October 28, 2005, 12:00 AM

Q3 sales at Drugstore.com rise 14.5% year over year, as net loss narrows

Drugstore.com increased its third quarter web sales by 14.5% to $96.6 million from $84.3 million in the third quarter of 2004. For the third quarter, Drugstore.com posted a net loss of $7.1 million compared to $32.8 million for the same quarter in 2004.

Kurt Peters

Executive Editor

Drugstore.com Inc. increased its third quarter web sales by 14.5% to $96.6 million from $84.3 million in the third quarter of 2004. At the same time Drugstore.com is also reporting a narrower net loss. For the third quarter, Drugstore.com posted a net loss of $7.1 million compared to $32.8 million for the same quarter in 2004.

"With the exception of our small wholesale OTC business, all of our business units showed solid year-over-year growth," says chairman and CEO Dawn Lepore. "Most importantly, we continue to post double-digit growth in our core OTC and mail-order pharmacy businesses.”

For January through September, Drugstore.com had total sales of $293 million vs. $256.4 million for the first nine months of 2004. For the first nine months of 2005, Drugstore.com posted a net loss of $16.4 million compared with $42.4 million for January-June 2004.

For the fourth quarter of 2005, Drugstore.com, No. 28 in the Internet Retailer Top 400 Guide to Retail Web Sites, is targeting a net sales range of $105 million to $110 million and a net loss range of $6.4 million to $7.4 million.

The company also announced it was terminating its wholesale OTC fulfillment agreement with Amazon.com Inc., effective Nov. 9. In the third quarter, wholesale OTC sales generated under the agreement with Amazon.com were $1.5 million, with very low margins, says Drugstore.com. "Given the decline in wholesale OTC revenues, low margins associated with this business and considerable management distraction, I made the strategic decision to contact Amazon.com and end our partnership,” Lepore says.

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