Online home goods retailer Overstock.com Inc. missed analysts’ expectations for Q3 2023 this morning, with revenue down 18.9% year on year to $373.3 million.
It fell short of analyst estimates of $396.1 million, while gross margin ran at 18.7%, down from 23.3% in the same quarter last year. Of perhaps most concern, annual active customers fell 0.9 million year-on-year to 4.9 million.
In pre-market trading the company saw a small drop in its share price to just below $15, well below half of its year-to-date peak of nearly $35 on Aug. 1.
Indeed, Salt Lake City, Utah-based Overstock’s revenue has been declining over the last three years, dropping on average by 1.77% annually. Importantly, Overstock has been struggling to grow its active buyers, a key performance metric.
Over the last two years, its buyers have declined 26.9% annually, one of the lowest rates of growth in the consumer internet sector, according to analysts.
“Over the last three months, we have accelerated efforts to build a company with a bigger, brighter, and bolder future,” said CEO Jonathan Johnson, launching a robust defense of prospects for growth.
“On June 28, we acquired the Bed Bath & Beyond brand and intellectual property – a brand ranked in the top five most recognized home brands in the U.S. Within hours of closing the deal, we revived the brand in Canada, and in just 33 days we relaunched the brand in the U.S. under our asset-light operational model.”
BB&B Deal Offers Growth
Johnson added: “It is important to take a step back to understand the deal and how we intend to monetize it going forward. Just a few years ago, when we first looked at acquiring the Bed Bath & Beyond business, it cost close to $2 billion.
“We chose to watch from the sidelines with our eye on four key assets: the number five most recognizable brand in the home space [in that same ranking, Overstock was 25]; a 100 million-plus customer file; vendor relationships with some of the biggest home category brands in the world; and valuable intellectual property. We were thrilled when that opportunity arose, and we took it.”
Johnson said that the company broke the deal into two headline numbers totaling approximately $175 million: approximately $25 million paid to the bankruptcy estate for the brand and related IP and in acquisition-related fees; and approximately $150 million of additional investment to launch the brand, “reignite the customer file”, and expand and create new categories while working to maintain core customers.
He said that company is in “the early stages” of capitalizing on the acquisition.
“As I’ve said from the onset, growing the customer file is our primary measure of success. Orders have returned to positive year-over-year growth for the first time in over two years. This acquisition has positioned us for growth over the long-term,” Johnson said.
Overstock To Rename As Beyond
Overstock.com Inc. previously announced that it would change its name to Beyond Inc. effective Nov. 6, 2023. Concurrently, the company will transfer its stock listing from the NASDAQ
NDAQ
Following the corporate name change, Beyond, Inc. will continue to operate under the Bed Bath & Beyond brand which it acquired with associated intellectual property on June 28 under a Bankruptcy Court process. It rebranded as Bed Bath & Beyond, launching bedbathandbeyond.ca (formerly overstock.ca) in Canada on June 29, followed by bedbathandbeyond.com (formerly overstock.com) and the brand’s new mobile app in the U.S. on Aug. 1.
Johnson added: “Changing our corporate name to Beyond Inc. sets us up well for a brighter future. As we continue the process of transforming our consumer brand, our new corporate name will help us reach millions of new customers.”
Overstock.com Inc. will continue to trade on the NASDAQ with symbol OSTK until the close of market Friday, Nov. 3. Beyond Inc. will begin trading on the NYSE with ticker symbol BYON when markets open Monday, Nov. 6.
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