Amazon Revenue Up 33%
A 33% increase in third-quarter sales to $851 million was not enough for electronic commerce pioneer Amazon.com Inc. to report a profit.
The Seattle-based online retailer said Thursday that it lost $35 million, or 9 cents a share, in the three months ended Sept. 30, compared with a loss of $170 million, or 46 cents a share, last year.
The improvement in sales was chiefly due to price reductions, said Chief Executive Jeff Bezos, but it came at a cost.
“We are committed to lower prices for customers even though it’s expensive for us,” Bezos said during a conference call. The company is making up for lower prices by boosting sales volume and by holding the line on costs, he said.
During the quarter, the company also lowered the threshold for free shipping from $49 per order to $25. As a result, the company spent $10 million on shipping in the third quarter compared with $2 million a year ago.
“We view shipping as really a part of the long-term investment we made in pricing,” Chief Accounting Officer Mark Peek said. The $25 cutoff for free shipping will remain in effect at least through the holiday sale season, he said.
Sales growth was particularly strong in the company’s electronics, kitchen and tools segment, increasing 25% to $129 million.
Seven-year-old Amazon’s only profitable quarter was at the end of last year. Peek would not predict when the company would again be in the black.
Amazon shares rose 11 cents to $19.86 on Nasdaq in regular trading before the earnings report was released. They lost about $1 in after-hours trading.
