(EMAILWIRE.COM, April 26, 2001 ) Southern California Facility First to Hit Break-Even Milestone

Webvan Group, Inc. (Nasdaq: WBVN) announced its financial results for the first quarter 2001, which ended March 31. The company also announced the appointment of Robert Swan as chief executive officer.

Webvan also announced further modifications to its business plan,including the closing of its operations in Atlanta and reductions in its corporate staff. The restructuring moves are intended to lower operating costs and support the company's push to achieve full profitability in the second half of 2002.

In addition, Webvan reported that it is in preliminary discussions with certain existing investors regarding possible debt or equity financing of approximately $25 million. Webvan has engaged Goldman Sachs & Co. to assist in evaluating its financing and strategic alternatives. The company today also announced plans for a 25-to-1 reverse stock split, subject to shareholder approval at the upcoming annual meeting.

"Our top priorities are to give Webvan's customers an unparalleled shopping experience, prove the economics of our business model and reach profitability," said Robert Swan, chief executive officer of Webvan Group, Inc. "With the approximately $115 million in cash, cash equivalents, and marketable securities on hand at the close of the first quarter 2001, we will need $25 million in capital to pursue a fully-funded business plan, allowing us to fund operations up to the point when the entire company is cash-flow positive. We currently anticipate reaching this cash-flow milestone in the second half of 2002."

First Quarter 2001 Results

"The first quarter of 2001 was undoubtedly the most challenging and the most rewarding period in Webvan's young history," Swan said. "In this period we saw substantial improvements across our operations, leading to a solid financial performance. I am pleased to announce that our Fullerton, California customer fulfillment center, which serves Orange County, exited the first quarter with a positive cash flow. Passing this milestone is a significant accomplishment for Webvan, proving the viability of our business model and clearly demonstrating our ability to run a profitable enterprise."

Webvan reported that net sales for the first quarter 2001 totaled $77.2 million, an increase of 106 percent over pro-forma net sales of $37.5 million for the first quarter of 2000. Sales for the first quarter of 2001 include only 51 days of revenue from Webvan's Dallas/Ft. Worth market, which was closed on February 20. The pro forma results for 2000 include the full impact of HomeGrocer.com for this period.

Net loss for the first quarter was $86.1 million, or a loss of $0.18 per share compared with a pro-forma loss of $75.4 million, or $0.17 per share in the first quarter of 2000. Pro-forma net loss and net loss per share exclude the amortization of goodwill resulting from the company's September 2000 acquisition of HomeGrocer.com, amortization of deferred compensation and restructuring charges and includes HomeGrocer's operating results for the first quarter of 2000.

Gross profit for the first quarter was $21.7 million, or a gross margin of 28.1 percent compared to a pro forma gross profit of $7.8 million and a gross margin of 20.9 percent, for the comparable period in 2000.

The company reported a cash position of $115 million at the end of the first quarter. Webvan also reported combined company-wide inventory turns of 17.8 times on an annualized basis.

The company stated that its active customer accounts in the preceding 12 months ending March 31, 2001 exceeded 761,780. Repeat orders represented 84.1 percent of total orders during the period. The average order size for the recently completed quarter was approximately $114.

"We are taking the necessary steps on the marketing and merchandising fronts to build and retain our customer base and to increase the frequency and order size of their shopping with Webvan," Swan said. "Equally important, Webvan is acting aggressively to hit its profitability goals by reducing operating costs which lowers the required order volume needed to turn a positive cash flow in each of our markets. In the first quarter, we reduced our pro forma operating loss by $24.5 million over the previous quarter."

Restructuring

In line with its on-going effort to conserve capital, Webvan announced that it is indefinitely suspending service and operations in Atlanta in order to focus on its other markets. The company will continue its online retailing service in Chicago, the Pacific Northwest (Seattle, WA and Portland, OR), the San Francisco Bay Area, and Southern California (Los Angeles, Orange County, San Diego).

"While we regret the impact this decision has on our loyal customers in the Atlanta Area, we firmly believe that this is a necessary and right step for the long-term viability of Webvan," Swan continued. "In light of our business priorities, we believe that the company's resources can be more effectively and efficiently utilized to bring our other markets to profitability. These restructuring moves reduce operating costs and support the company's push to achieve full profitability in the second half of 2002."

About 485 positions are affected by the decision to close the Atlanta market. The company also announced that it is eliminating approximately 400 positions at its corporate offices in Foster City, California and Kirkland, Washington as it aligns the organization to its near-term business strategy. Webvan currently employs approximately 3,500 workers.

"This was a difficult decision because of the impact it has on members of our Webvan family," added Swan. "On behalf of all Webvan employees and customers, I want to thank our impacted Associates for their outstanding contributions. They are pioneers in the effort to introduce consumers to the benefits of online retailing. We are committed to working with these colleagues to help them through this transition."

Robert Swan Named Webvan CEO

Webvan's board of directors has named Robert Swan as chief executive officer. Swan previously served as Webvan's chief operating officer, a post he assumed in September 2000. He joined Webvan in October 1999 as senior vice president of finance and was named chief financial officer in February 2000. Swan has joined the company's board of directors.

