After a high-flying fourth quarter for which Overstock.com reported operating income of $1.1 million at the end of 2002, the Salt Lake City, UT-based discount retailer is posting this year’s first quarter results in red ink. On total revenues that rose 142% from a year ago to $29.2 million, Overstock reported a net loss of $3.9 million, compared with a $3 million loss in the year-ago quarter.
Saying he was “disappointed” with what he termed a “sizable net loss” for the quarter, CEO Patrick Byrne outlined factors that contributed to results. He cited a shift in consumer buying behavior beginning in mid-February and continuing through March that the company sought to offset by cutting prices, which reduced both net income and margins. Byrne also said some of Overstock’s advertising programs had become less effective during the quarter. Also reflected in the net loss were legal expenses and an undisclosed settlement with Microsoft regarding allegations that Overstock had advertised unauthorized Microsoft software.
To address issues contributing to the quarter’s loss, Overstock says it has restructured marketing programs to align expense with revenue, refocused marketing efforts and technology on creating personalized offerings on the web site and in e-mail campaigns, and reduced costs, including a 10% workforce reduction. While cautioning that the economy and global environment will likely continue to affect sales, Byrne says he anticipates these measures will improve bottom-line results in the second quarter.
The company also announced the appointment of Jason Lindsey, an Overstock co-founder who has served as CFO since 1999, to the additional role of president. The appointment expands Lindsey’s role in all aspects of the business, according to the company. Patrick Byrne continues as chairman and CEO.
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