Q3 2024 Beyond Inc Earnings Call and Investor Day

<unk> results could differ materially from such statements.

Operator: Additional information about risks, uncertainties, and other important factors that could potentially impact our financial results is included in our Form 10-K for the year ended December 31, 2023, in our Form 10-Q for the quarter ended June 30, 2024, and in our subsequent filings with the During this call, we'll discuss certain non-GAAP financial measures. The slides accompanying this webcast, those published this morning on our IR site, and our filings with the SEC contain additional disclosures regarding these non-GAAP measures, including reconciliations of these measures to the most comparable GAAP measures. You can find a copy of both of these presentations today on our Investor Relations website.

Additional information about risks uncertainties and other important factors that could potentially impact our financial results is included in our Form 10-K for the year ended December 31st 2023, and our Form 10-Q for the quarter ended June 30th 2024, and in our subsequent filings with the SEC.

During this call, we'll discuss certain non-GAAP financial measures. The slides accompanying this webcast that was published this morning on our IR site and our filings with the SEC contain additional disclosures regarding these non-GAAP measures, including reconciliations of these measures to the most comparable GAAP measures you can find a copy of both of them.

These presentations today on our Investor Relations website, we would encourage you to review the forward looking statements disclosure on slide two of each as a reminder, this webcast is being recorded and will be available for replay on our Investor Relations website. Following the conclusion of today's live event. Finally, as Mark has mentioned our intention with this event is.

Operator: We would encourage you to review the forward-looking statements disclosure on slide 2 of each.

Operator: As a reminder, this webcast is being recorded and will be available for replay on our Investor Relations website following the conclusion of today's live event.

Marcus Lemonis: Finally, as Marcus mentioned, our intention with this event is to be highly interactive. So we'd invite you to ask questions as they arise. We'd like this to be as conversational as possible.

To be highly interactive so we would invite you to ask questions as they arise we'd like this to be as conversational as possible.

Operator: Just one housekeeping item, we will be taking several breaks throughout this session.

One housekeeping item, we will be taking several breaks them throughout this session. So with that let me turn it back to you Mark Asbury. Thank you Alexis.

Marcus Lemonis: So with that, let me turn it back to you, Marcus. Great. Thank you, Alexis.

Marcus Lemonis: As Alexis mentioned, we're looking for more of a fireside environment today as opposed to us just talking at every... As we get into the Q3 financials, we're going to spend a significant amount of time going through each of these boxes because obviously the results on the bottom line are unacceptable to us as a management. As we look back at the last 12 months, we're going to show you several slides that show you the sequential improvement. But these six boxes are going to get distilled down to essentially three problems. Conversion. Margin, and SG&A. And throughout the day, we're going to keep coming back to conversion, margin, and SG&A and what we're going to do about those.

Mark Asbury: As <unk> mentioned, we're looking for more of a fireside environment today as opposed to us is talking with everybody.

Mark Asbury: As we get into the Q3 financials, we're going to spend a significant amount of time going through each of these boxes because obviously the results on the bottom line are unacceptable to us as a management team.

Mark Asbury: As we look back at the last 12 months, we're going to show you several slides that show you the sequential improvement.

Mark Asbury: These six boxes are going to get distilled down to essentially three problems.

Mark Asbury: Conversion.

Mark Asbury: Margin and SG&A.

Mark Asbury: And throughout the day, we're going to keep coming back to conversion margin and SG&A and what we're going to do about those things, but have Adrian take us through the financial results for the quarter.

Adrianne Lee: But have Adrianne take us through the financial results for the court.

Adrianne Lee: to Marcus, and thank you. I'll just go through these boxes. I think this is a standard slide that we present every quarter, but wanted to share, obviously, our revenue results are down year over year. That is, in part, a decision, or mainly driven by our decision and commitment to become profitable. So if you'll look at the next box, gross margin came in at 21.2%. This is 110 basis point improvement versus Q2. And again, something that was by design. I do want to make a note on gross margin versus last year. If you look at the comparable periods where we were bed bath, so if we think back to Q3 last year, we were one month overstock, and we were two months bed bath and beyond.

Speaker Change: Two markets and thank you I'll just go through these boxes I think this is a standard slide that we present every quarter, but wanted to share obviously, our revenue results are down year over year that is in part a decision and are mainly driven by our decision and commitment to become profitable. So if you'll look at the next box gross margin came in at 21, 2%.

Speaker Change: This is a 110 basis point improvement versus Q2, and again something that was by design I do want to make a note on gross margin versus last year. If you look at the comparable periods, where we were bed bath. So if we if we think back to Q3 last year. We were one month overstock than we were two months bed Bath and beyond.

Adrianne Lee: So if I look at August and September last year versus August, September this year, we're actually a 50 basis point increase year over year due to less promotional discounting, again, by design and on our path to profitability. This year, SG&A came in at 45 million for the quarter. We did announce a reduction this week in force, in part, to help us continue to drive this cost down. We expect this number to be a kind of low 40s going forward, but happy with the progress quarter over quarter, a million dollar improvement. All in adjusted EBITDA, a loss of $32 million.

Speaker Change: So if I look at August and September last year versus August September. This year, we're actually a 50 basis point increase year over year due to less promotional discounting again by design and on our path to profitability.

Speaker Change: You'll see our SG&A came in at 45 million for the quarter. We did announce a reduction this week in force in part to help US continue to drive this cost down we expect this number to be a kind of low forty's going forward, but happy with the progress quarter over quarter a million dollar improvement.

Speaker Change: All in adjusted EBITDA, a loss of $32 million. This is an improvement versus Q2, which is what we had committed to doing at 10% commitment and it is if you recall, we had a loss of 36 million in the second quarter. So pleased with the progress, we're making but obviously a lot more work to be done.

Adrianne Lee: This is an improvement versus Q2, which is what we had committed to doing, a 10% commitment, and it is. If you recall, we had a loss of $36 million in the second quarter. So pleased with the progress we're making, but obviously a lot more work to be done.

Adrianne Lee: As we go into the most important thing that gets everybody's attention, it's revenue. And when I come back to those three principal points of conversion, margin, and SG&A, this slide is optically the most troubling. But we're actually encouraged by what we're seeing. If you take a look back, and you eliminate these COVID years, and you start to really study what happened in Q3 of 23, really what we believe happened ultimately, and we're not going to spend a lot of time on it, is that when Bed Bath & Beyond and Overstock merged together into a general marketplace, the assortment that got created was not the assortment that the consumer wanted.

As we go into the most important thing that gets everybody's attention its revenue and when I come back to those three principal points of conversion margin and SG&A.

Speaker Change: This slide is optically the most troubling.

Speaker Change: But we're actually encouraged by what we're seeing.

If you take a look back and you eliminate these COVID-19 years and you start to really study what happened in Q3 of 'twenty three really what we believe happened ultimately and were not going to spend a lot of time on it is that when bed bath and beyond and overstock merged together into a general marketplace. The assortment that got created was not.

Speaker Change: The assortment that the consumer wanted they were used to coming to overstock for furniture for rugs for patio and they had a great success generating over $1 5 billion and conversion in the range of 1.7% to two point too and we don't disclose that number so I'm, saying it just because I want you to understand the context.

Adrianne Lee: They were used to coming to Overstock for furniture, for rugs, for patio, and they had a great success, generating over $1.5 billion and conversion in the range of 1.7 to 2.2. Now, we don't disclose that number. So I'm saying it just because I want you to understand the context. As we look through the following quarters after the merger of the two, you can see that revenue hung in there, and then all of a sudden revenue dropped off. And what we wanted to do, and we said it in the previous quarter, is to get a very acute focus on profitable transactions.

Speaker Change: As we look through the following quarters. After the merger of the two you can see that revenue hung in there and then all of a sudden revenue dropped off and what we wanted to do and we said it in the previous quarter is to get a very acute focus on profitable transactions.

Adrianne Lee: prior to the two brands merging together. at 1.7% or 1.8% conversion. That's a significant difference from where we are operating today, which is closer to 1.3. I think the thing that we're most pleased with is that site traffic continues to be very robust, very robust. Principally, our fundamental problem comes down to conversion. When you look at the gross margin, you can see where overstock historically was, anywhere from 23.6 to 26. But if I eliminate these periods in here during COVID, even at 23.6, or 26.6 at the third quarter of last year, you can see that there is a significant distance between even the improvement we're at today versus where we were.

Speaker Change: Prior to the two brands merging together.

Speaker Change: At 1.7% or one 8% conversion.

Speaker Change: That's a significant difference from where we are operating today, which is closer to 1.3.

Speaker Change: The thing that we're most pleased with is that site traffic continues to be very robust very robust.

Speaker Change: Principally our fundamental problem comes down to conversion.

Speaker Change: When you look at the gross margin you can see where overstock historically was anywhere from 23, 6% to 26, but if I eliminate these periods and here during COVID-19, even at 23.6 or $26 six at the third quarter of last year, you can see that there is a.

Speaker Change: Significant distance between evenly improvement we're at today versus where we were.

Adrianne Lee: When we started to mix things together and create this marketplace, while traffic remained robust, and conversion started to drop, everybody understands that the only way you're actually going to generate sales is by over-promoting and over-discounting, which is what took us. to 19.2 in Q4, 19.5 and where we started to commit that we would have sequential improvement. Early indications in Q4 is that we should have another 500 Basis Points of Improvement. Excuse me. 50 basis points. Another sequential improvement. Yep. So we're expecting to get pretty close to 22 in Q4. As you look at GNA and tech expense, this is a real goal of ours to get this number down into the low 40s.

Speaker Change: When we started to mix things together and create this marketplace, while traffic remained robust and conversion started to drop.

Speaker Change: Everybody understands that the only way you're actually going to generate sales is by over promoting and over discounting which is what took us.