Prior to joining Webvan, Swan spent 14 years at General Electric Company, most recently as vice president and chief financial officer of GE Lighting. He also served as vice president, finance of GE Medical Systems in Europe, chief financial officer of GE Transportation Systems, and as manager of programs and planning for GE's Corporate Operations and Audit Staff. Swan is 40 years old. He holds a B.S. in Management from the State University of New York at Buffalo, and an M.B.A. from the State University of New York in Binghamton.

Swan succeeds George T. Shaheen, who resigned as Webvan's chief executive officer and chairman on April 13, 2001.

Company Plans Reverse Stock Split

The company said today that its board of directors has approved a 25-to-1 reverse stock split, subject to approval by Webvan's shareholders at the annual meeting to be held in June.

"At present, we have too many shares of Webvan securities outstanding," Swan said. "A reverse split of 25-to-1 will reduce our number of outstanding shares to approximately 20 million. We believe such a move is in the best interest of our shareholders. A reverse split will also support our effort to raise the Webvan share price above the Nasdaq's $1 per share listing requirement."

Webvan Board Changes

Webvan announced that Ronald D. Fisher, Managing General Partner of SOFTBANK Capital Partners, has joined the company's board of directors.

"Ron is a seasoned executive who will add a great deal of depth and experience to our board," said Christos M. Cotsakos, chairman and chief executive officer of E*Trade Group and a member of the Webvan board of directors. "He has a proven record in helping young companies grow into successful and profitable enterprises. His insights will be very valuable to the board, Bob and the Webvan management team."

Tim Koogle and Michael Moritz have stepped down as members of Webvan's board of directors, effective immediately. Koogle is the vice-chairman of Yahoo! Inc. Michael Moritz is a general partner with Sequoia Capital.

In addition to Cotsakos, Fisher and Swan, Webvan's Board of Directors is now comprised of: Jim Barksdale, partner of The Barksdale Group; David M. Beirne, general partner, Benchmark Capital; and Mary Alice Taylor, former chairman and chief executive officer of HomeGrocer.com.

About Webvan

Webvan Group, Inc., is setting a new standard for Internet retailing, combining the convenience of online shopping with a personalized courier service that delivers products into customers' homes within a timeframe of their choosing. Through its Web site, http://www.webvan.com, Webvan offers a broad selection of quality products at competitive prices. The company's relentless focus on customer service, innovation, and value saves its customers time and money. Webvan's corporate headquarters are located in Foster City, CA.

Conference Call

Webvan will discuss its first quarter 2001 financial results and today's other announcements in a conference call available to the general public. The call, to be held today (April 26) at 9:00am EST/6:00am PST and hosted by Robert Swan, can be accessed by dialing 712/257-2860, passcode: Webvan. A replay of the call will be available through May 3 by dialing 402/280-9983. The conference call will also be available through Webvan's Web site at http://www.webvan.com or at http://www.StreetEvents.com.

Safe Harbor Statement under Private Securities Litigation Reform Act of 1995: The statements contained in this press release that are not historical facts, including statements relating to the company's revised business plan under which the company intends to achieve profitability by mid-2002, the possibility of financing by insiders and the analysis of such financing and other strategic alternatives by Goldman Sachs & Co., the reverse stock split of 25:1 and its potential impact on Nasdaq listing concerns, the sufficiency of existing cash, coupled with a capital infusion, to adequately fund the company's operations until profitability, the implication for the profitability of the company's business as a result of achieving profitability in the Fullerton, CA facility, and the statement regarding actions taken to build and expand our customer base and otherwise cut operating expenses and order volume dependency are forward-looking statements that involve certain risks and uncertainties, including but not limited to: the risk that the assumptions underlying the revised business strategy may change and that the company will need additional cash to fund operations in 2001 or 2002, the risk that the current discussions with investors regarding possible financing do not materialize into a financing or that the amount of such financing is materially different than the approximately $25 million under discussion, the risk that existing shareholders may experience substantial dilution and, given the preliminary nature of the discussion regarding possible financing and thereby the uncertainty as to the form the financing may ultimately take (e.g., equity, equity-linked or debt), the risk that the securities that may ultimately be issued may have rights, preferences or privileges senior to those rights of the company's common shareholders, the risks that the shareholders may not approve the proposed reverse stock split and that a reverse stock split could negatively impact the value of the company's shares by allowing additional downward pressure on the stock price as its relative value becomes greater following the reverse split, the risk that a reverse split will not effectively address the continued listing requirements of the Nasdaq, the risk that the Fullerton facility will not maintain profitable operations, and the risks relating to the ability to achieve favorable operating margins at our facilities, including by improving operational productivity and aligning capacity with demand, necessary to achieve profitability on a facility-by-facility or company-wide basis, as well as other uncertainties detailed in the company's filings with the Securities and Exchange Commission, including the annual report on form 10-K for the year ended December 31, 2000.

Please Note: Financial Tables can be downloaded with the full press release from the Assets column at right.

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Produced for Webvan Group, Inc.

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Webvan Group, Inc.
Bud Grebey
650/627-3558 (Media)
Mark Rogowsky
650/627-3370 (Investors)

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