April 30, 2009, 12:00 AM

Drugstore.com avoids recession’s ills, reports record Q1 revenue

The online retailer’s first quarter revenue of $98.3 million represents 6.2% growth over $92.6 million in the same period a year ago. The company attracted 400,000 new customers, 15% more than during the first three months of 2008.

Paul Demery

Managing Editor, B2B E-commerce

The sickly economy did not keep Drugstore.com Inc. from reporting a healthy 6.2% growth in revenue in the first quarter to $98.3 million from $92.6 million in the same period a year ago.

Sales of over-the-counter products, the biggest part of the company’s business, increased 11% to $72.1 million, including 14% growth in sales at its Beauty.com cosmetics e-commerce site. Vision sales increased 13% to $17.4 million, while mail-order pharmacy sales decreased 28% to $8.8 million. The company attracted 400,000 new customers, 15% more than during the first three months of 2008.

"I am very pleased with our strong first quarter results-posting record quarterly revenues, net income and adjusted EBITDA, and delivering another profitable quarter," says Dawn Lepore, CEO and chairman of the board. "Against the backdrop of a challenging consumer environment, we achieved OTC sales growth of over 11% year-over-year, drove beauty sales growth of 14% and increased vision sales by 13%. All of these results are significantly ahead of e-commerce and industry trends and we believe we are gaining market share over both traditional brick-and-mortar stores and e-commerce companies. Our success in the current market conditions makes us an even more attractive partner and distribution channel for leading health and beauty companies."

The company reported net income of $1.3 million, including a $1.2 million benefit from a $1.7 million settlement of a sales tax dispute with the State of New Jersey that was less than the $2.9 million the company had set aside. Drugstore.com, No. 41 in the Internet Retailer Top 500 Guide, absorbed a net loss of $2.7 million in the first quarter of last year.

The company also reported that its average order was $67, total orders grew 10.6% to 1.5 million and that fulfillment expenses as a percentage of sales decreased 70 basis points to 11.2%. Capital expenditures decreased 67% to $1.7 million. 77% of net sales came from repeat customers.

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