Shares of Overstock.com Inc. rose 4.5 percent Thursday (April 30) after the eCommerce retailer announced a narrower first-quarter loss and the fact that April sales more than doubled.
“In a time of great uncertainty, Overstock is performing well,” said CEO Jonathan Johnson in a statement. “Our retail business, which was already on track to achieve its Q1 plan before the COVID-19 crisis hit full bore, has benefited from an increased demand for home furnishings and other key product categories from customers looking to shop from the safety of their homes.”
While the coronavirus pandemic has altered the landscape for many retailers, Johnson said April sales have increased by more 120 percent year over year, mostly from the home furnishings category. April revenues will be reflected in second-quarter results to be released in July.
In an earnings call with analysts, David Nielsen, the company’s retail president, said one of the key contributors to earnings was improved freight rates that factor into product costs, Furniture Today reported.
“We have expanded our footprint to preposition products closer to customers, Neilson said. “This helps to eliminate long shipping costs so by bringing products closer to customers, we can reduce costs and improve margins.”
He also told analysts that the cost to acquire new customers fell in the first quarter. “As brick-and-mortar stores were backing off due to temporary closings, we took advantage of that and increased our marketing spend to acquire customers at a reduced cost,” he added.
Johnson said Overstock benefitted from its role as being “countercyclical. We are a low-priced operator. Historically, in times when people are pinching pennies, they look for deals, and that’s who we are. In the past when the economy has gone south, we can do well in those times.”
All told, the Salt Lake City-based company reported that its net loss narrowed to $19.5 million (40 cents per share) in the latest quarter, down from $42.9 million (or 78 cents per share) a year earlier. The red ink improved even though revenues fell 4.6 percent to $351.5 million from $367.7 million one year ago.
However, earnings before interest, taxes, depreciation and amortization, improved by 31 percent. Overall, the results were good enough to drive Overstock shares up 54 cents to close at $12.62 on the Nasdaq Stock Market.
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