Speaker Change: To 19.2 in Q4, 19.5, and where we started to commit that we would have sequential improvement.

Speaker Change: Early indications in Q4 is that we should have another.

Speaker Change: 500 basis points of improvement.

Speaker Change: Excuse me 50 basis points sequential improvement so we're expecting to get pretty close to 22 in Q4.

Speaker Change: As you look at G&A and Tech expense. This is a real goal of ours to get this number down into the low forties keep in mind that in the previous years. We were operating one nameplate. We're now operating three nameplates theres a little bit of an anomaly here in Q3 of 'twenty two.

Adrianne Lee: Keep in mind that in the previous years, we were operating one nameplate, we're now operating three nameplates. There's a little bit of an anomaly here in Q3 of 22. Oh, and that was driven by we had kind of a one-time accrual in that. So I would say a normalized Q3 is around 50-51. So we know that this number needs to live down in the low 40s. Again, back to conversion, margin, and SG&A. The Adjusted Ibida is an awful story. Prior to the merger of these two brands in Q3 of 23, the company was able to maintain some level of profitability.

And that was driven by we had kind of a one time accrual in that so I would say a normalized Q3 is around 50 51 million. So we know that this number needs to live down in the low forties again back to conversion margin and SG&A.

Speaker Change: The adjusted EBITDA is an awful story.

Speaker Change: Meyer to the merger of these two brands in Q3 of 23, the company was able to maintain some level of profitability, obviously, the COVID-19 years inflated that but even prior to COVID-19 right. There was a normal level of profitability and a decent level of revenue.

Adrianne Lee: Obviously, the COVID years inflated that but even prior to COVID, right, there was a normal level of profitability and a decent level of revenue. As we look at what happened in these following quarters, quarter after quarter, we can see that margin, conversion, conversion, margin, all these things continue to come back over and over again. Here's the odd thing to us, customers still love the business. site traffic and site orders continue to be very robust. And even after we got far less promotional, raising prices and dropping promotions, we're still able to main a significant amount. If you go back to even the COVID peaks, and you look at 19, you look at 22, and even the beginning of 23, we're still outperforming in those categories.

Speaker Change: If we as we look at what happened in these following quarters quarter. After quarter, we can see that margin conversion conversion margin. All of these things continue to come back over and over again.

Speaker Change: Here's the odd thing to us customers still love the business.

Speaker Change: <unk> traffic insight orders continue to be very robust and even after we got far less promotional rising raising prices and dropping promotions, we're still able to main a significant amount.

Speaker Change: If you go back to even.

Speaker Change: The Covid peaks and you look at 19, you look at 'twenty, two and even the beginning of 'twenty three we're still outperforming in those categories.

Adrianne Lee: Orders in average order have been a rollercoaster for the company. Prior to the merger, you can see what was happening, all the way up to $243,000 is the high. But if you go back and you look at the historical averages, $163,000, $173,000, $214,000, we've been doing a pretty nice job of being in that $204,000 to $199,000 range. Again, the problem with that is we got too promotional on furniture on Bed, Bath & Beyond. You never want to look back, but as you look at taking the marketplace of overstock and then merging it with soft goods, top of bed, small appliances at Bed Bath, the customer arrived at the party and they were just totally confused.

Speaker Change: Orders and average order had been a rollercoaster for the company prior to the merger you can see what was happening all the way up to $2 43, as a high but if you go back and you look at the historical averages $1 63, 173 to 2014, we've been doing a pretty nice job of being in that 204 to $1 99.

Speaker Change: A range again the problem with that is we got to promotional on furniture on bed Bath and beyond.

Speaker Change: You never want to look back, but as you look at taking the marketplace of overstock.

Speaker Change: And then merging it with soft goods top of bed small appliances at bed Bath the customer arrived at the party and they were just totally confused.

Adrianne Lee: We took a very curated bed-bath assortment and a very hyper-focused overstock assortment and created a marketplace of 13 million SKUs. And when the customer came, they didn't know what to do. Cart abandonment was high. People leaving the site was high. People not even going past the first page had exploded because they arrived at something they didn't expect. LTM orders and average order value also continues to be strong. And we believe there's still sequential improvement opportunity, both in the orders and average order value and this graph as well.

Speaker Change: We took a very curated bed bath assortment in a very hyper focused overstock assortment and created a marketplace of 13 million Skus and when the customer came they didn't know what to do cart abandonment was high people, leaving the site was high people not even going past the first page had exploded because they would.

Speaker Change: Right, that's something they didn't expect.

Speaker Change: LTM orders and average order value.

Speaker Change: Also continues to be strong and we believe there is still sequential improvement opportunity both in the orders and average order value and this and this graph as well.

Marcus Lemonis: This is the slide that we want to spend the next 45 minutes on. And there are a lot of hypotheticals in here. We're not allowed to use the word proforma. So goal state is pretty similar to proforma, but these are the actual results. And what we wanted to show people is that our path to profitability is not as murky as the outsider may believe, because we understand what are the principal items that will drive that. In all of these cases, in every single example of this pro forma model here, this goal state, none of these items, from the top line of conversion to the gross margin to the sales and marketing to tech, are anywhere outside of what we believe is normal.

This is the slide that we want to spend the next 45 minutes on and there are a lot of hypotheticals in here, we're not allowed to use the word pro forma so Gulf state is pretty similar to pro forma but these are the actual results.

Speaker Change: And what we wanted to show people is that our path to profitability is not as murky as the outsider may believe because we understand what are the principal items that will drive that in all of these cases in every single example of this pro forma motto here this goal state.

Speaker Change: None of these items from the topline of conversion to the gross margin to the sales and marketing to tech or anywhere outside of what we believe is normal. This still assumes that there's macro headwinds theres still assumes that we're underperforming on the margin side from historical averages Theres still assumes that were sales in March.

Marcus Lemonis: This still assumes that there's macro headwinds. This still assumes that we're underperforming on the margin side from historical averages. This still assumes that our sales and marketing is higher than our goal of 11%. This does assume that the tech and G&A will be 41 million. I think we'll see that probably middle to end of first quarter, beginning of second quarter, so it's not that far away. The reason you won't see it in Q4 is we made that riff of 20% of our workforce yesterday. So that obviously hasn't had a chance to come in.

Speaker Change: Hitting is higher than our goal of 11%. This does assume that the tech and G&A will be $41 million I think we'll see that probably middle to end of first quarter beginning of second quarter. So it's not that far away. The reason you won't see it in Q4 as we made the RIF of 20% of our workforce.

Speaker Change: Yesterday.

Speaker Change: So that obviously hasn't had a chance to come in I'm going to have Dave.

Dave: I'm gonna have Dave take us through these modifications and Alex will bring some supporting document up to help you through that. Dave. Okay, so let's talk about gross margin for a moment. When you think about the 25% gross margin, as Marcus said, When you think about historicals, it fluctuated between 25 and 27 percent. So, pegging at a 25. not unrealistic and not on the top end by any means, trying to be realistic. When you connect the dots between the 21.2, which was what we experienced in Q3 of 24, to get to that 25, there are some significant improvements that we know we can make.

Speaker Change: Take us through these modifications and Alex will bring some supporting document up to help you through that.

Dave: Okay. So let's talk about gross margin for a moment when you think about the the 25% gross margin as Mark has said.

Speaker Change: When you think about historically.

Speaker Change: Fluctuated between 25 and 27% so.

Speaker Change: Pegging it at 25.

Speaker Change: Not not unrealistic and not <unk>.

Speaker Change: Not on the top end by any means trying to be realistic when you connect the dots between the 21 point too which was what we experienced in Q3 of 24 to.

Speaker Change: To get to that 25, there are some significant improvements that we know we can make and mark has talked about them and it started in August of 2023, when we layered two brands on top of each other the assortment of one brand.

Dave: And Marcus talked about them, and it started in August of 2023 when we layered two brands on top of each other, the assortment of one brand and the coloration shell and identity of another. As customers came to the website, they were confused. They didn't understand. They didn't. Why Furniture? Why Case Goods Furniture? Why Upholstered Furniture? So as we as we address gross margin, one of the significant components of gross margin is the amount of discounting we had to do to make it appealing enough to convince that customer that we were a legitimate place to purchase.

Speaker Change: And the coloration shell and identity of another.

Speaker Change: As customers came to the website they were confused.

Speaker Change: They didn't understand.

Speaker Change: They didn't.

Speaker Change: Why furniture white case goods furniture, why upholstered furniture.

Speaker Change: So as we as we address gross margin one of the significant components of gross margin is the amount of discounting we had to do to make it appealing enough to convince that customer that we were legitimate place to purchase.

Dave: But it had to be that kind of a deal. When you go to sales and marketing, along those same lines. Can we double click on the margin a little bit? Yeah. So it is stunning. And in some cases, hard to believe that you can go from twenty one point two to twenty five. And the reason we want to spend some time on that is when you go back and you look at the historical averages and you take covid out of the equation, because we know that covid had margins at twenty eight, twenty nine percent in some months and you take that away.

Speaker Change: But it had to be that kind of a deal.

When you go to sales and marketing along those same lines can we double click on the margin a little bit yeah. So it is stunning and in some cases hard to believe that you can go from 21 point to 225 and the reason we wanted to spend some time on that is when you go back and you look at the historical averages.

Speaker Change: And you take Covid out of the equation, because we know that Covid had margins at 28, 29% in some months and you take that away. It really is very simple for us it's taking the SKU assortment.

Dave: It really is very simple for us. is taking the SKU assortment. and the marketing allocation of dollars on those SKUs and appropriately putting them back into the two brands where they respectively belong. Over the last five months, we have worked hard to peel and duplicate SKUs that were on Bed Bath that used to historically be at Overstock and put them back on Overstock. We have not eliminated any SKUs over at Bed Bath & Beyond.com to any great extent other than certain marketplace items that we didn't think were competitive, certain vendors that we didn't think were compliant, but other than that, we have not taken that away.

