Amazon's physical stores fall
Amazon reported a 3% decline over the year in physical store sales on Thursday. This is the first annual comparison with Amazon's ownership of Whole Foods, when the $ 13.7 billion acquisition was closed in August 2017. The deal highlights the willingness of e-commerce giants to enter physical retail. The stakes have continued in several formats, including their cashless stores Amazon Go, Amazon bookstores and Amazon 4 star stores.
On a conversation with analysts, Amazon's manager of investor relations attributed David Fildes some of the downturn to timing issues. In particular, an adjustment to Whole Foods' tax calendar has finally added another five additional sales values to the fourth quarter results a year ago.
And then there is another adjustment that there is no doubt as much e-commerce transaction as there is a brick-mortar transaction.
"Online orders where people go to the Prime Now app and then order for delivery or pickup at Whole Foods stores, count or count in the online store's portion of revenue," Fildes said. "So if you adjust for them, what's the whole growth throughout the year on an apple-to-apple basis was about 6%."
Over the past year, Amazon has expanded the free grocery store and pickup from the entire Mat through Prime Now so customers can order at the Prime Now app and have groceries delivered. Grocery delivery is available in more than 60 US metros, and pickup service is available in over 20 US metros. Amazon says the pickup service will expand to several regions.
The bottom line is Whole Foods does not deliver accurate growth figures.
"Much of this is because Whole Foods proposal is simply not up to scratch," said Neil Saunders, CEO of GlobalData Retail. "Fundamentals and commodities still cost much more than rivals such as Target, and this is one of the reasons why Whole Foods is unnecessarily expensive, has persisted."
The Amazon stock rose first, but went down 4.9% afterwards trading after the earnings announcement.
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