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Overstock.com Inc. Reports Operating Results (10-K)

March 02, 2012 | About:
10qk

10qk

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Overstock.com Inc. (OSTK) filed Annual Report for the period ended 2011-12-31.

Overstock.com has a market cap of $155.5 million; its shares were traded at around $6.88 with and P/S ratio of 0.1.

Highlight of Business Operations:

Revenues declined by 22% in our direct business due primarily to a transition of some of our clothing and shoes category to a fulfillment partner model. Revenue from our fulfillment partner business increased by 1%. The direct business declined to 16% of total revenue in 2011 from 19% in 2010, while our fulfillment partner business generated 84% of our total revenue in 2011 compared to 81% in 2010.

Revenues in 2010 increased by 24% compared to 2009. Our pricing and marketing initiatives drove improvement in several key components of revenue growth, including new customer growth, visits to our Website, conversion and average order size. Growth was broadly distributed across most of our major product categories, and in both our direct and fulfillment partner business. Our direct business increased by 39%, and our fulfillment partner business increased by 21%. The direct business was 19% of total revenue in 2010 compared to 17% in 2009, while our fulfillment partner business generated 81% of our total revenue compared to 83% in 2009.

Total net revenue increased 8% to $349 million for the three months ended December 31, 2010, from $322 million for the three months ended December 31, 2009. Direct revenue increased 26% to $69.2 million for the three months ended December 31, 2010, from $55.1 million for the three months ended December 31, 2009. Fulfillment partner revenue increased 5% to $280 million for the three months ended December 31, 2010, from $267 million for the three months ended December 31, 2009.

Direct Gross Profit and Gross MarginGross profit for our direct business increased 12.5% to $22.5 million for the year ended December 31, 2010, from $20.0 million for 2009. Gross margin for the direct business decreased to 10.7% for the year ended December 31, 2010, from 13.3% 2009. The decrease in gross margin for the year ended December 31, 2010 is primarily due to pricing initiatives that were implemented beginning in the third quarter of 2009 and an increase in returns related costs, partially offset by leverage gained on fixed warehousing costs due to increased revenues. Gross profit for our direct business was essentially unchanged at $6.3 million for the three months December 31, 2010, and $6.6 million for the same period in 2009. Gross margin for the direct business decreased to 9.0% for the three months ended December 31, 2010, from 11.9% for the same period in 2009. The decrease in gross margin for three months ended December 31, 2010 is primarily due to pricing initiatives including holiday promotions and mark-downs of slow-moving inventory (primarily on apparel and shoes), partially offset by a shift in sales mix to higher margin products along with leverage gained on fixed warehousing costs due to increased revenues.

Fulfillment Partner Gross Profit and Gross MarginGross profit for our fulfillment partner business increased 15.5% to $167.1 million for the year ended December 31, 2010, from $144.7 million for 2009. Gross margin for the fulfillment partner business decreased to 19.0% for the year ended December 31, 2010, from 19.9% for 2009. The decrease in gross margin for the year ended December 31, 2010 is primarily due to pricing initiatives that were implemented beginning in the third quarter of 2009, partially offset by a shift in sales mix to higher margin products as well as lower returns-related costs. Gross profit for our fulfillment partner business increased 9.7% to $53.2 million for the three months ended December 31, 2010, compared to $48.5 million for the same period in 2009. Gross margin for the fulfillment partner business increased to 19.0% for the three months ended December 31, 2010 compared to 18.1% for the same period in 2009. The increase in gross margin was primarily due to a reduction in product costs, including reductions from suppliers participating in promotions, along with a shift in sales mix to higher margin products, partially offset by pricing initiatives.

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