Webvan: annual sales grow 642%; a new plan reduce the for capital to fund 2001 operations

Net sales for fiscal year 2000 of Webvan Group Inc. totaled $259.7 million, an increase of 642% over the pro forma $35.0 million for fiscal year 1999. These results include the full impact of HomeGrocer.com sales over these periods. Fiscal year 2000 pro-forma net loss was $413.2 million, or a loss of $0.91 per share. Pro-forma net loss and net loss per share excludes the amortization of goodwill resulting from the company's September 2000 acquisition of HomeGrocer.com, and non-cash compensation and restructuring charges, and includes the operating results and share counts of HomeGrocer.com for the entire fiscal year. The company's cash and marketable securities were $211.8 million at the end of 2000. Webvan also reported combined company-wide inventory turns of 18.1 times on an annualized basis.

In the fourth quarter, Weban's sales totaled $84.2 million, an increase of 325% over pro forma net sales of $19.8 million for the fourth quarter of 1999. Webvan reported that its fourth-quarter pro-forma net loss was $109.1 million, or a loss of $0.23 per share.

The company stated that its active customer accounts in the 12 months ending December 31, 2000, exceeded 640,000, an increase of more than 22% from the 524,000 at the close of the third quarter of 2000. Repeat orders represented 86% of total orders during the fourth quarter. The average order size for the recently completed quarter was approximately $112, an increase of 9% over the $103 reported for the prior quarter.

Gross profit for fourth quarter 2000 was $22.9 million, a gross margin of 27.2%, up from third quarter 2000, in which pro forma gross profit was $21.2 million, or a gross margin of 25.8%.

Webvan today also stated that it does not anticipate the need for additional capital to fund operations during the year. At the close of the third quarter 2000, the company stated that it would need to raise $80 million to $100 million in the third quarter of 2001. The company's new business strategy focuses on its stand-alone profitability targets for Webvan's 10 markets, completing the integration of HomeGrocer.com, and a cash conservation program to reduce annualized corporate and operating expenses. The company also stated that it has indefinitely postponed the commercial launch of webvan.com in Northern New Jersey, Baltimore, and Washington, D.C.

"Webvan is taking the necessary actions to deliver on its value proposition to customers and conserve capital in the current economic environment," said George T. Shaheen, chairman and chief executive officer of Webvan Group, Inc. "We are aligning our business strategy with the priorities we established for 2001 and are positioning Webvan for future growth. We believe these actions will strengthen our business, conserve cash, and significantly reduce our need to raise additional capital. Under this plan, the company would need to raise an additional $40 million to $60 million in capital by the end of 2001, or early 2002, to fund its 2002 operations up to the point when the company generates a positive cash flow."

Mr. Shaheen added: "In 2000, Webvan made the transition from a start-up enterprise operating in one market to a national presence with operations in 10 major U.S. markets. These results reflect the progress we have made toward making Webvan a premier player in the e-commerce channel." In the fourth quarter, Webvan introduced a fully redesigned web store to make shopping faster, easier, and more intuitive, including a new softer color scheme that is more appealing, a simplified home page design, fast category navigation (eliminating the need to refresh with each click), and new category tabs that highlight the breadth of our product offering and easily direct customers to the company's 11 stores.

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