PFSweb, Inc.

“Our consolidated results for the third quarter reflect a sequential improvement versus our June 2009 quarter, driven by the ramp up of new Service Fee business client activity, further cost reduction initiatives implemented within all our business segments and certain incremental inventory cost related adjustments. We believe we have taken the necessary steps to manage costs without sacrificing our ability to grow in the direct to consumer (“D2C”) market or limiting our ability to win new Service Fee business clients,” stated Mark Layton, Chairman and Chief Executive Officer of PFSweb. “I am especially pleased with the new End2End solution for our Service Fee business, which has significantly enhanced our ability to compete for and win new client agreements. In just the past year since it was launched, we have proven what a game changer this new solution can be, winning new client agreements against our competition. We are currently in the process of launching these new client agreements, which are in different stages of being rolled out. Further, I am encouraged that our eCOST.com subsidiary continues to show bottom line improvement even on lower revenue levels. Recently announced new marketing programs at eCOST.com have been effective in increasing web traffic, boosting the number of repeat shoppers and expanding our Platinum membership program.

“I am upbeat about the outlook for the coming year in terms of growth in both our eCost.com and Service Fee business segments. We continue to maintain a solid financial position to support our operations, with more than $17 million in cash, cash equivalents and restricted cash and we are maintaining our target to achieve breakeven to positive free cash flow for calendar year 2009,” continued Mr. Layton.

Summary of consolidated results for the quarter ended September 30, 2009:

PFSweb’s September 30, 2009 results, while sequentially improved versus the June 2009 quarter, reflect a decrease as compared to the third quarter of 2008 primarily due to the global economic environment and changes to the company’s client mix, including the impact of the non-renewal of its agreement with its largest Service Fee business client earlier this year.

• Total reported revenue was $85.6 million compared to $109.9 million for the third quarter of 2008;
• Adjusted EBITDA (as defined) was $1.2 million versus $2.5 million for the third quarter of 2008;
• Net loss was $846,000, or $0.09 per basic and diluted share, compared to net income of $43,000, or $0.00 per basic and diluted share, for the third quarter of 2008;
• Non-GAAP net loss (as defined) was $723,000, or $0.07 per basic and diluted share, compared to non-GAAP net income of $354,000, or $0.04 per basic and diluted share, for the third quarter of 2008; and
• Total cash, cash equivalents and restricted cash equaled $17.8 million as of September 30, 2009 compared to $18.1 million as of December 31, 2008.

Summary of consolidated results for the nine months ended September 30, 2009:

• Total reported revenue was $256.9 million, compared to $339.1 million for the nine months ended September 30, 2008;
• Adjusted EBITDA (as defined) was $3.1 million versus $7.7 million for the nine months ended September 30, 2008;
• Net loss was $3.6 million, or $0.36 per basic and diluted share, compared to net income of $0.5 million, or $0.05 per basic and diluted share, for the nine month period ended September 30, 2008;
• Non-GAAP net loss (as defined) was $3.2 million, or $0.33 per basic and diluted share, compared to non-GAAP net income of $1.6 million, or $0.16 per basic and diluted share, for the nine months ended September 30, 2008;

Summary of results by business:

Service Fee Business:

For the third quarter of 2009, Service Fee revenue was $13.1 million, compared with $22.9 million for the same period in 2008. This decline was primarily due to the non-renewal of a U.S. Government agency client relationship and lower activity among existing clients as a result of the economy, partially offset by increased service fees generated from new service contract relationships. The Service Fee business reported Adjusted EBITDA of $(0.8) million for the third quarter of 2009, compared to Adjusted EBITDA of $1.5 million for the same period last year.

For the nine months ended September 30, 2009, Service Fee revenue was $42.6 million, compared with $65.0 million for the same period in 2008. This decline was primarily due to the non-renewal of a U.S. Government agency client relationship and lower activity among existing clients as a result of the economy, partially offset by increased service fees generated from new service contract relationships. The Service Fee business reported Adjusted EBITDA of $(0.5) million for the nine months ended September 30, 2009, compared to $4.2 million for the same period last year.

Mike Willoughby, President of PFSweb’s Services division, commented, “After experiencing a set back with the non-renewal of a U.S. Government agency client, which officially ended in the second quarter of 2009, we have been focused on winning new service fee agreements and implementing a number of disciplined cost reduction initiatives. The Service Fee revenue and operating results for the September 2009 quarter reflect an improvement compared to the June 2009 quarter. We are excited about several additional new Service Fee client programs being rolled out in the fourth quarter of 2009, as well as additional recent client wins, which are currently expected to be implemented during the first half of calendar year 2010. As we have previously stated, our new End2End Solution offering has been very well received by the market, resulting in a number of new client wins this year and a robust pipeline of potential new agreements.”

