July 23, 2003, 12:00 AM

Amazon says free shipping, low prices grew Q2 sales 37% over Q2 ‘02

Second quarter sales at Amazon reached $1.1 billion, 37% above last year’s Q2 sales. Amazon also reported a 42% increase in units sold.

Kurt Peters

Executive Editor

Second quarter sales at Amazon.com Inc. reached $1.1 billion, 37% above last year’s Q2 sales of $806 million, the company reported. Amazon also reported a 42% increase in units sold. The company recorded a net loss of $43 million compared to a net loss of $95 million in Q2 2002.

The quarter included the shipping of 1.4 million copies of the popular new Harry Potter book.

Amazon CEO Jeff Bezos reported that the company took money it had been spending on TV and print advertising and applied it to lower prices. The company attributes its sales increases to those lower prices as well as its policy of free shipping on orders in excess of $25.

"Amazon.com customers continue to respond in record numbers to our everyday low prices and free shipping," said Tom Szkutak, chief financial officer of Amazon.com. "Our strategy of offering low prices and free shipping, combined with the inherent advantages of online shopping, is allowing us to raise our guidance."

Amazon expects third quarter net sales to be $1.075 billion to $1.15 billion, up 26% to 35%, compared with third quarter 2002, and full year sales to reach $4.9 billion to $5.1 billion, up 25% to 30%, compared with 2002.

Amazon also reports that:
Third-party seller transactions grew to 20% of worldwide units in the second quarter, compared with 14% of units a year ago.
U.S. and Canadian site sales grew 20% to $703 million in the second quarter and segment operating income grew 53% to $55 million, or 8% of net sales.
International segment sales, representing U.K., German, French and Japanese sites, grew 81% to $397 million in the second quarter and benefited by $54 million from changes in foreign exchange rates compared with the second quarter 2002. International segment operating income was $13 million, a $22 million improvement.
Inventory turns for the trailing four quarters improved to 20 for the second quarter, up from 19.



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