• by Gavin O'Malley  @mp_gavin, July 23, 2009

Despite a strong gain in sales, Amazon saw net income decrease 10% to $142 million in the second quarter, or $0.32 per diluted share, compared with net income of $158 million, or $0.37 per diluted share, in second quarter 2008.

Net sales increased 14% to $4.65 billion in the second quarter, compared with $4.06 billion in second quarter 2008, the ecommerce giant reported on Thursday.

Operating cash flow was $1.88 billion for the trailing twelve months, compared with $1.09 billion for the trailing twelve months ended June 30, 2008.

Free cash flow increased 89% to $1.54 billion for the trailing twelve months, compared with $0.82 billion for the trailing twelve months ended June 30, 2008.

Operating income decreased 27% to $159 million in the second quarter, compared with $217 million in second quarter 2008.

“We’re pleased that customers saved more than $900 million with our free shipping offers, including Amazon Prime, over the last year,” said Jeff Bezos, founder and CEO of Amazon. “We’re staying heads down focused on providing customers low prices, vast selection, and fast delivery.”

For the third quarter 2009 Guidance, Amazon expects net sales to be between $4.75 billion and $5.25 billion, or to grow between 11% and 23% compared with third quarter 2008.  Operating income, meanwhile, is expected to be between $120 million and $210 million, or between 22% decline and 36% growth compared with third quarter 2008.

On Wednesday, Amazon announced plans to buy online footwear retailer Zappos.com for roughly $847 million in cash and stock.

The deal will give Amazon more direct access to apparel ecommerce, the largest shopping category online. Online apparel, footwear and accessories generate about $23 billion in annual sales, according to Forrester.
The popular online retailer ranked third last week among online retailers within the Apparel and Accessories category behind Victoria’s Secret and Old Navy, according to Hitwise.