Shutting down Overstock was ‘a fatal mistake’: Beyond executive chairman

Dive Brief:

• Newly appointed CEO of Overstock Dave Nielsen said during a Wednesday earnings call the brand plans to relaunch its online store in about five weeks in collaboration with Shopify. That’s ahead of a previously announced September relaunch timeline.

• Parent company Beyond Inc., whose portfolio includes Bed Bath & Beyond, reported Q4 revenue of $384.4 million, down 5% from $404.8 million a year ago. The retailer posted a gross profit of $60 million but a net loss of $161 million, compared to a loss of $15.5 million in the year-ago quarter, and an operating loss of $65 million, compared to a loss of $2.6 million year over year. 

• Beyond’s full-year net revenue fell 19% year over year to $1.6 billion from nearly $2 billion. Gross profit was $314 million – 20% of revenue – with a net loss of $307.8 million, compared to a $35.2 million loss year over year, and an operating loss of $118 million compared to an operating income of $27 million. 

Dive Insight:

Home and furniture have remained among the challenging segments of retail in recent months as consumers continue to feel economic and inflationary pressures, shifting their spending away from discretionary purchases. 

Beyond Inc. has an opportunity to grow revenue, get more return on its marketing spend and cut costs by distilling its customer database, which has 150 million records, according to Marcus Lemonis, executive chairman of the board. 

Looking back, shutting down Overstock.com “was a fatal mistake,” Lemonis said during the call. While that move enabled Bed Bath & Beyond to win on selling big ticket items with a high average order value, that came at Overstock’s expense. Beyond now plans to reopen Overstock’s online store before the end of the first quarter.

“Turning Overstock.com back on will not only allow Bed Bath & Beyond to expand its existing assortment and hone in on its historical legacy success, but it allows Overstock to do the same,” Lemonis said.

Wedbush analysts Michael Pachter and Alicia Reese said in a Wednesday note that Q4’s results show that Beyond’s “brand implementation is still in the early days but there is much to look forward to with ambitious revenue targets, asset sales and tight expense management.”

While Beyond posted soft financial performance for the last quarter and the year, the retailer did see growth in its active customer file. The number of active customers rose to about 5.6 million for Q4, up 9% from 5.2 million a year ago. Beyond defines active customers as those who made at least one purchase during the last 12 months.

The company’s long-term performance improvement goals also include reaching 10 million active customers, a $250 average order value who buy from the company at least twice a year. The company also wants to reach $2 billion in revenue this year, a $3 billion run rate by the end of 2025. Beyond previously committed to cutting $25 million in costs and said this week it’s raising that goal to $45 million. Beyond posted a negative adjusted EBITDA of $61 million for the year. But “with $3 billion in revenue in 2026 and at 5% margin, Beyond could reach EBITDA of $150 million by 2026,” Wedbush’s analysts said. 

Wednesday marked the first time Beyond’s new leadership team – comprised of Lemonis, Nielsen, and Chandra Holt, CEO of Bed Bath & Beyond – led an earnings call together. CFO Adrianne Lee also expanded her responsibilities and is now simultaneously serving as chief administrative officer. The company announced the leadership changes on Tuesday.

Nielsen said the company also plans to launch new home-centric websites and services this year. Those moves are part of a larger strategy to drive up customer acquisition and retention. In particular, the relaunch of Overstock is significant because it will enable the company to drive higher average unit retails, improve overall margins and meet customers where they're shopping with items they want. 

Bed Bath & Beyond also reintroduced its gift registry last month. The retailer said it’s partnering with MyRegistry.com to offer a digitally-driven registry experience.

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