Thank you for standing by, and welcome to the Beyond Inc. Second Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Alexis Callahan, Vice President of Investor Relations and Public Relations. Please go ahead.

Thank you, operator. Good morning, and welcome to Beyond Inc.'s Second Quarter 2024 Earnings Conference Call. Joining me on the call today are Executive Chairman, Marcus Lemonis; Chief Financial and Administrative Officer, Adrianne Lee; and President, Dave Nielsen. Today's discussion and our responses to your questions reflect management's views as of today, July 30, 2024, and may include forward-looking statements, including without limitation regarding our future goals, revenue, file size, financial performance, our outlook for the remainder of the year or any other period, growth, stock price, profitability, strategy, macroeconomic conditions, customer demand, the value of any of our brands or investments, relationships with third parties and agreements we are entering into with them margin improvement, customer experience and related efficiencies, loyalty programs, the launch, relaunch or other upcoming changes for any brands or websites and the timing of any of the foregoing. Actual results could differ materially from such statements. Additional information about risks, uncertainties and other important factors that could potentially impact our financial results is included in our Form 10-K for the year ended December 31, 2023, and our Form 10-Q for the quarter ended March 31, 2024, and in our subsequent filings with the SEC. During this call, we'll discuss certain non-GAAP financial measures. Our filings with the SEC, including our second quarter earnings release, which is available on our Investor Relations website at investors.beyond.com contain important additional disclosures regarding these non-GAAP measures, including reconciliations of these measures to the most comparable GAAP measures. Following management's prepared remarks, we will open the call for questions. A slide presentation with supporting data is available for download on our Investor Relations website. Please review the important forward-looking statements disclosure on Slide 2 of that presentation. With that, let me turn the call over to you, Marcus.

Good morning, and thank you. As Alex -- Alexis mentioned, I'm joined today by Adrianne Lee and Dave Nielsen. This morning, we'll be summarizing our second quarter results as well as answering specific questions about our company and the meaningful progress we are making. As a refresher, there are a number of imperatives we entered this quarter with that have framed the remainder of the year. I'll start off with my reaffirmation that I not only believe but expect this company to do great things. My conviction is around this company's ability to operate multiple brands profitably, all while growing revenue and file size. Earlier in the second quarter, our shareholders approved a performance stock unit plan that awarded me options that vest when the stock price reaches $45, $50, and $60. I appreciate the acknowledgment but recognize that I only make money when we all make money. I personally believe we'll get there. For those invested in the company today or contemplating it, I want you to know the topics in our mind every single day as the management team, in some cases, things that even keep us up at night. It's imperative that every decision we make is to drive towards profitability. And once there, we maintain that rigor along with holding firm to an asset-light model. Establishing a definitive strategy for Bed Bath & Beyond, not only to be a $1 billion plus e-commerce brand, but find thoughtful and creative ways to expand the brand, generate cash flow off the IP, while also expanding its brand presence even further, increasing the brand's value while maintaining its position as one of the world's most well-known home brands. We also want to focus on the relaunch of Overstock, in a way that allows it to return to its roots…

Thank you, Marcus. I echo that sentiment. I'm pleased with what the team achieved in the second quarter and remain committed to continuous improvement and bringing each of these brands back to the $1 billion-plus brands they have the potential to be. To that end, I'd like to walk through some key operational highlights for each brand. On Bed Bath & Beyond, we saw growth in core legacy categories like bedding, bath and decor, as well as emerging strength in categories like patio and outdoor furniture, which are not historically endemic to the brand, but are highly accretive to average order value. This is encouraging as customers are recognizing product adjacencies, for example, bedroom furniture and feeling more comfortable shopping the entire room. While we continue expanding our assortment within the four rooms, we're exclusively focused on, were simultaneously curating down from a marketplace like assortment of roughly 12 million SKUs to one that has enough breadth and depth to be category-leading, but small enough to ensure an easy and seamless customer experience. This curation also impacts our supplier base, making key suppliers more meaningful, resulting in better margins for us, as their volume increases. Our merchandise team is also working hard to bring back a number of important name brands that left years ago, which we think will move the needle in reviving Bed Bath & Beyond. In addition to an uptick in average order value, it was also encouraging to see a higher proportion of sales from repeat customers during the quarter, a trend we expect to continue as we further refine our targeting and promotional models. Next, on Overstock. This was our first full quarter of operations since our relaunch at the end of March, and we're encouraged by the early progress we've seen. Historically, dominant product…

