Amazon.com Inc.'s revenue rose 25% in the second quarter, bucking the retail industry's slump with its dominance of online shopping.
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However, Amazon said Thursday that profits fell 77% as Amazon spent heavily to expand. Profits were $197 million, or 40 cents, down from $857 million, or $1.78 per share, a year earlier. Analysts surveyed by Thomson Reuters expected adjusted earnings of $1.42 per share.
Sales in the second quarter were $38.0 billion, up from $30.4 billion a year ago. That was above Amazon's own forecast of $35.25 billion and $37.75 billion for the quarter and above analysts' expectations of $37.18 billion.
Shares of the company fell 1.2% in after-hours trading after finishing $1,046 on Thursday. Shares were up about 39% year-to-date after the close.
Amazon's stock hit a record high Thursday morning ahead of the results before closing down, temporarily making Amazon founder and Chief Executive Jeff Bezos the world's richest person. According to Forbes, which tracks a list of billionaires, Mr. Bezos reached a net worth of $90.6 billion as the market opened, pushing him in front of Microsoft Corp. founder Bill Gates.
Amazon's performance contrasts with many traditional U.S. retailers, which are struggling with declining foot traffic and the shift of consumer spending online. At a time when Amazon is investing heavily and expanding, other retailers are saddled with high debt loads and falling sales, forcing them to close stores and cut jobs -- and extending Amazon's advantage.
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Amazon's strong quarterly sales growth -- a feat it repeats every quarter -- reflects how the online retail giant keeps broadening the categories it operates in. In recent weeks, it has become an official seller for Nike Inc. and Sears Holding Corp.'s Kenmore brand of appliances.
Last month, Amazon announced a $13.7 billion including debt acquisition of Whole Foods Market Inc., immediately catapulting it into a major player in brick-and-mortar retail and grocery. Whole Foods reported Wednesday that comparable sales fell again in its latest quarter, a trend it has promised to reverse by September.
Amazon's ever-increasing clout is accompanied by a new phase of heightened investment, after several quarters of spending discipline. The retailer is plowing profits back into product development, warehouse building and delivery infrastructure, as well as overseas expansion and video content. Amazon, which keeps promising ever shorter delivery times, is under pressure to contain shipping costs, which rose 36% to $4.57 billion in the second quarter from a year earlier.
It said on Wednesday it plans to host a giant job fair next week to hire for its 50,000 current U.S. warehouse openings, part of its pledge to hire 130,000 U.S. workers through mid-2018. Amazon said Thursday that its global workforce rose by more than 31,000 in the second quarter to 382,400.
The international business has been stuck in the red in recent quarters. That remained the case in the second quarter, as the operating loss deepened to $724 million. Sales increased to $11.5 billion, from $9.84 billion a year ago. Amazon earlier this week announced its expansion into Singapore using a new strategy focused on loyal and frequent spenders.
Amazon offered operating income guidance for the third quarter between a $400 million loss and a profit of $300 million, well below analyst expectations. Amazon expects revenue of between $39.25 billion and $41.75 billion for the third quarter.
The online retailer's bottom line was boosted by its Amazon Web Services cloud computing division, which increased sales by 42% to $4.1 billion from a year earlier. The unit, which rents computing power to a variety of startups, government agencies and other corporations, has become a major factor in Amazon's recent streak of profitability.
Still, the division is facing tougher competition from both Microsoft Corp. and Alphabet Inc.'s Google, prompting some concerns about whether the growth can continue on pace, especially amid price wars.
Write to Laura Stevens at email@example.com
(END) Dow Jones Newswires
July 27, 2017 16:59 ET (20:59 GMT)