Published by yourcollegebars on July 29, 2017

Amazon plows ahead with high sales and spending; profit plunges

Amazon plows ahead with high sales and spending; profit plunges

(Reuters) – Inc. said on Thursday an increase in retail sales with lower profits due to its rapid expansion and costly new purchase categories and countries showed no signs of slowing.

The world’s largest online retailer posted a turnover of $ 38 billion in the second quarter, up 25 percent from a year earlier. The dizzying growth was contrary to the fate of many brick and mortar rivals, who have had trouble finding their balance and that as more people buy online.

However, the Seattle-based Amazon fell 77% of quarterly revenue and even said it could lose up to 400 million in operating income during the quarter. Beyond thinking about the notoriously thin retail margins, the forecast indicates that Amazon could invest heavily to maintain its dominance.

Shares – almost 40% this year – fell 3.2% to $ 1 012.68 on the secondary market. The company had earned 40 cents per share instead of $ 1.42 according to analysts, according to Thomson Reuters I / B / E / S.

“The third quarter is typically a period of high investment,” CFO Brian Olsavsky said during a press conference, citing operating and hiring costs to prepare the company for the Christmas holiday party. He added: “Our video content spending will continue to grow, both sequentially and in the fourth quarter.”

In fact, the investment in faster shipments and videos has become a means to get away from the company. While some predict spending in these areas of the Amazon – stepped up from last year – to help the company advance to strengthen its First Primer club.

Olsavsky said the included video content with superior membership helped Amazon to keep its subscribers and persuade them during a free trial to sign up for $ 99 per year in the United States. A cornerstone of the company’s strategy, the first to encourage buyers to buy more products, more often from Amazon.

Subscriber sales, including Prime expenses, increased 51% in the second quarter to $ 2.2 billion. Cowen & Co analysts have estimated that more than 50 percent of US households will have a larger membership by the end of 2017.

“The fact that they invest in so many fronts today talk about the opportunity before them,” said Edward Jones analyst Josh Olson. “We give them the benefit of the doubt here because they have done so historically so well.”

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