Thank you, Dave. Revenue declined 6% year-over-year in the second quarter. Sequentially, revenue increased by 4%, driven by an 18% AOV improvement as we mixed out of bedding and into patio furniture. As a reminder, our intent was to deliver revenue in line with the first quarter, while improving profitability, and we accomplished just that in the second quarter. Gross margin landed at 20.1% for the quarter, a 530 basis point decline compared to the same period last year. Elevated discounting and higher carrier costs continue to be the main sources of margin pressure. Sequentially, however, we delivered a 70 basis point improvement in gross margin as we work to optimize discounting and improve carrier costs. These were slightly improved -- excuse me, these were slightly offset by our seasonal mix into patio furniture. I want to reiterate our 6-store plan we outlined in our fourth quarter earnings call that we continue to execute on to improve our gross margin profile. Renegotiating freight rates with our carriers. This is now complete. We saw some benefit this quarter, and we'll continue to see improvement in our run rate going forward, improving vendor relations for more favorable product costs. This is an ongoing effort by our merchandising team and a key area of focus for our upcoming Partner Summit. Relaunching Overstock.com. Thus far, the brand has been accretive to our overall gross margin, providing integration add-ons. In late June, we launched our partnership with A&G, which will provide customers with installation and assembly services. We continue to market warranties and shipping insurance and are pleased with early performance. Reintroducing owned brands and embarking on licensing activity, we continue to opportunistically pursue these. And lastly, eliminating inefficient discounting. We made progress in the second quarter and expect continued improvements over time as our…

Thanks, Adrianne. Before we move into Q&A, I want to make one final comment. While our company does not provide specific guidance, we feel it's very important at this time to give our investors a range of our performance expectations. When you look at the history of both Bed Bath & Beyond and Overstock separately, you'll notice that Q2 typically outperforms Q3 from a revenue standpoint by anywhere from 12% to 14%. It is our goal to have our third quarter revenue performance to be in line with that, if not better, than that historical trend. It is also our expectation that we have sequential gross margin improvement as well as a minimum low double-digit percentage sequential improvement to adjusted EBITDA. It is our belief that as we continue to curate and calibrate our business that we will set ourselves up to enjoy the tailwinds that could potentially come from improvements in interest rates, ultimately sparking home demand and demand for home products. With that, we'll take some questions.

[Operator Instructions] Certainly. And our first question for today comes from the line of Steven Forbes from Guggenheim Partners.

Marcus, it sounds like you're talking about an 18-month time frame or I don't know if I'm overreading that, but is that how you sort of currently see the business on its path to profitability? Is that a fair sort of time frame behind the potential achievement of sort of a neutral EBITDA margin profile? Or any updates on -- I know, you're not providing longer-term guidance, just like how do you see the business sort of capturing that state of neutrality as it relates to cash flow dynamics and overall profit?

Yes, it better be long before the 12 to 18 months. And the reason I identified 12 to 18 months in a few topics is because there's the maturation process, and we want to set proper expectations and not rec the business. But it is our expectation that at some point in 2025, we are able to achieve profitability. That is how we're building our plan. That is how we're looking at our overall headcount, and that's how we're looking at managing the different parts of our business.

I appreciate that clarity. And then, given the second quarter cash flow dynamics, is there a days payable outstanding ratio we should be modeling OWC needs around or any help sort of as you think about the business, reestablishing relationships with vendors, the SKU sort of optimization path, how we should think about OWC needs and/or usage for the remainder of the year?

