Overstock (NASDAQ: OSTK) stock is down 23%. OSTK stock has fallen because it appears that rebranding as the failed Bed, Bath and Beyond was not a good idea. Which is one of those things that might be worth thinking about - if a brand has just trashed itself in hte spiral into bankruptcy what are you going to gain by taking on the name yourself? Maybe they thought it would work but these early signs aren’t encouraging
Overstock itself: “Overstock.com, Inc. operates as an online retailer in the United States. It offers furniture, décor, area rug, bedding and bath, home improvement, outdoor, and kitchen and dining items. The company provides its products and services through its internet websites comprising overstock.com, o.co, overstock.ca, and overstockgovernment.com” Well, you can sort of see the idea. BBBY was in the same area, was known for deals on stuff but went bust so why not adopt the name?
But sa we said about BBBY: “We need to note the terms in that Chapter 11 filing. Bed Bath and Beyond stores are being liquidated, closed down. The management are not thinking that there is anything left, There is just the task of plucking the last bones from the corpse and going home. As we say, BBBY stock could do just about anything in these next few days and weeks. But barring something truly, wondrously, extraordinary BBBY is headed to zero.” If someone’s trashed the brand enough that they’ve gone into liquidation, not just reorganisation, then what is the value of that brand?
Overstock stock price from Google Finance
We can see the results too: Revenue Metrics: Active customers (last twelve months): Over 4.8 million as of September 4, 2023. Mid-single-digit percent net increase in customers since the U.S. launch. Orders: Mid-single-digit percent growth year-over-year. Includes high-teens percent growth year-over-year since the U.S. launch. Revenue: Mid-teens percent decline year-over-year. Includes low-double-digit percent decline year-over-year since the U.S. launch. Average order value: High-teens percent decline year-over-year. Includes low-20s percent decline year-over-year since the U.S. launch.
More but lower value customers leading to a fall in gross sales. And margins are looking very, very, tight too: “Gross profit as percent of revenue: Approximately 18%. Sales & Marketing expense as percent of revenue: Approximately 15%.” Actually, we’d be amazed if that led to a net profit at all.
At this stage we think we’d just say that taking over BBBY doesn’t seem to have been a good idea for Overstock.
