SAN FRANCISCO (Reuters) - Whether he’s waging a financial lawsuit or seeing shares of his e-commerce site surge and fall, Overstock.com (OSTK.O) chief Patrick Byrne refuses to be fazed by his turbulent relationship with Wall Street.
“My score card is completely internal,” the Overstock chairman and chief executive told Reuters on Thursday. “You do the right thing to do the right thing.”
The site, selling excess inventory of clothing, accessories and furniture, is popular because of its discount prices. But it has lost $240 million since Byrne launched the company in 1999, he said. Between $60 million and $70 million of that bill is shared by Byrne with family and friends, he said.
Now he envisions an end to the red ink this year and hopes the online retailer will realize a net profit of $10 million in 2008.
“If we have a good year, I think we can make 1 percent (profit margin),” he said, estimating total sales of $1 billion. “That’s different from saying I’m promising to make $10 million this year. But it’s definitely possible.”
With all the uncertainty, Overstock shares have fluctuated between a high of $39.39 and a low of $8.61 in the past year.
The company went through an especially tough patch in the past two years, but last month it reported a much narrower-than-expected quarterly loss, helped by higher sales and a bigger gross margin.
“2006 was the worst. “2007 was pulling out of it,” Byrne said. “The wolf is getting further and further from the door.”
The Utah-based CEO said he expected Overstock to lose 2 cents per dollar in sales in the first three quarters of 2008, but hoped to make it up in the fourth quarter to realize a profit for the year, and then continue profitably in 2009. “It is very realistic. I think we can,” he added.
A U.S. economic downturn has only increased his supply of new inventory offers over the past month, which Byrne hopes to translate into more sales.
Overstock is also expanding globally this summer, with an emphasis on Canada and Britain, after years of selling only in the United States. The effort should increase sales by 5 or 10 percent, he said.
Byrne earned a feisty reputation by suing Gradient Analytics Inc in 2005, accusing it of conspiring with hedge fund Rocker Partners, now known as Copper River Partners, to write negative research reports about the retailer and drive down its stock price.
The hedge fund took a short position in the stock, which allowed it to profit from the stock decline, according to Overstock’s claims.
The case is scheduled to go to trial later this year. Gradient has countersued, saying Byrne waged a smear campaign.
Byrne is waging a war against naked short selling, or the practice of selling stock that has not yet been borrowed.
The Tae Kwon Do black belt holder, who once sought a career in boxing, was so passionate in discussing the topic in a Reuters interview that he accidentally broke an arm off a wooden chair with a strong gesture.
He disagrees with claims that he is overzealous in his campaign, which includes a website -- www.deepcapture.com/.
“The New York Post ran pictures of me with UFOs coming out of my head,” Byrne said. “It was a collective hatchet job by the New York financial press.”
Overstock has also brought a $3.48 billion lawsuit against major U.S. brokerages, including Citigroup Inc (C.N) and Morgan Stanley (MS.N), alleging they schemed to drive down the price of the company’s stock.
Byrne also said he envisioned retiring perhaps in three or four years to pursue other interests. “I don’t see myself here in half a decade,” he said.
So how does he intend on spending his post Overstock life? “My personal goal is to be sitting in a cave with a backpack.”
Editing by Braden Reddall, Richard Chang