Amazon Sales Beat Wall Street Expectations

But profit fell due to increased operating expenses

It’s been a good three months for Amazon, thanks to the Kindle and an emphasis on digital content. Tuesday, the online retailer reported second-quarter sales that beat analysts’ expectations, with shares jumping in late trading.

Amazon reported that sales climbed to $9.91 billion—a 51 percent increase over the same period last year, when sales were at $6.57 billion—beating Wall Street’s projection of $9.38 billion. CEO Jeff Bezos said in a statement that competitive pricing and a growing selection of merchandise had led to “the fastest growth we've seen in over a decade.”

Despite strong sales, Amazon’s profit dropped 8 percent to $191 million, or 41 cents a share, compared with $207 million, or 45 cents, a year earlier. Still, the profit managed to top analysts’ estimate of 34 cents a share.

Amazon blamed the decline in profit on a 54 percent rise in operating expenses to $9.71 billion, much of it due to the construction of new distribution centers, increased advertising for the Kindle, and investments in online entertainment.

Wall Street took Amazon’s booming sales as good news, regardless of the profit decline, and drove the company’s stock up $11.40—or 5.3 percent—to $225.58 by Wednesday morning. Earlier, shares had touched $11.65 for the biggest gain since April 27.