Webvan exits Dallas market to focus on nine other markets
Webvan Group Inc. announced today that it will halt service in Dallas in order to conserve operating capital and focus on the profitability of its nine other markets. "We are taking this action in light of Webvan`s 2001 strategic priorities - bringing our regional operations to profitability and conserving capital," said George T. Shaheen, chief executive officer of Webvan Group, Inc. "While we regret the impact this decision has on our employees and customers in the Dallas area, we firmly believe that this is a necessary and right step for the long-term viability of Webvan." This move comes on the heels of the Webvan`s postponing opening in Baltimore, Washington D.C. and New Jersey. The company says it needs as much as $60 million in additional capital to fund operations in 2002. "Dallas is our least developed and most competitive market," Shaheen said. "Given these dynamics, gaining the necessary customer base to bring our Dallas operations to profitability within our strategic time frame would require a large investment in marketing and working capital. We believe that these resources can be more effectively and efficiently utilized to bring our nine other, more established markets to profitability."
Webvan announced last month that it believes it has sufficient capital to fund operations through 2001. The company also said that it expects to achieve a company-wide positive cash flow in the second half of 2002. Webvan`s Dallas operations employ approximately 220 workers. The company entered the Dallas market through its acquisition of HomeGrocer.com in September 2000. HomeGrocer.com launched its online service in the area in May 2000. The service adopted the Webvan brand name earlier this year, but it has not been converted to Webvan`s technology platform or business model.
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