reported a loss yesterday for its second fiscal quarter of £60 million, substantially greater than last year but better than analysts had expected.

Net sales for the quarter, which ended 30 June, increased 84 percent to £385 million, helped along by the speedy growth of's online stores in the U.K. and Germany, the company said in a statement. has sacrificed profitability in favour of an aggressive strategy to expand its operations outside of the U.S. and broaden its product offerings.

The company expects that financial model to continue through the fourth fiscal quarter, although its losses will narrow to single digits as a percentage of total sales, Warren Jenson,'s chief financial officer, said in the statement.

Sales outside of the U.S., including exports from the U.S., accounted for 23 percent of the second-quarter sales.

The company's online stores in the UK and Germany combined accounted for £49 million, up 134 percent from the same period a year ago, Amazon said.

The company celebrated its five-year anniversary this month, and has served more than 23 million customers since it went into business.

It continued to diversify its offerings during the quarter by opening the Amazon Kitchen in the U.S., an extension to its online store that sells culinary equipment.

Not everything at Amazon is rosy, however. Earlier this week the company said that Joseph Galli Jr., its president and chief operating officer, is leaving the company after just 13 months in the job to become chief executive officer of VerticalNet, a Web site serving business-to-business markets.