Exhibit 99.1
1-800-FLOWERS.COM(R) Reports Strong
Revenue and Earnings Growth for its Fiscal 2007 Third Quarter
-- Net income for the quarter increased 168.4 percent, or $2.6
million, to $1.1 million, or $0.02 per share, compared with a
loss of $1.5 million, or ($0.02) per share, in the prior year
period. Pro forma EPS*, excluding the effect of stock-based
compensation, was $2.0 million, or $0.03 per share
-- EBITDA* grew to $8.0 million, compared with $735,000 in the
prior year period, reflecting the combination of strong
revenue growth, increased gross profit margin and enhanced
operating expense leverage. (*A reconciliation of EBITDA
(Earnings Before Interest, Taxes, Depreciation and
Amortization) and pro forma EPS to net income and net income
per common share, respectively, is included as part of the
attached tables.)
-- Total revenues for the quarter grew 18.8 percent, or $33.8
million to $213.8 million, compared with $180 million in the
prior year period, driven by strong growth in the Company's
key Consumer Floral, BloomNet Wire Service and Gourmet Food
and Gift Baskets categories.
Business Editors/Retail Writers
CARLE PLACE, N.Y.--(BUSINESS WIRE)--April 26,
2007--1-800-FLOWERS.COM, Inc. (NASDAQ: FLWS), the world's leading
florist and a provider of specialty gifts for all occasions, today
reported revenue growth of 18.8 percent, or $33.8 million, to $213.8
million for its fiscal third quarter ended April 1, 2007, compared
with revenues of $180 million in the prior-year period. This increase
was driven by strong growth in the Company's key Consumer Floral,
BloomNet Wire Service and Gourmet Food & Gift Basket business
categories and included the contribution from Fannie May Confections
Brands, which was acquired in May 2006. The strong revenue growth was
achieved despite lower year-over-year sales in the Company's Home &
Children's Gifts category reflecting management's decision to scale
back marketing in this category.
During the fiscal third quarter, the Company improved its
operating expense ratio (excluding depreciation and amortization) by
180 basis points to 36.8 percent compared with 38.6 percent in the
prior year period. This reflects strong revenue growth as well as
management's focus on leveraging its operating platform. Gross margin
for the quarter also improved, increasing 150 basis points to 40.5
percent compared with 39 percent in last year's fiscal third quarter.
The Company attributed the improved gross margin to a combination of
factors, including enhanced sourcing, pricing initiatives and product
mix. Combined with the strong revenue growth, these factors resulted
in EBITDA for the quarter of $8.0 million representing an improvement
of $7.3 million compared with $735,000 in the prior year period.
Net income for the quarter increased 168.4 percent, or $2.6
million, to $1.1 million, or $0.02 per share, compared with a loss of
$1.5 million, or $0.02 per share, in the prior year period. Pro forma
EPS, excluding the effect of stock-based compensation, was $2.0
million, or $0.03 per share. (*A reconciliation of EBITDA and pro
forma EPS to net income is included as part of the attached tables.)
Jim McCann, CEO of 1-800-FLOWERS.COM, said, "We are very pleased
with our fiscal third quarter results, particularly with the continued
improvement in our year-over-year bottom-line performance. This
reflects the combination of strong revenue growth in our three key
business categories - Consumer Floral, BloomNet Wire Service and
Gourmet Food and Gift Baskets - as well as further improvements in our
gross margin and operating expense ratio." McCann said that the strong
top- and bottom-line results for the quarter illustrated the
effectiveness of the Company's online and offline marketing programs
as well as its "good-better-best" merchandising strategy that features
an increasing number of "signature" gift items, particularly in its
Consumer Floral business. In this category, McCann noted that the
Company grew its e-commerce revenues by approximately 10 percent,
thereby extending its industry leading position. "Furthermore, it's
worth noting that we achieved solid revenue growth and improved
profitability in our Consumer Floral business despite the impact of
inclement weather experienced throughout much of the Midwest and
Eastern portions of the country during the important Valentine's
holiday," he said.
