Drugstore.com reports its first quarterly profit
Drugstore.com reported its first-ever quarterly profit in the last three months of 2007 along with record quarterly revenue and gross margins. For the year, the online retailer reported sales of $445.7 million, up 7.2% from $415.8 million in 2006, and projected a revenue increase of 12% or more in 2008.
“I am very pleased to announce that we reached GAAP profitability in the fourth quarter for the first time in company history," says Dawn Lepore, CEO and chairman of drugstore.com, inc. "During the quarter, we delivered record results across many of our key metrics including prestige beauty sales increasing 57% year-over-year, gross margins up over 300 basis points year-over-year, and core OTC contribution margin dollars up 40% year-over-year. Our core OTC business grew 18% year-over-year, in-line with ecommerce trends, but below our expectations due to increased marketing costs in paid search and portals." GAAP stands for Generally Accepted Accounting Principles, the accounting method used by most U.S. companies; OTC refers to over-the-counter drugs.
For the fourth quarter of 2007 the company reported net sales of $118.2 million, an increase of 8.8% from $108.6 million in Q4 2006.
The company reported net income of $156,000 for the fourth quarter, compared with a loss of $2.9 million in the prior year quarter. For the year the e-retailer reported a net loss of $9.0 million, down from a loss of $13.0 million in 2006.
Other highlights of this week’s report include:
Q4 orders grew 9% to 1.6 million and contribution margin per order grew almost 20% to about $13. For the year orders grew by 10% and margin per order increased to about $12.
2.5 million customers have placed orders within the past year, including 398,000 new customers. Repeat customers represented 82% of net sales for the year, and 80% for the quarter.
Average net sales per order were $75 for the year and fourth quarter. For the year the average order was $57 for over-the-counter items, $99 for vision products, $106 for orders for pick-up at local pharmacies and $159 for mail-order pharmacy.
For the year over-the-counter net sales grew by over 18% to $234.3 million, vision net sales grew over 10% to $54.9 million, local pick-up pharmacy net sales were up about 6% to $106.4 million and mail-order pharmacy net sales decreased 26% to $50.1 million.
The company projects net sales for 2008 in the range of $498 million to $512 million and net income in the range of a $1 million loss to a $3 million profit.
Drugstore.com is No. 35 in the Internet Retailer Top 500 Guide.
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