Drugstore.com cuts $20 million in expenses and announces fourth quarter results
The announcement includes plans to eliminate approximately 125 jobs through layoffs and expected attrition, as well as reductions in planned marketing expenses. The company ended 2000 with a strong balance sheet that included an estimated $130 million in cash. Based on its current plan, drugstore.com believes it has enough cash on hand to reach operating cash flow break even.
We informed employees of staff reductions today, Fri., Jan. 19, Neupert said. I believe we can achieve our previously stated 2001 revenue goals with a smaller team and less spending on marketing. With today's changes, drugstore.com will reduce planned operating expenses by $20 million for 2001, and decrease total headcount by approximately 125 positions, or approximately 20 percent of the total workforce. These steps put us on a plan to reach operating cash flow break even with the funds we have on hand.
In a separate release, the company confirmed its financial results for its fourth quarter and fiscal year 2000, which ended Dec. 31, 2000. Net sales for the fourth quarter have been reported at $36.2 million, representing a more than 95 percent increase over the same period in 1999.
In its fourth quarter, drugstore.com reported a gross profit of $5.2 million, or 14.5 percent of net sales compared to a loss of $3 million, or negative 16.3 percent of net sales in the same quarter of 1999. The company also claims to have added 257,000 new customers in its most recent quarter, while its orders from repeat customers were 62 percent of its total quarters for the period.
Despite all the doom and gloom, our increases in revenues and gross margins during the fourth quarter confirm the company's ability to earn customer confidence and loyalty, Neupert said.