CHICAGO -- Peapod here said sales were up 33% in its fiscal second quarter, but expenses related to its purchase by Ahold accelerated the Internet grocer's losses.
Peapod saw sales rise to $22.7 million, up from $17.1 million a year ago, for the quarter ended June 30. Peapod attributed the increase to a 43% gain in its number of orders. Its losses widened to $10.4 million from $4.9 million.
Peapod's results illustrated its ongoing adjustment to new majority owner Ahold, the Dutch grocer whose 51% purchase of Peapod was completed during the quarter. Peapod took charges of $1.5 million during the quarter related to streamlining operations. Included was a charge related to cancelling the construction of a distribution center in Dallas.
Peapod's operations in Texas, San Francisco and Columbus, Ohio, are "under review" by the company, which is phasing out retailer partnerships in all three areas, spokeswoman Paula Wheeler told SN. The company maintains a distribution center in Chicago. Peapod is rolling out Internet shopping at Ahold-owned Stop & Shop stores in the Northeast.
"We are already beginning to see the benefits of [the Ahold-Peapod] combined strategy, with a concentrated focus in Chicago and on the East Coast," Marc Van Gelder, Peapod's recently appointed chief executive officer, said in a statement.
Peapod recently changed its pricing structure and delivery options in Chicago, offering free delivery on orders of more than $75, and an unattended delivery option. Wheeler said the changes will keep Peapod "visible and aggressive" in Chicago, where competitors including Streamline.com, Westwood, Mass., and Webvan, Foster City, Calif., each launched Chicago service this year.
Peapod said it had more than 135,000 customers as of June 30, with 91% of its orders coming from repeat customers. Its average order size is $115. Sales declined from $24.9 million in the first quarter of 2000, which ended March 31.
