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

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

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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