During the quarter, the Company also achieved double-digit revenue
growth in its BloomNet Wire Service and Gourmet Food and Gift Basket
categories. "Our BloomNet Wire Service business continues to gain
momentum as top quality florists throughout the country embrace our
value proposition," said McCann. BloomNet sales for the period
increased approximately 39 percent to $12.7 million and gross profit
margin improved 190 basis points to 51.9 percent. During the quarter,
the Company introduced several new products and services designed to
help its BloomNet florists enhance their revenue growth and
profitability, including web hosting and a point-of-sale store
management system.
Revenues in the Company's Gourmet Food and Gift Basket business
grew more than 150 percent, or $21.4 million, to $35.6 million during
the quarter, benefiting from continued double-digit growth in its
Cheryl&Co. and The Popcorn Factory brands as well as an incremental
contribution of $17.3 million from the Fannie May Confections business
acquired in May of last year.
In its Home and Children's Group category, McCann said the Company
continued to take proactive steps to improve the performance of this
business. "During the quarter, we strengthened the management team,
improved the creative look and feel of the catalogs and revised the
circulation plans for all titles to place more focus on the category's
existing customer base. As a result of these and other changes we are
implementing, we have begun to see improvements in customer response
rates and bottom-line performance. To augment these efforts and help
in our analysis and planning, we have hired a consulting firm with
specific expertise in the direct-to-consumer/catalog space. In
addition, through their investment banking capabilities, they will
assist us in evaluating all of our strategic options for this
business," said McCann.
In terms of its key customer metrics, the Company said more than 2
million e-commerce customers placed orders during the fiscal third
quarter of which 59 percent were repeat customers. During the period,
the Company cost effectively attracted more than 830,000 new
customers. These customer metrics reflect the Company's ability to
leverage its unique collection of assets across all of its business
categories and brands, including its database of more than 25 million
customers, its floral-category brand leadership and its extensive
online and offline marketing programs
CATEGORY RESULTS:
FLORAL:
-- 1-800-FLOWERS.COM Consumer Floral: During the fiscal 2007
third quarter, revenues in this category increased 8.9 percent
to $139.9 million compared to $128.6 million in the prior year
period. E-commerce revenues for the category increased 9.6
percent. Gross margin for the quarter increased 120 basis
points to 38.5 percent compared with 37.3 percent in last
year's third quarter. Reflecting strong revenue and margin
growth and improved operating leverage, Category EBITDA
improved 34 percent to $19.1 million compared with $14.3
million in the prior year period. The Company defines Category
EBITDA as earnings before interest, taxes, depreciation and
amortization and before allocation of corporate overhead
expenses.
-- BloomNet Wire Service: Revenues increased 38.9 percent to
$12.7 million compared with $9.2 million in the year ago
period. Gross margin increased 190 basis points to 51.9
percent compared with 50 percent in the prior year period.
Category EBITDA increased 70.2 percent to $3.8 million
compared with $2.3 in last year's third quarter, reflecting
the growth in florist membership and product and service
offerings compared with the prior year.
SPECIALTY BRANDS:
-- Gourmet Food and Gift Baskets: Revenues increased 151 percent
to $35.6 million compared with $14.2 million in the prior year
period. Gross margin increased 70 basis points to 43.2 percent
compared with 42.5 percent in the year ago first quarter.
Category EBITDA increased to $1.8 million compared with a loss
of $1.6 million in the prior year period. Results in this
category reflect revenue contribution of $17.3 million from
the Fannie May Confections Brands business which was acquired
in May 2006. Excluding the Fannie May contribution, revenues
in this category increased more than 25 percent compared with
the prior year.
-- Home and Children's Gifts: Revenues declined 7.1 percent to
$26.3 million compared with $28.4 million in the prior year
period. The lower revenues reflect management's planned
reduction in marketing as the Company focuses on improving
profitability. Gross margin was essentially unchanged at 39.9
percent compared with 40 percent in the same period last year.
Category EBITDA was a loss of $3.2 million compared with a
loss of $2.7 million in the prior year period.
Company Guidance:
The Company reiterated its guidance for fiscal 2007 which calls
for growth of more than 100 percent in EBITDA and EPS reflecting its
stated focus on achieving continued improvements in gross margin and
operating leverage. The Company said it anticipates total revenue
growth for fiscal 2007 at the low end of its original guidance range
of approximately 17-to-20 percent, reflecting the lower sales in its
Home and Children's Group. Regarding its current fiscal fourth
quarter, which includes the spring holiday season featuring Mother's
Day, the Company expects the period will represent approximately
25-to-27 percent of full-year revenues.
