Webvan Issues Mixed Q4 Warning

Online grocer Webvan (Nasdaq: WBVN) warned Tuesday that its fourth-quarter revenue will fall short of expectations, but said that it anticipates a lower-than-expected loss per share.

The Foster City, California-based company said that it believes fourth quarter losses will be approximately 23 cents per share, with revenues of approximately US$84 million. Analysts polled by First Call/Thomson Financial had reportedly expected losses to be 26 cents per share on revenues of $100 million.

“We expect that fourth-quarter earnings for fiscal year 2000 will better our earlier estimates for the period, despite a general slowing of retail spending in the quarter,” said George T. Shaheen, chairman and chief executive officer of Webvan Group.

Added Shaheen: “In addition to the slowdown in retail spending, fourth quarter revenues were affected by internal capacity constraints and fewer first-time orders, as we reduced marketing expenditures and focused on customer retention and ordering frequency.”

Shaheen said that the focus on customer retention had led to a 10 percent increase in the average order size from $102 in the third quarter to $112 in the fourth quarter.

Webvan shares closed Tuesday at 47 cents, with no change from Monday’s market close. Webvan has traded as high as $17.50 in the past year. Final results for the fourth quarter will be announced on January 25th.

HomeGrocer Lives On

Shaheen attributed the better-than-expected loss per share to the “synergies realized” by Webvan’s $1.2 billion acquisition of HomeGrocer.com in September.

Since that time, Webvan has focused on integrating the two companies’ building brand-name recognition, particularly among HomeGrocer.com’s customers in Seattle, Washington; Portland, Oregon; and Southern California.

Merging Pains

The marriage has not been all smooth sailing, however. Since being acquired by Webvan, HomeGrocer.com has undergone two rounds of job cuts. In September, HomeGrocer.com handed pink slips to 50 employees and then in December said it would lay off another 100 employees.

Webvan has also had to make its share of adjustments. In September, the company said it would delay its scheduled expansion into the Baltimore, Maryland-Washington, D.C. and Bergen County, New Jersey markets from the fourth quarter of 2000 to the second half of 2001.

The company also said that a planned move of its distribution center in Renton, Washington to a facility in Kent, Washington would occur in the second quarter of 2001 rather than in the first.

Troubled Sector

Webvan is not the only “last-mile” dot-com to face problems in recent days. On Monday, online delivery service Kozmo.com announced that it islaying off 120 workers and shutting down its operations in San Diego, California and Houston, Texas.

Rival online grocer Peapod barely escaped bankruptcy last summer when it was bought out by Dutch grocer Royal Ahold for $73 million.

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