Overstock.com stock surged on Thursday as the retailer reported a smaller loss than feared and investors welcomed preliminary indications that its acquisition of Bed Bath & Beyond is working out.
Overstock (ticker: OSTK) posted a second-quarter adjusted loss of 2 cents a share, while Wall Street had expected a loss of 8 cents. Sales fell 20% from a year earlier to $422 million, but analysts expected them to come in at $409.6 million.
"The acquisition of the Bed Bath & Beyond brand is the beginning of a new phase of growth for us," said CEO Jonathan Johnson. "The successful launch and early performance of our Bed Bath & Beyond business in Canada has been encouraging. The Bed Bath & Beyond brand is strong. In Canada, customers want to buy – and are comfortable buying – from the new Bed Bath & Beyond website."
Overstock won an auction for the bankrupt retailer's brand and intellectual property in June, agreeing to pay $21.5 million. Later that month, the company said it would rename itself Bed Bath & Beyond, and switched its operations in Canada to the new name. The company is aiming to launch the Bed Bath brand in the U.S. in early August, Johnson added.
Shares of Overstock were up 7.7% to $33.50 in premarket trading on Thursday. The stock has gained 60% this year, buoyed by the Bed Bath & Beyond acquisition.