Overstock.com Inc. reported revenue was down 20% year over year to $422 million for the quarter ended June 30, 2023.

The online furniture retailer completed its acquisition of competitor Bed Bath & Beyond in June for $21.5 million. 

Overstock.com ranks No. 50 in the Top 1000. The database is Digital Commerce 360’s ranking of the largest North American online retailers. Bed Bath & Beyond ranked No. 47 prior to its bankruptcy.

Bed Bath & Beyond is the future, Overstock hopes

“The acquisition of the Bed Bath & Beyond brand is the beginning of a new phase of growth for us,” Overstock CEO Jonathan Johnson said in a written statement. “The successful launch and early performance of our Bed Bath & Beyond business in Canada has been encouraging. The Bed Bath & Beyond brand is strong.”

The U.S. site is scheduled to launch in early August.

Overstock’s name and branding is a problem for the retailer, solved by the deal, Johnson said in a July 27 call with analysts.

“Overstock has had a great business model but weighed down with a boat anchor of a name,” he said. Bed Bath & Beyond was “weighed down by a boat anchor of an outdated business model,” he said, so combining the brands is a boon to both.

Overstock is planning a “larger-than-normal promotional and marketing budget” for the next few quarters to win over Bed Bath & Beyond customers, he said. Time are tough for home furnishing retailers particularly online. Ecommerce sales were down 5.9% for home furnishing retailers in Digital Commerce 360’s Top 1000 in 2022. Things were only marginally better when including brick and mortar sales, which grew 1% in 2022.

Sales slowed in Q2

Though revenue was down year over year, things are looking up for Overstock, according to chief financial officer Adrianne Lee. Revenue was down 20% year over year, but that’s less of a drop than the 29% decrease in Q1, Lee noted.

Overstock attributed sluggish sales to problems in the home furnishing category overall. Lee pointed to decreased consumer engagement and the weak housing market, echoing talking points from April.

Overstock’s gross profit was $94 million, down $27 million from the year-ago period. Margins will likely be worse in the next few quarters, the retailer shared, due to plans to advertise more discounts.

Consumers are trading down

Customers are ordering less frequently — and spending less when they do order, Overstock said.

The number of active customers declined 29% from the previous year to 4.6 million. Consumers are shifting spending to experiences rather than goods, the retailer said. Overstock also transitioned away from selling non-home related merchandise, which contributed to the decline, it said.

Orders per active customer declined slightly, down 5% to 1.56 in the second quarter. Average order value also declined 5%, to $234. Though down year over year, that’s an increase over AOV of $220 in Q1.  Overstock sees evidence of customers continuing to trade down to less expensive merchandise, Lee said.

Overstock earnings

For the fiscal second quarter ended June 30, 2023, Overstock Inc. reported:

• Total net revenue fell 20% year over year to $422 million.
• Gross profit was down $27 million, totaling $94 million.
• Active customer count declined 29% to 4.6 million.
• The number of orders delivered fell 16% to 1.8 million.
• Overstock average order value (AOV) fell 5% to $234.

Percentage changes may not align exactly with dollar figures due to rounding.

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