Overstock finished strong in 2004

0 Comments | Deseret News (Salt Lake City), Jan 28, 2005 | by Brice Wallace Deseret Morning News

Overstock.com Inc. had what its leader called "a great quarter," but despite the quarterly profit, the company suffered another full- year net loss.

The Salt Lake-based online closeout retailer said Thursday that it had net income attributable to shareholders of $2.4 million, or 12 cents per share, on revenue of $221.3 million during the fourth quarter. That compares with a net loss of $3.2 million, or 19 cents per share, on revenues of $123.2 million in the same quarter of 2003.

The consensus Wall Street expectation for the most recent quarter was for earnings of 8 cents per share.

For the full year, the company had a net loss of $5.2 million, or 29 cents per share, on revenues of $494.6 million. That compares with a loss of $12.1 million, or 75 cents per share, on revenues of $238.9 million for 2003.

The company noted that much of the revenue increase was due to a change in its customer return policies and procedures implemented in the 2003 third quarter.

"This Q4 was a great quarter," chief executive Patrick Byrne said in a message to shareholders.

Byrne also said "this was easily our smoothest Christmas ever. The few glitches that did appear were all quickly resolved." He also said this was the first fourth-quarter surge "we handled without a mad scramble."

"We did not make enough money in Q4 to break even for 2004 but did make $2.5 million, generated a lot of cash, and are up on a plane from which I believe only our own inattention or mistakes will knock us for some time," Byrne said.

Byrne noted that the company's gross profits rose 186 percent, from $11.8 million to $33.7 million, during the quarter.

"For two years, I have emphasized that in my eyes this is our income statement's most important ratio and that if our gross profits grow at such a pace, while operating expenses grow at a much slower pace, we will have a great business. We are well on our way," he said.

The fourth-quarter profit, he said, "is a nice, nearly forgotten feeling." He added that he often has said he is happy if the company can grow 60 percent to 100 percent while keeping losses around break- even.

Byrne said the company's new auction business "got off to a solid start" and that eBay's fee increases "may be a boon for us." He also noted that travel cruises "went live on Jan. 1 and are doing surprisingly well."

But it would not be a traditional Overstock.com earnings report without Byrne remarking on his perceived shortcomings. Despite several strong programs, "I made many mistakes. There were many things I could have done better, so as always, there is still much room for improvement," he said.

Overstock's stock price rose $3.26 Thursday to close at $65.94 per share. During the past year, the price has ranged from $17.36 to $77.18.

E-mail: bwallace@desnews.com