Overstock.com Seeks Expansion Into Physical Retail
Many physical retailers are looking to stretch the legs of their e-commerce divisions to maintain sales in the era of COVID-19 and the "retail apocalypse." But internet furniture and home merchandise seller Overstock.com (NASDAQ: OSTK) is taking the opposite approach, and is pursuing growth in "meatspace" after years of a cyberspace-only model.
According to statements by company retail president Dave Nielsen to Adweek, Overstock is so eager to get a brick-and-mortar presence in 2021 it might sell itself to a retailer with a significant lineup of physical store locations. Nielsen said Overstock leadership would prefer being acquired over starting its own stores, though it's also considering a partnership or merger.
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According to its most recent quarterly report for the fiscal second quarter, Overstock's sales weren't significantly dented by the summer reopening of physical furniture stores. Its margins rose from 10.2% to 13.6%, sending its profits higher, too.
Nielsen says Overstock believes a strong presence in both digital and brick-and-mortar retail, rather than specializing in one sales channel, will be the best post-coronavirus strategy. Overstock openly says it wants to be bought by or partner with TJ Maxx, subsidiary of The TJX Companies (NYSE: TJX), a department store offering furniture sales among other categories.
TJX Companies' sales were sent into a tailspin by pandemic closures and lockdowns, but the company has seen a strong rebound since, with comparable-store sales only 3% below 2019's figure during the most recently reported quarter. The company also began paying its dividend again recently with a 13% boost, indicating it may well have the resources to acquire or partner with Overstock if it becomes persuaded such a partnership or buyout is in its best interests.
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Rhian Hunt has no position in any of the stocks mentioned. The Motley Fool recommends Overstock.com and The TJX Companies. The Motley Fool has a disclosure policy.
