Overstock announces Q3 2023 results and will launch a clearance website by the end of the year

It is learned that on October 26, Overstock announced its third-quarter 2023 results. Data showed that its third-quarter revenue did not meet analysts' expectations and the number of active customers continued to decline. Based on the performance, Overstock's brand reshaping process seems to be still in its early stages and the effect is not obvious.

Brand remodeling has little effect, Q3 performance is mixed

According to data released by Overstock, its revenue in the third quarter of 2023 fell 18.9% year-on-year to $373.3 million, lower than analysts' expectations of $396.1 million; gross profit margin was 18.7%, lower than 23.3% in the same period last year. In addition, Overstock's operating loss in the third quarter was $41 million and its net loss was $63 million.

In premarket trading, Overstock shares fell slightly to just below $15, well below half their Aug. 1 peak of nearly $35.

In fact, Overstock’s revenue has been declining for the past three years, with an average annual decline of 1.77%. But more worrying is that in the third quarter, the number of Overstock’s active customers fell by 900,000 year-on-year to 4.9 million. Previously, Overstock has been working hard to increase active buyers, a key performance indicator.

However, in the past two years, the number of Overstock buyers has fallen by an average of 26.9% per year. In the third quarter of this year, Overstock's active buyers fell by 15% year-on-year, but increased by 6% quarter-on-quarter. In addition, the number of orders increased by 3% year-on-year to 1.9 million, and the average order value fell by 21% from last year to $192.

This is the first financial report released by Overstock after acquiring the BedBath&Beyond brand assets. Overall, the effect of the acquisition is not obvious, and it may take more time to grow. Overstock also plans to make further adjustments.

The brand remodeling plan has been adjusted, and two major changes will be made before the end of the year

As early as 2020, Overstock began to consider acquiring BedBath & Beyond's business. However, due to the high acquisition cost of US$2 billion and the latter facing declining same-store sales and debt problems at the time, Overstock chose to continue to wait and see.

It was not until April 2023 that BedBath&Beyond declared bankruptcy, and Overstock immediately acquired the brand and intellectual property rights for $21.5 million at the end of June. At that time, the former was one of the top five brands in the US home furnishing retail industry, and Overstock's popularity ranked 25th.

After the acquisition, Overstock updated its website domain name to BedBath&Beyond in Canada and the U.S. Although the acquisition brought it 100 million customer profiles and numerous supply chain resources, helping it add 25 million new shoppers, its active customer base still declined.

Overstock revealed that it faced two major problems after the acquisition. First, core active customers continued to reduce their home-related purchases and lost market share faster than competitors. Second, the Overstock brand gradually faded out of consumers' sight. Even the name change to BedBath&Beyond did not achieve the expected results.

To further promote its brand reshaping, Overstock recently announced that it will be renamed Beyond on November 6, 2023. At the same time, it will be transferred from Nasdaq to the New York Stock Exchange and its stock code will be changed from OSTK to BYON.

In addition, in order to alleviate the continued loss of core customers, Overstock announced on October 26 that it plans to relaunch Overstock.com and offer a variety of clearance home products at clearance prices, which is the business model Overstock adopted when it first went online.

Looking ahead to the fourth quarter, Overstock expects that gross margins may be lower in the fourth quarter due to increased holiday promotions, and revenue will improve slightly. In addition, Overstock expects the number of active customers to increase to around 5.2 million, and the average order volume will continue to decline.

Editor✎ Ashley/

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