The retailer says results reflect the search penalty imposed by Google over inbound links.
Sales barely increased in the first quarter for Overstock.com, the retailer reported today. Overstock, No. 28 in the Internet Retailer Top 500 Guide, partly blamed the flat revenue figure on the penalty imposed by Google earlier this year over Overstock soliciting inbound links to boost search rankings, a violation of Google’s rules.
For the third quarter ended March 31, Overstock reported:
• Sales increased 0.5% to $265.5 million from $264.3 million in the first quarter of 2010.
• Sales and marketing spending rose year over year 7.7% to $15.4 million from $14.3 million.
• Technology expenses grew 20.1% to $16.7 million from $13.9 million in the first quarter of 2010.
• General and administrative expenses grew year over year 20.8% to $18.0 million from $14.9 million.
• Net loss was $454,000 compared with a net income of $3.7 million in the prior year.
Google depressed Overstock’s natural search rankings between Feb. 22 and April 21 as punishment after the retailer tried to encourage inbound links by offering discounts to student bloggers and other web publishers affiliated with universities. Google frowns upon paid links. An earlier Overstock filing with the U.S. Securities and Exchange Commission said the penalty resulted in a 5% decrease in revenue during the penalty period.
For the year ended March 31, Overstock also reported:
• Net income of $9.7 million, down 37% from $15.4 million for the previous 12-month period.