Drugstore.com announces fourth-quarter loss, layoffs
In the wake of laying off 20% of its employees, online retailer Drugstore.com Inc. today reported a net loss of $43.1 million.
The Bellevue, Wash.-based company showed $36.2 million in net sales for the fourth quarter, which ended Dec. 31. While the number represents almost a doubling of sales over the same quarter last year, CEO and Chairman Peter Neupert said he expects to reduce projected 2001 spending by 20%, or $20 million.
"We believe Drugstore.com will be one of the dot-coms that will survive and thrive," Neupert said. "Our unrelenting focus on meeting the wants and needs of our customers and our willingness to make the swift, smart business decisions to build a long-term profitable business demonstrate our staying power."
The company, which takes orders online for next-day delivery, also announced Friday that vice president of finance and chief financial officer David Rostov is resigning to pursue other opportunities. He will be succeeded by Bob Barton, the company's vice president and general manager of pharmacy operations.
Neupert, who announced Friday that Drugstore.com would lay off 125 of its 600 employees, said the company would also reduce its overall operating expenses by 20% so "we can achieve our previously stated 2001 revenue goals with a smaller team and less spending on marketing. These steps put us on a plan to reach operating cash-flow break-even with the funds we have on hand."
The company ended the year with $110 million in sales, a 215% increase over 1999, adding 257,000 new customers in the fourth quarter. Pharmaceuticals represented 44% of net sales in the fourth quarter at the company, which also sells beauty and health products. In reporting the loss for the fourth quarter, the company said that excluding amortization of intangible assets and stock-based compensation, the pro forma net loss was $28.6 million.
Neupert said the increase in revenue and gross margin during the fourth quarter "confirm the company's ability to earn customer confidence and loyalty."
In October, Drugstore.com laid off 10% of its employees in the wake of a net loss of $33.3 million for the third quarter.