Dive Brief:
- Overstock.com announced on Monday that CEO Patrick M. Byrne is stepping down to take an "indefinite" medical leave of absence, according to a release from the company.
- Byrne recommended to Overstock's board that Mitch Edwards, senior vice president of strategic initiatives and general counsel at the company, be named acting CEO. It is not yet known when—or if—Byrne will return to the CEO spot.
- In a letter to shareholders, Byrne explained he has been battling Stage IV hepatitis C, which he contracted in 1984 after "a barefoot doctor sewed up a head wound under less-than-ideal conditions" in Xinjiang, China.
Dive Insight:
Patrick Byrne founded Overstock in 1999, with a focus on selling returned and surplus furniture, clothing, jewelry, and other goods.
Byrne is leaving his company in good shape. The retailer brought in $1.7 billion in revenue in 2015, an 11% over the previous year. Byrne predicted $40 million in net profit before taxes this year in his letter to shareholders, an increase over the $3.1 million in pre-tax net income it reported in fiscal year 2015.
Byrne is a leading advocate for Bitcoin and blockchain technology, a shared database for tracking individual Bitcoin transactions. Notably, Overstock became the first major retailer to accept Bitcoin in 2013. The company has $10 million in gold and silver coins (as well as three months of food for each employee) stored up so the company can still make payroll in case of a financial crisis. It has also experimented with reduced-friction payments online, which allows shoppers to order purchases and pay for them later, if they qualify.
Byrne is also well-known for his opinions of naked short-selling, a practice where Wall Street investors short a stock without borrowing it. Bryne aided Overstock shareholders in filing two lawsuits against naked short-sellers in 2006 and 2007.
Going forward without Byrne, Overstock will have its hands full competing with other off-price retailers, both online and not.
TJX, owner of T.J. Maxx, Marshall's, and Home Goods, is a formidable threat in the brick-and-mortar realm, although it has mostly eschewed efforts to boost its e-commerce operations. The retailer currently has 3,300 stores globally, with plans to expand to 5,475 stores in the long term.
Department store retailers are also betting big on the off-price market, including Macy's with its new Backstage concept, Hudson's Bay with Saks Off 5th, and Nordstrom with its Nordstrom Rack stores. Nordstrom Rack is widely seen as the most successful of the bunch, with net sales in Rack stores increasing 6.9% in the fourth quarter, far outperforming net sales in full-price stores, which decreased 2.5%. The retailer plans to add 20 new Rack locations in 2016, compared to three full-price Nordstrom stores.
Even more of a threat to Overstock is the retailer's focus on e-commerce: While Nordstrom is keeping its tech spending the same in 2016 compared to last year, it's focusing on refining its online assortment and making its fulfillment process more efficient.