November 7, 2008, 12:00 AM

Drugstore.com delivers mixed Q3 results

In Q3 Drugstore.com Inc. increased sales by 8.4% but its net loss widened by 50%. For the first nine months, sales are up by 10% while the e-retailer’s net loss has improved by 5.5% to $8.6 million from $9.1 million a year ago.

Katie Evans

Managing Editor, International Research

Drugstore.com Inc. increased sales but also widened its net loss in third quarter.

For the third quarter ended Sept. 28, Drugstore.com grew sales by 8.4% to $87.8 million from $81 million in the prior year while the online retailer’s net loss widened by 50% from $2.4 million in the third quarter of 2007 to $3.6 million. The third quarter loss includes $1.7 million in accelerated non-cash marketing expense, $800,000 related to consulting services, and $1.8 million in non-cash stock-based compensation expense, the retailer says.

"We posted a solid third quarter, with strong beauty growth, record gross margins, and adjusted EBITDA improvement of 76% over the prior year period,” says CEO Dawn Lepore. Total orders for Drugstore.com in the third quarter grew by 7% to approximately 1.3 million, while the number of new customers served increased by 6% to about 325,000. “Overall beauty revenues increased over 20% from the prior year period, aided by 32% growth in our Beauty.com business,” says Lepore.

In the third quarter, Drugstore.com spent 12.4% of total revenue - $10.9 million – on fulfillment and order processing and $7.9 million, or 9% of all revenue, on marketing and sales and $6 million – 6.8% of revenue – on general and administrative expenses.

For the first three quarters of the year, Drugstore.com, No. 41 in the Internet Retailer Top 500 Guide, recorded a net loss of $8.6 million on sales of $272.6 million vs. a net loss of $9.1 million on revenue of $248 million in the prior year.

For the fourth quarter, Drugstore.com is expecting net sales in the range of $94 million to $99 million and net income in the range of $400,000 to $1.9 million.

 

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