Drugstore.com saw total revenue jump in the 2010 second quarter, fueled by surging over-the-counter and beauty product sales.

drugstore.com, second quarter, sales, revenue, OTC sales, Dawn Lepore, net loss, net income, adjusted EBITDA, Salu, SkinStore.com, BioScrip, Medco Health Solutions, over-the-counter, Beauty.com, pharmacy, mail-order pharmacy, Russell Redman

Other Services
Reprints / E-Prints
Submit News
White Papers

Retail News Breaks Archives

2Q sales surge at drugstore.com

August 4th, 2010

BELLEVUE, Wash. – Drugstore.com saw total revenue jump in the 2010 second quarter, fueled by surging over-the-counter and beauty product sales.

The online retailer said Wednesday that for the quarter ended July 4, sales climbed more than 27% to $113.1 million from $88.9 million a year earlier. Total orders grew by 26% to 1.8 million.

OTC sales swelled 34.5% to $95.9 million, reflecting Beauty.com growth of 13% and total beauty sales growth of 60%, including the SkinStore.com business from the acquisition of Salu Inc., according to drugstore.com. The company said average net sales per order were $64, with average net sales per order for OTC rising 3% to $59 and for vision increasing 3% to $120.

The e-tailer noted that during the second quarter it served about 535,000 new customers, including from its strategic partnerships, representing a gain of 34% over the prior-year period.

"In a softer consumer spending environment, we were pleased to deliver 27% year-over-year revenue growth and strong gross margins of 30.4%," chairman and chief executive officer Dawn Lepore said in a statement. "Revenue growth was driven by OTC sales up 35%, including solid contributions from our recent acquisition Salu, which added over $11.5 million. During the quarter, we generated new customer growth of 34%, offering further evidence that we are a clear leader in one of the least penetrated markets in e-commerce."

Drugstore.com reported that in the second quarter it incurred combined transaction and integration expenses totaling about $450,000 related to its acquisition of Salu and sale of mail-order pharmacy assets to Bioscrip Inc.

Including these expenses, drugstore.com said it had a net loss of $2.7 million and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $4.6 million, as the gain on sale of approximately $5 million related to the sale of its mail-order pharmacy business will be recognized in the third quarter of 2010. That compares with net income of $1 million and adjusted EBITDA of $5.5 million reported in the year-ago period, which included about a $3 million contribution from the discontinued local pickup pharmacy business. 

Cash provided by operations during the 2010 second quarter was $4.1 million, a $1.5 million improvement versus a year ago.

Lepore also commented on drugstore.com's extended online store alliance with Medco Health Solutions, announced Wednesday.

"Our relationship with Medco has proven to be highly strategic and incremental to the strength of our core business, and we believe this agreement positions both companies for long term success," she stated. "Our belief in the power of the Medco relationship has not changed. However, given the slower than anticipated ramp in partnership revenue in the first half of the year, we now expect overall partnership revenue in the range of $16 million to $20 million for 2010." 

For the third quarter of 2010, drugstore.com projects sales of $107 million to $111 million, net income of $2 million to $3.25 million, and adjusted EBITDA of $8 million to $9 million. The outlook for the quarter includes an estimated $5 million gain related to the sale of the mail-order pharmacy segment.

For fiscal year 2010, which compares a 52-week year to a 53-week year, the company expects OTC revenue growth of between 24% and 28%, and vision revenue growth in the low single digits.