Amazon Sees Surge in Sales Following Acquisition of Whole Foods

Amazon Sees Surge in Sales Following Acquisition of Whole Foods

Shares of Inc. are on fire in after-hours trading today after the Seattle e-commerce behemoth beat third-quarter earnings.

Aside from the company's takeover of Whole Foods, which has shaken the grocery industry on both sides of the Atlantic, Amazon has made a number of new developments in the most recent quarter.

Overall profit margins, however, narrowed during the quarter as Amazon continues to invest in new warehouses and global expansion in countries like India, while also lowering prices to compete with retailers such as Walmart ahead of the crucial holiday season.

Overall for the three-month period ending September 30, profits totaled $256 million, or 52 per share, up slightly from $252 million, or 52 per share, a year earlier. Analysts were expecting income of 3 cents a share.

Prime Day, a summer marketing event Amazon has created to replicate the shopping frenzy that is more typical of the winter holiday season, helped boost sales.

Amazon's total sales were $43.7 billion, up 34% from the third quarter of past year, when the company sold $32.7 billion worth of everything from toilet paper to streaming movies.

Amazon had an eventful third quarter, including its purchase of Whole Foods and announcing it would open a second headquarters.

"We think we'll also be developing new store formats, " he said.

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Key to its success has been signing more people up for Amazon Prime, its fast-shipping and video-streaming club.

Revenue from its subscription fees grew by 59% to over $2.4 billion.

Amazon Web Services (AWS), which handles data and computing for large enterprises, saw its profit margin expand from the previous quarter.

Still, Amazon shares were up by as much as 8 percent in extended hours, and have grown 30 percent year-to-date.

Investors have continued to give a pass on Amazon's laser-thin profits.

The company said it expected between $56 and $60.5 billion of sales in the fourth quarter, which is always the company's biggest. Analysts were expecting $930.78 million, according to Thomson Reuters I/B/E/S. He noted that Amazon has started to begin the "technical work to make Prime the Whole Foods customer rewards program at some point in the future", echoing what fellow exec Jeff Wilke said at the GeekWire Summit earlier this month.

Short believes that Whole Foods' food innovation cycle is likely to slow as the two companies further integrate, and that if Whole Foods becomes more like conventional food stores, may even come to a halt, while competitors - most notably Trader Joe's - continue to become more innovative. Analysts estimate Amazon will have spent $4.5 billion this year.

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