Speaker Change: And the marketing allocation of dollars on those skus and appropriately putting them back into the two brands, where they respectively belong.

Speaker Change: Over the last five months, we have worked hard to appeal and duplicate skus that were on bed bath that used to historically be it overstock can put them back on overstock, we have not eliminated any skus over at bed Bath and bed Bath <unk> beyond dot com to any great extent other than certain market play.

Speaker Change: Items that we didn't think were competitive certain vendors that we didn't think were compliant but other than that we have not taken that away.

Dave: As those SKUs move over, As those queues move over, we've seen material improvement.

Speaker Change: As those skus move over.

Speaker Change: As those skus move over we've seen material improvement.

Dave: We're free to ask questions. Please. Yeah, no, I don't believe that the gap from 21.2 to 25 has anything to do with adjusting first cost. Zero. We're giving no credit to that. We're giving no credit to mix shift either. We're giving 100% of the attribution from 21.2 to 25 of selling the product at the right place at the right time. Bed Bath & Beyond cannot effectively and profitably sell large-ticket furniture, rugs, and patio on its site profitably. Overstock.com has historically and will continue to sell large ticket items at a double or triple contribution margin from what Bed Bath & Beyond can do.

Speaker Change: Please please.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Other other potential drivers.

Speaker Change: Sure.

Speaker Change: Okay.

Yes.

Speaker Change: Mix changes.

Speaker Change: So can we get.

Speaker Change: Yes.

Speaker Change: So the bridge.

Speaker Change: First of all.

Speaker Change: Negotiated already.

Speaker Change: Yeah.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Yes, no I don't believe that the gap from 21.2 to twenty-five has anything to do with adjusting first costs.

Zero, we're giving no credit to that were giving no credit to mix shift either.

Speaker Change: We're giving 100% of the attribution from 21.2 to 25 of selling the product at the right place at the right time.

Speaker Change: Bed Bath and beyond cannot effectively and profitably sell large ticket furniture rugs and patio on its site profitably.

Speaker Change: Overstock Dot com has historically and will continue to sell large ticket items at a double or triple contribution margin from what bed Bath can do.

Dave: In a very short period of time, Overstock is already ramped up to be approximately a $200 million run rate business. As we move things over, we think that's going to continue to accelerate.

Speaker Change: In a very short period of time Overstock is already ramped up to be approximately a 200 million dollar run rate business.

Speaker Change: As we move things over we think that's going to continue to accelerate but not until several weeks ago I don't want to spend some time on this did we actually start spending specific dollars on specific skus at overstock, we had not done that until about three or four weeks ago. A couple weeks ago. Yeah. In fact that takes us to the cells.

Dave: But not until several weeks ago, and I want to spend some time on this, did we actually start spending specific dollars on specific SKUs at Overstock. We had not done that until about three, four weeks ago. Couple weeks ago. Yeah.

Dave: In fact, that takes us to the sales. But let's stay on the margin for just a second. So here's what we saw. We took a chunk of skew. to 10% of the span. that we were spending on bed bath. We moved it over to Overstock. and On Those Products. Leaving the SKUs in both places when we moved that spend over to overstock for that category. We saw 90% increase in sales in the first week, or 90% of the sales that we'd experienced in the first week. on 50% of the dollar spend that was required. on Bed Bath.

Speaker Change: But let's stay on the margin for just a second.

Speaker Change: So here's what we saw.

We took a chunk of skus.

Speaker Change: We took 10% of the spend that.

Speaker Change: But we were spending on bed Bath and beyond.

Speaker Change: And we moved it over to overstock.

Speaker Change: And on those products, leaving the Skus in both places when we moved that spend over to overstock for that category.

Speaker Change: We saw 90% increase in sales in the first week or 90% of the sales that we'd experienced in the first week.

Speaker Change: On 50% of the dollar spend that was required.

Dave: Now... Yes. So the contribution margin is how we define a profitable transaction, which includes multiple layers. You may want to go into that. Multiple frictionals that play into the contribution margin, whether it's discounting. Freight, At Spend, different components that we put in there, sponsored marketing that goes into it from the partner. But the one that you've got to think about is it didn't require the same amount of discounting. And that's what improves the bottom line. And that's why I was kind of holding out, Marcus, the sales and marketing, that particular example has more to do with how we go from 16.7.

Speaker Change: On bed Bath.

Speaker Change: No.

Speaker Change: Yes.

Speaker Change: Yeah.

Speaker Change: <unk>.

Speaker Change: Yeah.

Speaker Change: <unk>.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: Gene.

Gene: So the contribution margin is how we define a profitable transaction, which includes multiple layers you may want to go into that multiple frictionless.

Gene: But play into the contribution margin whether.

Gene: Whether it's discounting.

Gene: <unk> freight.

Gene: It's been different different components that we put in there sponsored marketing that goes into it from the partner, but the one that's the that.

Gene: You got to think about is it didn't require the same amount of discounting and that's what improves the bottom line, but and that's why I was kind of holding out mark is that the sales and marketing that that particular example has more to do with how we go from 16.7.

Dave: to 12.0. And that is, and this is a really important point. In the first week of transitioning 10% of our ad spend to a campaign on a different website, and getting 90% of the sales, and only requiring 50% of the spend to do that. is significant. It's even more significant when you realize That's the first week. And it typically takes Up to four weeks for Google algorithm PLA spending to burn in. It will get better. Our anticipation, I'm not going to guess what it will be, but we're already seeing the 90% become 92 and 94.

Mark Asbury: 12 point, though.

Mark Asbury: And that is and this is a really important point.

Mark Asbury: In the first week of transitioning 10% of our outspend to a campaign on a different website.

Mark Asbury: And getting 90% of the sales.

Mark Asbury: And only requiring 50% of the spend to do that.

Mark Asbury: Is significant it's even more significant when you realize.

Mark Asbury: That's the first week and it typically takes.

Mark Asbury: Up to four weeks for Google algorithm piolet spending to burn in it will get better our anticipation I'm not going to guess what it will be but we're already seeing the 90% become 92 and 94, we expect it to get over 100% and still be.

Dave: We expect it to get over 100% and still be at significantly less dollars required on Google to get that same amount of sales. So how that correlates to margin is there's less site sales. Because when conversion starts to rise and I'm not having to induce people with an extra 10, an extra 20, we see them not moving around in their cart and walking away from it and we send them another email. That margin from 27 down to 21.2 is not mixed. And I don't want anybody to try to convince anybody that it's a mix issue.

Mark Asbury: That's significantly less dollars required on Google to get that same amount of sales. So how that correlates to margin is that theres less site sale.

Mark Asbury: Because when conversion starts to rise and I'm not having to induce people with an extra 10, an extra 28, we see them not moving around in their cart and walking away from it and we send them. Another email that margin from 27 down to 21.2 is not mix and.

Mark Asbury: And I don't want anybody to try to convince anybody that its a mix issue. It's an over promotion issue trying to generate revenue off of a terrible conversion.

Dave: It's an over-promotion issue trying to generate revenue off of a terrible conversion. which you don't get, but so we're going to have to be careful. You should anticipate that the contribution margin on an overstock transaction is materially more profitable on those skews than it ever has been from the merger to now on Bed Bath, materially. Yes, materially. and have been candid. More than the number that's in the column. and have been. from launch, and as we apply ad spend, as we apply promotions, Holt. because the customer understands it, the customer knows it, the customer comes to Overstock.

Mark Asbury: So we were.

Mark Asbury: Today.

Mark Asbury: Run rate.

Mark Asbury: Yeah.

Which you don't get but so we're gonna have to be careful yep.

Mark Asbury: Okay.

Mark Asbury: Great.

Speaker Change: You should anticipate that the contribution margin on an overstock transaction is materially more profitable on those skus than it ever has been from the merger to now on bed Bath materially yes materially.

Speaker Change: And he has been he candid.

Speaker Change: More than the number that's in the column.

Speaker Change: And has been.

Speaker Change: From launch.

Speaker Change: And as we apply AD spend as we apply promotions.

Speaker Change: Holds.

Speaker Change: Because the customer understands it the customer knows that the customer comes to overstock.

Dave: With those power categories in mind, that's what it was known. That's what the brand was known for. Nope, it's improving the margin on all transactions. So when he asked about negotiating first cost down, this idea that Beyond has an influence with vendors in an asset-light, no-risk-taking model to get people to lower their prices is just, it's nonsense. It's not possible. Because when you think about the compression that the vendors have taken on inflation, on freight, and everything else, their willingness to hold all of the goods on their books, have all of the 3PL issues on their books, and then us to be able to put a website up and drop ship product, our inability to move that needle has been obvious for probably four or five months.

Speaker Change: With those power categories in mind that's.

Speaker Change: What it was and that's what the brand was known for.

Speaker Change: No it's improving the margin on all transactions.

Speaker Change: Yeah.

Speaker Change: So when he asked about negotiating first cost down this idea that beyond has an influence with vendors in an asset light no risk taking model to get people to lower their prices is just it's nonsense, it's not possible.

Speaker Change: Because when you think about the compression that the vendors have taken on inflation on freight and everything else, they're willingness to hold all of the goods on their books have all of the three P. L issues on their books, and then us to be able to press of what put a website up and drop ship product our inability to to move that.

Speaker Change: Needle has been obvious for probably four or five months, yeah are there certain vendors, where we've gotten improvements absolutely is it material enough to get us to our goal of 27 not possible. So the idea behind the transaction with container store or the potential transaction with the container store and the completed transaction with Kirkland's is.

Dave: Yeah, are there certain vendors where we've gotten improvements? Absolutely. Is it material enough to get us to our goal of 27? Not possible.

