January 24, 2013, 1:25 PM

Overstock boosts sales and profits

The web-only retailer increased sales 4.3% in 2012.

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Web-only mass merchant Overstock.com Inc. posted a moderate increase in sales in 2012 and a larger increase in profit, largely through tightening spending on general and technology expenses.

For the year ended Dec. 31, Overstock, No. 27 in the 2012 Internet Retailer Top 500 reported:

  • Sales increased 4.3%, to $1.099 billion from $1.054 billion in 2011.
  • Gross profit increased 10.8%, to $198.4 million from $179.1 million last year.
  • Net income totaled $14.7 million compared with a net loss of $19.4 million.
  • Sales and marketing expenses increased 2.8% to $63.5 million from $61.8 million.
  • Technology expenses decreased 2.2% to $65.5 million from $67 million.
  • General, administrative and technology expenses decreased 15.5% to $57.3 million from $67.8 million.

For the fourth quarter Overstock also reported:

  • Sales increased 8.9%, to $342.0 million from $314.1 million in Q4 2011.
  • Gross profit increased 20.2%, to $61.2 million from $50.9 million last year.
  • Net income totaled $8.8 million compared with a net loss of $3.4 million in Q4 2011.
  • Average ticket increased about 14.8% year over year to $132 from $115.
  • Sales and marketing expenses increased 9.0% to $20.6 million from $18.9 million.
  • Technology expenses increased 13.4% to $18.6 million from $16.4 million.
  • General, administrative and technology expenses decreased 20.9% to $14 million from $17.7 million.

Overstock is well-positioned to weather any national or global financial crisis in 2013 because the company has planned for many scenarios and because of ongoing efforts to make its global supply chain increasingly nimble, CEO Patrick Byrne told analysts on the company’s year-end earnings call. “We’ve spent the past 18 months making the supply chain more agile and we see that as a competitive advantage,” Byrne told Wall Street analysts. “As for any financial changes nationally or globally we have files in the file drawer ready for any number of scenarios.”

Going forward Overstock also sees more competition coming from store-based retailers, particularly chains that have what Byrne calls a good “clicks-and-bricks” strategy. “The big chains are getting better at this and they have an advantage over the pure-plays with their clicks-and-bricks model,” Byrne told analysts. “The store retailers are the competitive segment to watch.”

Chain store retailers can take advantage of foot traffic to stores to market their e-commerce brand—a distinct advantage over web-only merchants, Byrne says.

But chain retailers still aren’t the fastest-growing merchant segment among all Top 500 retailers, according to data published in the 2012 Top 500 Guide. In 2011, Top 500 web-only merchants grew much faster than every other merchant type—about 32% to a combined $73.39 billion in 2011 from $55.68 billion in 2010. In comparison, store-based retailers grew year over year by 14.7% to $64.63 billion from $56.36 billion.

Even without Amazon, online-only merchants in the Top 500 grew their combined sales by 17.8% to $25.31 billion from $21.48 billion in 2010.

 

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