Despite the dismal retail environment, (AMZN) posted results that beat expectations for the second consecutive quarter. And, even more surprising to many, the retailer managed to accomplish that feat without resorting to price discounts.

Amazon continues to benefit disproportionately from the general shift to online commerce and the careful shopping behavior that consumers are exhibiting during the downturn. The breadth of the products it offers through independent merchants and its own expansion into new categories, along with low-priced shipping in the U.S. and abroad, continues to woo shoppers.

First-quarter revenue jumped 18% to $4.89 billion, from $4.13 billion a year ago, surpassing the 15% growth that analysts had been expecting. The company posted net income of 41¢ a share for the quarter, 10¢ higher than analysts' average forecast.

This accelerated growth is helping Amazon grab an even larger share of the retail market than analysts have been expecting. It's far outstripping the 2.7% growth in the U.S. and 9.6% growth overall that Jeffery Lindsay, an analyst at Bernstein Research, forecasts for the year for e-commerce. And it compares with the 0.5% decline that the National Retail Federation is expecting for traditional U.S. retailers.

Second-Quarter Guidance Surprisingly Low

"It was a strong quarter," says Colin Sebastian, an analyst at Lazard Capital Markets. "Amazon continues to take market share and they continue to be a favored outpost for consumers who are looking for good value."

Amazon was able to offer that value without giving away the store. The operating margin, a measure of profitability, was also better than expected. At 5%, it was well above Wall Street's expectations of 4.3%. And despite the difficult economy, Amazon showed better-than-expected growth in its domestic sales of books, CDs, and other media as well as strong demand for electronics gear. It's likely benefiting in that market from the collapse of competitor Circuit City, analysts say.

The biggest drawback in Amazon's report was its second-quarter guidance, which is below the just-announced results.

Amazon estimates sales of $4.3 billion to $4.75 billion in the second quarter—a range that surprised some on Wall Street. "Clearly companies are taking a measured approach to their outlook," says Lazard's Sebastian. The forecast compares to analysts' consensus sales estimate of $4.6 billion. Amazon declined to discuss on its conference call what current trends it is seeing in the business. "It's low to the point of almost sandbagging," Lindsay says. "What they are saying is that if everything pretty much went wrong, this is where it would be."

Stealing Market Share from eBay

Shares of the Seattle-based company initially dipped on the guidance in after-hours trading. But after traders took a closer look at the numbers, the stock reversed direction and moved higher, rising 2.7% to 82.75.

When it comes to overall market share growth, one rival that Amazon continues to steal share from is eBay (EBAY), analysts say. One highlight of the quarter was the growth in the number of products sold by other merchants who list their products on Amazon's site. Those sales represented 32% of overall Amazon revenues, up from 27% in the fourth quarter and 30% in the year-earlier quarter.

Data from Web traffic monitoring service ComScore (SCOR) also backs up that trend. Amazon had 61 million visitors in March, up from 50 million a year ago. EBay, meantime, drew 70 million visitors, down from 80.1 million.

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