Overall sales continue to grow amid changes at the top for Overstock.com Inc.
Overstock, No. 29 in the Internet Retailer 2016 Top 500 Guide, reported second quarter net revenue of $418.5 million, up 7.9% from $388.0 million last year. Through the first half of 2016, Overstock reported overall sales of $832.2 million, up 5.8% from $786.4 million.
President Saum Noursalehi attributed sales growth, in part, to the retailer’s emphasis on improved search engine optimization to compensate for a 2015 change Google made to its search algorithm. “We’ve had a lot of focus on enhancing our shopping experience as well as enhancing the content on our site,” he said. “As a result, we’ve seen higher traffic and rankings than we have prior to this algorithm change. So, the focus there has really paid off.”
An analysis of Overstock’s organic search traffic from web analytics company SimilarWeb’s platform shows that Overstock has increased its number of organic search visits by 9.9% in the past year to 9.1 million visits.
The company also is working to improve its overall mobile apps in an effort to win over a younger audience.
“With mobile you don’t have much of a display space and so it’s all about reducing clicks,” Noursalehi said. “Our team has done a great job of doing that. We’ve integrated easy to pay features like Apple Pay and Android Pay and so as a result we’ve seen improvements in conversion.”
Overstock founder and CEO Patrick Byrne, addressing an analyst’s question about competing with Wayfair Inc. (No. 24), said the online furniture retailer has come on strong, but he believes Overstock is ready for challenges in a market segment where it sees great growth potential. “We’ve had a lot of players come up against us who are willing to lose hundreds and hundreds and hundreds of millions of dollars year after year. That’s not our style,” he said. “Of course they have very deep pockets behind them, but we see what they’re doing and I think that we’ve sort of stemmed their onslaught and are now making inroads.”
International sales also are targeted for growth, Byrne said on the call. Overstock is selling in the Middle East and intends to add up to a dozen countries in coming months, he said. “We have a significant evolution in our business model happening this quarter; significant evolution. Stay tuned.”
The online retailer heads into Q3 with a new president and other top-level changes. Last week, Overstock promoted company veteran Noursalehi to president, replacing president Stormy Simon, who stepped down in July. In late July, Byrne returned from a medical leave of absence due to his successful treatment of stage 4 hepatitis C. The company’s general counsel, Mitch Edwards, who had been acting CEO in Byrne’s absence left the company on July 27.
“[Stormy] has been letting me know for some time that she was ready to tap out and do other things with her life,” Byrne said, according to a transcript of the call from Seeking Alpha. “Mitch joined knowing that he would probably become acting CEO and maybe CEO, depending on how my health answers worked out. I got my health answers and he’s a fine powerful guy who’s ready to go be CEO of something, and I think he probably really didn’t want to step back from being acting CEO to being general counsel. So he has moved on as well,” Byrne said. “I owe them a debt of gratitude for having bridged me through a very difficult medical time in my life.”
For the second quarter ended June 30, Overstock reported:
- Direct revenue, defined as orders Overstock fulfills from its own warehouses, of $24.6 million, down 28.5% from $34.4 million in Q2 2015.
- Partner revenue, defined as revenue from sales of Overstock’s partner products where Overstock is the merchant of record but goods are shipped directly by the manufacturer, of $393.9 million, up 11.4% from $353.6 million.
- A net loss of $1.2 million compared with a $1.4 million profit last year.
For the first six months of 2016, Overstock reported:
- Direct revenue of $51.3 million, down 27.3% from $70.6 million in the year-ago period.
- Partner revenue of $780.9 million, up 9.1% from $715.8 million.
- Net income of $11.9 million compared with $4.0 million.