Overstock, having already stepped out of other sectors such as jewelry to focus on home and housewares and readying a transition of its banner to Bed Bath & Beyond in early August, was in transitory mode in the second quarter yet still managed to beat Wall Street estimates.
Net loss was $73.5 million, or $1.63 per diluted share, versus net income of $7.1 million, or 12 cents per share, in the year-earlier quarter. Adjusted for one-time events, net loss was $790,000, or two cents per diluted share, versus net income from continuing operations of $8.3 million, or 19 cents per diluted share, in the year-prior quarter, the company noted.
An analyst consensus estimate published by MarketBeat called for loss per adjusted diluted share of nine cents and revenues of $409.6 million.
Overstock reported that net revenue was $422.2 million versus $528.1 million in the quarter a year previous. Operating loss was $4.2 million versus an operating income of $11.5 million in the year-before period.
In a conference call, Overstock CEO Jonathan Johnson (pictured above) said the Bed Bath & Beyond intellectual rights acquisition is an exciting proposition, even as the company gets ready to rebrand under that banner. At a time when almost nothing on its site is overrun or liquidation merchandise, the company was stuck with a legacy name that no longer represented how it goes to market. The Bed Bath & Beyond name will encourage consumers to rethink what they assume about Overstock just as changes to the product assortment establish it as a destination specialty retailer for home and housewares products, Johnson said. The company has added 600,000 new products to its site since early June, all fulfilled on a drop-ship basis in accordance with Overstock’s asset-light business model. It is targeting the most loyal Bed Bath & Beyond customers as the company initiates the rebranding in the United States. In the U.S., the company expects to shift from the Overstock to the Bed Bath & Beyond banner during early August, Johnson said.
In Canada, where Overstock switched from its namesake to the Bed Bath & Beyond banner almost immediately after acquiring the bankrupt company’s intellectual rights, Johnson indicated direct traffic visits to the bedbathandbeyond.ca site have increased substantially. Overstock is applying the vast Canadian customer file it acquired, one order of magnitude larger than Overstock’s previous compendium, including in email marketing campaigns that it rolled out slowly to avoid capture by spam filters. The company has seen an increase in click-through rates, driving further traffic to bedbathandbeyond.ca, he said. The increase in visits has accelerated Overstock’s rate of new customer acquisition, Johnson pointed out, adding bedding, bath and kitchen have been the company’s strongest growth categories.
“The acquisition of the Bed Bath & Beyond brand is the beginning of a new phase of growth for us,” Johnson said. “The successful launch and early performance of our Bed Bath & Beyond business in Canada has been encouraging. The Bed Bath & Beyond brand is strong. In Canada, customers want to buy and are comfortable buying, from the new Bed Bath & Beyond website. We are optimistic about our future with this new brand in the U.S. The combination of a highly recognized and much-loved consumer home brand and our asset-light operating model should meaningfully grow and scale our business in the U.S. and Canada. We know there is work to be done to win Bed Bath & Beyond customers and retain our existing loyal customers through this transition. We have the right strategies, the right action plan, and the right people in key positions to execute this transformation. The entire organization is focused on ensuring the success of the Bed Bath & Beyond U.S. launch, still targeted for early August.”
In commenting on second-quarter results, Johnson added, “The team continued to execute well during the second quarter. As we navigated an intensely competitive environment well with our asset-light business model, we were able to provide smart value to our customers, improve our year-over-year revenue trend, and deliver another quarter of positive adjusted EBITDA. Our balance sheet remains strong with over $300 million in net cash, setting us up well to execute the transformative rebranding of our furniture and home furnishings e-commerce business.
