Beyond Inc. financial results for its first quarter fell short of Wall Street expectations, but Executive Chairman Marcus Lemonis said the past several weeks have been dedicated to positioning the company’s three major retail brands — Bed Bath & Beyond, Overstock and recently acquired Zulily — for growth.
Net loss was $73.9 million, or $1.62 per diluted share, versus a net loss of $10.3 million, or 23 cents per diluted share, in the year-previous quarter.
Adjusted for one-time events, net loss was $55.5 million, or $1.22 per diluted share, the company reported. In the first quarter a year before, when the company was still operating as Overstock, it posted an adjusted net loss of $4.7 million, or 10 cents per diluted share.
A MarketBeat-published analyst consensus estimate called for a loss of 92 cents per adjusted diluted share and revenues of $389.4 million.
Net revenue was $382.3 million versus $381.1 million in the year-earlier quarter. Operating loss was $57.5 million as compared to $8.4 million in the year-prior period.
Among the company’s first quarter highlights were a 27% increase in orders delivered to 2.2 million and a 26% increase in active customers to six million year over year, Beyond reported.
Lemonis said in a conference call that transaction gains and the rapid growth of such categories as soft home, kitchen and other legacy core Bed Bath & Beyond segments indicate that the brand remains strong. He maintained Beyond completed the sale of Wamsutta, a Bed Bath & Beyond legacy brand, for $10.25 million, or almost half of the original purchase price of the Bed Bath & Beyond intellectual property pool acquisition. In addition, Beyond is working on the start of a four-store test in the United Arab Emirates with a major regional retailer and reached an agreement to license the Bed Bath & Beyond brand on an omnichannel basis in Mexico, Lemonis said.
Lemonis (pictured above speaking at the 2024 Inspired Home Show) said Beyond intends to leverage the Overstock brand to position it as the leader in excess, factory-direct liquidations and reverse logistics businesses. To that end, he said, the company is in discussions around the final term sheet for a partnership with one of the largest liquidators in the United States.
As for Zulily, Lemonis said Beyond, during the past 60 days, successfully re-engaged with the brand’s top 10 vendors and started an onboarding process. On an historical basis, he added, margins in that business were in excess of 20%, but, now, Beyond sees a path to a number closer to 24%, once mature.
In announcing the financial results, Lemonis said, “2024 has begun with a strong strategic focus on building a portfolio of profitable brands designed to drive high customer affinity and lifetime value. We are now 120 days into this new era for the company, building a foundation that will cause the next ten years to look materially different from the last ten while deepening my conviction in our vision to become the ‘AAA of Home,’ offering solutions for everything within the four walls of your home and extending to the four corners of your property. That foundation consists of three powerful brands: Bed Bath & Beyond, Overstock, and now Zulily, and we believe each of them has the potential to become a billion-dollar-plus revenue brand in its own right. That foundation requires us to have the right team, the proper brand positioning, and the most efficient process to profitably grow.
“During the first quarter, we delivered 2.2 million transactions through Bed Bath & Beyond alone, crossing the 6 million active customer level for the first time in a non-COVID environment, successfully soft-launched Overstock six months ahead of schedule, and brought on Salesforce to launch a world-class CRM platform and manage our customer journeys and records,” Lemonis continued. “We also acquired Zulily, a great strategic fit for our portfolio and plan to relaunch the site later this year. Importantly, we’ve now clearly defined the brand identity and consumer value proposition for each brand, leaning into the white space of their historical core competencies and natural strengths.”
Lemonis said, Beyond put together “a world-class team and believe we now have the right players on the field, having hired talent and expertise in the areas of the business where needed, including legacy Bed Bath and Zulily talent. As importantly, we aligned management incentives around our financial objectives, something that historically has not been in place and gives me great confidence in our ability to achieve long-term, sustainable success. The entire team is committed to our path forward, and I believe we now have all the pieces in place to win.”
Adrianne Lee, Beyond’s chief financial and administrative officer, noted, “We’re pleased with the growth in active customers and transactions during the quarter. However, in analyzing the profitability of that growth, we are making the strategic decision to focus on investments to launch these brands and acquire customers with a higher probability of repeat behavior. We will be investing prudently to build our brands for sustainable growth, not transient, transactional growth, and have stood up internal processes to enable our teams to evaluate decisions through the lens of investment return. We believe this will help drive our long-term success and improve shareholder returns. To that end, we are halfway through the plan outlined last quarter to reduce expenses by $45 million on an annualized basis and will aim to continue to eliminate unnecessary fixed costs and create a more variable cost structure. We believe these actions, in combination with soft launching Overstock and soon Zulily, will yield sequential improvements in our margin profile. As we move through the balance of the year, we will continue investing in our foundation and refining the processes that we believe will enable profitable growth for the long term.”
