WEBVAN MISSES GOAL, STOCK FALLS TO NEW LOW

JON SPRINGER

FOSTER CITY, Calif. -- Webvan Group here saw its stock plunge to new lows late last week following the company's announcement that quarterly losses had accelerated and that it had missed long-promised goals of profitability at its Oakland warehouse.

Webvan's stock was down 22% to $1.22 per share Thursday afternoon.

Webvan said it lost $120.2 million, or 26 cents per share, on sales of $87.4 million in its fiscal third quarter ended Sept. 30. Webvan reported the figures on a pro forma basis which included results from HomeGrocer.com, the competitor it acquired during the quarter. Webvan on a stand-alone basis lost $148 million, including a $54.8 million charge for restructuring and amortization related to the HomeGrocer purchase completed on Sept. 5.

Though sales nearly doubled from the prior quarter and earnings were close to analyst targets, Webvan's performance at its Oakland facility was a huge disappointment, analysts said. The company had long predicted its distribution centers could break even on an EBITDA basis after five quarters of operation, but its Oakland facility, after five quarters of operation, still needs significant increases in average order sizes and order frequency, said Bob Swan, Webvan's chief operating officer, in a conference call.

In addition, the Oakland facility was beset by "capacity issues" in regard to having the proper number of route drivers to meet fluctuating demand, Swan said.

Sales in the Bay Area were $23 million, consisting of 2,350 orders per day at an average order size of $105, Swan said. Webvan needs between 3,300 and 3,500 orders at a $110 per order to reach its cash-flow break-even point.

Mark Rowen of Prudential Securities, in a report downgrading Webvan stock to "sell," said Webvan's Bay Area performance "clearly points to a demand problem." Webvan did not say when it could expect improved performance in Oakland.