Marcus Lemonis: So the idea behind the transaction with Container Store, the potential transaction with Container Store, and the completed transaction with Kirkland's, is to put Bed Bath & Beyond back into an omni-channel experience. It's going to have nothing to do with the consumer, but when we look at that cooperative negotiation between a said vendor, and we can offer them more distribution, shelf presence, and the ability to buy product and put it in the warehouse, we believe that the wholesale prices that typical retailers enjoy from those vendors will then be passed on to its asset light partners. Our ability to find incremental return on investment from those potential transactions is far greater than the surface of an economics that you see.

Speaker Change: To put bed bath and beyond back into an omni channel experience its gonna have nothing to do with the consumer but when we look at that cooperative negotiation between set vendor and we can offer them more distribution shelf presence.

Speaker Change: And the ability to byproduct and put it in the warehouse, we believe that the wholesale prices that typical retailers enjoy from those vendors will then be passed on to its asset light partner.

Speaker Change: Our ability to find incremental return on investment from those potential transactions is far greater than the surface surface effort economics that you see.

Marcus Lemonis: It is our belief, and we've validated that already, that if you sit with a Conair or a Cuisinart or any vendor that you can think of that was historically part of the Bed Bath assortment, and you can bring them retail assortment back again, you can buy product and stick it in their warehouse, and you can drive their revenue, you're going to be able to negotiate, like Kirkland's would, or like Container Store would, or like Bed Bath would, an appropriate wholesale price for taking in the product and taking on the risk and putting it in the warehouse.

Speaker Change: It is our belief and we've validated that already that if you sit with a con error cuisinart or any vendor that you can think of that was historically part of the bed Bath assortment and you can bring them retail assortment back again, you can byproduct and stick it in their warehouse and you can drive their revenue youre going to be able to negotiate like clockwork.

Speaker Change: Wood or light container store water like bed, Bath wood and appropriate wholesale price for taking in the product and taking on the risk and putting it into the warehouse.

Marcus Lemonis: Our company has not been able to enjoy the benefits of what that wholesale pricing would give us for all the reasons I mentioned. The way that we have started to renegotiate with vendors isn't, give me a better price. It's I'm going to give you more cash and you're going to give me more margin. That is the problem that we ultimately have, is that our ability to influence or exert pressure on people isn't going to happen unless you're handing them purchase orders. And that's ultimately what they want.

Speaker Change: Our company has not been able to enjoy the benefits of what that wholesale pricing would give us for all the reasons I mentioned.

Speaker Change: The way that we have started to re negotiate with vendors isn't give me a better price. It's I'm going to give you more cash and you're going to give me more margin.

Speaker Change: That is the problem that we ultimately have is that our ability to influence our exert pressure on people isn't going to happen unless you're handing them purchase orders.

Speaker Change: And that's ultimately what they want.

Marcus Lemonis: So our margin improvement that takes us from 25 to 27, not 21.2 to 25. is our belief that there's three to 400 basis points of first cost improvement by singularly presenting that vendor with an omni-channel experience. And many this week have been critical.

Speaker Change: So our margin improvement that takes us from 25% to 27% not 21, 2% to 25.

Speaker Change: It is our belief that there's three to 400 basis points of first cost improvement by singularly presenting that vendor with an omnichannel experience and many of this week have been critical why are you investing in kirkland's, you're going to open up bed Bath stores. Why are you doing this with the container store, it's very simple we love being in <unk>.

Marcus Lemonis: Why are you investing in Kirkland? You're going to open up Bed Bath Stores. Why are you doing this with Container Store? It's very simple. We love being an asset light model. We want to be more asset light tomorrow than we are today, both in people and in hard assets. We want to look more like a tech and data company. But in order for that e-commerce core business to get back to the 1.5 plus revenue that we need, we can't afford financially to spend what we're spending to drive customers and to convert that customer by inducing them with the kind of discounts and the kind of spend that we're operating with today.

Speaker Change: That light model, we want to be more asset light tomorrow than we are today, both in people and in hard assets we own.

Speaker Change: To look more like a tech and data company, but in order for that E Commerce core business to get back to the 1.5 plus revenue that we need we can't afford financially to spend what we're spending to drive customers and to convert that customer by inducing them with the kind of discounts.

Marcus Lemonis: We believe it's possible to reverse that trend by offering them the omni-channel portfolio that nobody ever replaced when Bed Bath went away. Nobody ever replaced.

Speaker Change: And the kind of spend that we're operating with today.

Speaker Change: We believe it's possible to reverse that trend by offering them the omnichannel portfolio that nobody ever replace when bed Bath went away nobody ever replace it.

Speaker Change: Right.

Speaker Change: Sure.

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: Mhm.

Speaker Change: Sure.

Speaker Change: Sure.

Speaker Change: Sure.

Speaker Change: Yeah.

Speaker Change: Yeah.

Marcus Lemonis: So before we get to the optimized state, I want to stay into what we know the proforma should have looked like had we not merged these two sites together. And I hate to keep coming back to that, but this column here is what we believe the performance would have been if Bed Bath and Overstock always operated as two sites, and we never destroyed the optimization that Overstock had. And rather than having revisionist history, it's taking us way too much time and way too much money to get back to that state. But we believe it. And if you go back and you look at the Average Order Improvement.

Speaker Change: Yeah.

Speaker Change: Yep, so before before we get to the optimized state I want to stay into what we know the pro forma should have looked like had we not merge these two sites together and I hate to keep coming back to that but this column here is what we believe the performance would have been if bed Bath and AUM.

Speaker Change: <unk> always operated as two sites and we never destroyed the optimization that overstock had and rather than having a revisionist history, it's taking us way too much time and way too much money to get back to that state, but we believe it and if you go back and you look at.

Speaker Change: The average order improvement.

Marcus Lemonis: Holding the Active Order and Customer Frequency. DNA and Tech Expense, and the Gross Margin Sequential Improvement, that's what gives us confidence, a lot of confidence. to make this a more idealistic state for us without any macro improvements and without any optimization of the transactions.

Speaker Change: Holding the active order and customer frequency.

Speaker Change: The G&A and tech expense and the gross margin sequential improvement, that's what gives us confidence a lot of confidence.

Speaker Change: To make this a more idealistic state for us without any macro improvements and without any optimization of the transactions. We just want to make sure that we don't leave this column without you understanding that it is our belief that if all the skus are back at overstocked the way they're supposed to be.

Marcus Lemonis: We just want to make sure that we don't leave this column without you understanding that it is our belief that if all the SKUs are back at overstock the way they're supposed to be and the Bed Bath & Beyond current site is curated to what the customer knows it should be and the PLA spend is appropriately allocated to the SKUs on the appropriate sites and conversion just gets back to the lowest number in the band of average that overstock enjoyed before. The lowest number. I think in that input is it 1.6 Alex? That is below the company's lowest level of conversion ever.

Speaker Change: And the bed Bath <unk> beyond current site is curated to what the customer knows it should be and the P. L. A spend is appropriately allocated to the skus on the appropriate sites and conversion just gets back to the lowest number in the band of average that overstock enjoyed before the lowest.

Speaker Change: Number I think in that input is at one six Alex.

That is below the company's lowest level of conversion ever.

Marcus Lemonis: Ever And I hate to oversimplify it, it is literally right skews, wrong place.

Speaker Change: Ever.

Speaker Change: And I hate to oversimplify, it is literally wrongs right skus wrong place.

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Oh.

Speaker Change: Okay.

Speaker Change: Okay.

Marcus Lemonis: Can I answer the last part first? Bed Bath will continue to drop as you move the hyper focus of furniture, rugs, and patio away from there. And we expect that shift to start to show up over at Overstock. The contribution margin of selling furniture at Bed Bath is candidly negative to zero on a good day. The contribution margin historically at Overstock was? 10%. In our thesis, we only have it at seven. So we're not, we don't want to fill this room with anything other than the lowest possible performance.

Speaker Change: Yeah.

Speaker Change: Can I, let me answer the last part first bed Bath will continue to drop as you move the hyper focus of furniture rugs and patio away from there and we expect that shift to start to.

Speaker Change: To show up over at Overstock, the contribution margin of selling furniture at bed Bath is candidly negative to zero on a good day the contribution margin historically at overstock was 10%.

Speaker Change: In our thesis we only have it at seven so.

Speaker Change: We're not we don't want to fill this room with anything other than the lowest possible performance I wanted to talk about the skus. So on the Skus.

Dave: I want to talk about the SKUs. So, on the SKUs. When you think about moving these SKUs, I got to take you back to something Marcus just said about The Domain Authority that we lost with Overstock. If we were to pick up the SKUs that are the most important SKUs for Overstock that are currently on Bed Bath and move them all at once. Catastrophe. We would see cells plummet. This would be A hundred million. A hundred million. We would be in big trouble. And so, we have to... SEO strategies that we're working on. Overstock is moving through that.

Speaker Change: When you think about moving these skus I Gotta take you back to something Marc has just said about.

Speaker Change: The domain authority that we lost with Overstock, if we were to pick up the skus that are the most important skus for overstock that are currently on bed Bath and move them all at once.

Speaker Change: Catastrophe.

Speaker Change: We would see sales plummet this would be.

Speaker Change: $100 million 100 million, we would be in big trouble and so we have to we have.

Speaker Change: S strategies that were working on overstock is moving through that.

Dave: You know, we pulled that website up. Six months earlier than we had intended to launch it, the team busted it. They wanted to make this happen. But we launched it without some experiences that, in hindsight, we probably should have waited a little bit longer. Maybe not the full six months, but maybe taking another couple of months to get it right. As we have begun pulling SKUs off, we are seeing SEO rebound. We're up to about eight-ish percent of overstock. being that SEO portion of the traffic, that organic traffic coming in, we've got a long ways to go with that.

