Amazon.com is known for its spending habits. Now it seems those spending habits have caught up with them. This past Tuesday the online retailer posted a 73% drop in third quarter profits and a larger than expected decline in operating margins.
But this was in the face of the 44% increase in sales during the same period of time. The forth quarter outlook was set at conservative. Investors were rattled with the news as shares fell 12% or $28.17 in after hours trading.
Tom Szkutak, Amazon’s finance chief, indicated that the spending was a result of having to keep pace with the stronger than expected sales. “We’re investing in a lot of capacity” which included chipping centers and capacity for cloud storage centers.
At the end of 2010 the company had 52 fulfillment centers, they reported to be on pace to open more than 17 new facilities this year. Which is more than it had projected before the start of the year.
As the retail giant continues to serve both physical products and not digital products, it will be interesting to see how the forth quarter numbers fall into place.