Supplies Distributors Business:

For the third quarter of 2009, Supplies Distributors revenue was $45.1 million, compared to $55.4 million for the same period last year. Adjusted EBITDA was $2.2 million for the third quarter of 2009, compared to $1.4 million for the same period last year.

For the nine months ended September 30, 2009, Supplies Distributors revenue was $135.7 million, compared to $177.8 million for the same period last year. Adjusted EBITDA was $4.6 million for the nine month period of 2009, compared to $5.1 million for nine month period in 2008.

Mr. Willoughby concluded, “While the decline in activity for the Supplies Distributors business due to the overall global economic environment is disappointing, this business continues to be profitable with steady net income each quarter. The September 2009 quarter results benefited from certain inventory cost related adjustments which we do not anticipate will continue to occur at a similar level in future quarters.”

eCOST.com Business:

For the third quarter of 2009, eCOST.com revenue was $20.6 million, compared to $23.7 million for the same period in 2008. While revenue from our business-to-business (B2B) segment experienced moderate growth over the prior year, this growth was more than offset by a decline in our business-to-consumer (B2C) segment. Primarily as a result of cost reductions, Adjusted EBITDA for eCOST.com in the quarter improved to $(0.2) million, as compared to $(0.5) million for the same period last year.

For the nine months ended September 2009, eCOST.com revenue was $61.8 million, compared to $74.7 million for the same period in 2008. Revenue from both our B2B and BTC segments declined as compared to the prior year. Once again, primarily as a result of cost reductions, Adjusted EBITDA for eCOST.com in the nine month period ended September 30, 2009 improved to $(0.9) million, as compared to $(1.7) million for the same period last year.

“The improvements we have made to the eCOST.com business have allowed us to minimize its net loss even on lower revenue levels we have experienced during the difficult economic environment over the past 9 months. We believe that the streamlined infrastructure we have implemented and the effective promotional and marketing programs we have launched will enable us to benefit from stronger results as the economy recovers. This past week eCOST.com launched two new high profile marketing tools, Secret Sale and Make an Offer, that we believe will provide the business with another set of tools to efficiently acquire new customers and generate incremental revenue opportunities. In fact, our beta test of the Secret Sale program increased the number of unique visitors to eCOST.com’s site by more than 75%,” stated Mr. Layton.

“In addition to expanding the scale of our overall business and diversifying our revenue base, eCOST.com has offered us the ability to test new web-commerce technologies that we can utilize in our Services Fee business and offer to our clients. This has been an extremely effective way to improve our technology and eCommerce platforms for existing clients and adds to our value proposition and appeal as we target new Service Fee business clients,” concluded Mr. Layton.

Conference Call Information

Management will host a conference call at 10:00 am Central Time (11:00 am Eastern Time) on Friday, November 13, 2009, to discuss the latest corporate developments and results. To listen to the call, please dial (888) 562-3356 and enter the pin number (40783637) at least five minutes before the scheduled start time. Investors can also access the call in a “listen only” mode via the Internet at the Company’s website,www.pfsweb.com. Please allow extra time prior to the call to visit the site and download any necessary audio software.

A digital replay of the conference call will be available through December 13, 2009 at (800) 642-1687, pin number (40783637). The replay also will be available at the Company’s website for a limited time.

Non-GAAP Financial Measures

This news release contains the non-GAAP measures free cash flow, non-GAAP net income (loss), Earnings Before Interest, Income Taxes, Depreciation and Amortization (“EBITDA”) and Adjusted EBITDA.

Free cash flow is defined as net cash provided by operating activities less capital expenditures.

Non-GAAP net income (loss) represents net income (loss) calculated in accordance with U.S. GAAP as adjusted for the impact of non-cash stock-based compensation expense, amortization of identifiable intangible assets and impairment of goodwill and identifiable intangible assets.

EBITDA represents earnings (or losses) before interest, income taxes, depreciation, and amortization. Adjusted EBITDA further eliminates the effect of stock-based compensation and impairment of goodwill and identifiable intangible assets.

