Amazon profits tumble 45% as spending outpaces sales growth

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Online retailer Amazon has reported a 45 per cent plunge in fourth-quarter profits after higher sales were offset by increased investment in its digital content and distribution network.

The firm said it earned $97 million (£61.6m) in the three months to December, down from $177m for the same period last year, although revenues jumped 22 per cent to $21.3bn.

International sales, including the UK, rose 20 per cent to $9.1bn. Along with fellow internet giant Google and coffee chain Starbucks, Amazon has faced criticism over its tax affairs in the UK.

The company has been investing to enhance its distribution network and develop its Kindle electronic business as part of a long-term growth plan.

Founder and chief executive Jeff Bezos said: “We’re now seeing the transition we’ve been expecting. After five years, electronic books is a multi-billion dollar category for us and growing fast – up approximately 70 per cent last year.”

For the current quarter, Amazon expects to generate revenues of $15bn to $16.6bn, which falls short of analysts’ expectations of $16.86bn.