Steve, this is Adrianne. And I would just say, as we're working to onboard new vendors within these brands, we're staying within kind of our typical guardrails of kind of payables and receivables. So I would say kind of no change in modeling as you think about onboarding Zulily vendors or curating Bed Bath & Beyond vendors, staying really within our guardrails of kind of what you've seen us historically have as payable.

Let me add one thing to that. As our performance continues to improve and vendor consolidation comes to light and those vendors enjoy that consolidation while also appreciating our improvement in performance, it is our expectation that we'll be able to renegotiate even better terms with certain providers. In some cases, some of the terms that we have don't meet my standards, but we understand that we need to earn the right to make that request, and that is a huge focus for us as we look at growing our profitability.

And our next question comes from the line of Thomas Forte from Maxim Group.

I have one question and one follow-up. And first off, congrats on the performance in the quarter. So the first question I have is, Marcus, can you talk about your capital allocation priorities, especially as it relates to potentially monetizing the non-performing assets, either selling the headquarters or anything related to Medici Ventures?

Yes. So from a capital allocation standpoint, we are laser-focused today, tomorrow and deep into the future on continuing to be an asset-light business. And candidly, we have entered into an LOI with a party here in Salt Lake that will allow us to even be more asset-light. That obviously reduce about $34 million of debt off our balance sheet and potentially bring in cash flow in the neighborhood of $20 million-ish after paying fees. As we look at the Medici assets, Adrianne and I have taken a slightly more active role. And while we appreciate the nature of the agreement between our company and Pelion, we have started to open up some dialogue and recently made the request for Pelion to put on a Medici days. Now they're not obligated to do that, but we have strongly encouraged them to help our shareholders understand the value of that portfolio. Furthermore, it is our expectation, and quite frankly, our mandate for Adrianne and I to increase the level of communication with those companies that are part of our investment portfolio. The money left our company, and it went in to help these other companies start or fuel their ideas and a number of them we have very high hopes for. We think it's our responsibility to have a direct relationship with leadership and management in those companies, so we can understand how our company can better help them achieve their goals. And so, while we will always respect the direct relationship that Pelion has with them, because of the engagement that we put in place, we are not precluded from having our own relationship, having our own understanding and driving results that we expect for our shareholders. Now we're always looking at exploring alternatives with the portfolio, but it is…

For my second question, I wanted to ask you about the changes you've made to management and your efforts to deepen your bench.

From my perspective, I love subject matter experts who are willing to roll up their sleeves. And as I tell them all the time, we have a body on the table, and that body requires 7 days a week, 24-hour at least availability. When you run an e-commerce business, it's open 24/7, and we need to have a management team and a supporting staff underneath them that understands that the customer experience can never be impaired. We were fortunate to not have any disruption in our business since the beginning of the year in light of all of the outages that you've seen on the Internet. And I attribute the strength of our team, and the savviness of our team to a lot of that. But when it comes to understanding this company, there's one thing that I believe has been historically missing, and that's their love of product. And Dave has reset the expectation along with Stacey Shively in our company's necessity to fall in love with not only brand-new product from the world's greatest vendors, but from closeouts to liquidations to reverse logistics. It is our responsibility to bring the right product to the customer at the right time and most importantly, to be able to serve a wide swath of customers by doing it at the right price for them, which is why we have these various entry points. From my perspective, a flatter, a leaner organization is a more nimble and responsive organization. I think the other thing we've learned is we've added talent like Guncha and promoted people like Carlisha, is that those folks truly are subject matter experts in their respective business, and they definitively understand the sense of urgency that I demand in this business. Profitability is not an option or a casual…

And our next question comes from the line of Seth Sigman from Barclays.

Marcus, the philosophy going into the quarter was to use Q2 as a test period, I think, not to chase sales but to really try to understand the demand sensitivity to marketing and promotions and create this baseline. Can you elaborate on that? And how did that play out? What did you learn? And I realize a lot of this is still ongoing, right, as you guys figure things out. But what is the philosophy as you think about the third quarter here and maybe tie that in with the expectation for EBITDA to improve sequentially?

