Overstock’s CEO on Becoming Bed Bath & Beyond
MILAN — Now that Utah-based Overstock has saved the Bed Bath & Beyond name from extinction, management is taking on the task of creating the identity and winning product mix that endeared the retailer’s customers to its stores for more than 30 years.
Overstock won a bid for Bed Bath & Beyond’s key assets in June, including the former retailer’s website, domain names, database and loyalty-program data for a mere $21.5 million. Set to benefit from adopting one of the most famous names in U.S. retail history, Overstock is testing the waters with a new Canadian site currently operating under the Bed Bath & Beyond domain. Overstock will launch the new U.S. domain in August.
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Overstock will post second-quarter earnings July 27. The company said it cannot confirm when it will officially change its name to Bed Bath & Beyond.
While Overstock chief executive officer Jonathan Johnson is reticent to release guidance on 2023 figures, he chatted with WWD about the future of Bed Bath & Beyond, the Canada site’s positive performance and the possibility of a brick-and-mortar partner in the near term.
WWD: Between the products Bed Bath & Beyond had and the products that you traditionally have, how will Overstock merge these assortments to maintain that Bed Bath & Beyond experience? Or will it be another experience?
Jonathan Johnson: I think it’ll largely feel like the similar experience. So we have been adding more bed and bath product and kitchen product over the last year. And since we were announced as the stalking horse in the bankruptcy [Bed Bath & Beyond process], we’ve now added more than 500,000 products, most of them kind of Bed Bath & Beyond-related.
I think the Bed Bath & Beyond customer will feel like it’s a familiar experience. The sort of one-off spatula…or covered coffee cups and things like that…we won’t have, but the sheets, the linens, towels, housewares, kitchen appliances and all of that will feel very familiar to the Bed Bath & Beyond customer.
WWD: You mentioned in a previous interview that you weren’t planning to open physical stores. You have the name, you can do whatever you want with it. If all goes well on the financial end, why not consider opening a physical store, given that so many American shoppers will miss the Bed Bath & Beyond in-store experience?
J.J.: I think it’s a wait-and-see. One of the things that drove this transaction for us is Overstock has a great asset [in] its business model…but we had a name that was kind of dragging us down. Bed Bath & Beyond is an iconic and beloved brand, but its business model had dragged it down. Taking the two things that were drags away and putting the two good pieces together is exciting. Now does that mean we’ll never go into physical stores? No, but it’s not part of our current foreseeable future.
WWD: What about pop-ups or curated brand experiences to connect with customers?
J.J.: We do think about pop-ups, we do think about the brand experience and this is still very nascent thinking…early-stage thinking whether we license some Bed Bath & Beyond product to other stores, department stores and other types of stores — big-box stores, too — in order to get that brand out there. But the idea of big-box, Bed Bath & Beyond stores in the near future is not something we’re thinking about.
WWD: Have you pondered a social media strategy and collaborating with big names in home decor, interior designers, chefs and others? Do you have any plans to amp up the Bed Bath & Beyond name through social channels?
J.J.: I think the answer will be yes. Over the last year, Overstock has partnered with six brand ambassadors who are strong in home products, home design, home decorating. Our plan is to cycle in and out and add different ambassadors over time. We expect that with the Bed Bath & Beyond brand, we will have more opportunities to work with influencers, brand ambassadors, do more on social.
WWD: What is the possibility of the new Bed Bath & Beyond partnering with a brick-and-mortar store for online deliveries?
J.J.: One thing we’ve talked about and explored for a number of years is having a brick-and-mortar partner where our customers could do returns. You know, if you think of the Amazon–Kohl’s relationship where if you buy something on Amazon, you can return it at Kohl’s. If, if we found the right partner, it would make it easier for our customers to do returns. That would be, I think, the beginning of such a partnership.
WWD: How is the relationship with Bed Bath & Beyond suppliers?
J.J.: It may be easier with the Bed Bath & Beyond brand. One thing we found is that the Bed Bath & Beyond brand name has already begun to open up doors. Suppliers that weren’t interested in selling to us as Overstock are very interested in partnering with us as Bed Bath & Beyond. So, you know, the Overstock name from a generic perspective had a meaning and it meant liquidation. That’s not who we were, but it’s who some customers and who some suppliers perceived us to be. Bed Bath & Beyond has a generic meaning and it is who we are. It also has been, as you know, a beloved brand. And so I think that will make it easier for us to partner with people if we want to, to bring in more product as we make those efforts.
WWD: You launched the Canada Bed Bath & Beyond site shortly after announcing the purchase of Bed Bath & Beyond’s assets. Are there any financial indicators you can provide on its performance so far?
J.J.: It is performing. An analyst report issued by Jeffries shows the traffic up significantly. It shows, time on site, number of page views, and they are up. [A report issued by Jeffries on July 12 and viewed by WWD showed that since June 29, average daily visits to the company’s Canada site are 60 percent higher versus immediately prior to the conversion.]
WWD: With the U.S. site expected to roll out in early August, do you have any other plans to roll out any other international sites?
J.J:. We have a joint venture in Mexico. We’re talking to that partner to see what the go-forward looks like. We’ve had some potential partners from other countries reach out to us, but the focus right now is to get this right in the U.S. and to grow it in Canada. From there, we’ll look to see what we do other places.
WWD: And now that you have this new endearing name, what sort of effect do you think this will have on your sales for the full-year 2023?
J.J.: We haven’t given guidance on 2023 or 2024 sales just because it’s too early to know. Canada is such a small piece of our total revenue.
WWD: Have rising tariff and shipping costs, especially with China, impacted your product mix? Has the company and its suppliers explored new frontiers in terms of production?
J.J.: Pre-tariffs, 85 percent of Overstock’s inventory was probably manufactured in China. Post-tariffs, post [COVID-19] pandemic, that percentage was less than 50 percent. In terms of the supply chain, I think the kinks in the supply chain have been ironed out. The ability to get product right now — whether [or not] it’s from China…some of our suppliers have moved to Malaysia, Vietnam, India, even Mexico and parts of Europe…the supply chain’s pretty good right now.
We have a little less than 50 percent coming from China and a little more than 50 percent comes from the rest of the world.
WWD: Overstock posted a 30 percent decline in revenues last year. Do you think you’ll at least break even or better in 2023?
J.J.: I don’t think that our revenues will be up year-over-year, but I will note that even with revenues down, we’ve posted 12 consecutive quarters of positive EBITDA [earnings before interest, taxes, depreciation and amortization]. We continue to focus on making money so that we have a strong balance sheet, so when opportunities like Bed Bath & Beyond arise, we can advantage of them. We can play offense while a lot of others are playing defense.
