Overstock.com Inc., a web-only discount mass merchant, has decided to sell its travel services subsidiary, OTravel.com, citing a loss in value following Overstock’s $25 million purchase of the travel business in 2005.
Overstock has entered into a non-binding letter of intent to sell OTravel.com to an undisclosed third party, the retailer says. The travel business, which Overstock acquired in July 2005 from Ski West Inc., focuses mostly on offering discount travel packages to ski areas in the U.S. and Canada, but recently expanded into travel packages for cruise ships and destinations in the Caribbean and Mexico.
Overstock, No. 18 in the Internet Retailer Top 500 Guide, revealed this week in its annual 10K filing with the Securities and Exchange Commission that it reported a loss from discontinued operations at OTravel.com of $6.9 million for the year ended Dec. 31, 2006, including a goodwill impairment charge of $4.5 million. Goodwill is an accounting measure of the value of a business in terms of intangible assets such as customer patronage and reputation.
The drop in value of OTravel.com’s goodwill was determined after the decision to sell the travel subsidiary, and that drop in value plus another $400,000 in miscellaneous adjustments caused the company’s consolidated net loss for fiscal 2006 to widen to $101.9 million from the $97 million Overstock previously reported in preliminary unaudited results, Overstock says.
The decision to sell OTravel.com was made during the fourth quarter as part of a broader effort to improve financial operating performance by terminating a lease on a co-location data center, the marketing of office facilities for sub-lease, and marketing non-core businesses for sale, Overstock says in its 10K statement. Overstock did not name other non-core businesses that it may sell.
Overstock’s Geoff Atkinson, director of e-mail and web site marketing, will speak at the Internet Retailer Conference & Exhibition, June 4-7 in San Jose in a session entitled E-mail Marketing: Being Persuasive, Not Offensive.
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