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Outpost.com Feels the Chill

Kent, CT-based online computer goods retailer Cyberian Outpost Inc. said that its results for the fourth quarter ending Feb. 28 will be below analysts' estimates, coming in at a loss of 31 to 34 cents per share. Analysts had expected a loss of 16 cents a share.

However, Outpost.com said that its fourth quarter revenue will be between $118 million and $120 million, a growth rate of approximately 55 percent over the $76 million in net revenue for the same period last year, but again, less than analysts' estimates.

The company, which has never had a profitable quarter since going public, said that its fiscal 2001 loss is estimated to be between $1 to $1.03 per share, approximately a 33 percent improvement over the previous year's loss of $1.52 per share. However, analysts had expected a loss of 81 cents for the year.

Outpost stock closed yesterday at $1.50 and was down 37 cents in early trading after the announcement today; at one time it went for as much as $33 a share.

"While December and January posed some significant challenges, many of our core metrics remained strong and we are pleased with our February-to-date results," said Kate Vick, Outpost president and CEO. "During the quarter, we expect to add approximately 280,000 new customers and our repeat revenue remained very strong. With February's significant average order value improvement and revenue from shipping, our net margin contribution per order improved substantially."

Vick said that "we remain comfortable that we can achieve quarterly profitability by FY 2002 year-end."

Outpost.com said that based on its current assessment of computer industry and overall economic conditions, it expects total fiscal year sales to reach approximately $500 million.

The company also said that a recent shipping policy change, instituted on Feb. 1, has resulted in "an immediate significant increase in average order value and simultaneously eliminated a large number of small unprofitable orders."

The company began charging for shipping on orders under $100, a spokesman told internetnews.com. Free shipping remains in effect for larger orders.

The policy change was instituted as part of Outpost.com's overall profitability plan and was in response to negative operating trends that developed in December and January. While consumer demand and customer acquisition trends remained strong, Outpost.com said its December and January average order value decreased to $200 primarily due to softening demand for computers. This decrease, coupled with fuel surcharges on shipping fees, increased fulfillment costs significantly.

As a direct effect of the shipping policy change, the average order value has increased to over $280 and gross margin has improved significantly, the company said.



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