Amid struggles, Utah's Overstock.com lays off 50 workers
Utah's Overstock.com, the well-known online discount retailer, said it has cut 50 employees from its payroll, or about 3 percent of its workforce of nearly 1,500.
The company, whose shares reached a 52-week low on Thursday, said the job cuts were across the board and driven by the need to reduce operating expenses.
"Every year around this time we look at our operations and our head count and figure out what our staffing needs are forward," said President Jonathan Johnson. "We've been in business 12 years, and most of those years we've let some people go around this time."
The layoffs, though, come at a time when the company's share price is under pressure its stock closed at $7.13 on Thursday, down 32 cents and its business is showing signs that it may be struggling.
Although Overstock has yet to release the results for its fourth quarter, which typically is the company's best-performing period, its third-quarter results were much weaker than expected and raised questions about how successful the company would be during its all-important holiday shopping season.
In its third quarter ended Sept. 30, the company reported a loss of $7.8 million, or 33 cents per share, compared with the previous year's loss of $3.4 million, or 15 cents per share.
"We'll talk about our fourth quarter after those results are released, but we're not ready to do that yet," Johnson said Thursday.
Last week, the company told the U.S. Securities and Exchange Commission in a filing that it had paid off a $20 million master-lease financing agreement with U.S. Bank. Weeks before that, Overstock reported it probably would be in violation of the terms of that agreement by the end of the year.
"We paid [U.S. Bank] off," Johnson said. "So instead of leasing our technology and hardware from them under that agreement, we now own it outright."
Johnson discounted a low customer-service ranking last week by the market analytics firm Foresee. It ranked Overstock as having the lowest customer satisfaction among the 40 online retailers that it surveyed for its 2011 Holiday E-Retail Satisfaction Index.
"Next to Netflix, both Gap.com [down 6 percent, to 73] and Overstock.com [down 5 percent, to 72] have the largest declines in [customer] satisfaction, leaving them with scores at the bottom of the index," Foresee reported.
It noted that the average customer satisfaction score for its index was 79. "Any retailer scoring below average risks eroding loyalty, recommendations, sales and market share to competitors who score higher," it said.
But Johnson contends that there are all kinds of indexes and rankings.
"Only a couple of weeks ago, The National Retail Federation and American Express named Overstock as one of the top 10 retailers in the country for customer satisfaction," Johnson said. "It was our sixth year in a row being named in that group."