Dive Brief:
- Beyond’s second-quarter net revenue fell 5.7% year over year from $422 million to $398 million, the company said on Monday.
- Net loss narrowed from $73 million a year ago to $43 million in Q2. However, the retailer’s operating loss grew from $4 million in the year-ago quarter to $47 million — an increase of more than 1,000%. Beyond said it has achieved two-thirds of its plan to cut fixed expenses by $45 million on an annualized basis.
- Beyond expects to relaunch the Zulily brand on or about Sept. 10, Beyond Executive Chairman Marcus Lemonis told analysts on an earnings call Tuesday. Overstock had its first full quarter of operations after its March relaunch and the company is “encouraged by the early progress we've seen,” Beyond President Dave Nielsen said.
Dive Insight:
Beyond’s efforts to solidify its business footing began over a year ago after a series of events and decisions, starting with the Chapter 11 bankruptcy of Bed Bath & Beyond last April, brought that banner and Overstock.com together under the same corporate roof. The company added Zulily to its portfolio in March.
The company hit its Q2 revenue target and improved the bottom line by about 25%, Lemonis said. But overall, Beyond's performance remains concerning, Neil Saunders, managing director of GlobalData, said in emailed comments to Retail Dive.
“Sales are still in decline, and compared to 2021, revenue is down by almost 50%,” Saunders said Tuesday. “This means that the business has basically halved and has done so despite the acquisition of Bed Bath and Beyond and Zulily. On the bottom line, Beyond remains in the red. By no stretch of the imagination is this a good result, and it cannot be spun as one.”
Saunders said Beyond does have a bright spot in active customer numbers, which rose to 6.2 million, up 35% year over year. The growth in that metric, he said, “provides some hope that future quarters might generate some better sales numbers — especially as it restructures and brings back the Overstock brand.”
As part of the brand’s revamp, Overstock continues to increase its assortment from a few hundred thousand to “several million SKUs,” Nielsen said. With the benefit of an improved site experience, “we anticipate momentum accelerating across the balance of the year,” Nielsen said. “Historically dominant product categories of area rugs, furniture, and patio and outdoor furniture continue to top the list of performing categories in the relaunch, confirming the loyal Overstock customer is excited we're back,” he said.
With the anticipated fall relaunch of Zulily, the banner has signed over 100 legacy vendors, another 100 suppliers are in the onboarding pipeline and the site is in the internal testing phase, Lemonis said. Beyond acquired Zulily in March for $4.5 million.
Beyond brought on “a team of experienced merchants who were with legacy Zulily, know the Zulily customer and have established working relationships with important brand partners and their efforts are bearing fruit as we've made great progress on onboarding key legacy vendors, while also adding some new vendors to the mix,” Nielsen said.
Data suggests Beyond’s turnaround will likely move slowly as the company works to rebuild its customer relationships and marketing expertise, Wedbush analysts led by Michael Pachter said in a Tuesday note. Although Beyond is likely to see negative EBITDA margins for the rest of this year, “we think Beyond can return to positive EBITDA as soon as next year with a rapid acceleration of active customers as Overstock.com is rejuvenated and as Zulily launches, with order value rising, all while management maintains expenses discipline,” Wedbush’s analysts said.
