Whole Foods Helps Boost Amazon Shares Over $1000

Randall Padilla
October 28, 2017

That includes $1.3 billion from Whole Foods.

Excluding the impact of Whole Foods, net sales were up 29 percent, Amazon said. Q3 net income was $256 million or 52 cents per diluted share, which was roughly flat compared to the year-ago period but demolished the 3 cents-per-share Thomson Reuters I/B/E/S analyst expectation cited by Reuters.

Amazon's $13.7 billion Whole Foods acquisition accounted for $1.3 billion of revenue with an operating income of $21 million.

Shares at the e-commerce giant were up over 7% in trading afterhours. Operating income from e-commerce sales in North America was $112 million.

He called the growth in service sales along with Amazon's 59% year-over-year growth in subscription services in Q3 a positive, being more predictable sources of revenue. Management had guided for third-quarter operating income to be between a loss of $400 million and a gain of $300 million. Plus, content and technology at Amazon continue to evolve, and several analysts noted the company's growth (and potential growth) via its connected devices and voice assistance.

The company said it expected between $56 and $60.5 billion of sales in the fourth quarter, which is always the company's biggest. GlobalData Retail's Saunders said his firm sees Prime "as a critical tool to extend Amazon's customer reach, gather customer data, and to lock in loyalty in an increasingly fickle marketplace".

In addition, Bezos said active customers on Alexa-enabled devices are up five times over the same period previous year. The midpoint of Amazon's guidance for that period now sits at $68 billion, including a $4.4 billion Whole Foods contribution.

The company is rapidly growing: It paid almost $14 billion this summer for organic grocer Whole Foods; announced a series of new voice-activated Echo devices; and kicked off a public hunt for a place to build its second headquarters. The dramatic growth of marketing costs, which were partly a function of the Whole Foods acquisition as well as the substantial promotion of new devices, took its toll on the bottom line.

Amazon has been on a hiring spree, increasing its staff by 77% in the past year to 541,900 full and part-time workers, part of a rapid buildout of its regional warehouses. "These are not dramatic, but they are a step in the right direction and show that Amazon's approach is being noticed by consumers".

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors.

Amazon now pays developers out of its own pocket to create the skills, which Echo users are then able to download and install onto their Alexa at no charge.

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