FLWS - Earnings call transcript Q2 2018

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Operator

Good morning. And welcome to the 1-800 Flowers.com Incorporated 2018 Second Quarter Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. Instructions]. [Operator event this being is note, recorded. Please now Joe Pititto. would like to to over conference the turn I Please go ahead.

Joseph Pititto

Flowers.com for Jay. you us X-XXX all you, for financial Thank Good joining today morning to second fiscal XXXX our and thank Inc's quarter. results discuss

you at of yet not section at our the press Investor have of the release XXXXflowersinc.com. received this website issued Relations earlier who morning, copy can our those For a release be accessed of

will formal Our McCann, call open call CFO. we will and today today CEO; Chris Shea, the brief your be remarks Presenting with Bill questions. to then begin will and

Before of statements. make I from to today XXXX. in risks and These some Securities could meaning that will forward-looking we implied the be applicable Private begin, the statements actual materially within involve remind the differ everyone that results to may of those uncertainties we Act need cause or Reform statements expressed the of Litigation

risks For to these a including please release Form Form SEC annual our well the detailed press XX-K this filings, Company’s refer reports report our description morning, XX-Q. on quarterly as on as of and and uncertainties, issued

I SEC over turn or as now Company call, call today In addition, press financial be in to intent that Principles. earlier filings, Company’s release obligation can any release measures the supplemental today’s the with call, its accompanying discuss this the in will the Chris tables expressly prepared The to Accounting non-GAAP stated issued not any the any Reconciliations by press may any direct morning, disclaims today’s Generally in Accepted update these except financial of comparable McCann. company. otherwise GAAP or statements certain of accordance of this were measures will of measures forward-looking most to we recording made issued the be morning. found

Christopher McCann

joining all us. everyone morning for thank you Good

the quarter. we As achieved mixed press in we release in morning, results second our noted this

throughout good holiday the demand positive the was season. On consumer side,

However, demand at take a full advantage holiday arose we the in to operations Cheryl's were our brand the of to that primarily season. disruption in due Cookies not able temporary late

let this So address first. me

will Cheryl's major success us it XX a As more years story Cookies recall, has ago. than of acquired we many you since for been

has of our best In been consistently it fact brands. one performing

expand holiday have we the for also effort have digit its management more during capacity. We ran two this terms revenue, tripled margins than the into highest we all the We years loyalties To manufacturing handle To facility strong doubling quarter first of our the we holiday to continued season. our invested completed double among in for of growth this nearly year warehouse our fiscal customer upgrades of production contribution technology frequency. adapting strong Cheryl's, in this had our ago challenges in the retention of to of anticipation outlook in growth the system. systems. Unfortunately support brands and have strong and the needed invest and to for push new we

our out the Christmas. taking prior to what strong, we consumer holiday directed in full To orders producing orders days made the fashion. As the orders getting for fulfilling season. in delivering efforts we Cheryl's a we We products timely falling found our eight that for towards were and quickly terms wanted not stop of customers with behind that decision demand ourselves of difficult for to all placed customers, time our do and disappoint a result their ensure then already

customer incremental ensure satisfied. customers expedited to $X our that we estimated credits the were shipping cost labor, due that we and to bottom-line million in to had result and a forgo a similar As significant incurred revenue approximately hit to for all

solid issue. I’m report around from has to business Clearly, Following fulfilling faced cross our demand. temporary the to that that operational challenge special prior hand growing saw customers disruption. at committed returned love Cheryl’s and a the the the been and same to formed pleased pace frosted we to has are the team cookies addressed to the we functional we that resolve Cheryl’s holiday, we enterprise unique

this As Bill in we segment. temporary we discussed business David and minutes, detail by revenue at which Driving & in been comparable a e-commerce challenges, segment will few X.X%. had in Harry closed Food Gift have growth the growth nearly the would Baskets achieved of X.X% the growth its more grew Had total Gourmet was in not X%.

a our we progress very is key growth & area. at in strategic have past us Harry discussed accelerating we for this calls initiative David and are As in with pleased

customer expanded In importantly reflected the quarter the younger its addition to our growth saw innovative been initiatives rate existing We the the with & X% David. as Food, the David customers through food Harry Harry & for to increased of nearly such digit file Harry file at also & categories during product growth a this that customers and digital David along attracted specialty and new growth to grow wine. double modernization accelerated has in revenue robust new continued believe brand Gourmet well marketing from demographic bodes the

double digit we saw its in growth business single-digit in X-XXX and wholesale. quarter, the which strong During growth demand also high Baskets in consumer achieved