Speaker Change: You know, we pulled that website up.

Speaker Change: Six months earlier than we had intended to launch it the team busted that they wanted to make this happen but.

Speaker Change: But we launched it without some experiences that in hindsight we.

Speaker Change: We probably should have waited a little bit longer maybe not the full six months, but maybe taken another couple of months to get it right.

Speaker Change: As we have begun pulling skus off we are seeing S. C O rebound.

Speaker Change: We're up to about eight ish percent of overstock being.

Speaker Change: Being that SCO portion of the traffic that organic traffic coming in we've got a long ways to go with that we're going to continue in a very methodical approach to move those skus over but on the first of August when the site went from being red to Blue and the redirect and we lose all domain authority for over.

Dave: We're going to continue in a very methodical approach to move those skews over. But on the first of August, when the site went from being red to blue, and the redirect, and we lose all domain authority for overstock, that is all with Bed Bath, all the buying guides, all the history, all the deep links, all that is on Bed Bath & Beyond. So we're building that site from scratch. And it's going to take a few months to even the end of the year, end of 2025 to get there. A lot of the skews are already there.

Speaker Change: Stock that is all with bed Bath, all the buying guides all the history all the deep links all of that is on bed Bath and beyond so we're building that site from scratch and it's going to take a few a few months to even the end of the year into 2025, you get a lot of the Skus are already there, it's really where are we spending the marketing dollars.

Dave: It's really where are we spending the marketing dollars. And in an effort to really prove out our thesis and anticipation of today, when we started to move a million dollars, half a million dollars on very specific categories that were endemic to overstock, going back to the file, telling people things were back, we not only noticed the conversion has doubled since overstock launched, has doubled. It's still below the overstock standard, but it has doubled. What we saw that was more glaring to us is how conversion started to go up. how discounting started to go down and how margin performance started to go up.

Speaker Change: And in an effort to really prove out our thesis in anticipation of today. When we started to move a million dollars half a million dollars on very specific categories that were endemic to overstock going back to the file telling people things. We're back we not only noticed the conversion has doubled since overstock launched has.

Speaker Change: <unk> doubled its still below the overstock standard, but it has doubled what we saw that was more glaring to US is how conversion started to go up.

Speaker Change: How discounting started to go down and how margin performance started to go up a good contributor a big contributor to the margin improvement here has been the sequential rollout of overstock.

Dave: A good contributor, a big contributor. to the margin improvement here has been the sequential rollout of overstock. Every single quarter, we went from like $100 million run rate to a $200 million run rate with no real ad spend. That incremental margin improvement, and the one that we're telling you we believe is on track to happen in Q4, another 50 basis points, is coming from moving it from one pocket to the other. We just can't move it fast enough. And I don't say that to be tongue in cheek. We can't move it fast enough because we're tired of losing money.

Speaker Change: Every single quarter, we went from like $100 million run rate to a $200 million run rate with no real AD spend that incremental margin improvement and the one that we're telling you. We believe is on track to happen in Q4, another 50 basis points is coming from moving it from one pocket to the other.

Speaker Change: We just can't move it fast enough and I don't say that to be tongue in cheek, we can't move it fast enough because we're tired of losing money.

Dave: And because we know exactly what would fix the problem, we have this urge to rip the Band-Aid off and just move everything tomorrow. What the smartest people in the room, outside of our company and inside of our company, have said, if you want to kill everything, go do it.

Speaker Change: And because we know exactly what would fix the problem we have this.

Speaker Change: Urge to rip the band aid off and just move everything tomorrow, what the smartest people in the room outside of our company and inside of our company has said if you want to kill everything go do it. So you got to just figure out how to spend less pull things back in contract and have everybody understand in the market that for a short period of.

Marcus Lemonis: So you've got to just figure out how to spend less, pull things back and contract, and have everybody understand in the market that for a short period of time, what you're trying to do is improve profitability. We sold, I think it was 22% less. 22% less in Q3 against Q2, and we made, we lost $4 million less. What that's telling us is we don't need to chase revenue for a minute, and we understand that market share is an important game, but it shouldn't be market share on a commoditized product in a very bad macro environment at all costs.

Speaker Change: Time, what you're trying to do is improve profitability, we sold I think it was 22% less.

Speaker Change: 22% less in Q3 against Q2, and we made we lost $4 million less.

Speaker Change: What that's telling US is we don't need to chase revenue for a minute and we understand that market share is an important game, but it shouldn't be market share on a commoditized product and a very bad macro environment at all costs.

Marcus Lemonis: And the fact that we are able to hold on to the traffic, the active orders, and the customer file is really what we're managing to. If you said, what are the three KPIs that you're looking at today, we want to hit the profitability forecast that the market expects us to believe to hit. If you look at the quarter, our revenue was way off for the quarter, but our EBITDA was right on top of what the consensus was. We were managing to that. We were managing to the active file. We were managing to the average order, and we were managing to delivering the sequential margin improvement that we committed to, and the SG&A reduction that we committed to.

And the fact that we are able to hold on to the traffic the active orders and the customer file is really what we're managing too. If you said what are the three kpis that you're looking at today.

Speaker Change: We want to hit the profitability forecast that the market expects us to believe.

To hit if you look at the quarter, our revenue was way off for the quarter, but our EBITDA was right on top of what the consensus was we were managing to that we were managing to the active file we were managing to the average order and we were managing to delivering the sequential margin improvement that we committed to and yes.

Marcus Lemonis: We don't like the result, but we like some of the green shoots that we see in the business.

Speaker Change: G&A reduction that we committed to.

Operator: Yes, sir.

Speaker Change: We don't like the resolved, but we like some of the green shoots that we see in the business, yes, Sir.

Operator: How many quarters it'll take to get to these kind of medium-term targets and kind of... Adrianne, how much cash do you think it'll require between now and then?

Speaker Change: How many quarters, how many quarters it will take to get to these these kind of medium term targets and kind of.

Speaker Change: Adrian how much cash do you think it will require between now and then.

Adrianne Lee: So we're not going to make the mistake that I made once before by giving you a solid date on when it's going to happen. But what I am going to tell you is that we believe it's a couple to a few quarters. And we also believe that you're going to, for the first time, not see 10% improvement in EBITDA quarter over quarter, but you're going to see a material, material improvement in EBITDA year over year.

Speaker Change: So we're not going to make the mistake that I made once before by giving you a solid date on when its going to happen, but what I am going to tell you is that we believe it's a couple to a few quarters.

Speaker Change: And we also believe that you're going to for the first time, not see 10% improvement in EBITDA quarter over quarter, but youre going to see a material material improvement in EBITDA year over year.

Adrianne Lee: This fourth quarter will be the first quarter that there is no noise in the room. six days of just overstock at the high levels of conversion, the high levels of a train wreck from there.

Speaker Change: This fourth quarter will be the first quarter that there is no noise.

Speaker Change: Six days of just overstock.

Speaker Change: At the high levels of conversion to high levels of.

Adrianne Lee: It was a difficult situation. As we move forward, and you see Q4, we are expecting to be up in revenue from Q3 to Q4. We're expecting to be up in margin from Q3 to Q4. We're expecting to be adjusted EBITDA, because we have some RIF costs in there, up materially from Q4 of last year and an improvement to Q3 of this year.

Speaker Change: A train wreck from there it was a difficult situation.

Speaker Change: As we move forward and you see Q4, we are expecting.

Speaker Change: Seem to be up in revenue from Q3 to Q4, we're expecting to be up in margin from Q3 to Q4, we're expecting to be adjusted EBITDA, because we have some risk costs and they're up materially.

Adrianne Lee: And there's no magic to it. It's conversion improving and margin improving and SD&A reducing.

Speaker Change: From Q4 of last year, and an improvement to Q3 of this year and there's no magic to it it's conversion improving and margin improving and SG&A reducing.

Adrianne Lee: I truly believe that we will start to accelerate some of those changes as we get into January because we don't want to risk our Q4 revenue when things are very active. I would expect that Dave will start to accelerate more than just 10% movement at a time.

I truly believe that we will start to accelerate some of those changes as we get into January because we don't want to risk. Our Q4 revenue when things are very active I would expect that Dave will start to accelerate more than just 10% movement at a time.

Adrianne Lee: But we still want to be really scientific about it.

Adrianne Lee: On the cash side, you want to address that? Sure. Just a couple things. I think on the onset, we talked about we did enter into a contract to sell our headquarters, so we'll expect a cash inflow here in the fourth quarter for that, which will be helpful. We obviously continue to have things on our balance sheet that we want to monetize. We have some direct investments in some blockchain companies, as well as an indirect interest, which I think everybody in this room is aware of. So we'll continue to monetize our assets, and then as we improve our profitability and begin our journey to kind of a cash flow neutral, I think we'll be able to do that journey with the things I just mentioned.

Speaker Change: But we still want to be really scientific about it.

Speaker Change: On the cash side, you're going to address that sure just a couple of things I think on the onset we talked about we did enter into a contract to sell our headquarters. So we'll expect to have a excuse me a cash inflow I'm here in the fourth quarter for that which will be helpful. We obviously continue to have things on our balance sheet that we want to monetize them we have some dirt.

Speaker Change: <unk> investments in Ams and blockchain companies as well as an indirect interests I think everybody. In this room is aware of so we'll continue to monetize our assets and then as we improve our profitability and begin our journey to kind of a cash flow neutral.

Speaker Change: We'll be able to do that journey with the things I just mentioned.

Speaker Change: Yeah.

Speaker Change: Sure.

Operator: about what have you guys learned, I guess, in the last 6 to 12 months about how to more effectively price. And, I mean, in theory, that's both a sales opportunity and also a margin opportunity, just given how wide some of those gaps have been historically. So I think it ties in.

