Mighty Amazon is once again branching out in every direction. There’s the new Fire TV set-top box, a hotly rumored coming smartphone, the gradual rollout of its grocery business, Amazon Fresh, and new services like Amazon Pantry, which lets customers buy boxes of everyday items like food and drinks at discounted shipping rates. Overseas, the company is pushing deeper into countries like Spain, Italy, India and China.
Earlier this week, Amazon signed a high-profile deal with HBO, paying a reported $300 million over three years to lock up exclusive streaming rights to shows like The Sopranos, Deadwood and The Wire.
This exuberant expansion phase has cut into Amazon’s famously thin profit margins, but doesn’t appear to have hurt its sales.
Amazon reported its first-quarter earnings on Thursday, notching $19.74 billion in net sales. That beat Wall Street’s estimates of $19.43 billion and marked a 23 percent jump compared with the same period a year ago. The company also reintroduced something its investors haven’t seen in a while–a profit. It reported earnings per share of 23 cents, in line with estimates. Its stock inched ahead slightly in after market trading.
“We get our energy from inventing on behalf of customers,” CEO Jeff Bezos said in a statement, “and 2014 is off to a kinetic start.”
Amazon shares have had a rough ride of late, dropping 17 percent since the start of the year as it trades with characteristic volatility. Investors have worried that fast-growing Amazon may be getting squeezed by the changing e-commerce landscape. With shipping costs on the rise, the company recently raised the price of its two-day Prime shipping service from $79 to $99. Its expansion of Amazon Fresh, its grocery service, along with its own truck fleet, will allow the company to better control delivery of products to customers and lessen its reliance on UPS and Federal Express.
Amazon CFO Tom Szkutak said the company wasn’t worried the Prime price increase had hurt signups to the service, which entitles members to free two-day shipping and a growing catalog of streaming TV shows and movies. “It’s early, but we’re encouraged by what we see so far,” Szkutak said, adding that subscriptions have continued to grow week to week. “Customers, we believe, are responding to a great service, in terms of the offering we have on the physical side as well as the offering on the digital side.”
Amazon is also contending with an increasing number of states that collect sales tax on online purchases made by residents. A recent study from Ohio State University found that Amazon sales dropped by 10 percent in the 20 states where sales taxes are being collected. For online purchases of more than $300, sales fell by 24 percent, according to the report.
Florida, the fourth largest state in the country, will start collecting sales taxes on May 1.
