Exhibit 99.1
1-800-FLOWERS.COM(R) Reports Strong
EBITDA and EPS Improvements on Record Revenues of $145.8 Million for
its Fiscal 2008 First Quarter
-- Net loss for the quarter improved 22 percent to $5.8 million,
or $0.09 per share, compared with $7.4 million, or $0.11 per
share, in the prior year period.
-- EBITDA* loss for the quarter improved 45 percent, or $2.7
million, to $3.4 million compared with a loss of $6.1 million
in the prior year period reflecting increased gross profit
margin and improved operating expense ratio. (Earnings Before
Interest, Taxes, Depreciation and Amortization)
-- Total revenues for the quarter increased 6.3 percent to $145.8
million, compared with $137.1 million in the prior year
period, driven by the Company's Consumer Floral and BloomNet
Wire Service businesses.
(*A reconciliation of GAAP Net Income to EBITDA is included as
part of the attached tables.)
CARLE PLACE, N.Y.--(BUSINESS WIRE)--Oct. 23,
2007--1-800-FLOWERS.COM, Inc. (NASDAQ: FLWS), the world's leading
florist and a provider of specialty gifts for all occasions, today
reported record revenues of $145.8 million for its fiscal first
quarter ended September 30, 2007, representing an increase of 6.3
percent compared with revenues of $137.1 million reported in the
prior-year period. Excluding the Company's Home and Children's Gift
category, total revenues increased approximately 8 percent compared
with last year's first quarter. The Company noted that the solid
revenue growth was achieved despite the fact that the fiscal first
quarter is its lowest in terms of revenues due to the lack of gifting
occasions during the summer months.
Highlighting the fiscal first quarter results was the improved
operating leverage the Company achieved, reducing its operating
expense ratio (which excludes depreciation and amortization) by 100
basis points to 43.4 percent compared with the prior year period.
Gross margin for the quarter also improved, up 110 basis points to
41.1 percent, driven primarily by a 90 basis point improvement in
gross margin in the Company's Consumer Floral business. The
combination of these factors resulted in an EBITDA improvement for the
quarter of $2.7 million, or 44.7 percent, to ($3.4) million compared
with ($6.1) million in the prior year period.
Jim McCann, CEO of 1-800-FLOWERS.COM, said, "For the period,
revenue growth was driven by the strong performance in our Floral
category, including our flagship 1-800-FLOWERS.COM consumer brand and
our BloomNet wire service business. Importantly, during the quarter we
continued to enhance our gross profit margin and operating expense
ratio, achieving improvements of 110 basis points and 100 basis points
respectively. Combined with the revenue growth, this enabled us to
improve our bottom-line significantly, with EBITDA up almost 45
percent and net income improving more than 20 percent compared with
the prior year. We anticipate continued improvements in these areas
throughout fiscal 2008."
McCann said continued growth of the 1-800-FLOWERS.COM consumer
floral business, coming on the largest base in the industry, is
"helping us extend our market leadership position. Building on this,
we recently announced an exciting partnership with Martha Stewart
Living Omnimedia, Inc., to create an exclusive co-branded floral,
plant and gift basket program called Martha Stewart for
1-800-Flowers.com(TM). This program will launch in the spring of 2008
leveraging the best of both brands - lifestyle icon Martha Stewart's
unparalleled design talent with our Company's relationships with our
millions of customers and our unique same-day, any-day distribution
capabilities." McCann also noted that the Company's BloomNet wire
service continued to build market share during the fiscal first
quarter, growing revenues 38 percent through a combination of
increased penetration of its expanded suite of products and services
and by capturing a growing volume of the orders sent between florists.
"We have built, what we believe is the highest quality network of
florists in the industry and we are committed to helping them not just
survive in a contracting marketplace, but to thrive." McCann noted
that BloomNet florists are now uniquely positioned to benefit from the
Company's industry-leading growth.
During the fiscal first quarter, the Company attracted 506,000 new
customers, of whom 73 percent, or 372,000, came to the Company through
its online channels. These customers were attracted by the strength of
the 1-800-FLOWERS.COM brand as well as its expanded Specialty Brands
gift offerings. More than 1.3 million customers placed orders during
the quarter, of which 62 percent were repeat customers. This reflects
the Company's ongoing focus on deepening the relationship with its
existing customers as their trusted source for gifts and services for
all of their celebratory occasions.
CATEGORY RESULTS:
The Company provides selected financial results for its Floral and
Specialty Brands business categories in the tables attached to this
release and as follows:
FLORAL:
-- 1-800-FLOWERS.COM Consumer Floral: During the fiscal 2008
first quarter, revenues in this category increased 6.0 percent
to $87.6 million compared to $82.7 million in the prior year
period. E-commerce revenues for the category grew 7.2 percent
for the period. Gross margin for the quarter increased 90
basis points to 38.9 percent compared with 38 percent compared
in last year's first quarter. This, combined with enhanced
operating leverage, resulted in Category EBITDA improvement of
51.8 percent, or $4.0 million, to $11.9 million compared with
$7.9 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 percent to $9.9
million compared with $7.2 million in the year ago period.
