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Drugstore.com tops estimates, but reports loss

2 min read
Shares of online retailer Drugstore.com (Nasdaq: DSCM) gained Monday after the company reported a smaller-than-expected fourth quarter loss.

The company's stock rose 12 percent in premarket trading, before settling for a 5 percent gain to 2.75 when the markets opened. The company said earlier this month that it would beat estimates for the quarter.

Like many Internet retailers, drugstore.com shares have been rattled as investors bailed on speculative, unprofitable companies. On Friday, the company announced the departure of its CFO Bob Barton along with another round of job cuts. The layoffs, along with other cost-saving moves, are expected to reduce 2001 operating expenses by more than $20 million.

For the fourth quarter, the company reported a pro forma net loss, excluding amortization of intangible assets and amortization of stock-based compensation, of $28.6 million, or 45 cents a share. First Call's analyst consensus figure was for a loss of 55 cents a share for the period.

Pro forma net loss shrunk from the 84 cent a share loss in the year ago period.

Net sales for the fourth quarter were $36.2 million, up 95 percent from the $18.5 million pocketed in the fourth quarter of 1999.

Including charges, the company lost $43.1 million, or 68 cents a share, down from the comparable figure of $1.02 a year earlier.

Gross margins for the quarter were 14.5 percent, down from 16.3 percent in the fourth quarter of 1999.

As for the outlook for the first quarter, the company sees net sales of between $30 million to $31 million. First quarter loss, before interest, taxes and amortization, is projected come in between $25 million to $26 million. The company also said that gross margins will remain in line with the 14.5 percent seen in the fourth quarter.

The company said it has $130 million in cash and securities in its coffers, enough to reach cash-flow breakeven under this latest cost-cutting plan, which officials expect in 2004.

On a conference call, CEO Peter Neupert said that he remains confident in the position of the company, despite a slowing economy and a tough e-business climate.

Neupert also said that he expects the company to add 200,000 customers in the upcoming quarter, even though the company has reduced its marketing and sales budgets.

The company said it added 257,000 new customers in the fourth quarter, with repeat customers making up 62 percent of total orders.

For fiscal year 2000, drugstore.com's net sales totaled $110 million, up from $34 million seen in the previous year.

Pro forma net loss for the period was $143.1 million, or $2.64 a share, slightly better than the Street's estimate of a loss of $2.78 a share.