Someone Spiked Amazon's Eggnog Again

Not to spoil the company's good cheer, but these 'best ever' holiday sales actually don't look so hot.
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SAN FRANCISCO -- Who are you going to believe about this year's holiday sales -- Amazon.com (AMZN) - Get Report or MasterCard (MA) - Get Report?

As traditional as television's Yule Log, Amazon has once again taken the day after Christmas to announce that this season's sales -- the company's 14th -- were its "

best ever

."

You don't say.

Predictably, shares of Amazon shot 5% higher in early Friday trading, before pulling back to $52.55, up 2.2%.

Let's see, it was only ... well, one year ago exactly when the company told the world that last year's holiday sales were -- you guessed it -- the company's "best ever." On Dec. 26, 2007, Amazon shares closed up 2%. Looking back, would you have wanted to pick up Amazon then at $92.85?

The definitive debunking on this annual PR push by Amazon was

done last year

by uber-blogger Jeff Matthews, who pointed out, as he did a year earlier, that it what would be startling news if Amazon, or practically every other retailer,

didn't

report sales that topped a year ago.

This is because economies and businesses tend to grow, and tend to experience some degree of inflation, making total sales an essentially useless metric for looking at retailers. That's why the focus is usually on same-store sales -- sales at outlets that have been open for at least a year.

Data out Friday from MasterCard's SpendingPulse unit, paints a somewhat less sanguine picture. As Reuters reported, the 2008 holiday shopping season was the weakest in recent memory, as consumers cut spending in the wake of recession, mounting job losses and tighter credit. "It's probably one of the most challenging holiday seasons we've ever had in modern times," said Michael McNamara, vice president of Research and Analysis at MasterCard Advisors.

Holiday sales of luxury items, for example, fell by more than one-third from a year earlier.

Of course, buried in Amazon's own data of the past three holiday seasons is reason enough to be less optimistic. On Dec. 26, 2006 the company said that on its "best" shopping day of that holiday season orders "exceeded" 4 million items.

A year later, in 2007, the company noted its best day logged 5.4 million orders. And this year, 6.3 milllion orders came from the season's top day.

So, in 2007 the top-order day grew by 35%. This year, the top day's sales were only 16.7% above last year.

In other words, growth fell by half. That takes a little shine off "best ever," doesn't it?

None of this is to say that Amazon isn't a relatively cheap stock for the longer-term investor, or that it's anything but well-positioned competitively for a time when consumers return to consuming.

But it seems like it's high time to take Amazon's "Best Ever" holiday sales press release with a grain of salt.