A Bargain-Hunter’s Paradise and Discount Retailer Squeezes Extra Margin Out Of Small Sales Gain

As traditional retailers struggle amid a halting recovery challenged by high unemployment and still-reluctant spenders, e-commerce companies have thrived, serving shoppers looking for a deal.

Amazon.com (AMZN), the world’s largest online retailer, crushed analysts’ fourth-quarter views in January as sales jumped 42% over the year-ago quarter to $9.52 billion. Its profit also beat views as it surged more than 63% to 85 cents.

{loadposition in-article}

Workers unpack items at the inbound and stow stocking area inside an Amazon.com warehouse in Goodyear, Ariz.

The U.S. Commerce Department says overall e-commerce sales jumped 14% in the fourth quarter to $35.9 billion.

“That was the strongest growth rate we have seen in (online) sales since 2007,” said Mark Mahaney, analyst for Citigroup Global Markets.

The trend has boosted smaller e-commerce players, too. [Read the full article]

That’s been the lesson learned at 99 Cents Only Stores (NDN), a discount retailer that had struggled to bring income down to the bottom line.

In February 2008, the Commerce, Calif.-based chain outlined a program for improving profitability. It set the target of 4.7% earnings before taxes (EBT) by 2012.

But in announcing earnings last quarter, its fiscal 2010 third quarter ended in December, the chain proved it was well ahead of its own timetable.

Though sales grew by just 2.3%, the discounter still managed to roughly double net income and earnings per share. Net income came in at $24.5 million, up from $12.5 million the year before. EPS came in at 35 cents, up from 18 cents. For the four quarters ended Dec. 26, the chain achieved a 5.9% EBT, topping its 2012 targets well in advance. [Read the full article]

Germany’s Merck said Sunday it will pay around $6 billion to buy U.S. biotech equipment maker Millipore (MIL) and expand the German firm’s presence into life sciences.

Meanwhile, British insurer Prudential (PUK) said Monday it will buy the Asian unit of bailed-out American International Group (AIG) in a transaction worth $35.5 billion. That will let AIG pay back some of the money it owes the government.

Prudential’s shares tumbled on the huge deal, which will require a $20 billion rights issue, but the acquisition will turn the British firm into Asia’s top life insurer.

As of March 1, global M&A dollar volume for the current quarter was $374 billion, says Thomson Financial (see chart). Last year, total Q1 dollar volume was $515.4 billion, helped by three blockbuster deals in the pharma sector. In 2008, first-quarter volume was $528.2 billion.

But there continues to be a dearth of large-scale private equity deals. [Read the full article]

You may also like...