Marcus Lemonis: Yeah. When I started looking at the financial statements for 2023, 14% was the marketing spend as a percentage of revenue. And I have a goal of getting us down to 11% over time. That 3% is material when you’re talking about a $2 billion, $3 billion business. This company cannot afford a 14% marketing expense as a percentage of revenue nor should it be leaning exclusively on its vendors to mitigate that expense. The vendors have a finite amount of money and we need that money to show up with better first cost dollars, so we have true margins that are better and supporting the customer experience when things don’t go right. That’s a form of marketing. And I think too often people are focused on let’s just drive more and more and more.
You also need to retain what you’ve built. So, when we look at the overall marketing spend and our goal to drop it by 0.5% to 1% this year, that would mean that we would be looking at a 13% to 13.5% number as part of that. Improving the efficiency of that database to drive that below 13%, getting retention of our customers to drive that to 12% or below, and then getting more efficient with our database and being smarter about our relationships with our customers is the pathway to 11%. For those people that believe it’s not possible, there’s no reason that you couldn’t cut $30 million, $40 million of marketing expense out of this budget. The question is which $30 million or $40 million do you cut? And that usually is where the devil is in the details.
We believe we have the secret sauce to figure that out.
Steven Forbes: Thank you.
Operator: Thank you. One moment, please. Our next question comes from the line of Jonathan Matuszewski of Jefferies. Your line is open.
Jonathan Matuszewski: Great. Good morning, everyone, and thanks for taking my questions. And welcome to the team, Chandra. My first question is on the 2024 sales goal. Maybe if you could just break that down a little bit, the $2 billion? Marcus, I think you described Overstock.com as the silver bullet. So just curious how much you see Overstock.com contributing to 2024 after the 1Q launch? Thanks.
Marcus Lemonis: Yeah. Thanks, Jonathan. I read your note last evening that came out shortly after we released our earnings. And I suppose I can understand why you asked or why you questioned our ability to get to $2 billion. At this moment in time, Overstock and Bed Bath & Beyond are not separate reporting segments. We expect that in the 2025 calendar year, because of the materiality of what we believe Overstock will become, that we will report them separately. But if you look at the financials for 2023 from a revenue standpoint, we were approximately at $1.6 billion. And Bed Bath & Beyond’s business did not layer into that number until the early — the late summer, early fall August of 2023. What happened in that moment is when Bed Bath & Beyond — when the website literally went from red to blue, you literally just changed the name of it.
You not only confuse people, but I think you sent away Overstock customers. So, the way that I’ve asked the team to think about it is if you take the Bed Bath & Beyond core segment business from August 1st through December 31st or quite frankly even through today and you annualize that, and then you took the historical Overstock business that was January through July 31st and you annualized that, and then took out some of that crossover categories, that’s what gives us confidence that $2 billion is a clear path. Let me also add to that that we know that adding Baby and Beyond and a few other ancillary things also contribute to that. But we are not able to tell you because of SEC reporting how that $2 billion is going to be broken out. The reason I said that that Overstock is the silver bullet is there’s a gap to fill.
And that’s about as good as I can be. There’s a gap to fill. But we did use science and historical information to lay this track down. It wasn’t just some wild finger in the air swag.
Jonathan Matuszewski: Yeah. That’s very helpful color. And just a quick follow-up question. Marcus, I think you made some comments about kind of working closely — more closely with Pelion going forward. And just some color on the cash flow statement. I think you guys had a $10 million of proceeds from blockchain asset sales or cryptocurrency proceeds. Just more detail there and what’s the path ahead for ’24?
Marcus Lemonis: Yeah. I’m going to have Adrianne handle the cash portion of how she wants to manage unlocking the value of her assets. And she’ll go through whether it’s the building or Bitcoin things of that nature. But let me address the Pelion relationship. I take very seriously every dollar that leaves this company. And when I look at a P&L on a monthly basis and I see a line item of a management fee, I take that very seriously. And in 2021, this company for some reason decided that it couldn’t manage a portfolio that wasn’t even a non-core asset. So, it elected to sign up a partnership with a local corporate ventures fund to help manage those 16 portfolio companies. I’ve had the pleasure of speaking to a number of the leaders of those portfolio companies and quite frankly have been pleased when I have one-on-one dialogue with them about what they’re doing, what ideas they have, and more importantly, what sorts of results they’re driving.
But I had to make that phone call. And what I will not stand for is anybody getting in the way of our shareholders understanding what’s happening with money that has left their bank account and been invested in some other asset. And when I pay somebody a fee to manage that business, I expect results and communication. And so, we’re going to work with Pelion on improving those two things over time. And if those two things aren’t going to improve at a level that meets all of our standards, then we’re going to just assess what options we have in redoing it. But it is in no way an indictment on the businesses that are inside of that portfolio. In fact, we don’t control them. They are proprietors. We don’t have a controlling stake where we can tell anybody what to do.
And whether you agree or disagree with the investment that had been made over the previous five years, it’s water under the bridge. Our job is to understand the value of that investment and figure out how to monetize that investment. I have one goal, maximize the value of that investment, turn it into cash, and then weaponize that cash to grow this company by either investing in its core business or acquiring another bolt-on business that fits naturally inside of what our core business is. Adrianne?
Adrianne Lee: Yes, happy to. Jonathan, thanks for the question on cash. Let me just frame that up a bit. Obviously, we’re always looking at our balance sheet and looking at particularly non-performing assets and if there’s an opportunity to monetize in a meaningful way. So, the item you’re seeing here in the fourth quarter was our decision to sell some of our Bitcoin, actually all of our Bitcoin. So, we did have a holdings. If you recall, there was a point in our company history where we accepted cryptocurrency as payment, and we have decided to sell those currencies. I’ll say in addition, Marcus mentioned that we do have our corporate headquarters here in Salt Lake City pending or up for sale and we’re looking to monetize that asset as well.
Marcus Lemonis: And we received one offer…
Adrianne Lee: Yes, we have.
Marcus Lemonis: …so far. That offer as much as Dave and I would like to move on, it doesn’t meet Adrianne’s standards just yet. And we’re waiting on a few other offers that we expect to come in. But it is our goal to have transacted on this building one way or the other by the middle of the year. The carry cost on this building is about $8 million and that’s $7.6 million more than we’re willing to invest in just parking desks and computers. That money needs to be reinvested in technology, the database, expanding brands, et cetera, et cetera.
Jonathan Matuszewski: Very helpful. Best of luck.
Operator: Thank you. And that is our time for question today. I’d like to turn the call back over to Marcus Lemonis for any closing remarks.
Marcus Lemonis: Thank you so much. I couldn’t be more excited about the team that has been assembled here to manage the day-to-day operations. For those of you that know me, I drive a very, very hard charging mentality around serving at the pleasure of our employees and our shareholders. One thing that was not mentioned on today’s call is that we will use a different tactic overtime to influence the outcome of our results. We will use influencers and content and information and ideas to bring the customers closer to us. The days of buying singularly linear TV or just buying ads are over. Consumers don’t react to things like that. And you could expect a whole host of influencers to not just be involved in our business, but be motivated financially by the results, a really new idea around influencers being tied to the variability of performance.
We are on the cusp of announcing a few of them, and believe that not only are we going to be adding them to our pool, but I’m confident that Dave and Chandra are going to be adding additional resources to their army as well. Thanks for joining us on the call, and we look forward to seeing you on the next one. Take care.
Operator: Thank you. Ladies and gentlemen, this does conclude today’s conference. Thank you all for participating. You may now disconnect. Have a great day.