default-output-block.skip-main
BoF Logo

The Business of Fashion

Agenda-setting intelligence, analysis and advice for the global fashion community.

Amazon's Big Spending Dents Profit and Trims Forecast

Amazon said it would spend $800 million in the second quarter to move to one-day delivery for its best customers, trying to maintain its fast-shipping advantage over rivals like Walmart.
Amazon Prime package | Source: Shutterstock
By
  • Bloomberg

NEW YORK, United States — Amazon.com Inc. projected operating income that fell short of analysts' estimates, worrying investors that it's returning to a big spending cycle to fuel faster deliveries in the face of greater competition.

The company reported second-quarter profit was $5.22 per share, missing analysts’ average estimate of $5.56 a share. Revenue increased 20 percent to $63.4 billion, Amazon said Thursday in a statement. Analysts, on average, estimated $62.5 billion, according to data compiled by Bloomberg.

The Seattle-based e-commerce company also said operating income in the current quarter will be $2.1 billion to $3.1 billion, well shy of analyst estimates of $4.34 billion. The results show that Chief Executive Officer Jeff Bezos has ambitions of spending the winnings from a big Prime Day sales event and continued revenue growth.

Amazon said it would spend $800 million in the second quarter to move to one-day delivery for its best customers, trying to maintain its fast-shipping advantage over rivals like Walmart Inc. Operating expenses increased 21 percent to $60.3 billion in the period ended June 30, a faster pace than revenue. Shipping costs increased 36 percent to $8.13 billion.

The current quarter is when Amazon invests in its facilities for the busy holiday shopping period, so big spending on its one-day shipping initiative spooked investors, said RJ Hottovy, analyst at Morningstar Inc.

“The company’s been pretty upfront about investing in one-day shipping,” he said. “This is their heaviest investment period of the year, so it’s when we’re most likely to see a pull back.”

While e-commerce remains Amazon’s biggest source of sales, other businesses such as cloud-computing, logistics for online merchants and advertising are growing faster and now generate almost half of the company’s quarterly revenue. The internet business is facing greater competition from rivals such as Walmart and under greater scrutiny from government antitrust regulators and lawmakers who argue Amazon acts like a monopoly to dominate the field.

Amazon shares declined about 2 percent in extended trading after closing at $1,973.82 in New York. The stock has gained 31 percent this year, pushing the company’s market value near the $1 trillion mark it surpassed briefly last September.

By Spencer Soper with assistance from Jeran Wittenstein; Editors: Jillian Ward, Andrew Pollack.

© 2024 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions

More from Financial Markets
A financial lens on the fast-changing fashion sector, including markets, investors and deals.

In 2020, like many companies, the $50 billion yoga apparel brand created a new department to improve internal diversity and inclusion, and to create a more equitable playing field for minorities. In interviews with BoF, 14 current and former employees said things only got worse.


For fashion’s private market investors, deal-making may provide less-than-ideal returns and raise questions about the long-term value creation opportunities across parts of the fashion industry, reports The State of Fashion 2024.



L Catterton, the private-equity firm with close ties to LVMH and Bernard Arnault that’s preparing to take Birkenstock public, has become an investment giant in the consumer-goods space, with stakes in companies selling everything from fashion to pet food to tacos.


view more

Subscribe to the BoF Daily Digest

The essential daily round-up of fashion news, analysis, and breaking news alerts.

The Business of Fashion

Agenda-setting intelligence, analysis and advice for the global fashion community.
CONNECT WITH US ON
BoF Professional Summit - New Frontiers: AI, Digital Culture and Virtual Worlds - March 22, 2024
© 2024 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions, Privacy Policy, Cookie Policy and Accessibility Statement.
BoF Professional Summit - New Frontiers: AI, Digital Culture and Virtual Worlds - March 22, 2024