Overstock Cuts Q3 Loss as Revenues Fall 4%

November 9, 2017  by Larry Thomas in Financial Reports, Industry   

The company said its retail division had net income of $1.1 million, but its Medici subsidiary that is developing blockchain technology had a net loss of $1.9 million.

CEO Patrick Byrne said the retail division performed smoothly, and blamed the revenue decline on changes Google made in May to its natural search engine algorithms.

“We have reorganized a large number of resources around addressing this current challenge, as well as seeking to prevent it from occurring again,” Byrne said. “We have implemented a variety of innovations and technical improvements in this area and expect to continue to do so.”

He said the revenue shortfall was partially offset by increased efforts in other marketing channels such as sponsored search and email. Plus, the company increased its television advertising spending during the quarter.

In last year’s third quarter, revenues totaled $441.6 million, and the net loss totaled $3.1 million or 12 cents per share.

Byrne said he was especially pleased with the performance of the retail business “given that we have a loss-gushing direct competitor who is outspending us on paid digital marketing by 4.6 times, and who is running six to seven times as many television spots as we are running.”

The “loss-gushing direct competitor” is an apparent reference to Wayfair.

For the nine months ended Sept. 30, revenues edged up 1.2% to $1.29 billion, and the nine-month net loss totaled $14.2 million or 55 cents per share. In the first nine months of last year, the company had net income of $9.43 million or 37 cents per share, but that included a one-time gain of $19.5 million from the settlement of a lawsuit in its favor.