Definitions:
Pro Forma EPS: To supplement its consolidated financial statements
presented in accordance with GAAP, the Company has presented pro forma
EPS. The Company defines pro forma EPS as net income per common share
excluding stock-based compensation expense, net of the related tax
effect, as calculated under FAS No. 123R. The Company believes pro
forma EPS provides a meaningful measure of year-to-year period
comparative performance; however, its use and corresponding per share
results do not lessen the importance of net income per common share.
EBITDA: Net income before interest, taxes, depreciation and
amortization. The Company presents EBITDA because it considers such
information a meaningful supplemental measure of its performance and
believes it is frequently used by the investment community in the
evaluation of companies with comparable market capitalization. The
Company also uses EBITDA as one of the factors used to determine the
total amount of bonuses available to be awarded to executive officers
and other employees. The Company's credit agreement uses EBITDA (with
additional adjustments) to measure compliance with covenants such as
interest coverage and debt incurrence. EBITDA is also used by the
Company to evaluate and price potential acquisition candidates. EBITDA
has limitations as an analytical tool, and should not be considered in
isolation or as a substitute for analysis of the Company's results as
reported under GAAP. Some of these limitations are: (a) EBITDA does
not reflect changes in, or cash requirements for, the Company's
working capital needs; (b) EBITDA does not reflect the significant
interest expense, or the cash requirements necessary to service
interest or principal payments, on the Company's debts; and (c)
although depreciation and amortization are non-cash charges, the
assets being depreciated and amortized may have to be replaced in the
future, and EBITDA does not reflect any cash requirements for such
capital expenditures. Because of these limitations, EBITDA should only
be used on a supplemental basis combined with GAAP results when
evaluating the Company's performance.
About 1-800-FLOWERS.COM(R)
For more than 30 years, 1-800-FLOWERS.COM Inc. - "Your Florist of
Choice(R)" - has been providing customers around the world with the
freshest flowers and finest selection of plants, gift baskets, gourmet
foods, confections and plush stuffed animals perfect for every
occasion. 1-800-FLOWERS.COM(R) offers the best of both worlds:
exquisite, florist-designed arrangements individually created by some
of the nation's top floral artists and hand-delivered the same day,
and spectacular flowers shipped overnight "Fresh From Our
Growers(sm)." Customers can "call, click or come in" to shop
1-800-FLOWERS.COM twenty four hours a day, 7 days a week at
1-800-356-9377 or www.1800flowers.com. Sales and Service Specialists
are available 24/7, and fast and reliable delivery is offered same
day, any day. As always, 100 percent satisfaction and freshness are
guaranteed. The 1-800-FLOWERS.COM collection of brands also includes
home decor and children's gifts from Plow & Hearth(R) (1-800-627-1712
or www.plowandhearth.com), Problem Solvers(R)
(www.problemsolvers.com), Wind & Weather(R) (www.windandweather.com),
Madison Place(R) (www.madisonplace.com), HearthSong(R)
(www.hearthsong.com) and Magic Cabin(R) (www.magiccabin.com); gourmet
gifts including popcorn and specialty treats from The Popcorn
Factory(R) (1-800-541-2676 or www.thepopcornfactory.com); exceptional
cookies and baked gifts from Cheryl&Co.(R) (1-800-443-8124 or
www.cherylandco.com); premium chocolates and confections from Fannie
May Confections Brands(R) (www.fanniemay.com and www.harrylondon.com);
gourmet foods from GreatFood.com(R) (www.greatfood.com); wine gifts
from Ambrosia.com (www.ambrosia.com); gift baskets from
1-800-BASKETS.COM(R) (www.1800baskets.com) and the BloomNet(R)
international floral wire service, which provides quality products and
diverse services to a select network of florists. 1-800-FLOWERS.COM,
Inc. stock is traded on the NASDAQ market under ticker symbol FLWS.
