Amazon physical stores keep up double-digit sales growth in Q3

In the fiscal 2022 third quarter, Amazon brick-and-mortar stores notched their sixth straight quarter of double-digit sales gains.

For the quarter ended September 30, Amazon totaled net sales of $127.1 billion, up 15% from $110.8 billion a year earlier, the e-tail giant reported yesterday after the market close. Backing out a $5 billion unfavorable impact from foreign exchange rate changes, net sales climbed 19% year over year, according to the Seattle-based company.

Online sales rose 7% to $53.49 billion ( 13 excluding FX) for the third quarter from $49.94 billion a year ago. Sequentially, online sales edged up 5.2% from the second to third quarters.

Amazon’s physical store sales, which include Whole Foods Market, jumped 10% (flat excluding FX) to $4.69 billion in Q3 from $4.27 billion in the fiscal 2021 quarter. That followed year-over-year increases of 12.5% in the 2022 second quarter, 17.1% in the 2022 first quarter, 16.6% in the 2021 fourth quarter, 13% in the 2021 third quarter and 11% in the 2021 second quarter, which came after a 15.5% decline in the 2021 first quarter.

On a sequential basis, sales at Amazon brick-and-mortar stores dipped 0.6% for the 2022 third quarter after a 2.8% uptick in the 2022 second quarter and a nearly 2.1% decrease in the first quarter.

Related:Amazon adds to Aplenty grocery label

Amazon Fresh has set foot in metro New York as part of the supermarket banner's ongoing expansion.

Physical-store sales at Amazon come mainly from the Whole Foods unit and exclude online orders made via the company’s brick-and-mortar brands, such as Prime delivery and pickup through Whole Foods stores. Currently, Amazon’s U.S. physical stores include 520 Whole Foods Markets, 44 Amazon Fresh grocery stores and 26 Amazon Go convenience stores.

In the grocery realm since the previous quarter, Amazon entered the metropolitan New York market with the Amazon Fresh supermarket banner, opening stores in Oceanside, N.Y., and Paramus, N.Y., in July. Also that month, Amazon Fresh stores opened in Norridge, Ill.; Encino., Calif.; and Arlington, Va. Amazon, too, opened its second Amazon Go Starbucks outlet, located in Manhattan at The New York Times Building on 40th Street and 8th Avenue (620 8th Ave.). The store combines a Starbucks Pickup site with an Amazon Go store.

Amazon also has rekindled third-party grocery delivery with Cardenas Markets and Save Mart, added Blue Apron meal kits to Amazon.com, deployed the Amazon One palm-recognition payment system to Whole Foods Market stores across California, and expanded its Aplenty grocery private label.

“In the past four months, employees across our consumer businesses have worked relentlessly to put together compelling Prime Member Deal Events with our eighth annual Prime Day and the brand-new Prime Early Access Sale in early October,” Amazon CEO Andy Jassy said in a statement. “The customer response to both events was quite positive, and it’s clear that particularly during these uncertain economic times, customers appreciate Amazon’s continued focus on value and convenience.”

Related:Amazon to gain more CPG share in Prime Early Access Sale

Jassy noted that Amazon also is tightening up its store fulfillment operations in response to economic volatility. “We’re encouraged by the steady progress we’re making on lowering costs in our stores fulfillment network and have a set of initiatives that we’re methodically working through that we believe will yield a stronger cost structure for the business moving forward,” he explained. “There is obviously a lot happening in the macroeconomic environment, and we’ll balance our investments to be more streamlined without compromising our key long-term, strategic bets. What won’t change is our maniacal focus on the customer experience, and we feel confident that we’re ready to deliver a great experience for customers this holiday shopping season.”

For the third quarter, Amazon came in a smidgen below Wall Street’s consensus sales forecast. On average, analysts projected quarterly sales of $127.45 billion, with estimates ranging from $122.59 billion to $130.46 billion, according to Refinitiv.

At the bottom line, Amazon posted third-quarter net income of $2.87 billion, or 28 cents per share, down from $3.16 billion, or 31 cents per share, a year earlier. Analysts, on average, had estimated adjusted EPS of 21 cents, with projections ranging from a low of a 5-cent-per-share loss to a high of 39 cents in EPS, according to Refinitiv.