Overstock reports Q3 loss, amends previous financials
Overstock.com Inc. has reported a third quarter net loss of $1.6 million on revenue of $186.9 million, compared with a net loss of $5.6 million on revenue of $160 million in the same quarter last year. Total revenue grew by 16.8%.
For the first three quarters of the year combined, Overstock reported a net loss of $13.7 million on sales of $578.5 million, versus a net loss of $41.6 million on sales of $471.4 million in the previous year. In total, revenue grew 22.7% the first nine months of this year.
Overstock also said it had to restate previous financials due to accounting errors mostly due to “fall-out from our Oracle ERP [Enterprise Resource Planning, a software module] implementation of a few years ago.”
Overstock estimates that errors over the period in question - 2003 through the second quarter of 2008 - constitute a $12.9 million reduction in revenue and a $10.3 million increase in cumulative net loss.
“The short version is: when we upgraded our system, we didn't hook up some of the accounting wiring; however, we thought we had manual fixes in place,” said CEO Patrick Byrne in a statement. “We've since found that these manual fixes missed a few of the unhooked wires. It also turned out there were errors cutting both ways, which partially obscured the problem because we relied on reasonability testing to verify certain balances rather than a ground-up reconciliation. Now that we have found these errors, we have called a penalty on ourselves.”