In his first earnings season as Executive Chairman, Marcus Lemonis shared detailed plans for the future of Beyond Inc., which now encompasses the Bed Bath & Beyond, Overstock and Zulily brands.
Given the fact that two of the company’s three banners were bought out of bankruptcy, it’s not surprising that the past year has been a tad bumpy for the newly minted conglomerate, but Lemonis told analysts on the company’s Q1 2024 earnings call May 7 that he sees “green shoots everywhere.”
Following a major executive overhaul in February that included Lemonis’s installation as Executive Chairman, the company has quickly rejiggered its plans and even undone some of its previous work (namely the shuttering of Overstock).
During Q1, Beyond also sold off the textile brand Wamsutta, which it acquired as part of the Bed Bath & Beyond acquisition, for $10.25 million, recovering nearly half of what it paid for the BB&B IP. Lemonis also shared that the company has entered a “wide-scoping” relationship with Salesforce that centers on cleaning and better leveraging all the customer data Beyond now has from its combined brands.
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Now, Lemonis has laid out the specifics of how the business will move forward, including:
- A more thoughtful and strategic interplay between the offerings of Bed Bath & Beyond and Overstock (now that the latter brand has been revived);
- A winnowing down of the Bed Bath & Beyond assortment while at the same time pursuing opportunities for that brand’s international expansion;
- Where Zulily will fit into this mix when it is relaunched in Q3; and
- How becoming a more strategic partner for its vendors could be the key to driving future growth.
But First, Let’s Recap…
When Bed Bath & Beyond finally went belly up in April 2023 it came as a surprise to no one. The business’ failure had been forecast for months, years even, and was made all the more foreseeable following the similar failings of retailers that preceded it, such as JCPenney, Toys ‘R’ Us and Sears — all once-indispensable, beloved chains that spread across the country until they were spread too thin.
Like some of its chain-brand predecessors, Bed Bath & Beyond’s IP and digital assets (but not its hefty brick-and-mortar holdings) were bought, in this case by Overstock for $21.5 million in June 2023. But that’s where the similarity from other retail IP purchases ends, and the twist and turns begin.
After winning out over a number of other bidders for the Bed Bath & Beyond IP, Overstock proceeded to:
- Almost immediately relaunch the Bed Bath & Beyond website in Canada and announce its plans to have the brand take over Overstock.com;
- By August 2023, BedBathandBeyond.com was back, its swift return facilitated by taking over and doing away with the Overstock.com domain;
- In October 2023, Overstock filed with the SEC to officially change its corporate name to Beyond Inc.;
- Just a month later in November, CEO Jonathan Johnson, who spearheaded the BB&B acquisition and subsequent Overstock rebranding, stepped down and was replaced on an interim basis by long-time Overstock executive Dave Nielson;
- In February 2024, Nielson was officially named CEO of Overstock with Chandra Holt joining the company as CEO of Bed Bath & Beyond. Lemonis — who had served on the Beyond board since October 2023 and is also CEO of Camping World — was also named Executive Chairman;
- On March 7, just a month after these appointments, Beyond Inc. spent $4.5 million for the IP, domain and customer database of defunct flash sale site Zulily, which had gone out of business at the end of 2023; and
- By March 29, Overstock.com was back online, six months earlier than originally planned, after Lemonis called the previous leadership’s decision to shut down the brand a “fatal mistake.”
Now, with Overstock Revived, the Larger Strategy has Begun to Crystalize
Yes, Overstock is back, but at nowhere near the level it was when it was usurped by BB&B. As Lemonis shared on the earnings call, nearly 100% of the 2.2 million transactions Beyond recorded in Q1 were made through the BB&B website. Average order size in the quarter was $173, higher than BB&B’s historical average but lower than Overstock’s. This can be explained by the larger ticket size of items historically sold by Overstock; much of that inventory was shifted to the new BB&B site (accounting for the higher-than-normal average order size on BB&B), but it wasn’t moving at the levels it used to via Overstock, which is what “propelled” the company to relaunch Overstock.com so much faster than originally planned.
Now, the Bed Bath & Beyond assortment will return “to its historical categories but be enhanced with room-specific furniture sold as an understandable adjacency,” said Lemonis, while Overstock will return to selling items that aren’t endemic to the BB&B brand with a focus on furniture so that “both brands can thrive separately while complementing each other.”
The full revival of Overstock.com is expected to be a gradual process. The brand’s new website had to be built from the ground up since the old one had been requisitioned for BB&B, which in addition to being a monumental technical task also means the brand relaunched without its 24 years of online history behind it.
“I am so proud of the Overstock team for recognizing the need to pull up the soft launch by six months in order to maximize both top- and bottom-line performance of each brand,” said Nielson on the call. “Aligning each brand with the legacy product categories each is known for is fundamental to setting the groundwork for future profitable growth.”
