Drugstore.com Takes Expense Reduction Measures
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After Friday's announcement that the company would layoff 125 employees in a cost-reduction effort, drugstore.com today reported a pro forma net loss for the fourth quarter of $28.6 million, or $.45 per share.
After, a tough year on the market, where according to a recent Seattle Times study, drugstore.com came close to triggering a delisting on the NASDAQ, the company reported net sales for the fourth quarter were $36.2 million. This number represents a 95% increase over Q4 1999, and in fact accounts for more than all of 1999's net sales.
Drugstore.com reported a Q4 gross profit of $5.2 million, or 14.5 percent of net sales as compared to a loss of $3 million or negative 16.3 percent of net sales in the fourth quarter of 1999.
Net sales for fiscal year 2000 were $110 million, representing a more than 215 percent increase over fiscal year 1999. Pharmaceutical product sales were 44 percent of net sales in the fourth quarter. For fiscal year 2000, drugstore.com reported a gross profit of $9.3 million, or 8.4 percent of net sales, as compared to a loss of $8.5 million or negative 24.3 percent of net sales in fiscal year 1999. The company reported a pro forma net loss for 2000 of $143.1 million, or $2.64 per share.
"Despite all the doom and gloom, our increases in revenues and gross margins during the fourth quarter confirm the company's ability to earn customer confidence and loyalty," says drugstore.com president and CEO Peter Neupert.
Drugstore.com ended fourth quarter 2000 with approximately $130 million in cash, cash equivalents, and marketable securities. Total cash used for fourth quarter 2000 was $17.2 million, a significant improvement over prior periods.
In a statement from Chairman and CEO Peter Neupert, drugstore.com today announced steps to reduce projected 2001 operating expenses by more than $20 million through marketing cost reductions and a workforce reduction of 125.
The company believes that these changes along with the company's approximately $130 million in cash, will enable drugstore.com to break even in 2004.
"I believe we can achieve our previously stated 2001 revenue goals with a smaller team and less spending on marketing," says Neupert. "These steps put us on a plan to reach operating cash flow break even with the funds we have on hand."
The CEO reaffirmed his belief that the company "will be one of the dot coms that will survive and thrive."
"From our perspective, the cost-cutting steps announced today are practical and appropriate actions in response to today's market challenges," says Neupert.