Free cash flow, non-GAAP net income (loss), EBITDA and Adjusted EBITDA are used by management, analysts, investors and other interested parties in evaluating our operating performance compared to that of other companies in our industry. Free cash flow is used as a supplemental financial measure in our evaluation of liquidity and financial strength. The calculation of non-GAAP net income (loss) eliminates the effect of stock-based compensation, amortization of intangible assets and impairment of goodwill and intangible assets and EBITDA and Adjusted EBITDA further eliminates the effect of financing, income taxes, and the accounting effects of capital spending, which items may vary from different companies for reasons unrelated to overall operating performance.

PFSweb believes these non-GAAP measures provide useful information to both management and investors by excluding certain expenses that may not be indicative of its core operating results. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. These non-GAAP measures included in this press release have been reconciled to the GAAP results in the attached tables.

About PFSweb, Inc.

PFSweb develops and deploys comprehensive end-to-end eCommerce solutions for Fortune 1000, Global 2000 and brand name companies, including interactive marketing services, global fulfilment and logistics and high-touch customer care.. The company serves a multitude of industries and company types, including such clients as LEGO, Riverbed, InfoPrint Solutions Company (a joint venture company owned by Ricoh and International Business Machines), Hawker Beechcraft Corp., Rene Furterer USA, Roots Canada Ltd. and Xerox.

Through its wholly owned eCOST.com subsidiary, PFSweb also serves as a leading multi-category online discount retailer of high-quality new, "close-out" and manufacturer recertified brand-name merchandise for consumers and small to medium size business buyers. The eCOST.com brand markets more than 300,000 different products from leading manufacturers such as Sony, Hewlett-Packard, Denon, JVC, Canon, Nikon, Panasonic, Toshiba, Microsoft, Dyson, Kitchen Aid, Braun, Black & Decker, Cuisinart, Coleman, and Citizen primarily over the Internet and through direct marketing.

To find out more about PFSweb, Inc. (NASDAQ: PFSW - News), visit the company's websites athttp://www.pfsweb.com and http://www.ecost.com.

The matters discussed herein consist of forward-looking information under the Private Securities Litigation Reform Act of 1995 and is subject to and involves risks and uncertainties, which could cause actual results to differ materially from the forward-looking information. PFSweb's Annual Report on Form 10-K for the year ended December 31, 2008 identifies certain factors that could cause actual results to differ materially from those projected in any forward looking statements made and investors are advised to review the Annual Report and the Risk Factors described therein. These factors include: our ability to retain and expand relationships with existing clients and attract and implement new clients; our reliance on the fees generated by the transaction volume or product sales of our clients; our reliance on our clients' projections or transaction volume or product sales; our dependence upon our agreements with IBM and Infoprint Solutions; our dependence upon our agreements with our major clients; our client mix, their business volumes and the seasonality of their business; our ability to finalize pending contracts; the impact of strategic alliances and acquisitions; trends in the e-commerce, outsourcing, government regulation both foreign and domestic and the market for our services; whether we can continue and manage growth; increased competition; our ability to generate more revenue and achieve sustainable profitability; effects of changes in profit margins; the customer and supplier concentration of our business; the reliance on third-party subcontracted services; the unknown effects of possible system failures and rapid changes in technology; foreign currency risks and other risks of operating in foreign countries; potential litigation; potential delisting; our dependency on key personnel; the impact of new accounting standards and changes in existing accounting rules or the interpretations of those rules; our ability to raise additional capital or obtain additional financing; our ability and the ability of our subsidiaries to borrow under current financing arrangements and maintain compliance with debt covenants; relationship with and our guarantees of certain of the liabilities and indebtedness of our subsidiaries; taxation on the sale of our products; eCOST's ability to maintain existing and build new relationships with manufacturers and vendors and the success of its advertising and marketing efforts; eCOST's ability to increase its sales revenue and sales margin and improve operating efficiencies and eCOST’s ability to generate a profit and cash flows sufficient to cover the values of its intangible assets. PFSweb undertakes no obligation to update publicly any forward-looking statement for any reason, even if new information becomes available or other events occur in the future. There may be additional risks that we do not currently view as material or that are not presently known.

(TABLES FOLLOW)

PFSweb, Inc.
Senior Partner and Chief Executive Officer
Mark C. Layton, 972-881-2900
or
Senior Partner and Chief Financial Officer
Thomas J. Madden, 972-881-2900
or
Investor Relations
KCSA Strategic Communications
Todd Fromer / Garth Russell
212-896-1215 / 212-896-1250
tfromer@kcsa.com / grussell@kcsa.com