Yes. So I think, there's a couple of things. We went into the quarter and month-after-month in the quarter, we saw a nice progress as it related to our fixed expenses, our gross margin improvement and started to see that as we closed out each month, we were marching towards that. Now the first month of the quarter, unfortunately, did not meet the same expectations as the second and third month did of the quarter. As we entered the third quarter, we sat down as a team and had some very candid conversations about the macro environment, about how the consumer was feeling, around the noise, around the geopolitical environment, the upcoming Olympics. And we looked at ourselves and said, listen, we need to improve profitability, and we have a choice in the first month, do we chase revenue, overspend to try to attract new customers or hold on to them or do we very strategically learn to find ways to use our e-mail database more effectively, improve our PLA spend and do things to improve contribution margin, including raising prices. Now we all know that when you raise prices, you're going to get some level of resistance, and we saw it in small pockets. But I'm here to tell you that I'm happy with the profitability performance thus far in July and feel like as we marinate towards August and September and get ready for Labor Day, we will have continued to make improvements in margin, in our ad spend and our fixed costs. When you look at the third quarter in comparison to the second quarter, as I mentioned earlier, the second quarter always performed for Bed Bath and Overstock separately and now together, to be about 12% to 14% lighter in the third quarter. We feel confident…

Okay. Super helpful. And then just one follow-up, thinking about revenue from this past quarter. It came in slightly ahead of how you are forecasting it. It looks like AOV was maybe the surprise. Can you speak to that? It sounds like there was maybe some success selling bigger ticket things on Bed Bath also Overstock relaunching, how did that play a role in that? And how do you think about how that could play out through the rest of the year?

Seth, that's a great question. Average order side, as I mentioned in my comments, they had an uptick, and the adjacencies of bedroom furniture, patio and outdoor furniture and those areas that we've talked about the four specific rooms that Bed Bath is focused on from the bedroom, bathroom, the kitchen and patio furniture. As the bedroom was traditionally and historically for legacy Bed Bath, more of the soft goods, we're seeing that migration that it's okay to shop that entire room and buy that bed and buy that mattress, buy that bedroom furniture. And we're seeing that in these categories, and that's an advantage to us. Again, Overstock becoming more meaningful, as Marcus just mentioned, as we progressed through the quarter, is also on a very healthy right back to where it was before, average order value which we expected and anticipated, and that also contributed to that uptick.

One thing that everybody does have to start to think about as Zulily launches, is that we'll be operating three distinct businesses with two similar portfolios kind of between Bed Bath and Overstock. But if you go on to Overstock today and you compare it to the Overstock of quite frankly, a year ago, where Overstock was a year ago just selling primarily furniture, patio furniture, rugs and some other home decor. It is now an entirely different marketplace. You can go on to the liquidation tab and see name brand apparel starting from $20. And when you start to see transactions like that, or factory direct furniture or closeouts or open boxes, it will put pressure on some of the average order. As we launch Zulily, which is apparel and beauty, it will put pressure on the average order, and we will do our best going forward to try to call out the differences between the average orders to the extent that we're permitted, the differences in the average orders between the categories. So if we look at furniture, rugs, patio, things like that, we can show AOV, but we will break out apparel and other small items to not distort from the overall performance of the brand as we expect those transaction counts to be ultimately very meaningful.

And our next question comes from the line of Rick Patel from Raymond James.

Nice to see the progress. Can you provide some more color on active customers. How much of the increase versus the first quarter came from Bed Bath customers versus Overstock customers? And what's the right way to think about the shape of growth going forward? We had your expectations for revenue between 2Q and 3Q, but I'm curious about your customers follow a similar or different path since you'll be stacking cohorts from the platforms that are both ramping?

