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Overstock’s Retail Division’s 2018 Revenue

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Aug. 10 2019, Updated 9:38 a.m. ET

Revenue trails estimates

In the trailing five quarters, Overstock (OSTK) has missed estimates on four occasions while beating expectations just once.

In 2018, Overstock missed analysts’ sales estimate by 1.9% in the first quarter but beat the projection by 1.9% in the second quarter. Again, in the third quarter, sales fell marginally short of the projections. However, the company has reported year-over-year revenue growth in all three quarters of 2018.

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On a year-over-year basis, its revenues in the first and second quarters grew ~3% and 11.8%, respectively. In the third quarter, revenue was up 3.9%—a substantial improvement over the decline of 13.3% in the third quarter of 2017. For the fourth quarter, analysts expect Overstock to deliver revenue growth of 3.9% to $474.2 million.

Increased marketing investments

The top line is driven by increases in marketing investments. It’s also stepping up its distribution facilities. It opened a distribution center in Kansas City to speed up shipping. Overstock has been improving its retail operations to make it attract buyers. The company has set February as its deadline to sell the operations, though no probable buyer has been named so far.

However, Overstock continues to face troubles due to changes in its natural search algorithm. Also, higher promotional activity weighed on the top line. Stiff competition in the online space is adding to the struggle as well. In 2017, Overstock referred to Wayfair (W) as the “elephant in the room.” Wayfair is a rival e-retailer of home furniture and home decor.

A look at other online retailers’ performance

Wayfair has beaten sales estimates in all three reported quarters of 2018. It reported strong double-digit sales growth on a year-over-year basis. Wayfair is expanding its overseas footprint, improving its logistics network, and boosting brand visibility, which is driving sales.

Etsy (ETSY) has beaten sales estimates in all quarters while reporting year-over-year growth. Etsy has also been accelerating its marketing investments. It has been focusing on improving search and discovery on its platform, enhancing trust and reliability, and providing new tools for buyers and sellers. It’s extending its international footprint and overhauling the product mix.

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