Overstock.com 2010 Annual Report Download - page 16

Table of Contents
adversely affect our operations and operating results. These factors affect not only our operations, but also the operations of suppliers from whom we purchase
goods, a condition that can result in an increase in the cost to us of the goods we sell to our customers.
Decreases in discretionary consumer spending may have an adverse effect on us.
A substantial portion of the products and services we offer are products or services that consumers may view as discretionary items rather than
necessities. As a result, our results of operations are sensitive to changes in macro-economic conditions that impact consumer spending, including
discretionary spending. Difficult macro-economic conditions, particularly high levels of unemployment, also impact our customers' ability to obtain consumer
credit. Other factors, including consumer confidence, employment levels, interest rates, tax rates, consumer debt levels, and fuel and energy costs could
reduce consumer spending or change consumer purchasing habits. A continued slowdown in the U.S. or global economy, or an uncertain economic outlook,
could materially adversely affect consumer spending habits and our operating results.
We have a history of significant losses. If we do not maintain profitability, our financial condition and our stock price could suffer.
We have a history of losses and we may incur operating and net losses in the foreseeable future. The last year we incurred a net loss was for the year
ended December 31, 2008 in which the amount was a net loss of $11.0 million. As of December 31, 2010, our accumulated deficit was $242 million. We need
to generate significant revenues to maintain profitability, and we may not be able to do so. Although we had net income of $13.8 million and $7.7 million in
2010 and 2009, respectively, we may not be able to sustain or increase profitability on a quarterly or annual basis in the future. If our revenues grow more
slowly than we anticipate or decline, or if our expenses exceed our expectations, our financial results would be harmed and our business, prospects, financial
condition and results of operations could fall below the expectations of public market analysts and investors.
We will continue to incur significant operating expenses and capital expenditures to:
further enhance our distribution and order fulfillment capabilities;
further improve our order processing systems and capabilities;
develop enhanced technologies and features;
continue to expand our customer service capabilities to better serve our customers' needs;
expand or modify our product offerings;
expand warehouse and office space;
increase our general and administrative functions to support our operations and activities; and
maintain or increase our sales, branding and marketing activities, including maintaining existing or entering into new online marketing or
marketing analytics arrangements, and continuing or increasing our national television and radio advertising, direct mail and/or other marketing
campaigns.
Because we will incur many of these expenses before we receive any revenues from our improvement and enhancement efforts, our losses may be
greater than the losses we would incur if we developed our business more slowly. Further, we base our expenses in large part on our operating plans and
future revenue projections. Many of our expenses are fixed in the short term, and we may not be able to reduce spending quickly or at all if our revenues are
lower than we project. Therefore, any significant shortfall in revenues would likely harm our business, prospects, financial condition and results of operations.
In addition, we may find that these efforts are more expensive than we anticipate
10
•
•
•
•
•
•
•
•