, Amazon.com said net sales rose 16 percent to $667.6 million in the second quarter, compared with $577.9 million in the same three months last year. The retailer said its pro forma net loss was $168.4 million in the second quarter, compared with $317.2 million in the year-ago three months.

Net sales for the six months were $1.37 billion, compared with $1.15 billion in the same six months in 2000. Pro forma net loss for the first half was $402.4 million, compared with $625.6 million in the year-ago six months.

Looking ahead, Amazon.com expects net sales of between $625 million and $675 million for the third quarter, with gross margin ranging between 24 percent and 27 percent of net sales. Absolute pro forma operating losses are expected to be about flat with, to very slightly down from, the second quarter of 2001.

For the fourth quarter, net sales are expected to increase between 10 percent and 20 percent over the fourth quarter of 2000. Pro forma operating profitability is expected for the quarter.

At the same time Amazon was reporting its sales were falling short of expectations, the retailer said it had received a $100 million investment from AOL Time Warner. The investment was part of a larger deal where AOL will buy technology from Amazon to operate its online shopping channels.

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