Egghead Bags Retail, Bets on the Net
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Citing declining revenues and continuing losses in the retail channel, Egghead, Inc. announced today it will shift its business focus to Internet commerce, change its name to Egghead.com, Inc., and close its retail store network.
The company reported a net loss of $6.6 million or 29 cents per share for the third quarter, compared to net income of $1.5 million or 9 cents per share for the same period last year.
While sales from continuing operations for the third quarter of fiscal 1998 were $99.1 million, down 12.4 percent from the previous year's $113.2 million, Egghead said that Internet sales of $11.8 million marked an increase of $9.3 million from the previous year.
Egghead's adoption of a new Internet commerce business model will coincide with the closure its 80 store retail network and its Sacramento, CA-based distribution center.
Egghead said it will combine management and operations with Surplus Direct, noting that the two sites are posting revenues of approximately $1.0 million per week.
Orban added that he expects Egghead's agreement with GeoCities to be followed by investments in other marketing agreements to grow the company's online revenues during the coming fiscal year.