Amazon Posts Blockbuster Q4 — But Where Does Fashion Fit In?

Amazon
Amazon
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What goes up, doesn’t always come back down — at least if you’re Amazon.

The e-tail giant continues to contradict Newton’s third law of motion — announcing yesterday a fourth-quarter revenue surge of 38 percent to $60.5 billion, besting analysts’ expectations for sales of $59.83 billion.

Amazon’s profits also more than doubled to $1.9 billion, or $3.75 per share — receiving a $789 million boost from the Republican tax bill passed in December. Those results blew past Wall Street’s bets for profits of $1.85 per diluted share.

While the world’s largest online retailer has been a most disruptive force across retail — it’s acquisition of Whole Foods is the latest testament to its bid to snap up grocery market shares — its role in the fashion industry remains difficult to fully dissect. Amazon’s sheer sales volume — for clothing and other fashion items — is tough to deny but Amazon is not without challenges in the fashion realm. For one, it has had to get around consumer challenges regarding size and fit when buying clothes and shoes online (one method has been its offer of hassle-free returns), not to mention that some popular fashion brands and industry experts have criticized Amazon for not offering an elevated brand experience and allowing third-party sellers to proliferate inauthentic goods on its platform.

Although it seems clear that Amazon is in a battle with Walmart for dominion over every sellable item, one has to wonder how much of a priority fashion truly is for the Amazon.

For starters, Amazon’s 22-page earnings release doesn’t even mention the word “fashion” — or shoes and clothes for that matter. But the one time the firm’s management referenced fashion in its fourth-quarter conference call, it was to address a question about its budding private label business — which makes sense as many experts believe that the most significant catalyst to propel Amazon into a bigger fashion player will be its private label business.

“When we look at our strategy, it’s focused on, number one, providing a broad selection for customers across a number of categories so that they can find and buy exactly what they’re looking for,” Dave Fildes, Amazon’s director of investor relations, told shareholders Thursday. “When you look at private brands, it’s very much meant to supplement that great selection … Amazon Fashion is one area where you’re seeing us offer a number of private apparel brands. Some of the more popular lines with customers have been things like Goodthreads, Amazon Essentials, which is men’s and women’s basics.”

In addition to its private label push, Amazon last year launched Prime Wardrobe — a service that allows customers to try on clothes for free, only paying for the items they want. For three seasons, the company has also been a headlining sponsor of Japan’s biggest fashion event, Tokyo Fashion Week.

As to just how much ground Amazon is making in fashion: The company did $5.5 billion in apparel sales and $3.7 billion in shoe sales in 2017, according to One Click Retail.

Overall, Amazon said Thursday that its total sales in 2017 increased 31 percent to $177.9 billion. Net income was $3 billion, or $6.15 per diluted share, compared with net income of $2.4 billion, or $4.90 per diluted share, in 2016.

The results had sent the firm’s shares soaring. Today, as of 2:30 p.m. ET, Amazon shares remained up more than 4 percent, or $59.27, to $1,449.