In an effort to conserve operating capital, Webvan Group Inc. has ended its online delivery service in Texas, putting 220 employees out of work.

The company is taking steps to focus on the profitability of its nine other markets, according to George T. Shaheen, chief executive office.

"Dallas is our least developed and most competitive market," he said. "Given these dynamics, gaining the necessary customer base to bring our Dallas operations to profitability within our strategic timeframe would require a large investment in marketing and working capital. We believe that these resources can be more effectively and efficiently utilized to bring our more established markets to profitability."

The Dallas service was initiated in May 2000 by HomeGrocer.com, which was acquired by Webvan.com in in September 2000. The service adopted the Webvan brand name earlier this year, but it has not been converted to Webvan's technology platform or business model.

The company continues to offer service in Atlanta, Chicago, Orange County, Calif.; Portland, Ore.; Sacramento, San Diego, the San Francisco Bay Area, Seattle and Los Angeles.

Webvan announced last month that it believes it has sufficient capital to fund operations through 2001. The company also said that it expects to achieve a companywide positive cash flow in the second half of 2002.

Shaheen noted that Webvan.com is committed to working with the Dallas employee base to help it through the transition. "This was a difficult decision because of the impact it has on members of our local Webvan family," he said. "On behalf of all Webvan employees and customers, I want to thank our Dallas-based Associates for their outstanding contributions."

The company stopped trading on Friday at 5/16 per share.

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