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Originally published April 22, 2010 at 8:15 PM | Page modified April 23, 2010 at 8:37 AM

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Retail Report displays strength as earnings climb in tough economy posted another large gain in its quarterly profit Thursday, signaling the Internet giant continues to grow despite economic uncertainty and increased competition.

Seattle Times business reporters posted another large gain in its quarterly profit Thursday, signaling the Internet giant continues to grow despite economic uncertainty and increased competition.

Amazon's first-quarter profit rose 69 percent, easily beating predictions on Wall Street.

But its stock fell in after-hours trading, possibly because of a second-quarter outlook that underwhelmed some analysts.

A slight year-over-year decline in Amazon's gross margin also was a "mild disappointment," said Dan Geiman, of McAdams Wright Ragen in Seattle.

"With that said, it's hard to argue when sales are up over 40 percent and earnings are up over 60 percent," he added. "That's obviously a pretty strong performance."

Amazon's profit rose to $299 million, or 66 cents a share, from $177 million, or 41 cents, a year ago. Sales increased 46 percent to $7.13 billion.

The quarter ended just before the April 3 launch of Apple's iPad, a major competitor to Amazon's Kindle e-reader.

As usual, Amazon did not break out sales of the Kindle, saying only that demand remains "very strong." Chief Financial Officer Tom Szkutak declined to discuss the iPad's impact, but he did suggest Amazon can take advantage of other devices with mobile access to its website.

"What we are excited about is that the world may shift to a place where everybody has a 3G-connected device for browsing the Web," he said.

Target announced this week it will sell the Kindle at about 100 stores beginning Sunday, making it the first bricks-and-mortar retailer to carry the $259 device.

Analysts said the Target deal will help broaden the Kindle's appeal to customers who want a closer look before buying it.

"Not everyone shops online," said Colin Gillis, an analyst with BGC Financial in New York. "I could walk into an Apple store and see what the iPad looks like. But many people have never seen a Kindle."


The iPad, which costs $499 and up, lets users surf the Web, play videos and read digital books. Apple said it sold more than 500,000 devices in the first week after its debut, exceeding expectations.

Barnes & Noble last week began selling its $259 Nook e-reader at Best Buy stores. Sony also makes e-readers that are sold at Target, Staples and Costco stores.

Amazon introduced the Kindle in 2007, gaining dominance in the market for electronic books. Its website now carries more than 500,000 titles and controls about 90 percent of all e-book sales, according to estimates by Credit Suisse Group. The iPad and other devices will cut Amazon's share to about 72 percent this year, Credit Suisse said.

Amazon so far has avoided the worst of the global economic downturn, outperforming the overall retail sector.

For the three months ended March 31, North American sales rose 47 percent from a year earlier, and international sales rose 45 percent, due partly to favorable foreign exchange rates. Its media business, which includes books and music, grew 26 percent, while sales of electronics and other general merchandise increased 72 percent.

By comparison, total sales for all U.S. retailers in March were up 7.6 percent from March 2009.

Looking ahead, Amazon expects second-quarter sales of $6.1 billion to $6.7 billion, which would be up 31 percent to 44 percent. It projects operating income in the range of $220 million to $320 million, or growth between 39 percent and 102 percent.

"Overall, it was a strong quarter, but expectations were high," said Aaron Kessler,an analyst with Kaufman Brothers in San Francisco. "People probably were expecting a little better of a beat."

Shares of Amazon closed Thursday up $3.66, or 2.5 percent, to $150.09, then fell after-hours after the earnings report. The stock has traded between $73.10 and $151.09 in the past year.

The company's work force grew to 26,100 employees in the first quarter, up 5,500 from a year ago. Amazon did not give specifics about growth at its Seattle headquarters or other locations worldwide.

— Amy Martinez


Beginning May 1, PCC Natural Markets will donate 5 percent of products from its "Kid Picks" program, up to $10,000, to Seattle Children's Hospital as part of the "Families Helping Families" program. To become a PCC Kid Pick, products must be approved by two-thirds of the 30-plus child "judges" who test it at PCC stores, community events and schools. About 2,000 products are flagged as "Kid Picks" in PCC stores. The chain also is hosting free classes on family nutrition next month, including hands-on activities. — MA

Jones Soda will sell its Jones GABA drinks at Target retail stores beginning in late May, the Seattle-based beverage marketer said this week. Jones GABA contains gamma-aminobutyric acid, a natural amino acid said to enhance mental focus and clarity and decrease nervousness. — MA

Women's clothier BCBGMaxazria moved this week to temporary space formerly occupied by J.Jill at Pacific Place in downtown Seattle to make room for a store remodel. BCBG will return to its ground-floor location after the remodel is done in a couple of months, said Pacific Place general manager Lynn Beck. — AM

Leonetti Cellar in Walla Walla has formed a new management company called Figgins Family Wine Estates that will oversee Leonetti Cellar, a new wine venture called Figgins and a grass-fed beef brand called Lostine Cattle. Chris Figgins, director of wine making at Leonetti, is the new company's CEO. Figgins, a single-vineyard Bordeaux varietal blend from the Walla Walla Valley, will be available in the fall of 2011. — MA

Internet jeweler Blue Nile gave CEO Diane Irvine a compensation package worth nearly $2.1 million last year, the Seattle-based company disclosed in a regulatory filing. Irvine's total pay was down from $3.5 million in 2008. Blue Nile also set May 19 for its annual shareholder meeting, which will be at the Washington Athletic Club in downtown Seattle. — AM CEO Dawn Lepore received a 2009 compensation package worth $7.3 million, including stock and option awards with a grant-date value of $5.4 million, according to a regulatory filing by the Bellevue-based company. That was up from Lepore's total 2008 pay of $3.6 million. also set June 10 as the date for its annual shareholder meeting, which will be at the Hyatt Regency Bellevue. AM

Bloomberg News contributed to this report.

Retail Report appears Fridays. Amy Martinez covers goods, services and online retail. She can be reached at 206-464-2923 or Melissa Allison covers the food and beverage industry. She can be reached at 206-464-3312 or

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Retail Report is a look at the trends, issues and people who makeup the dynamic and versatile retail sector throughout the Puget Sound region. Every Friday with Melissa Allison and Amy Martinez. Send tips or comments to or



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