Chillin' out till it needs to be funded
Though we are unable to do justice to the consumption space because of shortage of hands, LVMH, Hersheys and even Ford proved that the consumption story is not just a digital mirage coming your way but well grounded in real spend on luxury and lifestyle, eating and clothes, reading and movies and much more including facebook and zynga on the fun front and linked in and apple on the business front.
Amazon in the mean time, straddled a momentous growth, oon a wafer thin company wide margin of less than 2% for an income of $191 mln but Sales of close to $10 bln in a single quarter. Net Sales had grown 36% in Q1 and 44% this quarter on the back of increasing noise on its exempt status on all its inter state deliveries and many in state deliveries except in jurisdictions like California and New York. It pays a sixth of the sales taxes paid by Walmart typically but still states like Arizona are yet welcoming to its warehouses as no one expects to start collecting sales taxes from online retailers yet/. Internationally too, Amazon grew nearly 50% including direct presence in UK, France, China and Germany. The drop in the net income is explained by the company on new retail investments like two 1.2 million sft facilities in Arizona and spending on Kindle and Cloud computing
Amazon’s International revenues chalked up $4.5 bln and sales include a favorable $477 mln kicker from Foreign Exchange. The company’s Operating Cash flows fo the 12 months are $3.2 bln and Free cash flows generated a $1.83 bln down 8%. Reutrn on invested Capital is down year on year from 34% to 21% Electronics and General Merchandise Sales internationally also grew to 53% of total Sales.
With 2 million seller accounts in Q1, seller units make 1/3 or the total volume sold. to 127 mln active customers (Q1) Also in the March quarter its equivalent of SGA, Fulfiment, MArketing, Content, Tech and General expenses were 18.1% up 234 bps year on year while Cost of Sales overall was 77.2% or $7.62 bln (Sales in Q1 were similar at $9.86 bln with a FX gain of $144 mln)
Q2 Cost of Sales were lower at 75% but Fulfilment higher at 20.2% of sales Account Payable days are still 69 with Inventory of $3 bln meaning 11.3 turns and a cash of $6.26 bln
Media Sales were $3.66 bln (Q1: $3.96 bln, $2 bln international) and EGM revenue up from $5.6 bln in Q1 to $5.9 bln, $3.5 bln of that coming from North America Amazon’s Income Tax rate is a healthy 22%