April 29, 2005, 12:00 AM

Q1 sales rise 18% at Drugstore.com, as operating loss widens to $5 million

Net sales at Drugstore.com rose 18% year-over-year to $99.6 million for the first quarter ended April 2, as operating loss widened 11% to $5.2 million, the retailer reported. Non-prescription over-the-counter sales grew 26% to $44.5 million.

Net sales at Drugstore.com rose 18% to $99.57 million for the first quarter ended April 2, up from $84.36 million in the year-ago period, as operating loss widened 11% to $5.17 million from $4.65 million, the retailer reported.

CEO and chairman Dawn Lepore attributed the increase in sales to multiple product categories. "Our stronger-than-expected sales in the first quarter were driven by solid revenue growth across our OTC, mail-order pharmacy, and local pick-up pharmacy segments," she said. "Net sales were the second highest in corporate history, second only to our seasonally strong fourth quarter in 2004, while total operating expenses as a percentage of net sales declined to an all-time low."

Operating costs and expenses rose 17.7% to $104.75 million from $89.01 million, as Drugstore.com increased spending on marketing and technology as well as fulfillment and other operations. "During the quarter, we established a new brand platform and began work on a targeted yet aggressive print campaign to capitalize on our market leadership position," Lepore said.

Drugstore also noted that Q1 sales in its OTC segment grew 26% year-over-year to $44.5 million, as net sales from repeat customers grew 30%; mail-order pharmacy net sales rose 24% to $18 million; online sales for local store pick-up grew 16% to $25 million.

It said Q1 net vision products sales declined 6% from the year-ago quarter, but rose 6% from Q4 of 2004.



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