AMZN Postmortem – International GPM% a Major Disappointment
Listening to the Amazon (AMZN – $150.09) conference call is simply a waste of time. The company’s CFO goes very much out of his way to effectively dodge every question.
The International Division’s somewhat disappointing sales and dramatic -142 Bps GPM% decline versus LY is troubling. This GPM% decline looks ugly on a 2-year or 3-year horizon. It does not look good for AMZN as both divisions will lap much tougher 2-year and 3-year GPM% run rates in Q2 2010.
The North American Division largely held up their end of the bargain by delivering stronger top-line growth (reversal of trend) and at least a modest improvement in GPM% versus LY.
Click herefor AMZN 4-year Divisional Gross Profit Margin Run Rates.
Therefore, we’re seeing only modest EPS upside versus consensus estimates from here. Profitability will improve for the year, but they’ll get there via expense leverage that will be greater than the GPM% decline. Not only that, the expense leverage this year is being helped by a revenue recognition change.
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on Friday, April 23rd, 2010 at 8:32 am and is filed under Commentary.
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AMZN Postmortem – International GPM% a Major Disappointment
Listening to the Amazon (AMZN – $150.09) conference call is simply a waste of time. The company’s CFO goes very much out of his way to effectively dodge every question.
The International Division’s somewhat disappointing sales and dramatic -142 Bps GPM% decline versus LY is troubling. This GPM% decline looks ugly on a 2-year or 3-year horizon. It does not look good for AMZN as both divisions will lap much tougher 2-year and 3-year GPM% run rates in Q2 2010.
The North American Division largely held up their end of the bargain by delivering stronger top-line growth (reversal of trend) and at least a modest improvement in GPM% versus LY.
Click here for AMZN 4-year Divisional Gross Profit Margin Run Rates.
Therefore, we’re seeing only modest EPS upside versus consensus estimates from here. Profitability will improve for the year, but they’ll get there via expense leverage that will be greater than the GPM% decline. Not only that, the expense leverage this year is being helped by a revenue recognition change.
This entry was posted on Friday, April 23rd, 2010 at 8:32 am and is filed under Commentary. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.