CEO Roland Smith will retire and Troy Rice will oversee e-commerce as Office Depot’s new chief operating officer.
Buoyed by marketing efforts and site improvements, Q4 sales jumped far ahead of last year’s $41.5 million, but a new returns policy and higher expenses cut into the bottom line.
Though revenues soared to $123.2 million from $41.5 million a year ago, Overstock.com posted a net loss of $3.1 million versus net income of $1.1 million for its fourth quarter ended Dec. 31, the company reported. Gross profit margin for the quarter rose 29% to $11.8 million from Q4 2002. Gross merchandise sales rose 94% for the quarter over gross merchandise sales of $67.2 last year. Gross merchandise sales represent the gross sales price of all sales transactions including those for which Overstock records only a commission.
For the year, the Salt Lake City-based online liquidator reported a net loss of $11.9 million compared with a net loss of $4.6 million last year, on revenues of $283.9 million, compared with revenues of $91.8 million for 2002. Gross merchandise sales for the year, at $294.8 million, were up 91% from last year.
A change in customer return policies and procedures implemented during the last quarter increased revenues and decreased gross margins significantly for the quarter compared to the previous quarter, the company says. Operating expenses rose to $15 million for the quarter from $8.1 million for the fourth quarter last year.
CEO Patrick Byrne says Overstock attracted 744,000 new customers in the quarter at an average cost per customer of $13, a cost that reflects marketing outreach as well as overhead for the marketing function. Also boosting sales during the quarter was an improved search function and a greater degree of personalization in product recommendations for returning customers, as well as strong growth in the books, music and video category.
Though Overstock’s TV ad campaign got a big chunk of the marketing budget this year, Byrne says the company may spend as much as $50 million in online advertising this year if it can find enough online outlets that meet the company’s criteria of an 8- to 10-cent cost per click.
Separately, Overstock announced it would consider filing a shelf registration statement with the Securities and Exchange Commission for the issuance of up to 2.5 million additional shares of common stock. Noting that documents had not been filed, the company said in a statement that the shelf registration would position it to raise capital quickly “in the event market considerations and the company’s capital needs make it appropriate.”