Overstock.com Posts Q3 Loss, Ponders Brick And Click

- Nov 10, 2017-

  • Mary Burritt

Mary BurrittNovember 10, 2017

MIDVALE, Utah – Overstock.com posted a lower-than-expected loss of 3 cents per share and a 5% increase in gross profit for this year’s third quarter compared to the same period last year.

The financial results and a myriad of possible directions for the company spitballed by its leadership during the earnings conference call, including the strategy of joining with a large brick-and-mortar chain, moved the company’s stock to an after-market closing price Wednesday of around $40 a share, a range it hasn’t traded in since August 2005.

The net loss per basic common share for this year’s third quarter was 3 cents, compared with a loss of 12 cents per share for this period last year.

Total net revenue decreased by 4% to $424 million for 2017’s third quarter, from $441.6 million in the same period last year.

Gross profit increased to $83.67 million for this year’s third quarter, from $79.72 million for the third quarter of 2016.

Net income loss was $1.1 million for this year’s third quarter, compared with a loss of $3.39 million for last year’s Q3.

However, for the nine months ending Sept. 30 of this year, Overstock.com reported a net income loss of $15.13 million, compared with $8.48 million in net income at the end of the same nine-month period last year. Overstock has posted a profit for each of the past five fiscal years.

In a conference call hosting a record 936 listeners, Patrick Byrne, CEO of Overstock.com, reviewed the possible directions for the company he founded in 1999 and took public in 2002, and its subsidiary Medici Ventures Inc., which develops blockchain technologies.

In contrast to the headline-grabbing statement Byrne made in last quarter’s conference call of possibly taking Overstock.com private, Byrne instead outlined possibilities that ranged from partnering with large brick-and-mortar companies with club memberships to using the e-commerce business as a test bed for blockchain technology applications.

Byrne said the “synergy goes both ways” when hypothesizing a union of Overstock.com with a large brick-and-mortar chain. The chains the company has considered have “a dozen or so mega distribution centers, each of which (is) feeding a couple dozen distribution centers, each of which (is) feeding 10 to 15 stores. If we were integrated with such a company … you would have a system competitive with Amazon, or even nicer than Fulfillment by Amazon.”

Fulfillment by Amazon is a package of services the e-tailer offers companies selling on its website that includes picking, packing, shipping and providing customer service for merchandise orders.

If a brick-and-mortar chain not only offered a distribution network, but also was a “large club membership kind of company, with 10 million people in their club and a million of them started shopping with us, that alone would double us,” Byrne said. “So the possibilities are overwhelming.”

Another possibility would be to “recapitalize with a large partner who wants to think really big,” Byrne said. “We hear there are some people in Asia who want to write some really big checks.”