Gross margin was 56.7 percent, a decline of 50 basis points
compared with 57.2 percent in the prior year period. Category
EBITDA increased 50.6 percent to $2.6 million compared with
$1.7 million in last year's first quarter.
SPECIALTY BRANDS:
-- Gourmet Food and Gift Baskets: Revenues increased 4.2 percent
to $23.2 million compared with $22.2 million in the prior year
period. Revenue growth in this category reflects the
seasonally slower first quarter summer months. Gross margin
was 40.9 percent, up 260 basis points compared with 38.3
percent in the year ago first quarter. Category EBITDA was
($1.9) million compared with ($1.6) million in the prior year
period. Fiscal first quarter results in this category reflect
product mix as well as expenses incurred in preparation for
planned growth in the category's key fiscal second quarter,
which includes the holiday shopping period.
-- Home and Children's Gifts: Consistent with management's plan
and previous guidance, revenues for the quarter were $24.7
million, flat compared with the prior year period. Gross
margin was 41.3 percent compared with 41.6 percent in the
prior year period, while Category EBITDA was ($2.3) million
compared with ($1.9) million in the prior year period. Based
on management's previously provided guidance for reduced
investment spending in this category, the Company anticipates
improved category EBITDA in the current fiscal second quarter,
traditionally its strongest period.
Company Guidance:
The Company reiterated its guidance for fiscal 2008 which calls
for revenue growth of 7-to-9 percent with EBITDA growth in a range of
20-to-25 percent and EPS growth of 30-to-35 percent compared with
fiscal 2007. Regarding its current fiscal second quarter, which
includes the calendar-year-end holiday period, the Company expects the
period will represent approximately 35-to-37 percent of full-year
revenues.
Definitions:
EBITDA: Net income (loss) 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 similarly situated companies. 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 24/7 at 1-800-356-9377 or www.1800flowers.com. 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), Wind & Weather(R) (www.windandweather.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 Global Select Market under ticker symbol FLWS.
Special Note Regarding Forward-Looking Statements:
This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements represent the Company's expectations or
beliefs concerning future events and can generally be identified by
the use of statements that include words such as "estimate,"
"project," "believe," "anticipate," "intend," "plan," "foresee,"
"likely," "will," "goal," "target" or similar words or phrases.
Forward-looking statements include, but are not limited to, statements
regarding the Company's expectations for continued improvement in
Company and category EBITDA and EPS and the Company's guidance with
respect to fiscal 2008, including its fiscal second quarter. These
forward-looking statements are subject to risks, uncertainties and
other factors, many of which are outside of the company's control,
that could cause actual results to differ materially from the results
expressed or implied in the forward-looking statements, including,
among others: the Company's ability to achieve its revenue and
profitability growth guidance for fiscal year 2008; its ability to
reduce costs 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 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 cost
efficiently manage inventories; its ability to leverage its operating
infrastructure; 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 for the fiscal year ended July 1,
2007 and its subsequent 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, Tuesday, October 23rd, 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
at www.1800flowers.com A 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 beginning at 2:00 p.m. (EDT) on 10/23/06 through midnight on
10/24/06 at: 1-888-203-1112 (domestic) or 1-719-457-0820
(international). Enter reservation #4823800.
(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)
September 30, 2007 July 1, 2007
------------------ ------------------
(unaudited)
Assets
Current assets:
Cash and equivalents $ 3,821 $ 16,087
Receivables, net 20,915 17,010
Inventories 83,163 62,051
Deferred income taxes 23,040 19,260
Prepaid and other 18,342 9,576
------------------ ------------------
Total current assets 149,281 123,984
Property, plant and equipment,
net 62,666 62,561
Goodwill 112,131 112,131
Other intangibles, net 52,082 52,750
Other assets 677 1,081
------------------ ------------------
Total assets $ 376,837 $ 352,507
================== ==================
Liabilities and stockholders'
equity
Current liabilities:
Accounts payable and
accrued expenses $ 52,795 $ 62,433
Current maturities of long-
term debt and obligations
under capital leases 50,829 10,132
------------------ ------------------
Total current liabilities 103,624 72,565
Long-term debt and obligations
under capital leases 64,813 68,000
Deferred income taxes 8,230 8,230
Other liabilities 2,614 2,681
------------------ ------------------
Total liabilities 179,281 151,476
Total stockholders' equity 197,556 201,031
