NEW YORK—Amazon’s push for faster delivery is hurting its profits.
The online retailer said its third-quarter net income fell 26 percent from a year ago, missing Wall Street expectations. Its sales outlook for the holiday shopping season also disappointed analysts, and its stock sank 7 percent in after-hours trading.
Amazon is moving to cut its delivery time in half to one day instead of two. To do that, it’s adding more workers in its warehouses and expanding its shipping network with more trucks, jets and package sorting facilities.
The effort is costing the company about $1.5 billion, nearly double what it previously said it would cost. But Amazon said the one-day shipping is attracting more customers and gets shoppers to spend more.
“It’s a big investment,” said Amazon CEO Jeff Bezos, in a statement.
The Seattle-based company reported net income of $2.1 billion in the three months ending Sept. 30, down from $2.9 billion a year ago.
Earnings per share came to $4.23. That’s 36 cents less than what analysts expected, according to FactSet.
The company, which used to report razor-thin profits, has seen its quarterly profits grow in the past two years as it expanded into fast-growing businesses, such as cloud computing and advertising.
Sales at its cloud computing business, which powers video-streaming service Netflix and other companies, rose 35 percent from a year ago. And revenue in its “other” category, which the company said is mostly made up of its advertising business, jumped 44 percent.
But as Amazon faces increasing scrutiny from regulators. The Justice Department opened an antitrust investigation of major tech companies and whether their platforms have hurt competition and stifled innovation. The department didn’t name any companies, but it said online retailers were an area of “widespread concern.”