Special Note Regarding Forward-Looking Statements:
The statements in this press release regarding the Company's
fiscal 2007 third quarter results includes comments regarding current
and future expectations involve risks and uncertainties that could
cause actual results to differ materially from those expressed or
implied in the applicable statements. These risks and uncertainties
include, but are not limited to: the Company's ability to achieve its
revenue and profitability growth guidance for fiscal 2007; its ability
to improve operating leverage and enhance its profit margins; its
ability to manage the increased seasonality of its businesses; its
ability to effectively integrate and grow its acquired companies; its
ability to cost effectively acquire and retain customers; its ability
to implement changes and improve the performance of its Home and
Children's Group; its ability to compete against existing and new
competitors; its ability to manage expenses associated with sales and
marketing and necessary general and administrative and technology
investments; its ability to reduce investment for catalog prospecting
and improve profitability at its Home and Children's Group business
category; its ability to cost efficiently manage inventories; and
general consumer sentiment and economic conditions that may affect
levels of discretionary customer purchases of the Company's products.
For a more detailed description of these and other risk factors,
please refer to the Company's SEC filings including the Company's
Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. The
Company expressly disclaims any intent or obligation to update any of
the forward looking statements made in this release or in any of its
SEC filings except as may be otherwise stated by the Company.
Conference Call:
The Company will conduct a conference call to discuss the attached
financial results today, Thursday, April 26, 2007 at 11:00 a.m. ET.
The call will be "web cast" live via the Internet and can be accessed
from the Investor Relations section of the 1-800-FLOWERS.COM web site.
An indexed recording of the call will be posted on the Investor
Relations section of the Company's web site within 2 hours of the
call's completion. A replay of the call can be accessed via telephone
for twenty four hours beginning at 1:00 p.m. (EDT) on 4/26/07 at:
1-888-286-8010 (domestic) or 1-617-801-6888 (international). Enter
pass code #25023871.
(Note: Attached tables are an integral part of this press release
without which the information presented in this press release should
be considered incomplete.)
1-800-FLOWERS.COM, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
April 1, July 2,
2007 2006
----------- ---------
(unaudited)
Assets
Current assets:
Cash and equivalents $10,158 $24,599
Receivables, net 21,750 13,153
Inventories 66,343 52,954
Deferred tax assets 25,562 17,427
Prepaid and other 11,534 10,347
----------- ---------
Total current assets 135,347 118,480
Property, plant and equipment, net 62,575 59,732
Goodwill 105,571 131,141
Other intangibles, net 53,414 29,822
Deferred income taxes - 6,224
Other assets 1,474 1,235
----------- ---------
Total assets $358,381 $346,634
=========== =========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued expenses $63,341 $63,870
Current maturities of long-term debt and
obligations under capital leases 20,013 10,360
----------- ---------
Total current liabilities 83,354 74,230
Long-term debt and obligations under capital
leases 70,606 78,063
Deferred tax liabilities 9,735 -
Other liabilities 2,014 1,158
----------- ---------
Total liabilities 165,709 153,451
Total stockholders' equity 192,672 193,183
----------- ---------
Total liabilities and stockholders' equity $358,381 $346,634
=========== =========
1-800-FLOWERS.COM, Inc. and Subsidiaries
Selected Financial Information
Consolidated Statements of Income (Unaudited)
(In thousands, except for per share data)
Three Months Ended Nine Months Ended
------------------- -------------------
April 1, April 2, April 1, April 2,
2007 2006 2007 2006
--------- --------- --------- ---------
Net revenues:
E-commerce (combined online
