July 26, 2005, 12:00 AM

Amazon reports second quarter sales growth of 26%, though profit slips

For the second quarter of 2005 sales totaled $1.75 billion at Amazon.com, up 26% from second quarter sales of $1.39 billion in 2004.

Kurt Peters

Executive Editor

From a sales standpoint, the second quarter was another good one for Amazon.com, the largest web retailer, as ranked by Internet Retailer’s Top 400 Guide to Retail Web Sites. For the second quarter of 2005 net sales totaled $1.75 billion, up 26% from second quarter sales of $1.39 billion in 2004.

Net income for the second quarter of 2005 was $52 million, compared with net income of $76 million for the same quarter the year before. Net income was down because due to a sharp rise in income tax expense, the company says.

The higher expenses and lower net income were due in part to Amazon’s Amazon Prime program, which includes unlimited express two-day shipping to members. "Though expensive for the company, Amazon Prime creates a premium experience for customers who join, and as a result we hope they`ll purchase more from us in the long term," says CEO Jeff Bezos.

For the second quarter, the company’s U.S. and Canadian sites generated sales of $960 million, up 21% from second quarter 2004. Segment operating income increased 9% to $72 million in second quarter 2005 from $66 million in second quarter 2004.

International sales, which include Amazon`s e-commerce sites in the United Kingdom, Germany, France, Japan and China, were $793 million, up 33% from second quarter 2004, the company says.

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