May 28, 2008, 12:00 AM

U.S. Auto Parts reports an 8.5% sales decrease for the first quarter

Web-only retailer U.S. Auto Parts Network reported sales of $40 million for the first quarter of 2008, an 8.5% decrease from $43.7 million in the prior year period. The company registered higher traffic but a decline in its average ticket.

Web-only retailer U.S. Auto Parts Network Inc. reported sales of $40 million for the first quarter of 2008, an 8.5% decrease from $43.7 million in the prior year period. Net loss for the first quarter ended March 31, 2008, was $900,000 compared with a net profit of $200,000 in the same quarter last year.

For the quarter, marketing expenses totaled $3.4 million, or 8.5% of net sales, compared with $2.5 million, or 5.6% of net sales, in the prior year period. The increase was attributed to additional headcount in the company’s Philippines call center, higher depreciation and operating expenses related to new facilities in the Philippines, and increased marketing service expense.

Online advertising totaled $2.6 million -- 6.4% of net sales -- for the first quarter of 2008, vs. $3.4 million, or 7.9% of net sales, for the prior year period. “The decline in marketing spend reflects our decision to limit incremental spending on paid search to break-even levels based on our estimated lifetime value of a customer,” the company says.

U.S. Auto Parts Network, No. 94 in the Internet Retailer Top 500 Guide, reported a 1.2% conversion rate in Q1, compared with 1.4% during the same period of 2007. Q1 2008 was in line with a 1.2% conversion rate for the fourth quarter of 2007. The number of monthly unique visitors in Q1 this year was 26 million, an increase of 16% vs. the prior year quarter, and an increase of 7% over Q4 2007.

The number of orders placed through the company’s and e-commerce sites totaled about 320,000 in the quarter, compared to 315,000 in the prior year period, and 293,000 in Q4 of 2007. The average order was $126 during Q1 2008, down slightly from $129 during the corresponding period of 2007, and just above $125 for the fourth quarter of 2007.

As of the fourth quarter 2007, the company began using a new method to calculate operating metrics. The new measurement is based on placed orders instead of the previous focus on net orders, the company says. The company says it made the change to reduce the impact on key metrics of returns, out-of-stock orders and incomplete payment processing.

“During the first quarter of 2008, we were pleased to see initial improvements in our conversion rate, both in our online business and our call center. We attribute these increases to improvements in the online shopping experience and greatly improved service levels in our call center,” says Michael McClane, chief financial officer. “During the quarter we increased our SKU count, improved our in-stock position and reduced our customer acquisition cost. Over the remainder of 2008, we plan to continue to drive sales while closely managing our cost structure.”

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