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Sales dip in Q4 at Amazon’s physical stores

Fiscal calendar shift, intersegment activity at Whole Foods impact results

Russell Redman

February 1, 2019

3 Min Read
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Amazon.com Inc. saw revenue decline for its brick-and-mortar stores despite reporting sharp gains in total sales for the 2018 fourth quarter and fiscal year.

The e-tail giant said late yesterday that, for the fourth quarter ended Dec. 31, physical store sales totaled $4.4 billion, down 3% from $4.52 billion a year earlier. On a sequential basis, brick-and-mortar store sales rose 3.6% from $4.25 billion in the third quarter.

Amazon_Prime_Whole_Foods_savings_sign.3_0.pngAmazon’s U.S. physical stores currently include 476 Whole Foods Markets, nine Amazon Go convenience stores, 18 Amazon Books stores, three Amazon 4-Star outlets and 87 Amazon Pop-Up sites. The company doesn’t break out sales totals for its brick-and-mortar retail segments.

“Physical stores decreased 3% year over year, and this is primarily Whole Foods but also includes our other stores, the Amazon Books stores, Amazon Go, Amazon 4-Star. What happened in the quarter was we were lapping the period last year when we had purchased Whole Foods in Q3,” Amazon Chief Financial Officer Brian Olsavsky told analysts in a conference call Thursday. “In Q4, we adjusted their fiscal calendar to link it up with Amazon's, and it added about five days of revenue into Q4 of last year. So we're comping that year over year.”

Olsavsky noted that the decrease also reflects accounting from intersegment activity between Prime Now and Whole Foods.

Related:What’s coming up next from Amazon?

“The online orders where people go to the Prime Now app and then order for delivery or pickup at Whole Foods stores is counted in the online stores component of revenues,” he explained. “So if you adjust for those, the Whole Foods growth year over year on an apples-to-apples basis was approximately 6% because of some of that — again, mostly the year-over-year accounting or days true-up issue — is showing up as negative 3% in physical stores.”

During 2018, Amazon expanded grocery delivery from Whole Foods Market through Prime Now to more than 60 U.S. metropolitan markets and Prime Now Pickup service from Whole Foodss to over 20 U.S. metro areas.

Amazon’s online store sales came in at $39.82 billion for the fourth quarter, up 13% from $35.38 billion a year ago. Sequentially, the increase was 37% — fueled by holiday sales — from nearly $29.1 billion in the third quarter.

Overall, Amazon’s net sales jumped 20% to $72.38 billion in the 2018 fourth quarter from $60.45 billion a year earlier. Net earnings were $3.02 billion, or $6.04 per diluted share, compared with $1.87 billion, or $3.75 per diluted share, in the 2017 quarter. Analysts, on average, had projected earnings per share (EPS) of $5.67, with estimates ranging from a low of $4.37 to a high of $8.27, according to Refinitiv/Thomson Reuters.

Related:Report: Amazon Go could become $4 billion business

For the full year, Amazon tallied net sales of $232.89 billion, up 31% from $177.87 billion in 2017. Net income rose to $10.07 billion, or $20.14 per diluted share, from $3.03 billion, or $6.15 per diluted share, in 2017. Analysts’ consensus forecast was for full-year EPS of $19.86, with projections running from a low of $18.47 to a high of $27.40, based on estimates from Refinitiv/Thomson Reuters.

About the Author

Russell Redman

Senior Editor
Supermarket News

Russell Redman has served as senior editor at Supermarket News since April 2018, his second tour with the publication. In his current role, he handles daily news coverage for the SN website and contributes news and features for the print magazine, as well as participates in special projects, podcasts and webinars and attends industry events. Russ joined SN from Racher Press Inc.’s Chain Drug Review and Mass Market Retailers magazines, where he served as desk/online editor for more than nine years, covering the food/drug/mass retail sector. 

Russell Redman’s more than 30 years of experience in journalism span a range of editorial manager, editor, reporter/writer and digital roles at a variety of publications and websites covering a breadth of industries, including retailing, pharmacy/health care, IT, digital home, financial technology, financial services, real estate/commercial property, pro audio/video and film. He started his career in 1989 as a local news reporter and editor, covering community news and politics in Long Island, N.Y. His background also includes an earlier stint at Supermarket News as center store editor and then financial editor in the mid-1990s. Russ holds a B.A. in journalism (minor in political science) from Hofstra University, where he also earned a certificate in digital/social media marketing in November 2016.

Russell Redman’s experience:

Supermarket News - Informa
Senior Editor 
April 2018 - present

Chain Drug Review/Mass Market Retailers - Racher Press
Desk/Online Editor 
Sept. 2008 - March 2018

CRN magazine - CMP Media
Managing Editor
May 2000 - June 2007

Bank Systems & Technology - Miller Freeman
Executive Editor/Managing Editor
Dec. 1996 - May 2000

Supermarket News - Fairchild Publications
Financial Editor/Associate Editor
April 1995 - Dec. 1996 

Shopping Centers Today Magazine - ICSC 
Desk Editor/Assistant Editor
Dec. 1992 - April 1995

Testa Communications
Assistant Editor/Contributing Editor (Music & Sound Retailer, Post, Producer, Sound & Communications and DJ Times magazines)
Jan. 1991 - Dec. 1992 

American Banker/Bond Buyer
Copy Editor
Oct. 1990 - Jan. 1991 

This Week newspaper - Chanry Communications
Reporter/Editor
May 1989 - July 1990

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