Fatbrain Sees Online Growth
Jim Milliot -- Publishers Weekly, 7/5/1999
Fatbrain.com has reported a 38.6% increase in revenues to $6.1 million for the first quarter ended April 30, 1999. The sales gain was led by a 150% jump, to $4.5 million, in the company's online bookstore; the gain offset a decline in Fatbrain's retail operations, where sales fell to $1.6 million from $2.6 million. Net loss for the company increased to $5.2 million from $1.7 million.During the quarter, the company added more than 25,000 customers, bringing the total to more than 103,000. Fatbrain also added 68 new corporate accounts to its FindITnow intranet bookstore program. The company attributed some of the growth to changing its name from Computer Literacy to Fatbrain.com at the end of March and to the subsequent branding campaign designed to promote its Web site as a major source of information for professionals (News, Apr. 5).
Although the company added training materials, product manuals and research reports to its product mix, books accounted for 83% of its $10.7-million online revenues in fiscal 1999, according to the company's 10-K filing with the SEC. International sales accounted for nearly 21% of online revenues last year. The company also noted that during the past year it acquired roughly 37% of its inventory from Ingram and about 22% from Pearson Education.
To help speed delivery of products to its customers, Fatbrain moved its warehouse from Fremont, Calif., to a 40,000-sq.-ft. facility in Erlanger, Ky., on May 1. The move was financed by the company's November 1998 public offering, which netted the retailer $30.8 million. Other proceeds from the offering are being used to move the company's headquarters to a new location in Santa Clara, Calif., and to hire new staff. At the close of fiscal 1999, Fatbrain had 141 employees; the company indicated it is planning a dramatic increase in its sales staff as well as a doubling of its editorial staff. The employees are being added to help the e-retailer cope with the addition of "tens of thousands" of titles in new categories in business, math and science.
With the continued investment in building its infrastructure, the company, which had an accumulated deficit of $13.8 million at the end of last year, expects to incur significant operating losses for the foreseeable future.
