Third quarter profits at Amazon, for the period ended September 30, soared over last year’s third period. Net income hit $2.9 billion, up from earnings of $256 million a year ago. Revenue in the quarter jumped 29%, to $56.6 billion.
While profits easily beat analysts' forecast, sales were below expectations. What investors seemed most concerned about was the sales forecast for the fourth quarter, which called for growth of 10% to 20%. In last year’s fourth quarter, sales rose 30% over the final period of 2016.
In the most recent quarter, Amazon’s online business had the slowest growth of all its divisions, with sales up 10%, to $29.1 billion. In a conference call, Amazon executives observed that some online business has transferred to its subscription division where revenue rose 52% over the third quarter of 2017. Among the subscription services gaining business is Kindle Unlimited, executives said. In the quarter Amazon launched Prime Book Box to all U.S. Prime members. Under the program, customers receive selected children;s books every one, two, or three months for $22.99 per box.
Third party sellers generated $10.4 billion in the quarter, a gain of 31% over the comparable period a year ago. The company's cloud business, AWS, saw sales jump 52%.
Sales at physical stores hit $4.2 billion in the period, with almost all the revenue coming from Whole Foods. Amazon did open a new concept store in the quarter, Amazon 4-star, in New York City. The store carries a curated selection of products, including books, that have at least a four-star rating, or are a top or hot seller.
Following the close of the quarter, the company opened its 19th Amazon Books outlet in in Marina del Rey, Calif. The bookstore is the first Amazon Books to feature a pickup location where customers can collect orders, or return merchandise.
