Amazon.com sales increase and so does loss

Increased fulfillment costs and other expense pressures caused Amazon.com to report a second quarter loss of $7 million even though sales increased 22% to $15.7 billion.

The company said its sales would have increased 25% were it not for a $392 million headwind related to unfavorable foreign exchange rates. The net loss of $7 million, or two cents a share, was a reversal from the same period the prior year when a profit of $7 million, or one cent a share, was reported.

The company’s sales were roughly in line with analysts’ estimates, but the two cents a share loss was well below analysts’ forecast of a five cent profit.

In addition, the company said its operating income declined 26% to $79 million compared to $107 million the prior year.

Profits were negatively affected by surging operating costs which increased 22.7% to $15.6 billion and included fulfillment costs which increased 35.5% to $1.8 billion.

Looking ahead, Amazon.com forecast a huge variation in its third quarter financial results, with sales expected to grow somewhere between 12% and 24% to a range of $15.45 billion and $17.15 billion.

The company also forecast an operating loss that at best would be slightly more than twice as bad as the prior year loss of $28 million. The third quarter operating loss is forecast to range from $65 million to $440 million.

Amazon.com  founder and CEO, Jeff Bezos, made no mention of the company’s deteriorating financial performance in the quarter and focused comments in a prepared statement on new offerings of product and content.

“We’re so grateful to our customers for their response to Kindle devices and our digital ecosystem. This past quarter, our top 10 selling items worldwide were all digital products — Kindles, Kindle Fire HDs, accessories and digital content,” Bezos said. “The Kindle service keeps getting better. The Kindle Store now offers millions of titles including more than 350,000 exclusives that you won’t find anywhere else. Prime Instant Video has surpassed 40,000 titles, including many premium exclusives like Downton Abbey and Under the Dome. And we’ve added more than a thousand books, games, educational apps, movies and TV shows to Kindle FreeTime Unlimited, bringing together in one place all the types of content kids and parents love.”