Overstock.com CEO Jonathan Johnson joined Cheddar News to break down the “very difficult sales environment” for his home furnishings company, which posted second-quarter declines in revenue and active customers even as it remained profitable for the ninth consecutive quarter. “Our business model is very nimble and can withstand jolts in the marketplace,” he said. “We don't own inventory, so we don't have to liquidate inventory. We can approach our partner suppliers and have them give us cost cuts so that we can still compete on price and do well.”


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‘Nimble’ Overstock.com Remains Profitable Despite Disappointing Q2 Results

Overstock dot com reported second quarter earnings before the bell today in the Utah based company, which sells furniture and other home goods, posted a miss on both its top and bottom lines along with a yearly drop in revenue and active customers, but Overstock is sharing that it did remain profitable for the ninth consecutive quarter despite weak consumer sentiment and supply chain bottlenecks use the shares of the company initially dropped off after the report, but later surged and are now up about 7.5%. So joining me now to discuss is Jonathan, johnson ceo of Overstock dot com and Jonathan. I want to ask you, you said today that sales were below your expectations. So how is the company able to remain profitable? Well, you know, it's, it's a very difficult sales environment, particularly as many of our competitors have inventory inventory that they own, that they have to liquidate. Our, our business model is very nimble and can withstand jolts in the marketplace. We don't own inventory so we don't have to liquidate inventory. We can approach our partner suppliers and have them give us uh, cost cuts so that we can still compete on price and do well. So for us, minding our business model, exploiting our business model allows us to protect the bottom line, uh, even in a time when it feels like the consumer has moved away from goods and is spending more on experiences, at least for the time being. Now, more than a year ago, Overstock shifted to become 100% e commerce furniture and home furnishings retailer as supply chain issues continue. How will you keep fulfilling those online orders? So, uh because again, we've got such a dispersed and distributed network of suppliers. Uh we've been able to navigate supply chain issues better than most. One of our suppliers is out of a patio furniture set. Another usually has one very similar to it. We also don't sell, don't offer for sale product that's not ready to ship. So, you know, during the last couple of years, when there was high demand and low supply, if it was for sale, you would get it today when the supply is high and the demands a little lower. We still have a broad network of people of suppliers that we can work with to get the lowest price product so that we can win on our smart value proposition. Now, Overstock did report a 29% year over year drop in active customer. So how are you working to bring those numbers back up? Well, you know, we're really focused on. One of the things that we're focused on is their mobile app. Uh That's been growing quarter over quarter very nicely for the last couple of quarters, those have become more loyal customers, customers were able to market to in a very individual and personal way. Some of the some of the drop in customers are non home furnishing customers that, you know, we don't offer those products, we continue to market to them, but we have found the customers who purchased home products are generally more loyal have a higher conversion rate in a larger average order size, which is proven out When you see that our average order value was up 16% year over year. Even as sales dropped now, how have you noticed consumer habits changing? You mentioned folks are more spending on services, but for those of us who can't afford, you know, a ticket somewhere because the tickets are so expensive they may want to invest in their house. So what are you seeing when it comes to consumer spending on the site? Yeah, we've seen that the home improvement categories have been the ones that have been growing year over year. Uh, last year for example, it was, it was outdoor furniture this year. The home improvement categories like bathroom vanities real need is people maybe can't afford because of interest rates, buying a new home, they're gonna make their current home more enjoyable, better living. So what are the goals for the future Does Overstock have they can share with us? Well, you know, we Now that we are solely a home company. I think you'll see more branding that associates are well known Overstock name with the home. You can see that and of course will always continue to work on our mantra. Sustainable, profitable market share growth is the number four online home furnishing company in the country. We think there's room to grow when Jonathan. If those mortgage rates do you get any higher, I think you have a lot of sales on sheds, those 10 by 16 ones that you guys dish out because they're getting out of control of those mortgage rates, Jonathan, johnson ceo of Overstock dot com. We appreciate your time, sir.