Overstock Posts Better-than-expected Drop in Q2 Sales
MILAN — Utah-based Overstock which recently saved the Bed Bath & Beyond name from extinction, on Thursday posted a better-than-expected 20 percent drop in sales in the second quarter to $422.2 million. The news boosted Overstock’s shares more than 12 percent to $35.02 on Nasdaq in trading. Analysts expected sales to drop to $409.6 million, according to an analyst survey by Zacks, as active users and order frequency declined.
Earlier this year, analysts credited this ongoing decline to the negative effect the company’s accessible name had on sales, especially amid a time when macroeconomic headwinds negatively affected the home category.
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Undaunted by the results, Overstock chief executive officer Jonathan Johnson remained confident as the group gears up to turn the page on a new chapter and transition its name to Bed Bath & Beyond and launch its U.S. e-commerce platform in early August.
“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.”
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 next month.
In the second quarter of 2023, Overstock widened its net loss to $73.5 million compared to a profit of $7.15 million in the second quarter of 2022, as its active customer base fell 29 percent to 4.6 million. Its diluted net loss per share was $1.63, while losses, adjusted for non-recurring costs, were 2 cents a share, also beating analyst expectations. An average estimate of six analysts surveyed by Zacks Investment Research project a loss of 9 cents a share.
“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,” he added.
In an exclusive interview with WWD earlier this month, Johnson said he was not expecting revenues to rise year-over-year. “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.”
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