Speaker Change: Yeah.

Speaker Change: No.

Speaker Change: How do you think about what have you guys learned I guess in the last six to 12 months about how to more effectively price and I mean in theory, that's both a sales opportunity and also a margin opportunity just given how wide some of those gaps have been historically, so I think it ties into just love to hear some feedback on that.

Dave: You know, you can imagine. When you do what we did to Overstock by layering over Bed, Bath and Beyond, the shock to the algorithm, the pricing algorithms, in that instance, when what those price algorithms are optimizing to is product margin. And when we start looking at these SKUs and the performance of them and the conversion It sends things into a bit of a tailspin. And what we've seen is with our pricing that, and I'll go back to the example we talked about with gross margin. The exact same SKU with the exact same price and cost on Bed Bath vs.

Speaker Change: You can imagine.

Speaker Change: When you do what we did to overstock by layering over bed Bath and beyond the shock to the algorithm the pricing algorithms in that instance.

Speaker Change: When what those price algorithms are optimizing to his product margin.

Speaker Change: And when we start looking at these skus and the performance of them and the conversion.

Speaker Change: Since things into a bit of Oh.

Speaker Change: A tailspin.

Speaker Change: And what we've seen is with our pricing.

Speaker Change: That.

Speaker Change: I'll go back to the example, we talked about with gross margin.

Speaker Change: The exact same SKU.

Dave: Overstock, one sales. One requires discount. And so our pricing has been a little bit shaky, partially because on Bed Bath, to try and make up some of this loss of discounting that we've had to do, we've been testing price elasticity wherever we could to find a little bit of room here and there.

Speaker Change: With the exact same price and cost on bed Bath versus overstock one cells.

Speaker Change: One requires discounting.

Speaker Change: And so our pricing has been a little bit shaky, partially because on bed bath to try and make up some of this loss of discounting that we've had to do we've been testing price elasticity wherever we could to find a little bit of room here and there while on overstock, we just keep the price the exact same right now.

Dave: While on Overstock, we just keep the price the exact same right now, to the point earlier, with SEO transition and moving products over, it's going to take us a little bit of time to really bifurcate the assortment so that one's on one Others, the right products are on on Bed Bath, the right products are on Overstock, but it's going to take us some time to do that. And the algorithms will find their way back to competitive targets.

Speaker Change: To the point earlier with CFO transition and moving products over it's going to take us a little bit of time to really bifurcate the assortment so that one's on one.

Speaker Change: Others. The right products are on on bed Bath, the right products on overstock, but it's going to take us some time to do that and the algorithms will find their way back to competitive targets.

Dave: We scraped the market. So we know somebody had produced a report in here on our competitive pricing, and they were dead on with what we understood as well. But in trying to accomplish this and meeting that we had raised prices, we did. And so as we looked at our margin improvement, that was a part of it. Now it was done through price elasticity testing and only leaving it if we could get there.

Speaker Change: We scraped the market. So we'd know somebody had produced a reporting here on our competitive pricing and they were dead on with what we understood as well, but in trying to accomplish this we had raised meeting that we had raised prices we did and so as we looked at our margin improvement that was a part of it now it was done through price elasticity.

Testing and only leaving it if we could get there.

Speaker Change: Yes, Sir.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: Yeah.

Adrianne Lee: The ATM was not tapped this past quarter. We did secure a $25 million revolver from BMO as a bridge to the sale of the building. And we want to keep that flexibility out there.

Speaker Change: Yes.

Speaker Change: The ATM was not tap this past quarter, we did secure a $25 million revolver from BMO as a bridge to the sale of the building and we want to keep that flexibility out there.

Adrianne Lee: I'm not a fan of leverage in a business like this, I would prefer not to.

Marcus Lemonis: When we made the very difficult decision to lay off 20% of our workforce, that's an acknowledgement that the overall cost structure needs to be restructured. When I look at the balance sheet and I look at some of the assets that are on there, and by the way, David Goon is expected to be here right after the first break to talk about T-Zero, and we're attempting to get a hold of Louis from Grain Chain, who's at a conference. It is, you know, something that we look at. How do we explore different options with blockchain Medici assets?

Speaker Change: I'm not a fan of leverage in a business like this I would prefer not to when we made the very difficult decision to lay off 20% of our workforce. That's an acknowledgment that the overall cost structure needs to be restructured.

Speaker Change: Yeah.

Speaker Change: When I look at the balance sheet and I look at some of the assets that are on there and by the way David Goon is expected to be here right. After the first break to talk about T zero and we're attempting to get a hold of Lewis from grain chain Who's at a conference.

Speaker Change: It is.

Marcus Lemonis: We invited Pellion to come today, they declined for whatever reason. But we will be filling you in on some of those things a little later and exploring those assets and other IP that we have inside the company is also an option.

Speaker Change: You know something that we look at how do we explore different options with the blockchain Medici assets, we invite impella on to come today they declined.

Speaker Change: For whatever reason.

Speaker Change: But we will be filling you in on some of those things a little later and exploring those assets and other IP that we have inside the company is also an option for those of you that don't remember, we sold Wamus Sutton for $10 million and.

Marcus Lemonis: For those of you that don't remember, we sold Wama Sutter for 10 million. And we have some other things that we think we can monetize.

Marcus Lemonis: I would prefer to manage with what we have right now. That would be my preference. And to keep a very tight, rigorous focus. Because as we look at how we're all incentivized, anything that we do to put us further away from that optionality is not a good thing.

Speaker Change: And we have some other things that we think we can monetize here I would prefer.

Speaker Change: To manage with what we have right now that would be my preference and to keep a very tight rigorous focus because as we look at how we're all incentivized anything that we do to put US further away from that Optionality is not a good thing we don't want to do bad things for the business and so.

Marcus Lemonis: We don't want to do bad things for the business. And so we want to make sure we're making the right decisions about how we're allocating capital and how we're thinking about using cash. Right now, it's about fixing the core business, getting the SKUs back to the right sites, improving conversion, which ultimately improves margin.

Speaker Change: So we want to make sure we're making the right decisions about how we're allocating capital and how we're thinking about using cash right now its about fixing the core business getting the skus back to the right sites, improving conversion, which ultimately improves the margin and we think had some of those things just been average today's conversation would be.

Marcus Lemonis: And we think, had some of those things just been average, today's conversation would be very different.

Marcus Lemonis: There is no increase in any site traffic at all. No increase in demand in that number. There is just the adjustment on a hypothetical basis of going from just under 1.3 in conversion to below the company's lowest historical conversion average ever. And that's what that would have resulted in.

Speaker Change: Three different there is no increase in any site traffic.

Speaker Change: At all no increase in demand in that number there is just the adjustment on a hypothetical basis of going from just under one three and conversion to below the company's lowest historical conversion average ever.

Marcus Lemonis: We feel confident in putting that up there, because we see the early results of doing that piece by piece. And we see the sequential margin.

Speaker Change: And that's what that would've resulted in we feel confident in putting that up there because we see the early results of doing that piece by piece and we see the sequential margin improvement.

Marcus Lemonis: Are we worried about cash? I'll just ask that question for myself. Yes, we think about it every day. That's a finite thing.

Speaker Change: Are we worried about cash I'll just ask that question for myself, yes, we think about it every day.

Marcus Lemonis: We also like the fact that we don't have interest payments to make and covenants to deal with. We think that's even a better thing, to be honest.

Speaker Change: That's a finite thing we also like the fact that we don't have interest payments to make in covenants to deal with we think that's even a better thing to be honest, yes, Sir.

Marcus Lemonis: Yes, sir. Well, the Kirkland's transaction is nothing more than a swap of cash out of a dead asset that cost us $8 million to keep into an active asset. We're going to be getting an interest rate, a collaboration fee, a licensing fee, and bringing Bed Bath & Beyond stores back in an omnichannel way without us taking an ounce of risk other than the loan and the investment. So that's taking a dead asset and turning it into a working asset that we ultimately believe, and we'll get to it a little later, will increase traffic, will increase gross margin, will increase a lot of And we'll own 40% of a business that we think has a very bright future, because pre COVID, that business was Pre-COVID, Kirkland's was Pre-COVID.

Speaker Change: Uh huh.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Right.

Speaker Change: Well the Kirkland's transaction is nothing more than a swap of cash out of a dead assets it cost us $8 million to keep into an active asset where we're going to be getting an interest rate of collaboration fee, a licensing fee and bringing bed bath and beyond stores back in an omnichannel way without us taking an ounce of risk other than the loan and the.

Speaker Change: <unk>.

Speaker Change: So that's taking a dead asset and turning it into a working asset that we ultimately believe and we'll get into it a little later will increase traffic will increase gross margin will increase a lot of things.

Speaker Change: And will own 40% of our business that we think has a very bright future because pre COVID-19 that business was profitable pre COVID-19 kirkland's was profitable.

Marcus Lemonis: Hey, Marcus, just take a step back. I'm kind of curious what overstock will be when it grows up. And I mean by the website, yeah, because it seems like it's gone through a couple different iterations over the last six to 12 months. I mean, my impression was, it was a home furnishings website, then you want to make it a close out website, get back to its roots, but very focused on close out. And now, I think you're going back to more of a broader home furnishings, like everyday low price offering.

Speaker Change: Pre COVID-19.

Speaker Change: Hey, Mark I.

Mark Asbury: Just take a step back and kind of curious what overstock will be when it grows up.

Speaker Change: And I mean by that the website, yeah, because it seems like it's gone through a couple of different iterations over the last six to 12 months I mean I. My impression was it was a home furnishings website, then you want to make it as a closeout website get back to its roots.

Speaker Change: But very focused on closeout and now I think youre going back to a more of a broader home furnishings like everyday low price offering, but I guess I guess I'm confused what overstock will be a year from now what it is today that you see on the site is what we hope it's going to be years from now which is a combination of things.

