Overstock continues restructuring its retail business as it posted a first quarter loss and named Dave Nielsen president of retail.
Nielsen will transition from his role as chief sourcing and operations officer. His experience includes stints with Payless Shoes and Global Access in the logistics sector. In addition, Ron Hilton, former vp/sourcing, will fill the position Nielsen is leaving.
Changes also are occurring on the Overstock board of directors. Kirthi Kalyanam is leaving the board after serving out his three-year term and Saum Noursalehi is stepping down to take a position on the board of tZero, which is part of the company’s blockchain business.
For the first quarter, Overstock posted a net loss of $39.2 million, or $1.18 per diluted share, versus $50.9 million, or $1.74 per diluted share, for the year-before period. A consensus analyst estimate published by MarketBeat called for a loss of 93 cents per diluted share.
Total revenue was $367.7 million as compared to $445.3 million in the year-before period. Retail revenue fell to $362.6 million versus $440 million in the quarter year over year. Operating loss was $36 million versus $54.4 million in the year-earlier period.
In a note to shareholders, Patrick Byrne, Overstock founder and CEO, wrote that cash flow has been returning to a positive position. Byrne pointed out that he had said previously that this would be a year of extraordinary growth in contribution, or gross profit minus sales and marketing expenses, which grew 111% for the first quarter. His expectation is to hold or increase that position for at least two more quarters as Overstock presses its initiative to drive search engine rankings, which have seen seven consecutive months of sequential improvement. Byrne asserted that six more months of similar headway would result in a full recovery in Overstock SEO results.
In addition, the company is establishing a new ad tech system that will allow it to better monetize site traffic, Byrne said. The company also has made a significant change in the architecture of its logistics, he said, which could lead to millions of dollars in savings per year. The nature of the change actually is hurting margins presently, but starting in the third quarter, the change will pay excellent dividends, he stated. Despite that, Byrne said, the margin contribution, at 10.8%, is double digit for the first time in many quarters and that Overstock would raise 2019 contribution guidance from $160 million to $165 million.