HomeGrocer.com (NASDAQ:HOMG – news) today reported record net revenues, strong increases in gross margin, and record average orders per day for the second quarter ended July 1, 2000. Quarterly net revenues rose 40 percent over first-quarter results to $29.8 million, exceeding consensus analysts’ estimates and increasing 766 percent over year-earlier revenues of $3.4 million.
Gross profit margins showed continued strong improvement, reaching 25.1 percent of net sales versus 17.4 percent in the first quarter and 18.4 percent in the year-ago quarter. As a result of increased sales and higher profit margins, the company’s gross profit more than doubled over the first quarter and rose nearly eleven-fold over the prior-year quarter to $7.5 million. Average order size was $103, in line with the $102 in the first quarter and up from the $96 in the year-earlier quarter. The company reported average orders per day of approximately 3,200, compared to approximately 2,300 in the first quarter.
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For the second quarter, HomeGrocer.com’s loss from operations was $50.2 million or $0.43 per share before stock-based compensation and costs associated with the proposed Webvan merger, which was better than analysts’ consensus expectations of a loss of $0.44 cents per share. The second-quarter costs associated with the proposed merger with Webvan Group were $1.5 million, or $0.01 per share, comprised principally of investment banking, legal, and accounting fees. At July 1, HomeGrocer.com had $158.6 million of unrestricted cash or securities on its balance sheet.
HomeGrocer.com’s expansion into new markets helped drive the company’s quarterly revenue growth. The company began serving customers in Dallas on May 12 and in San Diego on May 31. In addition, HomeGrocer.com currently operates facilities in Seattle, Wash.; Portland, Ore.; and Irvine, Fullerton, Azusa and Carson, Calif.
“Our initial results in Dallas and San Diego are by far the strongest we’ve achieved to date at any of HomeGrocer.com’s new facilities,” Mary Alice Taylor, chairman and chief executive officer, said. “Strong demand in those markets has prompted the company to buy additional trucks and hire additional employees to support the rapid growth.”
During the second quarter, HomeGrocer.com launched several initiatives designed to continue its drive towards profitability within its existing facilities and optimization of capital. These included the delay of its planned operations in Atlanta, Chicago and Washington, D.C. These moves will help focus the company on its operating and financial performance.
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By GlobalDataOn June 25, HomeGrocer.com and Webvan Group, Inc. signed a definitive merger agreement under which Webvan will acquire HomeGrocer.com in a stock-for-stock transaction. Upon closing, HomeGrocer shareholders will receive 1.07605 shares of Webvan common stock for each share of HomeGrocer.com common stock. The transaction is subject to customary regulatory and shareholder approvals, and is expected to close late in the third quarter or early in the fourth quarter of 2000. The combined company is expected to have operations in 13 metropolitan areas by year-end.
About HomeGrocer.com
HomeGrocer.com, based in Kirkland, Wash., combines technology with highly personalized service to revolutionize the way people shop. The HomeGrocer.com system integrates its Internet web site, www.homegrocer.com, with its customer fulfillment centers and fleet of tri-temperature trucks to deliver high-quality products directly to consumers’ homes or offices. HomeGrocer.com offers an extensive selection of groceries and household goods, including name-brand items, high-quality produce, meats, seafood and dairy products, fresh flowers, health and beauty aids, and top-selling books, videos and movies. HomeGrocer.com’s shares are quoted on the Nasdaq under the symbol “HOMG.”
Certain statements in this press release may be considered forward-looking statements about management’s views with respect to future events and financial performance, which are subject to risks and uncertainties. Actual results may differ from those identified in the forward-looking statements because of important factors such as the number of on-line competitors, price competition with all competitors, ability to manage growth, customers’ perceptions of on-line security, and other factors that can be found in HomeGrocer.com’s filings with the Securities and Exchange Commission, including its recent Registration Statement.
HomeGrocer.com, Inc.
Statements of Operations
(in thousands, except share and per share amounts)
13 Weeks 13 Weeks 26 Weeks 26 Weeks
Ended Ended Ended Ended
July 1, July 3, July 1, July 3,
2000 1999 2000 1999
———- ———- ———- ———-
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net sales $29,793 $3,442 $51,008 $5,220
Cost of merchandise
sold 22,312 2,807 39,827 4,294
Customer fulfillment
center expenses 22,496 2,145 40,140 3,389
Marketing expenses 15,729 1,353 21,317 2,088
Technology operations
and development
expenses 8,114 2,130 14,580 3,218
Preopening expenses 5,364 256 7,379 256
General & administrative
expenses 9,329 1,779 17,640 2,603
Merger expenses 1,487 0 1,487 0
Stock-based compensation
expense 6,719 714 14,862 822
———- ———- ———- ———-
Loss from operations (61,757) (7,742) (106,224) (11,450)
Interest expense (334) (130) (997) (151)
Interest income 3,663 352 5,351 356
Other income/(expense) 41 (125) 18 (124)
———- ———- ———- ———-
Net loss ($58,387) ($7,645) ($101,852) ($11,369)
========== ========== ========== ==========
Basic and diluted net
loss per share ($0.50) ($0.52) ($1.26) ($0.85)
========== ========== ========== ==========
Weighted average shares
outstanding used to
compute basic and
diluted net loss per
share 116,399,865 14,571,046 80,538,749 13,375,947
========== ========== ========== ==========
HomeGrocer.com, Inc.