Yes. I mean, listen, we -- as we get into the third and fourth quarter, the comps are becoming far more meaningful because, in our opinion, the company significantly overspent in Q3 and Q4 last year, particularly once August hit to acquire new customers. When you look at the customer file in the second quarter, most of it was largely attributable to Bed Bath & Beyond. And as you looked at the first quarter performance of Overstock, we largely kept spend very minimal as we were testing out the algorithm and rebuilding the site and looking at the taxonomy and looking at ways to improve the customer experience, we didn't want to go out and spend a ton of money and then have conversion be unacceptable to us. So we relaunched the e-mail. And it has not been as easy as we initially thought it would be to reengage that Overstock customer. We sat dormant for a number of months. And so we're having to be very creative about how we're doing that. We're having to incentivize customers. But we're balancing that against overpromoting site sale, which is a mistake that Bed Bath did starting in Q4 and trying to have Overstock have positive contribution margin to the company, all while trying to reactivate the file. As we get deeper into the third quarter and we're happier with our assortment, we'll start spending a little bit of money and we'll start learning how it performs, and we'll start seeing how the conversion works. But we want to be very clear about something. This is not a fast fix where we're just going to pour a bunch of money into the market. The macro environment is already difficult. The advertising environment, particularly right now, and we hope that other companies pay…

Can you also impact the potential to cross-pollinate customers between the banners. I know the platforms are being run independently, but when a new customer or a relapsed one, comes on board, what are you doing to entice them to shop the other banner?

Look, I think that there was a lot of early hope that there would be this pool of a database and that, that pool of the database would transfer across each brand. We want to be very careful as we establish very specific point of views and brand attributes to each one of the brands to not confuse the customer. The one way that we believe that will ultimately solve that is by creating a global loyalty program, and that loyalty program allows them to understand how they can use their reward points their club points or any other loyalty program that may exist to be specific to that brand to transfer up to this. Think about it like a Bonvoy at Marriott or a Star Alliance in the airlines. The reason I mentioned Star Alliance is the one thing you could expect from me and our company in the next several months, as we have this North Star goal about creating this overall global loyalty program is that we believe there's parts of the home and family type industry that we may never specifically play in because of our asset-light model. But we want to bring those particular companies who don't compete with us but complement us, whether they're another CPG company or whether they're a services business, to participate in our alliance. It's a very difficult proposition for companies of our size to make it on their own. And what we're finding and what you'll find with me is that I believe in creating a community, a cooperative that allows whether it's a finance company, a services company, a pool service company a retail company that sees customers, all playing in that same space to be able to live in that global database. That global database will have a global loyalty program. And ultimately, once that customer is in that system, we'll then start to do what I mentioned 6 months ago, which is to sell them other high-margin recurring revenue products once we build their trust and their loyalty.

And our next question is from the line of Curtis Nagle from BofA.

Just quickly going back to 3Q. One, just if you could comment on quarter-to-date trends. And then I just want to make sure I understand, I guess, the mechanics of, I guess, what I'll call the guide. Right? So 10% to 12% below 2Q on basic seasonality. It doesn't sound like you're factoring any sort of basic, I guess, ramping from the brand, but I'm not quite sure. And I think also we're factoring kind of comps from the overspending on customer acquisition last year. But just could you just walk through kind of how all that bounces out and sort of what's incorporated in terms of that's down 10% to 12% as you said?

Yes. Yes. So just as a reminder, we don't provide guidance as a company, but I felt obligated -- feel obligated to provide our investors particularly until we reach a level of profitability with a lot more insight on all the parts of our business, transparencies, how we want to operate. Just looking back, and I actually went back and looked at even historical Bed Bath & Beyond Financials when it was a public company and I looked at Overstock as well. The third quarter always was a little softer, and it's a terrible word to use, but it sequentially stepped down by 12% to 14%. Ironically enough, both businesses look the same, which means that probably that overall home space steps down when it's coming out of big patio furniture and things like that out of the summer and cleaning things for spring and getting organized. And what we always have called it is like a transition quarter in preparation for Q4. We're also spending a lot of time and a lot of energy learning how to calibrate our business and being very specific about how we're going to approach each specific day inside of the 90 days of the quarter. It's a Monday, what's the holiday? It's a Tuesday, what's coming up that weekend? When is the big sporting event, when are the Olympics? When are the primaries? And we're doing a much better job of overanalyzing behavior patterns and weather patterns and trying to lean on other companies and other expert advice to help us think about that. In using just the historical facts, I wanted to set an expectation just based on historical information. And if 12% to 14% is the walk down from Q2 to Q3, then people can do the math, it's 12% to 14% of $398 million. We feel confident that we could achieve, but candidly are more focused on bucking that trend, that even though the companies have both historically done that, we're looking at ways at outperforming that. Now we're not going to overspend or be reckless with how we do that, because we also want to have margin improvement and EBITDA improvement at the same time. So our goal for the quarter is to outperform the historical step-down to improve margins sequentially from the previous quarter and to improve EBITDA no less than low double digits in the third quarter on a percentage basis. We think we can do better than that but we are doing, we hope, a much better job of setting the proper expectations.

