FOSTER CITY, Calif.--(BUSINESS WIRE)--April 26, 2001--
Webvan Southern California Facility First to Hit Break-Even Milestone
Webvan Group, Inc. (Nasdaq:WBVN) announced its financial results
for the first quarter 2001, which ended March 31. The company also
announced the appointment of Robert Swan as chief executive officer.
Webvan also announced further modifications to its business plan,
including the closing of its operations in Atlanta and reductions in
its corporate staff. The restructuring moves are intended to lower
operating costs and support the company's push to achieve full
profitability in the second half of 2002.
In addition, Webvan reported that it is in preliminary discussions
with certain existing investors regarding possible debt or equity
financing of approximately $25 million. Webvan has engaged Goldman
Sachs & Co. to assist in evaluating its financing and strategic
alternatives. The company today also announced plans for a 25-to-1
reverse stock split, subject to shareholder approval at the upcoming
annual meeting.
"Our top priorities are to give Webvan's customers an unparalleled
shopping experience, prove the economics of our business model and
reach profitability," said Robert Swan, chief executive officer of
Webvan Group, Inc. "With the approximately $115 million in cash, cash
equivalents, and marketable securities on hand at the close of the
first quarter 2001, we will need $25 million in capital to pursue a
fully-funded business plan, allowing us to fund operations up to the
point when the entire company is cash-flow positive. We currently
anticipate reaching this cash-flow milestone in the second half of
2002."
First Quarter 2001 Results
"The first quarter of 2001 was undoubtedly the most challenging
and the most rewarding period in Webvan's young history," Swan said.
"In this period we saw substantial improvements across our operations,
leading to a solid financial performance. I am pleased to announce
that our Fullerton, California customer fulfillment center, which
serves Orange County, exited the first quarter with a positive cash
flow. Passing this milestone is a significant accomplishment for
Webvan, proving the viability of our business model and clearly
demonstrating our ability to run a profitable enterprise."
Webvan reported that net sales for the first quarter 2001 totaled
$77.2 million, an increase of 106 percent over pro-forma net sales of
$37.5 million for the first quarter of 2000. Sales for the first
quarter of 2001 include only 51 days of revenue from Webvan's
Dallas/Ft. Worth market, which was closed on February 20. The pro
forma results for 2000 include the full impact of HomeGrocer.com for
this period.
Net loss for the first quarter was $86.1 million, or a loss of
$0.18 per share compared with a pro-forma loss of $75.4 million, or
$0.17 per share in the first quarter of 2000. Pro-forma net loss and
net loss per share exclude the amortization of goodwill resulting from
the company's September 2000 acquisition of HomeGrocer.com,
amortization of deferred compensation and restructuring charges and
includes HomeGrocer's operating results for the first quarter of 2000.
Gross profit for the first quarter was $21.7 million, or a gross
margin of 28.1 percent compared to a pro forma gross profit of $7.8
million and a gross margin of 20.9 percent, for the comparable period
in 2000.
The company reported a cash position of $115 million at the end of
the first quarter. Webvan also reported combined company-wide
inventory turns of 17.8 times on an annualized basis.
The company stated that its active customer accounts in the
preceding 12 months ending March 31, 2001 exceeded 761,780. Repeat
orders represented 84.1 percent of total orders during the period. The
average order size for the recently completed quarter was
approximately $114.
"We are taking the necessary steps on the marketing and
merchandising fronts to build and retain our customer base and to
increase the frequency and order size of their shopping with Webvan,"
Swan said. "Equally important, Webvan is acting aggressively to hit
its profitability goals by reducing operating costs which lowers the
required order volume needed to turn a positive cash flow in each of
our markets. In the first quarter, we reduced our pro forma operating
loss by $24.5 million over the previous quarter."
Restructuring
In line with its on-going effort to conserve capital, Webvan
announced that it is indefinitely suspending service and operations in
Atlanta in order to focus on its other markets. The company will
continue its online retailing service in Chicago, the Pacific
Northwest (Seattle, WA and Portland, OR), the San Francisco Bay Area,
and Southern California (Los Angeles, Orange County, San Diego).
"While we regret the impact this decision has on our loyal
customers in the Atlanta Area, we firmly believe that this is a
necessary and right step for the long-term viability of Webvan," Swan
continued. "In light of our business priorities, we believe that the
company's resources can be more effectively and efficiently utilized
to bring our other markets to profitability. These restructuring moves
reduce operating costs and support the company's push to achieve full
profitability in the second half of 2002."
About 485 positions are affected by the decision to close the
Atlanta market. The company also announced that it is eliminating
approximately 400 positions at its corporate offices in Foster City,
California and Kirkland, Washington as it aligns the organization to
its near-term business strategy. Webvan currently employs
approximately 3,500 workers.
"This was a difficult decision because of the impact it has on
members of our Webvan family," added Swan. "On behalf of all Webvan
employees and customers, I want to thank our impacted Associates for
their outstanding contributions. They are pioneers in the effort to
introduce consumers to the benefits of online retailing. We are
committed to working with these colleagues to help them through this
transition."
Robert Swan Named Webvan CEO
Webvan's board of directors has named Robert Swan as chief
executive officer. Swan previously served as Webvan's chief operating
officer, a post he assumed in September 2000. He joined Webvan in
October 1999 as senior vice president of finance and was named chief
financial officer in February 2000. Swan has joined the company's
board of directors.
Prior to joining Webvan, Swan spent 14 years at General Electric
Company, most recently as vice president and chief financial officer
of GE Lighting. He also served as vice president, finance of GE
Medical Systems in Europe, chief financial officer of GE
Transportation Systems, and as manager of programs and planning for
GE's Corporate Operations and Audit Staff. Swan is 40 years old. He
holds a B.S. in Management from the State University of New York at
Buffalo, and an M.B.A. from the State University of New York in
Binghamton. Swan succeeds George T. Shaheen, who resigned as Webvan's chief executive officer and chairman on April 13, 2001.
Company Plans Reverse Stock Split
The company said today that its board of directors has approved a
25-to-1 reverse stock split, subject to approval by Webvan's
shareholders at the annual meeting to be held in June.
"At present, we have too many shares of Webvan securities
outstanding," Swan said. "A reverse split of 25-to-1 will reduce our
number of outstanding shares to approximately 20 million. We believe
such a move is in the best interest of our shareholders. A reverse
split will also support our effort to raise the Webvan share price
above the Nasdaq's $1 per share listing requirement."
Webvan Board Changes
Webvan announced that Ronald D. Fisher, Managing General Partner
of SOFTBANK Capital Partners, has joined the company's board of
directors.
"Ron is a seasoned executive who will add a great deal of depth
and experience to our board," said Christos M. Cotsakos, chairman and
chief executive officer of E*Trade Group and a member of the Webvan
board of directors. "He has a proven record in helping young companies
grow into successful and profitable enterprises. His insights will be
very valuable to the board, Bob and the Webvan management team."
Tim Koogle and Michael Moritz have stepped down as members of
Webvan's board of directors, effective immediately. Koogle is the
vice-chairman of Yahoo! Inc. Michael Moritz is a general partner with
Sequoia Capital.
In addition to Cotsakos, Fisher and Swan, Webvan's Board of
Directors is now comprised of: Jim Barksdale, partner of The Barksdale
Group; David M. Beirne, general partner, Benchmark Capital; and Mary
Alice Taylor, former chairman and chief executive officer of
HomeGrocer.com. |