Marcus Lemonis: But I guess I guess I'm confused what overstock will be a year from now. What it is today that you see on the site is what we hope it's going to be years from now, which is a combination of things that it did a decade ago. Five years ago, before it decided to become a home retailer, and it got rid of $400 million of revenue, or roughly $200 million from apparel and jewelry, we want to put that back. If you could flash back time to when Overstock sold furniture and rugs and patio and jewelry and footwear and apparel, and it did so with a close-out mentality, which is what the brand is, that is the business that we are building towards again.

Speaker Change: That it did a decade ago.

Speaker Change: Five years ago before it decided to become a home retailer and it got rid of $400 million of revenue or 200 roughly 200.

Speaker Change: Revenue from apparel and jewelry, we want to put that back if you could flash back time till an overstock sold furniture, and rugs, and patio and jewelry in footwear and apparel and it did so with a closeout mentality, which is what the brand is that as the business that we are building too.

Marcus Lemonis: And what you'll find interesting about the Overstock of Old that is why we're launching jewelry, why we're launching beauty, why apparel. They are high frequency. Visit categories. You get a lot of traffic. And the Overstock customer is at her core, at his core, they are a treasure hunter. They love the thrill of the hunt. They're smart. They're smart value driven buyers. And you need those product categories. We almost we call them traffic bait. They are the traffic drivers to get you to the website. When we set out a decade ago, two decades ago, we didn't set out on on overstock to make home goods, the core of our business, home goods evolved into the core of our business from all of the other categories.

Speaker Change: <unk> again.

Speaker Change: And.

Speaker Change: What youll find interesting about the overstock of all that that is why we're launching jewelry why we're launching beauty why apparel they.

Speaker Change: They are high frequency.

Speaker Change: Visit categories.

Speaker Change: You get a lot of traffic and the overstock customer is it.

Speaker Change: At her core at his core they are a treasure hunter.

Speaker Change: They love the thrill of the hunt they're smart.

They're smart value driven buyers.

Speaker Change: And you need those product categories, we almost we can call them traffic base. They are the traffic drivers to get you to the website when we set out.

Speaker Change: A decade ago, two decades ago, we didn't set out on an overstock to make home goods. The core of our business Homegoods evolved into the core of our business from all of the other categories.

Marcus Lemonis: People are comfortable buying area rugs. They're comfortable buying furniture, case goods, upholstered furniture. And they're comfortable buying seven-piece patio sets for $1,800. They'll buy diamond rings for $8,000. That's the overstock customer. It's not about a cheap price point. It is a very unique customer base that is very loyal. And as we bring back those things that they loved, we'll see the continued acquisition cost reduction because of those product categories that drive the high frequency visit to our site. People don't frequently come and check out, hey, I wonder what sofa they have this week. But they do come and check out, I wonder what apparel closeouts they have or what liquidation buys they're taking advantage of.

Speaker Change: People are comfortable buying area rugs, they're comfortable buying furniture case goods upholstered furniture, and they're comfortable buying seven piece patio sets for $1800 they'll buy diamond rings for $8000.

Speaker Change: That's the overstock customer, it's not about a cheap price point. It is a very unique customer base that is very loyal.

Speaker Change: And as we bring back those things that they loved we will see the continued acquisition cost reduction because of those product categories that drive the high frequency visit to our site.

Speaker Change: People don't frequently come and check out here I wonder what so far they have this week, but they do come and check out I wonder what apparel closeouts, they have or what liquidation buys there taking advantage of.

Marcus Lemonis: Overstock is built on the value proposition, unlike Big Lots that was built on how much junk can you put in the giant box. What consumers want is they want a heck of a deal, and that's what Overstock was known for. And when they started to narrow it down to just be home, it subjected itself to an unexpected macro environment where rates took off to 20-year highs, housing starts dropped, housing sales dropped, and home improvement dropped at the same time. And it had nothing else to lean on. That whole value category, even around luxury jewelry, had been taken away from it.

Speaker Change: Overstock is built on the value proposition. Unlike big lots that was built on how much junk and you put it into giant box what consumers want is they want a heck of a deal and that's what overstock was known for and when they started to narrow it down to just the home it's subjective itself to an unexpected macro.

Speaker Change: A environment where rates took off the 20 year highs housing starts dropped housing sales drop in home improvement dropped at the same time and it had nothing else to lean on that whole value category, even around luxury jewelry had been taken away from it and it became singularly too dependent on one silo that has some.

Marcus Lemonis: And it became singularly too dependent on one silo that has some cyclicality to it. We don't believe that the apparel, jewelry, beauty piece has as much cyclicality. And we went back and looked at the evidence from years past. Yes, the average order was a little lower. But the profitability in the margin was exceptionally higher. In fact, I think there were some quarters it was over 28%, high 27s, low 28s, when the jewelry and the apparel was selling.

Speaker Change: Cyclicality to it we don't believe that the apparel jewelry beauty piece has as much cyclicality and we went back and looked at the evidence from years past, yes. The average order was a little lower but the profitability and the margin was exceptionally higher in fact, I think there were some quarters. It was over 28% 20 set of high <unk>.

Marcus Lemonis: which we're not predicting we're going to get back to anytime soon.

Speaker Change: Sevens low 20 eights, when the jewelry and the apparel was selling and in the 2.2 0.3 conversion levels.

Speaker Change: Which we're not predicting we're going to get back anytime soon last one on this I've studied closeout for a long time. So most of those are retailers, they're not 100 per cent closeout.

Marcus Lemonis: where is where will overstock land or where was that in 2019 just so we can help frame those two places that you just described a pure markup markdown retailer understands how to value engineer certain closeouts by buying balks or big lots I want to remind everybody that Overstock is still an asset light environment. So when you talk about big lots and they buy hundreds of millions of couches in an engineered program, that still is capital that's out there, that's still warehousing, that's still a lot of fixed costs. We don't get to enjoy that at the same level that a big lots would, but we don't get to take on all the fixed costs that a big lots would.

Speaker Change: Big lots of all these others, there's there's a branded closeout element in there is a engineered closeout, where it's just everyday low price.

Speaker Change: Whereas we're will overstock land or where it was at in 2019, just so we can help frame. Those two places that you. Just described are pure markup markdown retailer understands how to value engineer certain closeouts by buying Bulks are big lots of things I want to remind everybody that overstock is still an asset light environment. So when you talk about big lots.

Speaker Change: They buy hundreds of millions of couches and in engineered program that still is capital that's out there that's still warehousing, there's still a lot of fixed costs, we don't get to enjoy that at the same level that a big lots of it but we don't get to take on all the fixed costs that are big lots of wood in our belief overstock is a perfect combination of both.

Marcus Lemonis: In our belief, Overstock is a perfect combination of both value engineered sourcing and close outs. In the last 24 months prior to today, it abandoned the whole close out environment and it just became who's willing, what marketplace vendor is willing to sell Overstock product under a construct of as much as 40 or 50% off. That was really what happened. I think as we go forward today, we need to convince people by showing them products that are true values. So part of the Kirkland's transaction and part of the Container Store transaction and part of any other affiliate transaction that may not require an investment is to require those companies to list their aged inventory on Overstock.

Speaker Change: Value engineered sourcing and Closeouts in the last 24 months prior to today it abandoned the whole closeout environment and it just became who's willing what marketplace vendor is willing to sell overstock product under a construct of as much as 40 or 50% off.

Speaker Change: That was really what happened I think as we go forward today, we need to convince people by showing them products that are true values. So part of the kirkland's transaction and part of the container store transaction and part of any other affiliate transaction that may not require an investment is to require those companies to list their aged inventory on.

Marcus Lemonis: That is an absolute mandate. Not because we think they're bad inventory managers, but because they need to get better turns and Overstock needs to continue to find value in a way that isn't always something they have to take onto their balance sheet. So to dig into Amy's Warehouse or into Amy's Stores or into Container Store's Warehouse and have access at a predetermined contribution margin that will sit on the site with name brands and other things that are very familiar to people, we believe gives Overstock another competitive advantage.

Speaker Change: Overstock that is an absolute mandate now because we think they're bad inventory managers, but because they need to get better turns and overstock needs to continue to find value in a way that isn't always something they have to take on to their balance sheet, so to dig into amy's warehouse or into Amy stores or into container stores warehouse.

Speaker Change: And have access at a pre determined contribution margin that will sit on the site with named brands and other things that are very familiar to people. We believe gives the overstocked another competitive advantage and in a future state. Many many years from now it wouldn't surprise me, if either kirkland's or container store does.

Marcus Lemonis: And in a future state, many, many years from now, it wouldn't surprise me if either Kirkland's or Container Store decided to open up a collective outlet. Because we still have to deal with returns, we still have to deal with open box, we still have to deal with damaged goods. So we look at improving margin. Part of optimizing margin is improving returns. Part of optimizing margin is making sure that we don't have to sell it all to jobbers ourselves at 10 cents on the dollar. We need to try to keep that all inside the ecosystem to the best of our ability.

Speaker Change: Sided to open up a collective outlet because.

Speaker Change: Because we still have to deal with returns we still have to deal with open box, we still have to deal with damaged goods. So we look at improving margin part of optimizing margin is improving returns part of optimizing margin is making sure that we don't have to sell it all of the jobbers ourselves at 10 cents on the dollar we need to try to keep that all inside the ecosystem to the best of our ability.

Marcus Lemonis: And overstock is the one thing that gives Kirkland's and Container Store a competitive advantage that they did not have before. And it's not a choice.

Speaker Change: <unk> an overstock is the one thing that gives kirkland's in container store a competitive advantage that they did not have before.

Speaker Change: And it's not a choice.

