Amazon got its wish for the holidays as the Seattle-based ecommerce giant again topped analyst expectations when it reported fourth quarter sales gains on Thursday afternoon. The company, which acquired grocer Whole Foods last year, cited a 38 percent gain in net sales for the quarter over the year-earlier period to $60.5 billion. Net income was $1.9 billion, more than double last year's $749 million. Much of the growth was led by sales of its own devices; Amazon cited its Fire TV and Echo Dot as best-selling products.
CEO Jeff Bezos noted in a statement that the brand exceeded its own expectations, specifically its projections for Alexa. "We don't see positive surprises of this magnitude very often—expect us to double down," he said, noting that "other companies and developers are accelerating adopting of Alexa."
For the full year, Amazon posted a 31 percent increase in net sales to $177.9 billion. The company, which is airing two spots in Sunday's Super Bowl, outlined key growth areas on a call with analysts, which we've broken down below:
Whole Foods juiced up
Revenue from physical stores, primarily from Whole Foods locations, was more than $4.5 billion as demand for products increased after Amazon lowered prices following its August acquisition. Amazon, which now sells Whole Foods products on its website, is continuing to lower prices even more, executives said. The company's biggest expansions efforts will be in consumables and grocery.
The right fit for private label
Amazon will continue to grow its private-label business, which now covers a great swath of categories including packaged goods and apparel. "We'll keep adding selection," said Brian Olsavsky, chief financial officer. Executives noted that such products, which include men's clothing and grocery brands, will supplement what other vendors are already selling on Amazon.com.
The company is continuing to add more for advertisers, particularly smaller brands, to get more eyeballs on their offerings. Brands can now pay for more multimedia like video on their product pages. "We're working with advertisers of all types and sizes to help them reach our customer base," said Olsavsky. "The goal is driving brand discovery."
What about health care?
Earlier this week, Amazon announced it will be joining forces with Berkshire Hathaway and JP Morgan Chase to tackle health care with a new product for employees. Unsurprisingly, executives declined to comment more on Thursday.
But device rivals beware
Analysts were quick to point out that the brand is far exceeding the competition.
"In our view, Amazon now has a clear edge over other smart device manufacturers," wrote Neil Saunders, managing director of GlobalData Research in a research note. "This, and the fact Prime offers far more benefits and services than rivals means Amazon should be able to withstand increasing competition from Apple, Google and others as they launch and upgrade their smart speakers and connected home products."