As profits sink, Amazon plans big fulfillment center push but no ‘same-day delivery’

Amazon.com’s profits took a big hit during the second quarter, with net income tumbling 96 percent to just $7 million or one cent per share.  But don’t look for the Seattle company, which recently expanded into a new headquarters in Seattle’s South Lake Union neighborhood and plans to push ahead with an even more ambitious real estate plan in the Denny Triangle neighborhood, to curb costs anytime soon.

Amazon’s capital expenditures during the quarter increased to $657 million as the company invested in technology infrastructure, largely around Amazon Web Services, and warehouses.

In a conference call with analysts Thursday, Amazon.com Chief Financial Officer Tom Szkutak said they will continue expanding the company’s “wide multi-node fulfillment network” in order to get closer to customers.

Amazon.com has announced 18 new fulfillment centers so far this year, with six already operating.

“We are looking at potentially opening even more than that,” he said. Later in the call, Szutak addressed questions about same-day shipping and how that might relate to the costs associated with the new fulfillment centers.

“In terms of delivery speed to customers, we are certainly trying to get geographically … and always trying to get closer to customers. That’s something that is not new. It is something we’ve been doing for some time. But, in terms of same-day, we don’t really see a way to do same-day delivery on a broad-scale economically. But, again, we will continue to work on behalf of customers to figure out a way to serve them by getting them product faster.”

Those comments seemed to counter a report from the Financial Times and others earlier this month in which speculation was raised that Amazon’s new fulfillment push, and reversal on sales tax collection issue, was part of a larger strategy to start offering same-day delivery.

Szkutak stressed again that Amazon.com, which already collects sales tax in several states and countries for about 50 percent of its customer base, supports federal legislation for a sales tax.

“We price our products irrespective of what sales tax is. That’s a customer obligation,” said Szkutak.

On a separate topic, Szkutak said that shopping on smartphones and tablets represent a “big tailwind” for the business.

“It is a tailwind that we expect will continue,” he said. The company, which now employees 69,100 people, did not disclose sales for its own line of Kindle e-readers and tablets.