Overstock gets a boost from shoppers, technology

The CEO of Overstock.com saysthe company is poised to take advantage of growth opportunities from "crypto-initiatives" and other means as the retailer posted an increase in revenue in the second quarter.

CEO Patrick Byrne said the company's launch of what it calls a "digital corporate bond", or a cryptocurrency-based security, based on bitcoin will fuel expansion and growth for the company.

For the second quarter ended June 30, Overstock grew revenue 17% to $388 million from $332.5 million for the same period the year before. Net income declined 10.5% to $1.7 million from $1.9 million. However, Overstock saw an increase in its profit margin, thanks in part to sales of furniture and other higher-margin home and garden products.

The retailer attributed the sales growth to a 15% increase in orders and a 5% increase in average-order size to $185 from $177 for the second quarter last year. And while average-order size has been on the rise in recent years, largely due to a shift into more home and garden products, Overstock said it expected the increase to lessen as that product shift tapers.

Gross profit for the quarter increased 18% to $73.7 million from $62.6 million for the same period a year ago due primarily to the revenue growth. An increase in gross margin to 19% was due primarily “to a continued shift in sales mix into higher-margin home and garden products” and partially offset by increased promotional activities, the company said.

"I am excited that we are delivering our 14th straight GAAP-profitable quarter along with 17% revenue growth while having funded, developed and launched what may be the most disruptive technology to hit the fintech sector in decades," said Byrne. “These expenses or investments may be material, and, coupled with the seasonality of our business, may lead to reduced income as compared to prior periods or to losses in some periods."

Sales and marketing expenses increased 19% to $28.1 million or 7.2% of total revenue, as Overstock increased its spending on display ads and other brand advertising marketing channels while it trimmed television spending. Technology expenses increased to $24.1 million, or 6.2% of total revenues.

Through the first six months, Overstock’s revenue grew 16.7% to $786.4 million. Net income decreased 25% to $4.41 million.

Byrne added: "We have introduced Club O silver. We are migrating millions of people over to it as we speak or to our new Club O silver program supplier Oasis got launched in May. We are signing up lots of people on that and filling up the warehouse and nice demand for that. Farmers Market were covering 45% of the U.S. population. And now with our 14th straight quarter of gap profitability, we think that’s a good place be in."

Take a tour of Overstock's biggest U.S. distribution center here.