Got it. And then just a quick follow-up, if I can. Just how to think about the sales and marketing spend as a percentage of total revenues in the back half of the year, right? How dependent is that on total revenue? Marcus, you mentioned, obviously, customer acquisition costs are up given election also, and some other things. So if you could just frame out kind of how at least you're thinking about that for the remainder of the year, that would be helpful.

Yes. We are not satisfied by any stretch of the imagination at our ad spend as a percentage of our revenue. It doesn't even come close to meeting our standards, and we know we have to improve that. But when we say that in one breadth at the same time, we need to keep growing our file and finding new customers, particularly ones that have an affinity to our company. We need to continue to engage with the customers we have now, as Dave mentioned, he was very happy with the level of repeat buyers that we have seen. We also need to be -- do a good job of reengaging those legacy Bed Bath & Beyond customers that have still not come back. And we want to find the balance of inducing them at our payroll and inducing them to our benefit. As we launch and continue to grow the Overstock business, we are going to have to spend money to go find new customers who really believe that there is a tremendous amount of right space in this liquidation closeout business that Overstock is leaning towards. And then lastly, we are planning on launching Zulily in -- at the end of Q3. So when you see all those things happening, lodging Zulily, throttling up Overstock, reengaging old Bed Bath, you would probably be surprised that at the same time, we're telling you that we're going to have margin improvement and EBITDA improvement, but that's largely part of what we think we're going to do to continue to tighten down on fixed costs in other areas. We can't afford to just start cutting marketing spend to find our way to a profit. I'm not going to do that as addicted to growth as I am normally and historically, I still want to find the balance of getting to where I ultimately believe we can get to, but doing it with temperance and rationalization.

[Operator Instructions] Our next question comes from the line of Marvin Fong from BTIG.

A lot of them have been answered, but maybe two, if I could. So just first one, basically the time a year ago, just for Bed Bath, we were kind of talking about 22% gross margin as sort of a goal for that business? I mean, is that still sort of a guiding light for what you'd like gross margin in that business to be? Or should we just kind of tear that up and you've entirely rethought the gross margin target for the core Bed Bath business? And then I have a follow-up.

Okay. Marvin, it's Adrianne. And I think the '22 -- so if we were talking last year, just one reminder, we did change our presentation of growth margin conference call to be kind of more similar to our peer set. There's about 4 points that we moved out of gross margin into OpEx. So if you did that apples-to-apples today, that number would be something like 26%. And I think as we talked about, our goal is to continue to improve gross margin. And we know that somewhere, if you look at each of these brands and their historic operating performance, they've been in those ZIP codes and/or better. So I think on our path to profitability, we'll continue to kind of chip away at that gross margin and get closer and closer to that mid-20 number.

Marvin, it's Dave. For your second question, I'd just like to add on to that. A couple of ways in which we are going about that as a leadership team, and we'll be talking about this at our upcoming Partner Summit. As we think about curation and making assortments more meaningful for our customers and the customer experience, there is a lot -- that has a lot to do with as well our supplier base. And as our supplier base narrows and deepen in the amount of volume flowing through them, that is a real opportunity for us and our partner base to renegotiate and to get more entrenched together in this business, giving better margins to us with more volume and more scale to those partners. And again, it aligns us with the customer experience and the shopping experience, which are needed.

