Amazon’s Q2 Sales, Profits Soar

By Alan Wolf -- TWICE, 7/24/2008

Seattle — Amazon.com’s second-quarter sales rose 41 percent to $4.1 billion, and net income rocketed 102 percent to $158 million, the e-tailer reported.

Founder and CEO Jeff Bezos suggested that the business benefited from high gas prices, which may have compelled more consumers to shop from home.

“Customers continue to take advantage of our low prices, free shipping and Amazon Prime,” Bezos said in statement. “Amazon Prime [a $79-a-year membership program that provides free two-day shipping] costs less than a tank of gas — more and more customers are joining the program and enjoying its benefits.”

Amazon also enjoyed the benefits of the program, as well as a related third-party shipping service called Fulfillment by Amazon, as shipping revenue rose 22 percent to $186 million, the company said.

Still, outbound shipping costs rose 38 percent to $314 million, leaving Amazon with a net shipping cost of $128 million, or 3.2 percent of net sales, up 71 percent from the year-ago quarter.

Operating income increased 86 percent to $217 million for the three months, ended June 30, and grew 71 percent, excluding the $17 million benefit of favorable foreign exchange rates.

In North America, sales at the company’s U.S. and Canadian sites rose 35 percent to $2.2 billion, while operating income grew 17 percent to $96 million.

The revenue gain reflects a 25 percent increase in sales of media, to $1.1 billion, and a 52 percent hike in sales of electronics and other general merchandise, to $920 million.

Media includes retail sales from all sellers in categories such as books, movies, music, digital downloads, software, and video games and consoles. Electronics and other general merchandise consists largely of retail sales of CE and computers from all sellers, but also includes home and garden, toys, kids and baby, grocery, apparel, shoes and jewelry, health and beauty, sports and outdoors, tools, and auto and industrial.

During the quarter Amazon introduced a limited beta version of Amazon Video On Demand. The service lets customers rent or buy ad-free movies and TV shows and watch them immediately within their Web browser or through an Internet video link on Sony Bravia TVs.

The company also increased the selection for its Kindle electronic book reader to more than 140,000 titles.