Amazon reports 10% profits fall

Online retailer Amazon grew sales between April and June but saw its shares suffer last night after revealing a fall in quarterly profits.

Online retailer Amazon grew sales between April and June but saw its shares suffer last night after revealing a fall in quarterly profits.

Net profits for the period were down by 10% to $142m (€100m), despite a 15% rise in sales to $4.65bn (€3.3bn).

The second quarter results disappointed analysts and caused shares in Amazon to fall nearly 7% in after-hours trading in New York.

Sanford C. Bernstein analyst Jeffrey Lindsay said the company’s report was generally good, but its stock was priced for an even stronger quarter. “That’s why you got such a negative reaction after hours,” he said.

The company said international sales were up 16% on a year ago to $2.2bn (€1.6bn).

The best seller list for Amazon’s UK arm was topped by Stephenie Meyer’s book 'Breaking Dawn' and also included the DVD release 'Slumdog Millionaire'.

The fall in second quarter profits came after the retailer recorded a $51m (€36m) payment to settle a long-standing dispute with former partner Toys R Us.

The lawsuit was over a partnership that gave Toys R Us exclusive rights to supply some toy products on Amazon’s site. Toys R Us claimed Amazon violated the partnership by letting others sell some toys on Amazon.com, while Amazon said the toy seller failed to keep items in stock.

Chief financial officer Tom Szkutak said the company saw declines in some media categories, including video games and video game consoles.

He noted that in the year before, three of the four hottest games were released during the second quarter, including Nintendo popular Wii Fit. This year’s gaming decline was balanced out by increased book sales, he added.

Amazon’s figures last year were helped by a $53m (€37.3m) gain from the sale of European DVD rental assets.

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