Drugstore.com’s Q2 net sales rise 51% year-over-year

Drugstore.com reached record sales in the second quarter ended June 27 of $87.8 million, including a 44% increase in non-prescription sales and a 10% rise in store pick-up sales, the company reports. Net loss widened 9%, to $5 million from $4.6 million, due partly to free-shipping offers and other promotions.

Bob Barton, CFO and acting CEO since the June resignation of Kal Raman, said Drugstore, No. 36 in Internet Retailer’s Top 300 Guide to online retailers, recorded strong year-over-year growth in each of its business segments. Over-the-counter, non-prescription sales rose to $36.7 million from $25.5 million; store pick-up pharmacy sales, where customers order on Drugstore.com but pick up at any of the more than 3,400 Rite Aid stores, rose to $23 million from $21 million; mail-order pharmacy sales rose 29% to $15.1 million; and Drugstore’s Vision Direct sales of contact lenses rose 9% to $12.9 million.

Average net sales per order increased 3%, to $76 from $74. Sales from repeat customers grew 41%, and revenue from repeat customers accounts for 72% of total net sales, Drugstore said. And the average annual spend per active customer in the last 12 months rose 7% to $178. Drugstore also added 294,000 new customers during the quarter (excluding wholesale over-the-counter customers), bringing its number of unique customers since its inception to 5.4 million. Its number of active customers in the previous 12 months increased 28% to 1.68 million from 1.3 million.

Barton also noted that Drugstore saw declines in most operating expenses as percentage of net sales. Q2 fulfillment and order processing expenses, for example, declined to 10.9% from 12.1% a year earlier as a percentage of net sales.

But the retailer’s gross margin dropped by 50 basis points, to 20% from 20.5%, reflecting the impact of its free, 3-day shipping program for non-prescription orders of $49 or more, various discount-price promotions, a higher concentration of sales of lower-margin products, and slower-than-expected growth along with increased marketing expenses in its Vision Direct business, the retailer said.