Amazon misses profit forecasts while Prime costs bite

The online retailer recorded second-quarter net income of $2.6bn, equating to $5.22 per share, which was above $5.07 this time the previous year but lower than analyst estimates of $5.57 per share.

The retailer’s net sales increased 20% to $63.4bn in the quarter to June 30, ahead of analyst expectations. However, Amazon flagged that profits would slip slightly in it current quarter.

The retailer’s operating income rose $3.1bn, ahead of $3bn the previous quarter.

The online retailer’s operating expenses increased 21% during the period as it ploughed £800m into one-day delivery services, which chief financial officer Brian Olsavsky said has impacted earnings.

“We expect we will be working through that for a number of quarters,” he said.

“It is a necessary strategy to compete with bricks-and-mortar’s speed advantage to the customer.”

The retailer posted its most successful Prime Day to date in the quarter, which spanned two days for the first time and said it had “surpassed the previous Black Friday and Cyber Monday combined”.

Amazon founder and chief executive Jeff Bezos said: “Customers are responding to Prime’s move to one-day delivery — we’ve received a lot of positive feedback and seen accelerating sales growth.

“Free one-day delivery is now available to Prime members on more than 10 million items, and we’re just getting started.”