------------------ ------------------
Total liabilities and
stockholders' equity $ 376,837 $ 352,507
================== ==================
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
-------------------
September October
30, 2007 1, 2006
--------- ---------
Net revenues:
E-commerce $114,503 $109,259
Other 31,307 27,873
--------- ---------
Total net revenues 145,810 137,132
Cost of revenues 85,929 82,318
--------- ---------
Gross profit 59,881 54,814
Operating expenses:
Marketing and sales 42,779 42,370
Technology and development 5,235 5,161
General and administrative 15,218 13,343
Depreciation and amortization 4,870 4,744
--------- ---------
Total operating expenses 68,102 65,618
--------- ---------
Operating loss (8,221) (10,804)
Other income (expense):
Interest income 178 337
Interest expense (1,545) (1,828)
Other 18 11
--------- ---------
Total other income (expense), net (1,349) (1,480)
--------- ---------
Loss before income taxes (9,570) (12,284)
Income tax benefit 3,780 4,865
--------- ---------
Net loss ($5,790) ($7,419)
========= =========
Basic and diluted net loss per common share ($0.09) ($0.11)
========= =========
Weighted average shares used in calculation of
basic and diluted net loss per common share 62,638 65,195
========= =========
1-800-FLOWERS.COM, Inc. and Subsidiaries
Selected Financial Information
Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
Three Months Ended
-------------------------------------
September 30, 2007 October 1, 2006
------------------ ------------------
Operating activities
Net loss ($5,790) ($7,419)
Reconciliation of net loss to
net cash used in operations:
Depreciation and amortization 4,870 4,744
Deferred income taxes (3,780) (4,865)
Stock based compensation 1,469 1,020
Bad debt expense 584 238
Other non-cash items 97 56
Changes in operating items:
Receivables (4,489) (7,078)
Inventories (21,179) (21,581)
Prepaid and other (8,766) (16,776)
Accounts payable and
accrued expenses (9,638) 6,391
Other assets 351 (387)
Other liabilities (67) 562
------------------ ------------------
Net cash used in operating
activities (46,338) (45,095)
Investing activities
Capital expenditures (4,332) (6,146)
Other 48 (262)
------------------ ------------------
Net cash used in investing
activities (4,284) (6,408)
Financing activities
Proceeds from employee stock
options 846 138
Proceeds from bank borrowings 50,000 37,000
Repayment of notes payable and
bank borrowings (12,481) (363)
Repayment of capital lease
obligations (9) (173)
------------------ ------------------
Net cash provided by financing
activities 38,356 36,602
------------------ ------------------
Net change in cash and
equivalents (12,266) (14,901)
Cash and equivalents:
Beginning of period 16,087 24,599
------------------ ------------------
End of period $ 3,821 $ 9,698
================== ==================
1-800-FLOWERS.COM, Inc. and Subsidiaries
Selected Financial Information
Category Information
(in thousands)
(unaudited)
Three Months Ended
--------------------------------------
September 30, October 1,
2007 2006 % Change
------------- ------------- ----------
Net revenues:
1-800-Flowers.com Consumer
Floral $ 87,599 $ 82,668 6.0%
BloomNet Wire Service 9,891 7,166 38.0%
Gourmet Food & Gift Baskets 23,162 22,224 4.2%
Home & Children's Gifts 24,735 24,867 (0.5%)
Corporate (*) 1,125 915 23.0%
Intercompany eliminations (702) (708) 0.8%
------------- -------------
Total net revenues $ 145,810 $ 137,132 6.3%
============= =============
Three Months Ended
--------------------------------------
September 30, October 1,
2007 2006 % Change
------------- ------------- ----------
Gross profit:
1-800-Flowers.com Consumer
Floral $ 34,096 $ 31,451 8.4%
38.9% 38.0%
BloomNet Wire Service 5,609 4,100 36.8%
56.7% 57.2%
Gourmet Food & Gift Baskets 9,483 8,519 11.3%
40.9% 38.3%
Home & Children's Gifts 10,206 10,342 (1.3%)
41.3% 41.6%
Corporate (*) 507 446 13.7%
45.1% 48.7%
Intercompany eliminations (20) (44) 54.5%
------------- -------------
Total gross profit $ 59,881 $ 54,814 9.2%
============= =============
41.1% 40.0%
============= =============
Three Months Ended
--------------------------------------
September 30, October 1,
2007 2006 % Change
------------- ------------- ----------
Category Contribution Margin:
1-800-Flowers.com Consumer
Floral $ 11,945 $ 7,870 51.8%
BloomNet Wire Service 2,564 1,702 50.6%
Gourmet Food & Gift Baskets (1,855) (1,574) (17.9%)
Home & Children's Gifts (2,296) (1,878) (22.3%)
------------- -------------
Category Contribution Margin
Subtotal 10,358 6,120 69.2%
Corporate (*) (13,709) (12,180) (12.6%)
------------- -------------
EBITDA ($3,351) ($6,060) (44.7%)
============= =============
(*) 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
Share-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
------------------
September October
30, 2007 1, 2006
--------- --------
Net loss ($5,790) ($7,419)
Add:
Interest expense 1,545 1,828
Depreciation and amortization 4,870 4,744
Less:
Interest income 178 337
Other income 18 11
Income tax benefit 3,780 4,865
--------- --------
EBITDA ($3,351) ($6,060)
========= ========
CONTACT: 1-800-FLOWERS.COM, Inc.
Investors:
Joseph D. Pititto, 516-237-6131
invest@1800flowers.com
or
Media:
Steven Jarmon, 516-237-4675
sjarmon@1800flowers.com