Drugstore.com delivers in three focus areas, CEO says

BELLEVUE, Wash. So far, so good. Drugstore.com on Thursday announced that it is delivering on three areas of focus in what has become an exceedingly challenging retail environment.

“I'm very pleased to announce that we've made substantial progresses in all [three] of these areas in the first quarter, posting one of our strongest quarters to date, despite facing a very tough economy,” Dawn Lepore, Drugstore.com CEO and chairman, told analysts Wednesday evening.

The three focal points for Drugstore.com included a focus on growing its over-the-counter and vision businesses at a faster rate than overall e-commerce; a focus on driving bottom-line improvements and a focus on incremental growth for the year.

So the scorecard so far —OTC revenue grew over 11%, well ahead of recent e-commerce industry trends, and the beauty business grew at an even faster pace, increasing 14%, despite a decline in the beauty industry.

Gross margins were at 28.2%, delivering adjusted EBITDA of $5.6 million to the bottom line, which is more than double the adjusted EBITDA the previous-year period.

“I believe our record performance in the first quarter offers evidence that we can continue to grow in a difficult economic environment, while also improving the strategic positioning of the company,” Lepore said, suggesting that the online retailer will be able to maintain its improved performance through the remainder of the year.

Looking forward, Drugstore.com plans to launch its Medco Health Solutions-branded OTC web site in the second quarter, with a notable ramp in the second half of the year. “We believe our partnership is on track and we are in active conversations with other potential partners,” Lepore said.