When Overstock, the online seller founded in 1999 as a general merchandiser, made the decision in February 2022 to focus exclusively on home, it was during the pandemic and the furnishings business was flying. Now, as the sector has slowed down considerably, Overstock has finished its transition and is starting to see how the strategy is playing out. Its financial results remain in the negative column, but CEO Jonathan Johnson says he’s pleased with the big picture.

“Overstock has been on a three-year journey to become 100 percent furniture and home furnishings,” he tells Business of Home. “Revenue is up since we began planning the transition in early 2020, and we have delivered positive-adjusted EBITDA [earnings before interest, taxes, depreciation and amortization] for 12 consecutive quarters.”

Still, he concedes the marketplace could be better. “The retail environment in general is challenging. I believe it will remain that way through the year. A combination of a weak macro [economy] and weak housing market will weigh on consumer shopping habits and the outlook for the industry.” The consumer, he says, “continues to prioritize service-related and need-based spending, putting pressure on demand for discretionary home goods.”

Overstock has always been known as a value-oriented retailer, and that has become even more true in the move to all home, says Johnson, pointing to its market positioning as a strength in a tough retail environment.

“Our ‘smart value’ proposition—our ability to provide customers with a wide variety of quality and stylish home furnishings on any budget—sets us apart from Wayfair, Amazon, Target and other competitors,” he says. “During a time when consumer behavior is so focused on deals and discounts, our business model is favorable. We did well during the Great Recession, and we expect to do well in this tough economic environment.”

The move to focus just on home has also been positive, he says. “Since streamlining our focus, we’ve acquired hundreds of new partners and millions of new products. We now offer a broader assortment of furniture and home furnishings to help drive more repeat purchases. Our customers now look to us as experts in the home space.”

Johnson also believes the company’s timing is advantageous given the April demise of Bed Bath & Beyond. “We operate in a large and fragmented marketplace, so whenever there is white space created by any struggling competitor, we view that as an opportunity to capture market share,” he says. “During the second half of last year, we added lots of giftable small appliances, sourcing them from suppliers who had lost orders from Bed Bath & Beyond. We continue to add product that appeals to the Bed Bath & Beyond customer.”

Those gains may well continue given the general retail climate. “We believe that we are well-positioned to take market share from competitors, many of which are closing stores or struggling with liquidity and distracted by debt management obligations,” says Johnson.

Opportunities aside, this transition has not been painless by any means for the company. In reporting its first quarter results in late April, Overstock’s overall net revenue was down and it showed a net loss of $10 million. Johnson points to the positive EBITDA results as well as its cash position as signs the retailer is starting to achieve its goals.

Wall Street agreed. The stock, which was trading at around $18 a share before the earnings report, jumped as high as $21 a share before dipping again more recently. Johnson is optimistic for the rest of the year. Having recently launched a new marketing campaign called “Your Home, Your Treasure,” he believes Overstock’s online-only positioning is the right place to be. “We like our asset-light business model and don’t have plans for physical stores,” he says. “During the pandemic, consumers became much more comfortable purchasing furniture and home furnishings online. We expect that migration to continue.”

Homepage image: Jonathan Johnson | Courtesy of Overstock

____________

Warren Shoulberg is the former editor in chief for several leading B2B publications. He has been a guest lecturer at the Columbia University Graduate School of Business; received honors from the International Furnishings and Design Association and the Fashion Institute of Technology; and been cited by The Wall Street Journal, The New York Times, The Washington Post, CNN and other media as a leading industry expert. His Retail Watch columns offer deep industry insights on major markets and product categories.