Sequential Statements of Operations
(in thousands)
13 Weeks 13 Weeks 13 Weeks
Ended Ended Ended
July 1, April 1, January 1,
2000 2000 2000
———— ———— ————
(Unaudited) (Unaudited) (Unaudited)
Net sales $29,793 $21,215 $10,762
Cost of merchandise
sold 22,312 17,515 10,596
Customer fulfillment
center expenses 22,496 17,644 11,017
Marketing expenses 15,729 5,588 5,116
Technology operations
and development expenses 8,114 6,466 5,364
Preopening expenses 5,364 2,015 1,232
General & administrative
expenses 9,329 8,311 8,474
Merger expenses 1,487 0 0
Stock-based compensation
expense 6,719 8,143 10,363
———— ———— ————
Loss from operations (61,757) (44,467) (41,400)
Interest expense (334) (663) (143)
Interest income 3,663 1,688 1,302
Other income/(expense) 41 (23) (488)
———— ———— ————
Net loss ($58,387) ($43,465) ($40,729)
============ ============ ============
13 Weeks 13 Weeks 13 Weeks
Ended Ended Ended
October 2, July 3, April 3,
1999 1999 1999
———— ———— ————
(Unaudited) (Unaudited) (Unaudited)
Net sales $5,666 $3,442 $1,778
Cost of merchandise
sold 4,625 2,807 1,487
Customer fulfillment
center expenses 4,526 2,145 1,244
Marketing expenses 2,142 1,353 735
Technology operations
and development expenses 3,691 2,130 1,088
Preopening expenses 1,406 256 0
General & administrative
expenses 4,686 1,779 824
Merger expenses 0 0 0
Stock-based compensation
expense 16,973 714 108
———— ———— ————
Loss from operations (32,383) (7,742) (3,708)
Interest expense (90) (130) (21)
Interest income 574 352 4
Other income/(expense) 4 (125) 1
———— ———— ————
Net loss ($31,895) ($7,645) ($3,724)
============ ============ ============
HomeGrocer.com, Inc.
Balance Sheets
(in thousands, except share amounts)
July 1, January 1,
2000 2000
————– ————–
Assets (Unaudited)
Current assets:
Cash and cash equivalents $158,571 $39,806
Marketable securities 0 37,762
Inventories 6,890 2,555
Prepaid expenses and other
current assets 16,373 3,032
————– ————–
Total current assets 181,834 83,155
Fixed assets, net 126,619 52,066
Deposits and other long-term
assets 6,742 3,776
Restricted cash 20,304 7,932
————– ————–
Total assets $335,499 $146,929
============== ==============
Liabilities & Shareholders’ Equity
Current liabilities:
Accounts payable 4,315 4,396
Accrued liabilities 12,896 4,856
Accrued compensation and related
liabilities 9,190 3,249
Current portion of capital lease
obligations 4,005 3,081
Current portion of long-term debt 3,934 980
————– ————–
Total current liabilities 34,340 16,562
Capital lease obligations, less
current portion 22,013 17,041
Long-term debt, less current
portion 6,259 749
Other long-term liabilities 1,259 430
————– ————–
Total liabilities 63,871 34,782
Commitments and contingencies
Shareholders’ equity:
Convertible preferred stock, no par
value:
10,000,000 and 78,357,142
shares authorized as of July 1, 2000
and January 1, 2000:
Issued and outstanding shares —
none and 73,206,738 as of July 1,
2000 and January 1, 2000,
respectively – 170,047
Common stock, no par value:
1,000,000,000 and 130,000,000 shares
authorized as of July 1, 2000 and
January 1, 2000:
Issued and outstanding shares —
128,043,971 and 29,605,536 as of
July 1, 2000 and January 1, 2000,
respectively 501,800 80,207
Notes receivable from officers for
common stock (3,231) (3,231)
Deferred stock compensation (31,744) (41,619)
Unrealized gain/(loss) on investments (88) 0
Accumulated deficit (195,109) (93,257)
————– ————–
Total shareholders’ equity 271,628 112,147
————– ————–
Total liabilities &
shareholders’ equity $335,499 $146,929
============== ==============
HomeGrocer.com, Inc.
Supplemental Data
13 Weeks 13 Weeks 13 Weeks 13 Weeks 13 Weeks 13 Weeks
Ended Ended Ended Ended Ended Ended
July 1, April 1, Jan. 1, Oct. 2, July 3, April 3,
2000 2000 2000 1999 1999 1999
———————————————————-
Gross
margin
percentage 25.1% 17.4% 1.5% 18.4% 18.4% 16.4%
Average
orders
delivered
per day 3,170 2,283 1,186 629 426 241
Net revenue
per order $103 $102 $100 $99 $96 $95
Percentage
of orders
from repeat
customers 74% 77% 74% 76% 74% 73%
Earnings
per share
before
stock-based
compensation
and merger
expenses ($0.43) (1) (1) (1) (1) (1)
26 Weeks 26 Weeks
Ended Ended
July 1, July 3,
2000 1999
——————–
Gross margin percentage 21.9% 17.7%
Average orders delivered per day 2,727 300
Net revenue per order $103 $96
Percentage of orders from repeat customers 75% 73%
Earnings per share before stock-based
compensation and merger expenses (1) (1)
(1) The company went public on March 10, 2000. As a result, the share
count is materially different in prior periods, reflecting the
company’s status as a private company. Comparisons are therefore not
meaningful.
