Amazon.com profit falls with Toys R Us settlement but sales jump 15%
SAN FRANCISCO -- Amazon.com said Thursday that its second-quarter earnings fell while sales rose, due to a $51 million payment to settle a long-standing dispute with former partner Toys R Us. The profit still beat Wall Street estimates, though.
Shares of Seattle-based Amazon AMZN fell more than 6% in extended trading after the results were released.
Amazon.com earned $142 million, or 32 cents a share, in the April-June quarter, 10% lower than the profit of $158 million, or 37 cents a share, a year ago. Analysts polled by Thomson Reuters expected a penny less per share.
Sales climbed nearly 15% to $4.65 billion, slightly below analyst estimates of $4.69 billion. Amazon's sales were helped last year by a $53 million non-cash gain from the sale of European DVD rental assets.
Sales of items such as books, CDs and DVDs inched up 1% to $2.44 billion in the second quarter, while electronics and other general merchandise sales soared 35% to $2.07 billion.
The company's North American sales rose 13%, while international sales increased 16%.
During a conference call with reporters, Chief Financial Officer Tom Szkutak said the company saw declines in some North American 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's popular "Wii Fit." This was balanced out by increased book sales, he said.
Szkutak said that third-party sellers, who offer their goods to consumers through Amazon, made up 30% of total unit sales — an increase from the previous year.
Amazon forecast third-quarter sales of $4.75 billion to $5.25 billion, in line with analyst estimates for $4.92 billion.
Amazon said in June it agreed to pay $51 million to Toys R Us to end a dispute that began in 2004. The company is making the payment in the current quarter but charged it to operating expenses in the just-reported second quarter.
The lawsuit was over a partnership that gave Toys R Us exclusive rights to supply some toy products on Amazon's site. Wayne, N.J.-based 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.
The companies originally joined up in 2000 after the toy seller's website, Toysrus.com, suffered a brutal 1999 holiday season in which some customers' toys were not delivered until after Christmas. That partnership was supposed to last through 2010.
The company — which said Wednesday that it will buy privately held online shoe store Zappos.com in a deal worth about $850 million — finished regular trading at $93.87, after hitting a new 52-week high of $94.40.