Domzdrowia.pl posts 1% sales decline in 2009 after weak Q4

2010-03-10

Domzdrowia.pl, the online drug retailer, reported a 6% y-o-y drop in net sales revenues in the fourth quarter of 2009, to PLN 1.79m (€0.46m). This came after a similar decline of 7.1% y-o-y in Q3 and contrasted with robust growth of 11% y-o-y in H1 2009. As a result, in 2009 as a whole Domzdrowia.pl registered a 1% decline in sales, to PLN 7.15m (€1.83m), preliminary figures show. The company also failed to fulfil its target of breaking even at the operating level in Q4, although both its net and operating losses narrowed by 60% y-o-y over the quarter. For the year as a whole it remained firmly in the red.
In its quarterly report, Domzdrowia.pl attributed the fall in turnover primarily to its decision to suspend online sales of Rx medicines, amid uncertainty about their legal acceptability. But the company aims to reintroduce prescription medicines to its product offering already in Q1.
Another reason behind the poor top-line result was that sales of pharmaceutical cosmetics, which command higher prices than medicines, were hurt by weaker consumer demand.
At the same time, the company carried out an optimisation of its product portfolio, exiting low-margin products available at brick-and-mortar pharmacies and focusing on most popular products sold over the internet. This, coupled with efficiency gains in logistics processes and with a reduction of fixed costs helped it significantly narrow losses. In mid-November Domzdrowia.pl also rolled out a new e-commerce platform, which is expected to boost traffic and sales.
The company is pressing ahead with its plan to develop a partner network of brick-and-mortar pharmacies. CEO Jacek Denkowski noted that it is looking for partners among pharmacy chains with nationwide coverage.