Shipping Costs Weigh On Amazon Earnings

Wall Street Journal graphic

Amazon.com Inc.’s record quarterly profit streak has ended, as the online retailer faced higher shipping costs, slowing growth from its cloud-computing business and a steeper loss in its overseas retail business.

The Wall Street Journal reports the company’s second-quarter profit rose 3.6% from a year ago to $2.63 billion after more than doubling last quarter. It missed analysts’ consensus estimate. Amazon had posted its best-ever profit the previous four quarters.

Amazon’s profitability was hit in particular by surging shipping costs. The company spent heavily on making one-day shipping the standard for its Prime members.

“It does create a shock to the system,” said Chief Financial Officer Brian Olsavsky in a call with analysts. “We expect we’ll be working through that for a number of quarters, but when the dust settles, we will regain our cost efficiency over time.”

On a positive note, Amazon’s sales growth reignited in the quarter after shrinking over the past four periods. Revenue rose 20% to $63.4 billion—better than analyst estimates—compared with a 17% increase three months earlier.