Overstock Q1 revenue decreases by 17%

SALT LAKE CITY — Revenue for e-commerce retailer Overstock came in at $367.7 million for the first quarter ending Mar. 31, representing a 17.4% decrease from last year’s figure of $445.3 million.

“Retail is returning to be a source of positive cash flow rather than a consumer of it,” said Patrick Byrne, Overstock CEO and founder. “I believe that by 2020, retail positive operating cash flows will be comparable with the past.”

The company’s net loss fell to $39.2 million from $50.9 million in the first quarter of 2018. Gross profit was down 22% to $73.1 million from $93.9 million during the previous year’s first quarter.

The diluted net loss per share was $1.18 per share vs. a loss of $1.74 per share during the year-ago quarter. Sales and marketing expense shrunk 57% to $33.5 million vs. $77.2 million in the first quarter of 2018.

Byrne said Overstock has made a significant change in the architecture of its logistics and anticipates this could lead to a savings of as much as several tens of millions of dollars per year.

“The nature of the change actually is hurting margins slightly now, but starting in Q3 the change pays excellent dividends,” said Byrne. “Last quarter, I gave guidance that our 2019 contribution would be $160 million. I am now raising that to $165 million.”

On the earnings call he added, “I am confident that we can grow dramatically those contribution dollars this year and next and that’s the main event. We are not trying to slug it out with a competitor who lost billions of dollars over the past seven years.”

Overstock says sales have been helped by its positive relationship with Pinterest, which is expected to go public this year.

“Pinterest offers an earlier touchpoint with consumers in that they have a 30 to 45 day window before purchase.  We have a huge budget with Pinterest and started working with them two years ago as a strong innovation in marketing,” said J.P. Knab, Overstock chief marketing officer.

Knab added that international sales for Overstock are profitable and are posting a positive contribution to the business with a deeper penetration into Canada.

“It is an honor working for smart shareholders,” Byrne said on the earnings call. “We are sitting in the cat bird seat, and you will see it this year.”