November 3, 2004, 12:00 AM

Drugstore.com’s revenue increases 41% in Q3, net loss up 6.7%

Q3 sales at Drugstore.com Inc. increased 41% to $84.3 million from Q3 2003, the company reports. Net loss for the third quarter was $6.4 million vs. $6 million a year earlier. Order volume during the quarter grew 40% year-over-year to 1.1 million orders.

Kurt Peters

Executive Editor

Third-quarter sales at Drugstore.com Inc. increased 41% to $84.3 million from Q3 2003, the company reports. Net loss for the third quarter was $6.4 million vs. $6 million a year earlier. Order volume during the quarter grew 40% year-over-year to 1.1 million orders.

Average order grew slightly to $77 from $76. The number of active customers who bought in the past year grew 34% to 1.8 million. The average amount each customer spends in a year grew 3% to $176. Sales from repeat customers grew by 36%, with revenue from repeat customers representing 76% of total net sales, the company says.

Marketing and sales expense per new customer was $33, an increase of $1, which the company attributes to marketing for its vision segment. Fulfillment and order processing expenses were 11.4% of net sales, down from 11.8% in the third quarter of 2003.

"We made encouraging progress in a number of key areas despite a critical management transition and a seasonally challenging period," said Dawn Lepore, who took over as CEO and chairman of the board at the end of Septemer. "Revenues in our over-the-counter segment grew by 37%, as we added a broader assortment of nutritional and beauty products. We also added a number of new store tabs to the Drugstore.com web site, to make it easier for consumers to find the more than 20,000 everyday and hard-to-find specialty items we offer.”

The company says the third-quarter net loss reflects the cost of recruiting fees associated with the search for a new CEO, a charge for a litigation settlement with Arlington Contact Lens Service Inc., and an adjustment to packaging inventory recorded in connection with its annual inventory count in the third quarter.

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