Amazon losses shrink

Online retailer Amazon.com has continued its slow progress towards profitability.

The big news for us is that we are still growing very fast and we expect to break even or better in the fourth quarter

Robin Terrell, managing director amazon.co.uk

But the improvement appears to have largely come through cost savings rather than any significant increase in sales.

For the three months to September, Amazon's losses were $58m, compared to $89 million in the same period last year.

But sales for the period were just $1m higher at $639m, broadly in line with Wall Street expectations.

"Well-positioned"

The company blamed a stock sale to ToysRus in the third quarter of last year.

The aftermath of the 11 September terror attacks had also hit business, it said.

And it warned that fourth-quarter net sales would be flat or rise at most by 10%, compared to last year.

In a statement, Jeff Bezos, founder and CEO of Amazon.com, said: "We continue to expect pro forma operating profitability for the fourth quarter, and while there are no guarantees, we are well positioned to achieve this important milestone.

"We've lowered our operating costs 20% and can now afford to drive growth by lowering prices for customers.

"If you're buying books over $20 from anywhere but Amazon.com, you're probably wasting money."

European outlook

Robin Terrell, managing director of amazon.co.uk, told BBC News Online that events in the US cost the company as a whole $25m to $35m in lost revenue.

But he still expected Amazon's UK and German operations to make an operating profit in the fourth quarter of 2001.

Mr Terrell emphasised the importance of forging alliances with other retailers to Amazon's future growth prospects.

Waterstone's recent decision to hand over the running of its online book store to Amazon would be particularly important in the coming months, he said.

He said he expected to announce further such deals in the near future.

"The big news for us is that we are still growing very fast and we expect to break even or better in the fourth quarter," he added.