eCost.com puts up $41 million in Q2 web sales

In its first year as a stand-alone web retailer, eCost.com is holding its own. For the second quarter of 2005, eCost, until April, a unit of PC Mall, which ranks as No. 29 in the Internet Retailer Top 400 Guide to Retail Web Sites, posted sales of $41 million, an increase of $2.2 million, which is up 6% from $38.8 million in the second quarter ended June 30, 2004. Pre-tax losses for the second quarter 2005 were $2.9 million compared to $2.8 million in the first quarter 2005 and pre-tax profits of $8,000 in the second quarter 2004.

The increased loss in the quarter was largely due to additional operating costs and increased public company costs related to the April spin-off from PC Mall, the company says. "The first and second quarters have been transition quarters for us as we separated from our former parent, PC Mall, and established ourselves as an independent, publicly-traded company,” says Adam Shaffer, chairman and CEO of eCost. “Not unexpectedly, this has created some challenges, particularly initiating fulfillment operations in our new distribution facility in Memphis, Tenn., which adversely impacted our gross margin in the second quarter. Despite these second quarter issues, we have stabilized the level of operating losses from last quarter and expect to reduce the losses going forward based upon operational improvements and positive June trends."

The company added 75,000 new customers during the quarter, expanding eCOST`s customer base to nearly 1.3 million at the end of June. Sales in the second quarter of 2005 grew 6% over the same period last year due to a 5% increase in the number of orders and an increase in average order value from $341 to $352, or 3%, the company says.