I think there's two other -- a couple of other points, Marvin, and then we'll wrap up that point. You're seeing a lot of focus for the company to explore this, what I believe is unchartered white space in e-commerce and liquidation closeouts, factory direct and things of that nature. And I have seen a number of comments around about the fact that off-price and closeouts have never been successful in liquidation. And I will tell you that they haven't done business with us. Overstock is principally an off-price closeout business. And prior to it being transferred over to Bed Bath, it was $1.5 billion business. if Dave had been in charge of the business years ago, it would have never left jewelry. It would have never left apparel and footwear. And so what we're doing is not only going back to those things that Dave wanted to do, because he's truly a merchant and understands it, but we are going to become the leader in the closeout liquidation for closure space. We believe, and we've seen early doses of that, that people are now starting to come to us. Two more other points is that we have also eliminated a number of distributor relationships that our company was required to go through both when it was Overstock and Bed Bath & Beyond went through bankruptcy. We sat down -- all three of us sat down with dozens of vendors who are a little unsure historically about Overstock and the brand sort of cast on it or they were unsure about Bed Bath & Beyond because they had been burned by a vendor. And we're requiring that everybody buys through a distributor. We have mitigated a number of those relationships and will enjoy margin just from those direct relationships alone with big, big global brands that in some cases, didn't even sell to the company. And lastly, you could expect over the next 6 to 12 months, we'll be rolling out a private label program, a private label program that will be sold in multiple channels. And when I say multiple channels, that means we are going to make margin in every marketplace that we can, both in our own marketplaces, but when we build the brand, we think there's other places we can make money as well. And so we're looking for every way that we can love on product, source it, improve our first cost or buy at a close out and bring it to consumers in different ways.

Got it. And my follow-up, just hearing good to hear that patio and outdoor did well in the Bed Bath channel. As I sort of think about how you guys were kind of talking about that last quarter, it seemed like maybe you guys thought that maybe build type of products from better suited to Overstock and there might be some transition there. So should we kind of take what we learned or saw in the second quarter as you'll be kind of keeping those products -- that product on Bed Bath and you'll continue to grow those categories?

Yes. Before Dave takes a deep dive on, Patio, I would tell you that I was not satisfied with how Patio performed. And so while it performed better and while Bed Bath & Beyond is actually getting more comfortable selling that and the consumer is more comfortable buying it from it, I wanted to see better performance out of that category. And we know where we slipped up and we are documenting day by day, week by week, what our missteps were so that we build the playbook for 2025 in that area.

Marvin, there are opportunities, as we mentioned, this theme of curation and calibration as we move forward. The curation component of our one of the four rooms that we're really focused on with Bed Bath & Beyond is that patio and outdoor. But it's not going to be everything to everybody. Over the last few years, we have seen so many pop-up suppliers of outdoor and patio furniture. They don't provide a good customer experience. They don't understand packaging. But we have a very deep and solid relationship with several of the top providers in these product categories and working with Stacey and the merchandising team and really curating down that assortment, there are margin opportunities and there are, as Marcus mentioned, private label opportunities, branding opportunities there that we believe for Bed Bath & Beyond can really create another opportunity for this business. On the Overstock side of things, I just want to touch again just a little bit on the advantages of this liquidation piece of the business. Liquidation historically for Overstock when we would buy physically millions of dollars of sheets of distressed merchandise, those were incredible to drive traffic to our website. They were what we considered many times marketing spend. With these partnerships and these alliances that we're making with liquidators, with reverse logistics companies where we don't have to invest in the assets and we can remain in our asset-light model, we can provide access to products through our partner base that are incredible for these individuals. I mean, we have thousands of partners who have distressed merchandise. At the same time, getting access to a model of distressed merchandise in the local area, where we have built the technology to be able to drop ship out of some of those locations. That when you don't have to move the merchandise is where margin is very accretive for all of us.

