Overstock.com rebrands, plans to expand to counter losses

SALT LAKE CITY — Overstock.com, best known for selling discounted housewares and jewelry online, is shifting focus. The Salt Lake City-based company is hoping first run items like Ralph Lauren men's suits, Graco strollers and even auto insurance can lure customers beyond those seraching for liquidation items.

It's a move the internet discounter is making as it copes with declining profits and stagnant revenue growth. Overtock reported a second-quarter loss of $7.8 million, compared to a $1.34 million loss the previous year. Revenue was $235 million in the quarter, up 2 percent from the same period a year earlier. Those results are causing investors to leave. The company's value has dropped by almost a third in the past year.

"For most of our history, we grew so much faster than the industry, and I consider it substandard when we are growing like this," CEO Patrick Byrne, said during a conference call with investors.

The company plans to stabilize losses with major changes, including more first-run products, a retail store, insurance offerings and a new brand. That includes dropping the Overstock name in lieu of a shortened O.co.

Rebranding

"'Overstock' doesn't adequately describe what we're doing," said Jonathan Johnson, Overstock's president, in an interview at the company's Salt Lake City headquarters. "Only about 25 percent of what we sell is liquidation. We've turned into more of a savings engine."

Rebranding an entrenched name may prove difficult for the struggling company.

"Changing a name or logo is probably the hardest thing to do," said Peggy Lander, partner and executive vice president of advertising at Richter7, a Salt Lake City-based marketing firm. "That is a very difficult process because customers have become accustomed to how they do business with that company. It's a hand-holding, nurturing process to guide customers into new brands."

Turning around the company may be challenging. In the past year, shares of Overstock have dropped 34 percent while the Standard & Poor's 500 Index rose 6.3 percent. Head count has also dropped from 1,500 full-time employees at the end of 2010 to about 1,300.

The rebranding is a crucial change for the company as investors fear Overstock is losing its competitive edge online, said Dan Kurnos, an analyst at Benchmark Company, in a telephone interview from his office in Delray Beach, Florida.

The shift could dispel notions that the company only sells low quality "overstocked" items rather than first-run products, Kurnos said.