Value America tops 4Q estimates

Value America (Nasdaq: VUSA) lost less than analysts expected in the fourth quarter.

After market close Wednesday, the online retailer reported a fourth quarter loss of $40.8 million, or 91 cents per share, excluding one-time events. First Call's survey of four analysts predicted a loss of $1.02 per share for the quarter ended Dec. 31.

Including restructuring costs and other non-recurring charges, Value America lost $45.9 million, or $1.02 per share.

Fourth quarter revenue increased 216 percent year-over-year to $61.2 million. Gross margin rose to 10.4 percent from 9.2 percent in the third quarter, as the company eliminated unprofitable product lines.

In the fourth quarter, Value America installed a new order management system. That installment, and shipping delays from suppliers, hindered revenue growth by up to 20 percent, the company said.

Company executives targeted 60 to 70 percent revenue growth and higher gross margins in 2000, and profitability in 2001. "We will accomplish this by optimizing online marketing and our inventory-less operation," said Glenda Dorchak, president and CEO. "At the same time, systems and customer service improvements were just recently completed and, since first quarter electronics sales are historically lower, we expect to see measurable improvement to revenues beginning in the second quarter."

More than half of Value America's orders so far this year came from repeat customers, the company said. Expenses fell, including advertising costs, which now equal 14 percent of revenue, compared to 28 percent in the fourth quarter.

Those factors show that the troubled retailer is on its way to improvement, Dorchak said.

"The fourth quarter of 1999 was a watershed period for Value America," she said. "Although our reorientation plan has only been underway for two months, early indications are that the plan is working."

For the full year 1999, Value America lost $170.6 million, or $4.39 per share, on revenue of $182.6 million.>