Yes. Look, there is thousands, if not tens of thousands of companies of all sizes from the small business on Main Street to a Fortune 500 company that needs to be able to deal with excess inventory, mistakes in their inventory, and particularly for a medium to small business that has cash trapped in their inventory and not in their bank account, we will become the solution for those folks to plug right in and we have started to onboard small businesses, medium and large businesses today through our supplier Oasis, through a platform with Shopify, through a number of different plug-ins that will give people that ability. The reason that, that's so important is that there are a lot of brands out there who don't want to necessarily have to open their kimono and air their dirty laundry out about any inventory mistake. Even myself as a multiple business owner, I'm not proud of inventory mistakes. And if I could find a place to monetize my inventory and do it in a marketplace where everybody doesn't have to see it and my brand isn't damaged that's really where things excel. And when you look at Overstock and Zulily together, that marketplace provides that safe place for big companies to find that and whether that's in the pet space and whether that's in the outdoor space, the patio space, the jewelry space, the collectibles space, the reverse logistics space and the list goes on and on, we don't see any borders or barriers to Overstock's ability to dominate in that space. I joke with Dave all the time. I'll let you know when we're done when we're selling chickens and cars. And I know that seems extreme, but that shows the width in which we believe Overstock can ultimately play. We will be visiting trade shows, and we'll be doing a lot of other things to sort of expand on that.

And our final question for today comes from the line of Jonathan Matuszewski from Jefferies.

The first one is just on your vendor conversations and vendor strategy. I think, the prepared remarks referenced the upcoming Partner Summit. So just wanted to get some perspective on your goals for that event in terms of conversations with suppliers and efforts to reengage them. I think you mentioned a strategy of narrowing the supplier base, which sounds encouraging from a unit economic perspective. Is there any risk there from a consumer choice angle?

Yes, great question, Jonathan. We're really excited about this upcoming summit. And I was just in Vegas actually on Sunday, spending time with many of these partners, giving them a little preload into some of the thinking that we'll be working on and presenting and talking to them about. There is always risk to any transition, but we are confident in the work that we've done with these partners and what these partners have to offer. Many of these partners can scale so much larger than they are and have additional assortments. Our strategy a few years back of just bringing on everybody and everybody jumping in to the patio furniture business to the furniture business, basically to furniture and home furnishings businesses since COVID. It is very important from a margin-accretive perspective that we do this. We see it as low risk on the sales side and the selection side. There's only so much you can process as a human as you're processing and going down through search pages, but it's more than that. It's about the customer experience, the shopping experience, and providing that customer with a look and a feel that makes sense, that makes them excited to shop that doesn't confuse them it doesn't disappoint them with poor packaging or poor ship confirmation timing. So there is -- there are so many elements that eliminate cost in our ecosystem by taking this approach of making our relationships with our key partners, more strategic, more aligned.

That's really helpful. And then just a quick follow-up. In the press release, there was a reference to kind of strategic partnerships and joint ventures ahead. And I think you guys did a nice job of talking about the opportunity there in terms of working with reverse logistics companies and closeouts and whatnot. How do your aspirations for a physical presence for your product play into this? And kind of how should we think about the opportunity if Bed Bath were to get product in four walls in a financially accretive way without obviously kind of building stores and just leveraging someone else's network potentially. How does that fit into your approach going forward? And what's the opportunity there?

I just want to, first and foremost, clarify we are and will continue to be an asset-light company taking on any contingent liabilities, leases, putting up distribution centers, taking on massive loads of inventory, are not in any future that we're a part of. However, you can expect in short order that it is our mission to put Overstock and Bed Bath & Beyond back in the marketplace. We believe that an omnichannel at least from a perception standpoint for the consumer is quintessential to our growth. That doesn't mean that we have to do it. There are plenty of other subject matter experts who do quite well at this as their core competency, and we believe that there are multiple opportunities and are in discussions with multiple parties to execute that strategy in short order. Remember that it also has to be part of a larger alliance around database and monetizing the file and monetizing the intellectual property. So as we start to disclose and roll out and finally negotiate certain transactions, all of the investors should rest assured that in every single case, any partnership will be materially accretive to the company and will still be in an asset-light environment.

This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Marcus Lemonis for any further remarks.

Great. Thank you for joining us on today's call. We look forward to seeing you next quarter. Take care.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.