Better than expected profits at Amazon after sales boost
The festive season brought a sales boost for Amazon - surprising investors with better-than-expected profit figures despite a continued increase in spending on new TV shows and expanding the business.
In its North American market, sales were up around £2.2 billion and, although they were flat elsewhere, Amazon's 700,000 sq ft warehouse in Staffordshire enjoyed a non-stop Christmas.
Around 2,500 temporary workers had to be hired to help the 1,000-strong permanent workforce cope with the surge in orders.
Operating 24 hours a day, the Rugeley fulfilment centre is the third biggest of the eight warehouses Amazon has so far opened in the UK.
It contributed to a revenue figure of £19.5 billion for the last three months of 2014, although Amazon said the impact of the strong dollar on exchange rates had cost it around £600m.
That helped Amazon to a profit of £142 million for the quarter, down on the £159m it made a year ago but a massive improvement on the £290m third quarter loss it had to announce in October.
For the year as a whole, Amazon's net sales surged by 20 per cent to £59 billion, but it made a net loss for the year of £160m.
The online retailer's strategy always has been to spend a big chunk of the money it makes to grow and expand into new areas like cloud computing, streaming video and hardware. But that hits profitability.
In the UK it has launched its own delivery network - Amazon Logistics - and is building a 431,000 sq ft new headquarters in central London. It is also opening a 46,000 sq ft photography studio in Shoreditch to cater for its rapidly growing European fashion business.
But the latest results seem to indicate that at least some areas in which Amazon has invested heavily, such as its £79 annual loyalty programme and Amazon Web Services cloud computing offerings for businesses, are finally helping out its bottom line.
Chief executive Jeff Bezos said Prime membership grew 53 per cent during the year even though it raised prices. Amazon has beefed up offerings, added a grocery delivery services and music streaming for Prime members. It also launched original TV shows such as the Golden Globe-winning Transparent, starring Jeffrey Tambor.
"Prime is a one-of-a-kind, all-you-can-eat, physical-digital hybrid - in 2014 alone we paid billions of dollars for Prime shipping and invested $1.3 billion in Prime Instant Video. We'll continue to work hard for our Prime members," Mr Bezos said.
