Mulling over Overstock.com's
Q4 sales nearly tripled for the online discount retailer. Traffic went through the roof. So far, so bubbly. Then you get to the bottom line, and there's no trace of red ink to be found.
Overstock's profit, which amounted to $0.06 a share, would surely seem out of place in the goo-goo, go-go days of incendiary greenbacks. Gross margins improved to a record 22% of sales -- another unusual scene circa 1999.
Just as Amazon.com
In fact, Overstock's fastest-growing revenue line item wasn't the significant spurt in direct sales. It was commission revenue, which more than tripled over last year's showing. That's worth noting -- it's sitting back and collecting juicy royalties as the low overhead middleman.
The one downer is that Overstock also announced it will sell 2 million new shares. How ironic that a company that prides itself on stocking distressed merchandise would try to pull off a secondary offering now that the stock has quadrupled off last year's low. Actually, while it's what most companies would do, one has to wonder why Overstock would try to raise money when it already has nearly $3 a share in cash, and the prospects have never been brighter.
Clearly, some bubble grandstanding continues. When confidence is overstocked, be wary of the eventual closeout sale at marked-down prices.