Empty Malls Bolstering Amazon's Numbers

Online retail seems to be holding up better than its brick-and-mortar counterparts.
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The local mall's loss could end up being

Amazon.com's

(AMZN) - Get Report

gain.

On edge about the prospect of continuing terrorist attacks, a growing number of Americans may be opting to shop from the safety of home, recent figures show. That could boost the prospects of online retailers such as Amazon, the largest stand-alone Internet retailer.

Data from several research firms over the past month have shown surprisingly healthy online sales activity. While e-commerce sales fell dramatically immediately following the Sept. 11 attacks, they have largely rebounded to normal levels. And though few people are predicting Amazon will blow away sales estimates, some analysts are now confident the company can meet its goal of turning a profit for the first time on a limited basis in the fourth quarter. Amazon had dropped 38 cents by early afternoon Wednesday to $9.18.

Unconventional Wisdom

The findings run counter to the widely held view following the terrorist attacks on New York and Washington. At the time, many observers predicted online retailers such as Amazon would

face the same struggle as their brick-and-mortar counterparts, many of which quickly reduced earnings and sales targets for coming quarters.

Indeed, September same-store sales rose just 0.7% at the top 33 retailers tracked by Thomson Financial/First Call, down sharply from August's 2.8% rise. Excluding the results of

Wal-Mart

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, the nation's largest retailer and a strong performer during economic downturns because of its low prices and wide selection of nondiscretionary items, September same-store sales at the biggest stores plunged 2.5%.

"We think retail sales will be down significantly because people will worry about the safety of themselves and their children," says Greg Kyle, an analyst at Pegasus Research, which recently published a report highlighting online retail as a likely beneficiary of the war on terrorism. (Kyle has a buy rating on Amazon, and his firm does not do investment banking.)

But September's online retail activity was on the same level as August, according to NextCard's e-commerce index, which is compiled from credit card transactions. That's "a good indicator that consumers are returning to previous online shopping patterns," says Scott Lascelles, group vice president of loyalty marketing at NextCard.

Data from another group showed that online retailing jumped 54% in September from a year ago. September e-commerce sales rose to $4.7 billion, according to Nielsen/NetRatings. Total online customers showed a 4% gain on August's figures.

Stronger

To be sure, no one is eager to be seen as profiting from the terror attacks. But it is inescapable that the online retailers suddenly have a much stronger story than they did earlier this year.

An indication of how strong will come when Amazon releases its third-quarter earnings, which it is scheduled to do on Oct. 24. Because the company does not release monthly sales, some research firms have begun

making their own projections.

Yet even these are widely divergent. For example, data from comScore, a new-to-the-scene research outfit, indicate the company could have trouble meeting its quarterly targets. Another firm, Boston-based Compete, has made the bold prediction that Amazon will report sales for the quarter in excess of $700 million, better than the current Wall Street consensus estimate of about $650 million, according to Thomson Financial/First Call.

Amazon has released earnings warnings in the past, but has not said anything since the attacks, perhaps an indication the company is comfortable with estimates.

Investors should know better next week.