Today’s changes include the elimination of 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 approximately $130 million in cash. Based on its current plan, the company believes it has enough cash on hand to reach operating cash flow break even.
In a press statement from Peter Neupert, Chairman and CEO, drugstore.com the following was revealed:
We informed employees of staff reductions today, Fri., Jan. 19. 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.
Our strong fourth quarter 2000 results demonstrate that drugstore.com can grow the business while making our cash last longer. Over the previous six months, we significantly reduced expenses while still showing positive improvement on key metrics. From our perspective, the cost-cutting steps announced today are practical and appropriate actions in response to today’s market challenges.
We believe drugstore.com will be one of the dot coms that will survive and thrive. Our unrelenting focus on meeting the wants and needs of our customers and our willingness to make the swift, smart business decisions to build a long-term profitable business demonstrate our staying power, said Peter Neupert, chairman and CEO, drugstore.com.
Preliminary 2000 Performance
Earlier this month, Neupert announced preliminary, unaudited net sales of at least $35 million for the company’s fourth quarter, which ended Dec. 31, 2000. The company’s strong fourth quarter performance represented at least a 90 percent increase in net sales over the same period in 1999, with net sales for the quarter surpassing all sales for fiscal year 1999.
Neupert also reported preliminary, unaudited gross margin of more than 13 percent for the company’s fourth quarter versus a negative 16.3 percent for the same period in 1999. In addition, drugstore.com added 257,000 new customers in fourth quarter 2000.
Details of today’s changes, as well as fiscal year 2000 operating results for drugstore.com, will be discussed as part of the company’s earnings announcement scheduled for Mon., Jan. 22, 2000, at 8 a.m. EST.
