Sell more, lose more was Amazon’s Q4 motto

SEATTLE — Amazon.com enjoyed tremendous sales growth in the fourth quarter, but it came at a steep price as expenses grew faster than sales due to investments to support future growth.

Sales increased 35% to $17.4 billion during the quarterly period ended Dec. 31, 2011 from nearly $13 billion the same period the prior year and were aided by a slight ($101 million) tailwind related to currency exchange rates. Despite the surge in revenue, profit declined 58% to $177 million, or 38 cents a share, from a prior-year quarterly profit of $416 million, or 91 cents a share.

Amazon founder and CEO Jeff Bezos did not comment on the profitability decline in a press release announcing the company’s results, but did thank customers for embracing new products.

“We are grateful to the millions of customers who purchased the Kindle Fire and Kindle e-reader devices this holiday season, making Kindle our bestselling product across both the U.S. and Europe,” Bezos said. “Our millions of third-party sellers had a tremendous holiday season with 65% unit growth and now represent 36% of total units sold.”

Bezos did not participate in the company’s 40-minute conference call Tuesday evening, and left CFO Tom Szkutak to highlight some of the company’s positive developments and investment philosophy.

“We are continually trying to improve all our processes and that includes delivery and fulfillment speed,” Szkutak said.

Accordingly, the company in 2011 added 17 new fulfillment centers to bring its global network to 69 centers and increased its number of employees by 67% to support growth and opportunities the company is fortunate to have, according to Szkutak.

“We feel that we are deploying capital appropriately,” Szkutak said, declining to elaborate on the level of investment the company plans to make expanding distribution capacity this year.

“You’ll have to stay tuned, and we’ll keep you updated as we go throughout the year,” Szkutak said in response to a question about how many fulfillment centers the company plans to open in 2012. “We are incredibly optimistic about the opportunity we have and that’s why we have invested the way we have.”

Those investments negatively affected full-year as well as fourth-quarter profits. For the full year, Amazon’s sales increased 41% to $48 billion compared with $34 billion in 2010, while net income decreased 45% to $631 million, or $1.37 per share, compared with net income of $1.15 billion, or $2.53 per share in 2010.