To expedite the reemergence of Overstock, the brand’s app was re-launched earlier this month with a campaign to drive downloads planned for the next 30 days, according to Nielson.
BB&B to Narrow Assortment, Widen International Reach
In addition to moving away from categories that make more sense for Overstock and aren’t adjacent to BB&B’s four focus areas — bedroom, bath, kitchen and backyard — CEO Chandra Holt shared that assortment curation will be a key focus for the brand in the coming year.
“You’ll see us move away from our marketplace-like assortment of 12 million SKUs to one that has enough breadth and depth to be category-leading to our suppliers but is edited to ensure an easy shopping experience for our customers,” she said on the call.
Retail veteran Stacey Shively has joined the company as Chief Merchandising Officer to lead that effort, while new Chief Marketing Officer Angela Minor will focus on another key objective of the brand’s revival: driving home the role of BB&B in customers’ major life events, such as getting married, having a baby and going off to college.
At the same time, the brand has its sights set on international expansion. Lemonis said that BB&B’s Canadian website is “solid” and that the company is starting a four-store test in the United Arab Emirates with one of the largest retailers in that region, as well as finalizing an agreement to license the BB&B brand in Mexico for omnichannel retail operations.
So Where Will Zulily Fit In?
The last piece of the puzzle is Zulily. Unlike Overstock, this relaunch isn’t being fast-tracked, and is still set to happen in the third quarter. Efforts to re-engage the platform’s vendors is underway with 10 of Zulily’s top vendors already starting the onboarding process, Lemonis said.
With the differentiation between Overstock and BB&B now more clearly defined, Zulily’s territory is also crystalizing — off-price fashion, accessories and beauty.
“When you look at off-price apparel, there are the major retailers that do it at the brick-and-mortar level — the TJ Maxxes, the Rosses, the Marshalls of the world. But when you go to the online sector, there really isn’t anybody playing in that space,” said Lemonis. “There are certain people that play in the upper-tier space that are an aggregator of what other people have on their shelves, but we believe those sites need some competition. In addition to that, as you go down the price-value stack all the way to the everyman or every-lady in the middle of America, we don’t believe that they’re being served properly. We believe there’s more of a volume and margin opportunity when you play in that mid-level tier.”
“Our vision for Zulily is to focus on the segment of customers who loved Zulily before — working moms who enjoy shopping for themselves and their families,” added Nielson. “Shopping is fun for them, and they like to browse frequently. They have an emotional attachment to the thrill and excitement of finding the best deals. At the same time, to bolster the P&L, we’ll provide an evergreen, must-have basic assortment in a highly curated everyday shopping experience that will require customer login.”
That shopping experience will be critical to Zulily’s future success, which is part of the reason why Beyond hasn’t pulled the trigger on its relaunch as fast as it did with Overstock, explained Lemonis. “Particularly with apparel, the experience to buy that garment, properly size that garment, be able to receive it in your home, figure out what you’re going to keep and to curate them with a more highly stylized environment is going to take several months,” he said. “This isn’t one of those situations where you just plug in the vendor and start selling.”
Beyond all That: Becoming More ‘Sticky’ to Vendors
Each brand in the Beyond portfolio will essentially be back to doing what it did best before all this started, but with centralized technology and back-of-house resources that will (hopefully) drive cost efficiencies.
“Utilizing the shared services technology team, [the Zulily relaunch] may be the first time we’ll see real scale in this business as the revenue grows without the high level of follow-on fixed expense,” predicted Lemonis.
He did hint at another potential growth lever for the combined company — offering more support to vendors in their supply chain and reverse logistics. “We believe there is a moat to be established if you create a circle that provides wins for the vendor community,” Lemonis said. “The first half of the circle is a traditional relationship to consumers built on the power of those brands you sell successfully, coupled with a mechanism to complete the circle to help those same vendors with their domestic returns, creating a more seamless experience for the customer, as well as processing, handling and the remarketing of those same products that have been returned. We believe that if we can be part of improving their supply chain for the vendors on the backend, which is where the game is often won or lost, we’ll have found another way to monetize the Overstock brand in an asset-light way.”
The same is true for the other brands in Beyond’s roster. Later on the call Lemonis shared more about this “in development concept,” saying: “[CFO] Adrianne [Lee] and I are putting our heads together with a number of advisors to try to figure out how to get those crucial vendors who make up 90% of all of the fashion in America to become sticky to the Zulily brand…We want to help them improve their margins; we want to help them with their returns; we want to help them with their customer and brand experience. And in exchange for that we have goal alignment.
“One thing that’s been missing across all these brands is a true goal alignment between what the vendor needs to accomplish for their own shareholders and what we need to accomplish for our shareholders, and how those two things can meet in one place and become very sticky to each other.”
