Overstock's Q1 2023 financial report exceeded expectations, but active customers declined

Recently, Overstock, an American home furnishing e-commerce company, released its Q1 2023 financial report, showing that its revenue and number of active customers both declined year-on-year, but still exceeded analysts' expectations. The company's 100% focus on home furnishings and the weakness of US home furnishing consumption led to the decline.

In the first fiscal quarter ended March 31, Overstock's total net revenue fell 29% year-on-year to $381 million, but was higher than analysts' forecast of $357.55 million; net loss was $10 million; earnings per share were $0.10, higher than analysts' expectations of $0.06.

Still, some insiders chose to sell their shares. Chief Financial Officer Adrienne Lee cited lower consumer engagement and a weak U.S. home furnishings market as key growth pressures.

2022 is a year of transformation for Overstock, which was founded in 1999 and narrowed its product line from general merchandise to only selling home furnishings. Therefore, this year is also Overstock's first year as a 100% online home retailer. Previously, home furnishings sales accounted for about 80% of Overstock.

As a result of this shift, Overstock's active customers continued to decline in the first quarter, with the following indicators:

• Active customers: 4.8 million, down 35% year-on-year;

• Net revenue per active customer in the last twelve months (LTM) was $370, up 4% year-over-year;

• 1.7 million orders were delivered, down 29% year-on-year;

• The average order value was $220, down 1% year-on-year;

• The number of orders per active customer was 1.57, down 6% year-on-year;

• Orders placed via mobile devices account for 51% of total merchandise sales.

Even with a decline in overall sales, mobile sales remain a bright spot for Overstock. In response to a decline in active customers, Overstock is focusing on customer loyalty and expanding its product categories by about 20%. Overstock's typical customer base tends to be "older and more affluent," and these users have higher loyalty and higher conversion rates.

Editor✎ Ashley/

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