Predictions of the imminent demise of e-commerce giant Overstock.com were rampant in early 2020, and company shares were hovering at an all-time high on March 13 of this year – the day President Donald Trump declared a national emergency. in the face of the rising COVID-19 threat.
But less than two years later, the company is reaching record performance numbers, its stock value has risen by more than 2,000%, and the oft-maligned furniture and household goods retailer outperforms many of its competitors.
This all-time low hit its lowest level just months after longtime Overstock executive Jonathan Johnson took over as CEO following the unsavory departure of Mercurial founder Patrick Byrne , amid the widespread fallout from Byrne’s public comments about his involvement in a “deep state” plot and inquiries into Russian interference in the 2016 US presidential election.
Johnson had run the company, founded in 1999, through some of its most successful years. But before accepting a board appointment to take the top spot in Overstock after Byrne left in August 2019, he had spent the past six years or so overseeing Medici Ventures, an investment subsidiary of Overstock. focused on blockchain technology startups.
While Overstock enjoyed early success as one of the pioneers of online shopping, the company found itself slipping amid an evolving market that became overrun with aggressive competitors in the market. e-commerce home furnishings niche.
But Johnson was ready to take a new direction when he got behind the wheel of the Overstock ship just before the pandemic closures.
“In 1999, e-commerce was definitely an infant industry,” Johnson said in an interview with Deseret News after his appointment as CEO. “In 2019, it’s a much more mature market with many larger players. Overstock has found a big niche focusing on home goods … and the business has recovered in the last quarter. There is certainly a place in the market for Overstock to grow and prosper, be profitable and generate positive cash flow.
“We see a bright future for retail.
This bright future may have come sooner than Johnson anticipated when online shopping saw a huge boost as COVID-19 lockdowns and home isolation pushed consumers toward options in line.
In an interview this week, Johnson discussed the arc his company has traveled under his leadership and what the future holds for Overstock.
And, of course, Byrne’s messy departure, coupled with the company’s performance struggles, presented Johnson with enormous challenges from the get-go.
“When I became CEO, Overstock was losing market share, shrinking and losing money,” Johnson said. “It was clear to me that we needed to re-focus on what we do best and deliver value to our shareholders. “
It started, Johnson said, with an overall readjustment of Overstock’s approach to growing its business, which included replacing a 27-point initiative plan with a four-point roadmap focused on achieving goals and measuring success based on key results. The move, Johnson said, provided “clarity of purpose at all levels of the company.”
Johnson has also moved away from micromanagement at the executive level and allowed those closest to operational issues to assess and implement their own solutions. And the changes, Johnson said, were reflected positively in a company culture that was changing before his eyes.
In the end, the timing of Overstock’s reset and retooling was very fortuitous as business, Johnson said, exploded shortly thereafter.
“In March 2020, when many of us were forced to self-isolate and work from home, business started to take off,” Johnson said.
While the usual buying of books, clothing, electronics and other smaller consumer goods has long been adopted by online shoppers, the furniture and furnishings industry has been a bit slower. to attract and retain customers.
But then everything changed.
“Over the past decade, the furniture market has migrated to online sales at a rate of around 1% to 2% per year,” Johnson told Deseret News in August 2020. “At the end of 2019, about 23% of these purchases were online.
“The pandemic has accelerated this and what has been three to five years of growth happened in a matter of months. We are now looking at around 36% of purchases made online.
COVID-19 related restrictions and limitations have also contributed to a doubling in sales volumes, a tripling of new customers and skyrocketing customer retention rates, Johnson said. And perhaps most importantly for the once struggling retailer, the company has regained market share.
As Overstock’s stock price is down from a high north of $ 121 per share last summer, the company’s shares were trading above $ 70 per share when trading closed. regular Wednesday, which earned the retailer a market cap of more than $ 3 billion.
Notably, Overstock also announced a share buyback effort last month and is expected to spend $ 100 million on outstanding common shares. This move is widely seen as a sign of the company’s confidence in continuing its positive performance.
“Today’s announcement demonstrates our confidence in our business and our ability to generate sustainable and profitable market share growth,” Johnson said when announcing the buyback program on Aug. 17. “This share buyback program is aligned with our commitment to strategically deploy capital where we believe we can generate the most value for our shareholders and underlines the strength of our balance sheet.
And market watchers who once sounded, and not so long ago, the death knell for Overstock are now almost unanimous in their support for the ‘buy’ recommendations and are quite optimistic about the outlook for the market. business.
None of this comes as a surprise to Johnson who is, and has been, quietly confident in his company’s ability to both level up and maintain momentum, even as consumer habits continue to fluctuate.
Many factors, aside from the pandemic, will continue to keep Overstock well positioned in its market, Johnson said. Record-breaking housing starts, consistently high personal savings rates and, perhaps most importantly, a buying audience newly comfortable with buying, say, an 8ft sofa online.
“Twenty years ago people were hesitant to buy books online,” Johnson said. “Ten years ago, the same could be said about shopping for clothes online. But, these industries have all undergone secular changes and this is what we now see in furniture and furnishings. For a growing number of consumers, shopping in a physical store is being replaced by a better experience.