PFSweb Reports First Quarter 2008 Results Including Adjusted EBITDA of $2.8 Million and Net Income of $0.4 Million

Business Wire, May 13, 2008

Service Fee Revenue Increases 23%, eCOST.com Revenue Increases 29%

Board of Directors Approves 1 for 4.7 Reverse Split of Common Stock

PLANO, Texas -- PFSweb, Inc. (Nasdaq: PFSW), an international business process outsourcing provider of end-to-end web commerce solutions and an online discount retailer, today announced its financial results for the first quarter ended March 31, 2008.

Summary of consolidated results for the first quarter ended March 31, 2008:

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Mark Layton, Chairman and Chief Executive Officer of PFSweb, stated, "During the first quarter of 2008, we experienced measurable growth across each of our businesses year-over-year. We believe that having a strong roster of clients and customers in multiple industries has helped us achieve this growth despite weaker macroeconomic conditions in the U.S. In addition, this quarter represents the fourth consecutive quarter of profitability. These results are a testament to the sustained momentum that we have built over the last 12 months."

Summary of results by business:

Service Fee Business:

For the first quarter of 2008, Service Fee revenue increased 23% to $20.8 million, compared with $17.0 million for the same period in 2007. The Service Fee business reported Adjusted EBITDA of $1.6 million for the first quarter of 2008, compared to $0.3 million for the same period in the prior year period.

Mike Willoughby, President of PFSweb's Services Division, commented, "The growth in our Service Fee business reflects revenue from several new clients that were signed over the past 18 months and are now fully implemented. We also benefited from incremental project work and a modified contract arrangement with one of our largest service fee clients. We continue to be excited about our growth opportunities in this business. In addition to winning the new contract announced earlier today with an iconic brand name company, we maintain a robust pipeline of pending proposals currently valued based on client projections at approximately $35 million."

Supplies Distributors Business:

For the first quarter of 2008, Supplies Distributors revenue was $62.3 million, compared to $58.8 million for the same period in the prior year. Adjusted EBITDA was $1.7 million for the first quarter of 2008, compared to $1.4 million for the same period in the prior year.

Mr. Willoughby continued, "Our Supplies Distributors business experienced a 6 percent increase in revenue for the quarter. This business continues to contribute steady Adjusted EBITDA and net income performance. In mid 2007, the core client that is supported by the Supplies Distributors business was merged into a joint venture. Since this time we have worked closely with the client's management team and continue to support this successful, long-term relationship."

eCOST.com Business:

For the first quarter of 2008, eCOST.com revenue increased 29% to $28.0 million, compared to $21.6 million in the same quarter of 2007. Adjusted EBITDA for eCOST.com in the quarter was a loss of $0.5 million, a significant improvement as compared to a loss of $0.9 million in the same quarter of 2007.

Mr. Layton continued, "We are pleased with the 29% increase in revenue that eCOST.com reported for the first quarter. In April 2008, we fully launched at eCOST.com the 'For the Home' and 'Sports and Leisure' stores. Our growth strategy, for both revenue and gross profit percentage expansion, includes the broadening of our product offering targeted to widen our customer reach and to improve our gross margin mix. The addition of more than 60,000 new products in these two new stores is a solid step forward in implementing this strategy. eCOST.com also recently launched a significant site feature and functionality upgrade, the 3rd such major upgrade since early 2006, that is designed to further improve ease of use, navigation capabilities and cross sell and up-sell capabilities.

Reverse Split

PFSweb announced that its Board of Directors approved a reverse split of the issued and outstanding shares of the Company's common stock. The reverse split will consist of a 1-for-4.7 reverse split of the common stock and will be effective as of June 2, 2008. PFSweb stockholders approved a reverse stock split up to 1-for-6 at the Company's 2007 Annual Meeting of Stockholders.

"Given the continued underperformance of our shares relative to our business performance, the Board of Directors authorized a 1-for 4.7 reverse stock split at its last meeting. This decision came only after careful deliberation and consideration of the potential risks and rewards of this course of action. By overcoming the challenges associated with trading below $1 through a reverse stock split, the Board believes that the Company will have a better chance to properly reflect the value that has been built into the business over the last 12-18 months," concluded Mr. Layton.

Significant operating events for first quarter of 2008 year-to-date:

* Service Fee Business signed two new clients totaling $8 to $10 million in annualized service fee revenue, based on client projections once fully implemented. This includes the previously reported new contract with The Discovery Channel Store, Inc., as well as a new contract with an iconic brand retailer scheduled to be implemented in the first quarter of 2009.