Peapod (Nasdaq: PPOD) announced fourth quarter results slightly better than expected and unveiled plans to speed up its conversion to a new business model.
After market close Wednesday, the online grocer reported a net loss of $9.1 million, or 50 cents per share. First Call's survey of six analysts predicted a loss of 51 cents per share for the quarter ended Dec. 31.
Fourth quarter revenue increased to $21.6 million, a 25.6 percent gain from the year earlier period, when Peapod lost $8 million, or 47 cents per share, on revenue of $17.2 million. Orders rose 46 percent in the fourth quarter. Gross margin grew to 25.4 percent compared to a 21.8 percent a year ago.
The shift to centralized facilities in Chicago and San Francisco boosted margins, Peapod said. The company, whose old model relied on local grocers, now plans to build central warehouses in all of its markets in the next year, starting with Dallas, said Bill Malloy, president and CEO.
"Our financial performance in the fourth quarter makes the case for this strategy," Malloy said.
Peapod's customer base rose 20 percent to 111,900, with an average of $117 in revenue per order.
For the full year 1999, Peapod lost $28.5 million, or $1.62 per share, on revenue of $73.1 million.
Shares of Peapod closed Wednesday's regular trading at 8 3/4, down 3/8 for the session. The stock has languished since tumbling last November following the company's report of disappointing third quarter results. The IPO of rival Webvan, which helped pioneer the local warehouse model now being adopted by Peapod, also drew some market attention away from Peapod.
Shareholders at the time also feared Peapod could face a cash crunch, but last week Peapod announced it raised $120 million through a sale of preferred stock to private investors. The preferred shares can be converted to common stock for $8 apiece. The deal would let preferred holders -- Apollo Management, The Yucaipa Cos., Pequot Capital Management, GRP II and Group Rallye -- elect up to five directors of Peapod, which would increase its board to 11 members from nine currently.
Among five analysts surveyed by Zack's Investment Research, two maintain the equivalent of "moderate buy" ratings on Peapod, two have "hold" advisories on the stock, and one recommends it as a "strong buy".>