and telephonic) $175,592 $161,820 $555,010 $520,959
Other 38,187 18,197 125,767 49,652
--------- --------- --------- ---------
Total net revenues 213,779 180,017 680,777 570,611
Cost of revenues 127,092 109,743 387,299 329,319
--------- --------- --------- ---------
Gross profit 86,687 70,274 293,478 241,292
Operating expenses:
Marketing and sales 59,023 53,188 200,430 179,286
Technology and development 5,469 5,170 15,831 14,736
General and administrative 14,198 11,181 41,472 32,174
Depreciation and
amortization 4,447 3,877 13,025 11,210
--------- --------- --------- ---------
Total operating
expenses 83,137 73,416 270,758 237,406
--------- --------- --------- ---------
Operating income (loss) 3,550 (3,142) 22,720 3,886
Other income (expense):
Interest income 203 474 794 830
Interest expense (1,551) (96) (5,804) (293)
Other 1 137 5 -
--------- --------- --------- ---------
Total other income (expense),
net (1,347) 515 (5,005) 537
--------- --------- --------- ---------
Income (loss) before income
taxes 2,203 (2,627) 17,715 4,423
Income tax expense (benefit) 1,150 (1,087) 7,159 2,253
--------- --------- --------- ---------
Net income (loss) $1,053 ($1,540) $10,556 $2,170
========= ========= ========= =========
Basic and diluted net income
(loss) per common share: $0.02 ($0.02) $0.16 $0.03
========= ========= ========= =========
Weighted average shares used
in the calculation of net
income (loss) per common
share:
Basic 62,358 65,092 64,216 65,082
========= ========= ========= =========
Diluted 64,284 65,092 65,475 66,399
========= ========= ========= =========
1-800-FLOWERS.COM, Inc. and Subsidiaries
Selected Financial Information
Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
Nine Months Ended
-----------------
April 1, April 2,
2007 2006
-------- --------
Operating activities
Net income $10,556 $2,170
Reconciliation of net income to net cash provided by
operations:
Depreciation and amortization 13,025 11,210
Deferred income taxes 7,824 1,983
Bad debt expense 1,111 361
Stock based compensation 3,386 3,058
Other non-cash items 72 277
Changes in operating items:
Receivables (9,708) (2,216)
Inventories (13,881) (12,520)
Prepaid and other (1,187) (3,598)
Accounts payable and accrued expenses (529) (2,406)
Other assets (867) 3
Other liabilities 856 (93)
-------- --------
Net cash provided by operating activities 10,658 (1,771)
Investing activities
Acquisitions, net of cash acquired (347) (4,959)
Dispositions 1,112 -
Capital expenditures (13,565) (17,045)
Proceeds from sale of investments - 6,647
Other (36) (63)
-------- --------
Net cash used in investing activities (12,836) (15,420)
Financing activities
Acquisition of treasury stock (15,722) (1,324)
Proceeds from employee stock options 1,269 321
Proceeds from bank borrowings 95,000 20,000
Repayment of notes payable and bank borrowings (92,433) (22,147)
Repayment of capital lease obligations (377) (1,037)
-------- --------
Net cash used in financing activities (12,263) (4,187)
-------- --------
Net change in cash and equivalents (14,441) (21,378)
Cash and equivalents:
Beginning of period 24,599 39,961
-------- --------
End of period $10,158 $18,583
======== ========
1-800-FLOWERS.COM, Inc. and Subsidiaries
Selected Financial Information
Category Information
(in thousands)
(unaudited)
Three Months Ended Nine Months Ended
--------------------------- ---------------------------
April 1, April 2, % April 1, April 2, %
2007 2006 Change 2007 2006 Change
--------- --------- ------- --------- --------- -------
Net revenues:
1-800-
Flowers.com
Consumer
Floral $139,943 $128,562 8.9% $337,077 $308,137 9.4%
BloomNet Wire
Service 12,743 9,177 38.9% 29,549 20,318 45.4%
Gourmet Food
& Gift
Baskets 35,617 14,188 151.0% 166,691 85,139 95.8%
Home &
Children's
Gifts 26,338 28,354 (7.1%) 148,908 157,199 (5.3%)
Corporate (*) 439 658 (33.3%) 2,235 2,557 (12.6%)
Intercompany
eliminations (1,301) (922) 41.1% (3,683) (2,739) (34.5%)
--------- --------- --------- ---------
Total net
revenues $213,779 $180,017 18.8% $680,777 $570,611 19.3%
========= ========= ========= =========
Three Months Ended Nine Months Ended
------------------------- ---------------------------
