loss less than expected

The huge online retailer loses $122m on better-than-expected sales of $574m squeaked past analysts' estimates in its first quarter Wednesday, posting a loss of $122m (£77.47m), or 35 cents a share, on sales of $574m.

First Call consensus pegged the online retailer for a loss of 36 cents a share in the quarter.

Ahead of the earnings report, shares closed up 1 1/16 to 53 1/2.

The $574m in sales beat most analysts' estimates and represented a 95 percent improvement from the year-ago quarter when it lost $36m, or 12 cents a share, on sales of $294m.

Merrill Lynch analyst Henry Blodget predicted would post sales in the neighbourhood of $54m in the quarter, down from the $676m it recorded last quarter.

Ahead of the earnings report, Blodget said "the gradual maturation of the e-tailing market" could contribute to slowing revenue growth.

Tom Wyman, an analyst at J.P. Morgan pegged for a loss of 42 cents a share in the quarter on sales of around $587m.

But investors are still wondering when or if will ever turn a profit.

In a conference call with analysts Wednesday, COO Joe Galli tried to address those concerns.

"We're focused on marching toward profitability while continuing to grow," Galli said.

He added that the company will be able to meet fourth-quarter demand without more distribution investment. It will also become more efficient, with less people and more inventory turns.

Galli said each general manager is responsible for driving profits. He also noted that high margin marketing deals won't be used as a profit crutch.

"Retail is still our backbone," he said.

In the quarter, added another 3.1 million customer accounts, bringing its total to more than 20 million. Repeat-customer orders accounted for 76 percent of its total sales, up from 66 percent in the year-ago quarter.

"Our platform has allowed us to expand the products and services we offer customers and demonstrate operating leverage in our results at the same time," said CEO Jeff Bezos in a prepared release. "We expect that the rest of the year will yield a similar balance of global growth and expansion while driving toward profitability in every business."

Last quarter, missed analysts' estimates, posting a loss of $185m, or 55 cents a share, on sales of $676m.

Its shares have slumped in recent months, falling from a 52-week high of 113 in December to below 50 earlier this month.

Twenty-two of the 31 analysts covering the stock still maintain either a "buy" or "strong buy" recommendation.

Analysts expect it to lose $1.22 a share in the fiscal year and not turn a profit until sometime in fiscal 2002.

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