Several months back, Bed Bath & Beyond was not on anyone’s radar as a player in the 2023 holiday season. However, Overstock.com’s acquisition of the once-struggling retailer, which had gained favor among meme stock enthusiasts, is not just preserving its importance but also serving as a catalyst for the online retail giant.
On Thursday (Oct. 26), Overstock released its third-quarter earnings, which, although a mixed bag, demonstrated some encouraging signs of progress as the company integrates Bed Bath & Beyond and its customer base.
In the third quarter, Overstock reported total net revenue of $373 million, a 19% decrease year over year. Gross profit amounted to $70 million, 18.7% of the total net revenue. The company incurred an operating loss of $41 million and a net loss of $63 million.
This was partially attributed to Overstock’s increased focus on kitchen products during the final two months of the quarter. In an effort to make sure Bed Bath & Beyond customers felt connected to the new ownership, Overstock reduced the emphasis on its traditional core areas of furniture and home furnishings. Consequently, this resulted in a potentially temporary decrease in the average sale per customer.
According to CEO Jonathan Johnson, the encouraging news is that both Bed Bath & Beyond and Overstock customers have remained loyal to the company, and there has also been a significant influx of new shoppers who were not previously part of either unit’s customer base.
“The actions we have taken are already starting to drive results. Our active customer base grew sequentially to 4.9 million customers at the end of Q3, increasing by nearly 300,000 customers in the quarter,” said Johnson on Thursday.
Additionally, by acknowledging that Overstock has not traditionally played a leading role in holiday sales, Johnson acknowledged Bed Bath & Beyond’s strong historical performance during the holiday season. Given this perspective, the integration of both new and existing customers holds the potential to yield substantial advantages, particularly during the holiday shopping season.
The upcoming branding campaign will be rolled out on both traditional linear television and streaming platforms. Additionally, the “big blue coupon,” a symbol closely associated with Bed Bath & Beyond, is set to make a comeback next month — just in time for the holidays.
The decision aligns with Overstock’s strategy during the first 60 days after launching Bed Bath & Beyond. In August, the company introduced a 25% discount coupon exclusively through their mobile app, targeting both the marketplace and the customer file. The move was intended to express gratitude to their loyal, long-standing customers and provide a welcoming introduction to the new Bed Bath experience. Consequently, mobile app sales increased by 55% compared to Q2, and this momentum continued into a strong Q4 performance.
Furthermore, to convert the most loyal legacy Bed Bath & Beyond customers, the company transferred and honored its previous accounts and reward balances to their platform. An additional $25 bonus reward was added to these accounts, with an expiration date set for the end of September, along with a complimentary one-year welcome rewards membership. These measures successfully attracted loyal legacy Bed Bath & Beyond customers and reactivated legacy Overstock customers.
“Our team has a terrific lineup of deals on key brands and we will leverage the brand to serve our customers and capture market share,” said Dave Nielsen, president at Bed Bath & Beyond. “Our new brand campaign will remind and educate customers across the addressable market that we have an even bigger Beyond assortment for their holiday entertaining needs. We are geared up to deliver a strong holiday season.”