April 1, April 2, % April 1, April 2, %
2007 2006 Change 2007 2006 Change
-------- -------- ------- --------- --------- -------
Gross profit:
1-800-
Flowers.com
Consumer
Floral $53,931 47,982 12.4% $130,808 $116,532 12.3%
38.5% 37.3% 38.8% 37.8%
BloomNet Wire
Service 6,612 4,589 44.1% 16,489 10,698 54.1%
51.9% 50.0% 55.8% 52.7%
Gourmet Food &
Gift Baskets 15,392 6,028 155.3% 76,585 39,407 94.3%
43.2% 42.5% 45.9% 46.3%
Home &
Children's
Gifts 10,520 11,350 (7.3%) 68,527 73,407 (6.6%)
39.9% 40.0% 46.0% 46.7%
Corporate (*) 268 395 (32.2%) 1,208 1,434 (15.8%)
61.0% 60.0% 54.0% 56.1%
Intercompany
eliminations (36) (70) (139) (186)
-------- -------- --------- ---------
Total gross
profit $86,687 $70,274 23.4% $293,478 $241,292 21.6%
======== ======== ========= =========
40.5% 39.0% 43.1% 42.3%
======== ======== ========= =========
Three Months Ended Nine Months Ended
------------------------- --------------------------
April 1, April 2, % April 1, April 2, %
2007 2006 Change 2007 2006 Change
-------- -------- ------- -------- -------- --------
Category
Contribution
Margin:
1-800-
Flowers.com
Consumer Floral $19,093 $14,250 34.0% $40,194 $29,441 36.5%
BloomNet Wire
Service 3,835 2,253 70.2% 8,793 4,449 97.6%
Gourmet Food &
Gift Baskets 1,827 (1,614) 213.2% 25,547 7,548 238.5%
Home &
Children's
Gifts (3,218) (2,667) (20.7%) (1,435) 6,622 (121.7%)
-------- -------- -------- --------
Category
Contribution
Margin Subtotal 21,537 12,222 76.2% 73,099 48,060 52.1%
Corporate (*) (13,540) (11,487) (17.9%) (37,354) (32,964) (13.3%)
-------- -------- -------- --------
EBITDA $7,997 $735 988.0% $35,745 $15,096 136.8%
======== ======== ======== ========
(*) Corporate expenses consist of the Company's enterprise shared
service cost centers, and include, among other items, Information
Technology, Human Resources, Accounting and Finance, Legal, Executive
and Customer Service Center functions, as well as Stock-Based
Compensation. In order to leverage the Company's infrastructure,
these functions are operated under a centralized management platform,
providing support services throughout the organization. The costs of
these functions, other than those of the Customer Service Center,
which are allocated directly to the above categories based upon
usage, are included within corporate expenses as they are not
directly allocable to a specific category.
1-800-FLOWERS.COM, Inc. and Subsidiaries
Selected Financial Information
Appendix A - Reconciliations of Historical Information
(In thousands)
(unaudited)
Reconciliation of Net Income to EBITDA:
Three Months Ended Nine Months Ended
------------------ -----------------
April 1, April 2, April 1, April 2,
2007 2006 2007 2006
-------- -------- -------- --------
Net income (loss) $1,053 ($1,540) $10,556 $2,170
Add:
Interest expense 1,551 96 5,804 293
Depreciation and amortization 4,447 3,877 13,025 11,210
Income tax expense (benefit) 1,150 (1,087) 7,159 2,253
Less:
Interest income 203 474 794 830
Other income 1 137 5 -
-------- -------- -------- --------
EBITDA $7,997 $735 $35,745 $15,096
======== ======== ======== ========
Reconciliation of Net Income (Loss) Per Common Share to Pro Forma Net
Income (Loss) Per Common Share:
Three Months Ended Nine Months Ended
------------------ -----------------
April 1, April 2, April 1, April 2,
2007 2006 2007 2006
-------- -------- -------- --------
Net income (loss) $1,053 ($1,540) $10,556 $2,170
Add: Stock-based compensation
expense, net of tax 965 719 2,375 2,265
-------- -------- -------- --------
Income (loss) before stock-based
compensation expense $2,018 ($821) $12,931 $4,435
======== ======== ======== ========
Basic and diluted net income
(loss) per common share $0.02 ($0.02) $0.16 $0.03
Add: Stock-based compensation
expense, per basic and diluted
common share $0.01 $0.01 $0.04 $0.04
-------- -------- -------- --------
Basic and diluted net income
(loss) per common share before
stock-based compensation expense $0.03 ($0.01) $0.20 $0.07
======== ======== ======== ========
CONTACT: Investors:
Joseph D. Pititto, 516-237-6131
invest@1800flowers.com
OR
Media:
Steven Jarmon, 516-237-4675
sjarmon@1800flowers.com