Company says it will need to raise funds to continue operations into fourth quarter.
Internet grocer Webvan incurred a net loss of $453.3 million in 2000 on net sales of $178.5 million for the year, according to the company’s annual report released this week. Webvan, which launched online in June 1999, has accumulated a total deficit of $612.7 million since its inception. The company noted that it has sufficient funding to operate into the fourth quarter of this year, but will need to raise $5 million to $15 million to continue operations beyond that. While sales across its nine market areas increased substantially in 2000 over 1999 sales of $13.3 million, and average order size grew to $104 from $78 the previous year, Webvan’s facilities are operating well below the capacity for which they were designed, the report said. Its distribution centers, for example, designed to process up to 8,000 orders a day, are operating at about 40% of capacity.
In the report, Webvan said its future success would depend on its ability to grow its customer base, increase repeat orders substantially among regular customers, improve operating efficiencies and ensure continuity and stability in the operation of its technology and systems. To achieve that, the company said that while it would seek to reduce operating expenses in a facility by facility basis, it would continue to invest and as a result, expected to incur further substantial operating losses.
For that reason, “Webvan cannot assure [investors] that it will achieve or sustain revenue growth or profitability.” Webvan’s shares, which had traded at a year’s high of $9.36 in July, yesterday closed at 12.5 cents per share.