Operator: What else on this slide? This is just because it's recent for the tech and G&A, the 20% reduction in force. Any more color there? I mean, it feels like it was, you know, partially some of the tech staff. Okay, so any more color in terms of who is impacted and any thoughts in terms of potential business? The tech stack, the true tech stack, and Guncha, do you want to come speak to this? We'll hand you a mic. All right, thank you. So the recent reduction that we did a couple of days ago, that did not impact the technology team at all.

Speaker Change: Yeah.

Speaker Change: What else on this slide.

Speaker Change: Yes, Sir.

Speaker Change: Yes.

Speaker Change: Yeah.

Speaker Change: Things just because its recent for the tech and G&A, the 20% reduction in force.

Speaker Change: Any more color there I mean, it feels like it was partially some of their tech stack Tech staff now.

Okay. So any more color in terms of who is impacted and any thoughts in terms of potential business disruption.

Speaker Change: The tech stack, the true tech stack and Ghansham.

Speaker Change: When it come speak to this will hand, you Mike.

Speaker Change: Yeah.

Speaker Change: Right.

Speaker Change: Alright. Thank you said that the recent reduction that we did a couple of days ago that wasn't Ah that did not impact the technology team at all so that doesn't mean that we're not looking at the full outsourcing model and kind of finding cost optimization efficiencies on the technology team side.

Chandra Holt: So that doesn't mean that we're not looking at the full outsourcing model and finding cost optimization efficiencies on the technology team side. We are actively working on it and doing it in a very phased manner. So we have selected, you know, an outsourcing partner, and we are working very closely to do it in a phased manner so we don't interrupt the business or add any risk. But the most recent reduction in force did not have any technology team. It had, you're probably referring to the Named Officer on the product side. And to be as direct as I can and as respectful as I can, I function in a meritocracy.

Speaker Change: We are actively working on it and doing it in a very phased manner shall we had selected.

Speaker Change: Outsourcing partner and we're working very closely to do it in a phased manner shall we don't interrupt the business are at any risk, but the most recent reduction in force did not have any technology team it had.

Speaker Change: You're probably referring to the.

Named officer on the product side and for.

Chandra Holt: Hard stop. And when things don't perform the way they're supposed to perform, we function in a meritocracy. We took out more than 150 people, which was an awful day for us. We believe that our business will be faster and smarter and leaner and quicker. And our ability to influence change wasn't moving fast enough. And our ability to show growth in conversion wasn't moving fast enough. And our ability to work with vendors to find ways to improve margin wasn't working fast enough. We have brought back a lot of people that had been previously let go by the previous regime that are key components to the overstock business.

Speaker Change: To be as direct as I can in a respectful as I can I function in a meritocracy.

Speaker Change: Hard stop.

Speaker Change: And when things don't perform the way they're supposed to perform we function in a meritocracy, we took out more than 150 people, which was an awful day for US we believe that our business will be faster and smarter and leaner and quicker and our ability to influence change wasn't moving fast enough and <unk>.

Speaker Change: Our ability to show growth in conversion wasn't moving fast enough in our ability to work with vendors to find ways to improve margin wasn't working fast enough. We have brought back a lot of people that had been previously let go by the previous regime that are key components to the over.

Chandra Holt: And so as we sell that building and we move to a much smaller B-class space, that building is going to be filled with a lot of old and familiar faces to the overstock brain. So one of the structures that we're really excited about, and we have two leaders from the old Overstock and one of the best home furnishings merchants that I know in the industry, we have them leading as general managers, full P&L management of the Bed Bath & Beyond brand and the Overstock brand. And they are singularly tasked with the responsibility of executing on each of these line items. And we'll get into more details later today of some of the tactical strategies and surgical strategies that we have in place that they are executing against.

Speaker Change: Stock business and so as we sell that building and we moved to a much smaller b class space that building is going to be filled with a lot of old and familiar faces to the overstock brand.

Speaker Change: Yeah.

Speaker Change: So one of the structures that we're really excited about and we have two leaders from the old overstock and one of the best home furnishings merchants that I know in the industry.

Speaker Change: We have them, leading those general managers.

Speaker Change: Full P&L management of the bed Bath and beyond brand and the Overstock brand.

Speaker Change: And they are singularly tasked with the responsibility of executing on each of these line items and we will get into more details later today of some of the tactical strategies and surgical strategies that we have in place that they're executing against but no more or is it achieve overall these.

Chandra Holt: But no more is it a chief over all these different brands. It is dedicated at the book of business at the P&L. and taking specific responsibility for each one of these things. When you have an app in the third quarter not functioning with the level of efficiency that you need it to, it impacts conversion. You have product on the wrong site, or the site experience isn't good, you have problems with conversion. And problems with conversion lead to site sale, which leads to margin compression. So as that conversion fixes itself, it not only fixes revenue, but it dramatically improves margin.

Speaker Change: Brands. It is dedicated at the business the book of business at the P&L.

Speaker Change: And taking specific responsibility for each one of these things when.

Speaker Change: When you have a app in the third quarter and not functioning with a level of efficiency that you needed to it impacts conversion.

Speaker Change: We have product on the wrong side or the site experience isn't good you have problems with conversion and problems with conversion lead to site sale, which leads to margin compression. So as that conversion fixes itself had not only fixes revenue, but it dramatically improves the margin and we've seen that really quickly here.

Operator: And we've seen that really quickly. The other two columns here are nothing more than illustrative that if the general macro environment started to get better, what would it look like? 10%, 20%? These are hypotheticals, and all they're doing is just laying on top of these three key metrics getting resolved.

Speaker Change: The other two columns here are nothing more than an illustrative that if the general macro environment started to get better.

Speaker Change: It looked like 10%, 20%. These are hypotheticals and all they're doing is just laying on top of these.

Operator: This particular column here is what we're going to save for after the break as we take you through how we're transforming the business from an asset light model to even a more asset light model.

Speaker Change: Three key metrics getting resolved.

Speaker Change: This particular column here is what we're going to save for after the break as we take you through how we're transforming the business from an asset light model, so even a more asset light model.

Operator: Any other questions? Yes, sir. A two-part question, so sorry if I missed this, but what in the illustrative environment columns is like the final split of the business between Overstock and Bed Bath? And then second part, you know, great to hear about the 10% of the SKUs that you kind of migrated over. You know, I guess maybe the devil's advocate argument would be, well, that maybe that was the lowest hanging fruit you guys kind of targeted, you know. Skew, that made the most sense, so what can you say to kind of give investors confidence that this will apply?

Speaker Change: Any other questions, yes, Sir.

Speaker Change: A two part question so sorry, if I missed this but what India lush illustrative environment columns as like the the final split of the business between Overstock and bed Bath and then second part you know great to hear about the 10% of the Skus that you're kind of migrated over you know I guess.

Speaker Change: Maybe the Devil's advocate argument would be although maybe that was the lowest hanging fruit you guys kind of targeted.

Operator: Across the Board, as you fully transition the entire business.

The skus that made the most sense. Okay. You know what can you say to kind of give.

Adrianne Lee: Thanks. Let's take the first one. You take the second one? We don't report the brand separately at this time. It is our hope in the future as Overstock gains more scale, that in a perfect world, we would break out all of the different banners that we own, and then separately, what the status is of the investments that we have, and how those investments are impacting the P&Ls of not only the overall business, but those banners individually. So, the makeup of that first move involves a particular product category and then all of the low sellers, because what we wanted to do, low sellers on Bed Bath & Beyond, what we wanted to do was make sure we didn't pull The best sellers on Bed Bath & Beyond, Over 2, Overstock, and Hurt.

Speaker Change: Investors' confidence that this will apply.

Speaker Change: Across the board as you fully transition the entire business. Thanks, I'll take the first one you take the second one okay.

Speaker Change:

Speaker Change: Yeah.

Speaker Change: We don't report the brands separately.

Speaker Change: At this time it is our hope in the future as overstock gains more scale that in a perfect world. We would break out all of the different banners that we own and then separately what the status is of the investments that we have and how those investments are impacting the P&L of not one.

Speaker Change: The overall business, but those banners individually.

Speaker Change: So the makeup of that first move involves a particular product category and then all of the low sellers because what we wanted to do low sellers on bed Bath and beyond what we wanted to do was make sure we didn't pull.

Adrianne Lee: Bed Bath, and Not Gain on Overstock. So one product category. And the rest are the low sellers on Bed Bath & Beyond. that we moved over. Now, you could argue that that's cherry picking. I would argue the best is yet to come. Because when I take the patio sets that are working on Bed Bath & Beyond, but that I know when I don't have to mark them down quite as much, don't have to play as much marketing spend and discounting, and I move them over to Overstock, and I've got the traffic coming. I believe we have a better result than what I told you was the first result.

Speaker Change: The best sellers on overstock or on bed bath and beyond over to overstock and hurt.

Speaker Change: Bed Bath and not game on overstock, So one product category.

Speaker Change: And the rest are the low sellers on bed Bath and beyond.

Speaker Change: That we moved over now you could argue that that's cherry picking.

Speaker Change: I would argue the best is yet to come because when I take the patio sets that are working on bed bath and beyond but that I know when I don't have to mark them down quite as much don't have to play as much marketing spend and discounting and I moved them over to overstock and I've got the traffic coming.

Adrianne Lee: I don't think it's cherry-picked.

Speaker Change: I believe we have a better result than what I told you was the first result.

Operator: Any other questions before the break? We're going to take a quick five-minute break, and then we'll jump back in. We'll start with an update on the Medici assets, and then we'll move into the strategy.

Speaker Change: I don't think it's Terry.

Speaker Change: Any other questions before the break.

Speaker Change: We're going to take a quick five minute break and then we'll jump back in will start with an.

Speaker Change: An update on the Medici assets and then we'll move into the strategy.