Overstock Operating as Bed Bath & Beyond Reports Financials

October 26, 2023  by HFBusiness Staff in Business Strategy, Industry   

Third Quarter 2023 Financial Highlights

~ Total net revenue was $373 million, a decrease of 19% year-over-year

~ Gross profit of $70 million, or 18.7% of total net revenue

~ Operating loss of $41 million

~ Net loss of $63 million

~ Diluted net loss per share of $1.39; Adjusted diluted net loss per share (non-GAAP) of $0.61

~ Adjusted EBITDA (non-GAAP) of ($24) million, which represents (6.4)% of net revenue

~ Cash and cash equivalents totaled $325 million at the end of the third quarter

“Over the last three months, we have accelerated efforts to build a company with a bigger, brighter, and bolder future,” said Jonathan Johnson, Chief Executive Officer.

“On June 28, we acquired the Bed Bath & Beyond brand and intellectual property – a brand ranked in the top five most recognized home brands in the U.S. Within hours of closing the deal, we revived the brand in Canada, and in just thirty-three days we relaunched the brand in the U.S. under our asset-light operational model.”

“It is important to take a step back to understand the deal and how we intend to monetize it going forward,” continued Johnson. “Just a few years ago, when we first looked at acquiring the Bed Bath & Beyond business, it cost close to $2 billion.”

“We chose to watch from the sidelines with our eye on four key assets we hoped to acquire when the opportunity presented itself: (1) the number five most recognizable brand in the home space (in that same ranking, Overstock was number 25), (2) a 100M+ customer file, (3) vendor relationships with some of the biggest home category brands in the world, and (4) valuable intellectual property. We were thrilled when that opportunity arose, and we took it.”

“To provide some clarity on the economics of the deal, we break down this opportunity into two numbers totaling approximately $175 million: (1) approximately $25 million we paid to the bankruptcy estate for the brand and related IP and in acquisition-related fees, and (2) approximately $150 million of additional investment to launch the brand, reignite the customer file, and expand and create new categories while working to maintain our company’s core customers,” said Johnson.

“We are in the early stages of capitalizing on our recent acquisition. Since launching the new Bed Bath & Beyond in the U.S. on August 1, we have been successful in acquiring new customers and reactivating past customers. Total active customers grew sequentially after over two years.”

“As I’ve said from the onset, growing the customer file is our primary measure of success. Orders have returned to positive year-over-year growth for the first time in over two years. This acquisition has positioned us for growth over the long-term. We look forward to providing a detailed update on our third quarter 2023 performance during the earnings call, with a focus on our business performance since the rebrand,” Johnson said.

Third Quarter 2023 Operational Metrics* 

~ Active customers of 4.9 million, a decrease of 15% year-over-year

~ Last Twelve Months (LTM) net revenue per active customer of $322, a decrease of 13% year-over-year

~ Orders delivered of 1.9 million, an increase of 3% year-over-year

~ Average order value of $192, a decrease of 21% year-over-year

~ Orders per active customer of 1.48, a decrease of 9% year-over-year

~ Orders placed on a mobile device were 58% of gross merchandise sales

*Certain terms, such as active customers, LTM net revenue per active customer, orders delivered, average order value, and orders per active customer are defined under "Supplemental Operational Data" below.

A replay of the Earnings Webcast conference call is available at http://investors.overstock.com.