April 23, 2004, 12:00 AM

Amazon hits record Q1 net sales of $1.5 billion

With a boost from the test of its new Jewelry Store, Amazon’s Q1 net sales rose 41% year-to-year to $1.53 billion from $1.08 billion. Despite tight margins on jewelry, Q1 net income rose to $111 million from a year-ago loss of $39 million, Amazon said.

Paul Demery

Managing Editor, B2B E-commerce

With a boost from the test phase of its new Jewelry Store, Amazon.com Inc.’s Q1 net sales rose 41% year-over-year to $1.53 billion from $1.08 billion, the company reported. Despite tight margins on jewelry, Q1 net income rose to $111 million from a year-ago loss of $39 million. Amazon also noted that, for the first time, more than half of net sales came from products delivered to customers outside of the U.S.

CEO and founder Jeff Bezos said the first quarter’s performance reflects Amazon’s continued strategy of expanding sales through new product categories and low prices. In addition to its new jewelry section, Amazon launched during Q1 a Home & Garden store on its German web site and two stores on its U.K. site, Do-It-Yourself & Tools and Garden & Outdoors.

The test phase of Amazon’s new Jewelry Store, conducted over the last several weeks before the store officially launched this week, resulted in more than 100,000 orders, Bezos said. "While the average margin in jewelry retailing is approximately 45-50%, we target substantially lower margins on our jewelry sales, and lower still – about 13% -- on diamond jewelry," he said. "This is in keeping with our strategy of driving growth through low prices."

Amazon said its Q1 North American segment sales, covering the U.S. and Canada, grew 20% year-over-year to $847 million and coincided with a 46% increase in North American operating income to $76 million. Its international segment, representing Amazon’s Q1 U.K., German, French and Japanese sites, grew 80% to $684 million.

Although Amazon continues to offer free shipping on orders over $25, it said its Q1 shipping revenue rose 20% to $94 million from $78 million a year ago.

Amazon said it expects full-year 2004 net sales to be between $6.45 billion and $6.85 billion, up 21-29% from $5.3 billion in net sales last year.



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