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Amazon Q2 Sales Up, Net Income Down

Fulfillment warehouse expansion strategy erases profits.

Amazon’s sales grew by double digits during this year’s second quarter, but high expenses brought the retailer’s net income significantly down, officials reported on Thursday.

The retailer posted a net-sales increase of 29 percent, putting it at $12.83 billion during the second quarter. North American sales were up 36 percent, at $7.33 billion, compared to the same time in 2011. However, net income decreased 96 percent, year over year, from $191 million in 2011, to $7 million this year, Amazon reports.

Tom Szkutak, Amazon’s chief financial officer, says Amazon’s operating expenses outpaced the revenue generated during the second quarter. In fact, operating expenses rose to $12.7 billion during this year’s second quarter, compared to $9.7 billion a year ago. Operating income was down $107 million this year from $201 million during the second quarter of 2011.

“We’re investing a lot in the business right now,” Szkutak tells reporters.

He adds that the high level of spending is expected to continue into the third quarter.

According to news reports, Amazon will open 12 more fulfillment warehouses this year to prepare for the holiday shopping season. It has already opened six this year.

Amazon projects another increase in sales during the third quarter, when it projects net sales will be between $12.9 billion and $14.3 billion. However, it expects an operating loss of between $350 million to $50 million during that quarter.

About the author

Olga Munoz
Olga Munoz is editor of TheOnlineSeller.com. In addition to writing news and feature articles about e-commerce, selling trends, online marketing and other topics of interest to online sellers, Olga manages the site's social media efforts. A journalism graduate of Chico State, Olga says her favorite part of being a journalist is learning interesting facts that help put stories into perspective, attending industry events and meeting interesting people "that leave you smiling, even in tough situations." Opinions expressed here may not be shared by The Online Seller and/or its principals.



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