Shares of Salt Lake-based Overstock.com Inc., an online seller of discounted merchandise, fell 20 percent Friday after the company said its gross margin is unlikely to increase above 15 percent.
Overstock.com fell $13.07 to $52.87 in composite trading on the Nasdaq Stock Market.
Gross margin, or revenue minus the cost of goods sold, climbed to 15.2 percent of sales in the fourth quarter from 9.6 percent a year earlier, the company said Thursday after the close of exchanges. Chief executive Patrick Byrne said Thursday in an interview that 15 percent was the "right level" as the company would pass on additional savings to customers.
Piper Jaffray & Co. analyst Aaron Kessler Friday downgraded Overstock.com to "market perform" from "outperform." The "conservative" gross margin guidance and higher operating costs will weigh on the shares in the near term, Kessler said in a note to clients.