in A Chocolate Chocolaters features on holiday introduction our within of cross Revenue marketing platform. introductory other world. to with we messaging and our the We innovation have seasonal from limited Simply newest we the than collection chocolate our launched and with segment exceeded the customers and trending for curated this brands a top we extremely despite our expectations terms reaction brand the Chocolate. also of customers. brand lovers In exposure pleased are around destination November from season Simply a of pleased great our for received are that

second we leading of that focusing X-XXX grew We none. brand, leveraging to the Simply upcoming for by segment, and both continue and is truly In the are original excited customer our Floral to the holiday focusing strength re-see X.X% and market occasions. Flowers by everyday for Consumer on the a valentine Chocolate on opportunity extend products gifting our revenue delivering position experience

the the decision forward. we competitive up take position opportunity investments we the advantage to market in move initiatives to of in as During several further the leading made step landscape extend we quarter, saw to our

transactional reputation as of leading us Express the continue capabilities with the one voice launch While Assistance enabled the this this to to brands year. the affected Google Flowers for during innovator these its this making build margin in on top contribution first fiscal us gross Google half the help bottom-line on ordering stronger quarter, of in deliver of a X-XXX and Also to quarter, feature. will results investments and second provide

the services our during and quarter. was be Lastly, to suite December to of business for to fourth Flowers demand fiscal fiscal since the has continue half essentially revenue start enable and growth our for quarters and the build will for floral segment already our has achieve year. while third BloomNet full book BloomNet unique solid year revenue us begun products the expect of current for the and second we in of third BloomNet demand of strong quarter fiscal the accelerated flat,

are quarter. We not but in of interruption saw a So demand, shows. to second good the because up sum we primarily full able operational advantage our to take customer

most quarter successfully Simply to solid addressed and top the brand, positive saw review the the to season. I return our expect over our we and to right consumer third important have for we we growth more strong anticipate that wholesale businesses; and our David in in culminating growth to and in trends brands. call well come which Bill We Harry year would X-XXX these had issue bottom-line a like our for We e-commerce key gate. performance last a Bill. have & accelerate performance the from launched performed and out this We began results now quarter. the quick the of for detailed Chocolate of that in customer Baskets return solid turn holiday

William Shea

Breaking Thank results. Chris. you, second our down quarter

sale revenues Consumer and was BloomNet revenues, X.X% $XXX.X and the Gourmet Gift of segments, terms Fannie by May essentially growth our Food in adjusted comparable for than grew Floral offset more revenues our the to Baskets, driven flat million. of which The In business. consolidated

and impact the & margin segment. profit gross compared unchanged lower EBITDA our $X.XX transportation diluted of for sales. have basis period. Comparable with operating year points in expenses in basis issue, combination costs, The prior and for XX.X% as in improved shipping per the XX or with $XX.X adjusted Wholesale approximately revenues contribution growth or prior prior to of Floral the net been prior of X.X%. operational of XXX declined the $XX.X and XX.X% the combination EBITDA period. comparable the primarily percentage issuance compared XX.X%, and of year $XX.X of in $X.XX was expedited share. the a the A income quarter the compared Comparable XX.X% Harry resulted quarter total impact period. margin million primarily $XXX.X trucking basis, compared the a margin higher per share, the On adjusted reflect revenue Baskets was and Cheryl's EBITDA lower million comparable to to would adjusted points in year diluted with Now million operational profit Net period. in Consumer gross Total million income these David the with factors year comparable to

XX% other the the the Regarding This in XX%. Because follows. Act, federal the affects results as second things to rate among rate impact of the at December of Jobs and Tax corporate June fiscal from Cuts and XX%. which tax federal company lowered signed our will transitional has legislation for year-end, a end rate the effect into be our fiscal XXXX new a of our was because quarter

$X.X per a a rate. recorded tax this have $X.XX we As diluted million or share transitional reflecting of benefit result,

effective revalued the tax the one-time that a to books $X.XX have of federal per These or tax net new associated lower income been of at $XX.X include carried Additionally, corporate In combination net quarter tax second using with rate rate. previous have the $XX.X the these were XX%. of or benefit share. our $X.XX due diluted share for a deferred rate million total liabilities we tax higher benefit federal of items, per on tax the now received million our

XXXX local we based Finally, with an anticipate XX%. years, on factors, state taxes other in tax lower and rate and having tax subsequent effective and approximately new of fiscal the combined rate federal

and offset at This Food to results adjusted of in David, X.X% growth Gift which Gourmet reflects by sale growth increased $XX.X our Baskets terms to wholesale business. $XXX and category total approximately e-commerce lower revenues partially May, X% or X.X% a of & of Comparable of million Harry segment. Fannie revenue Now million. achieved

nearly combined. X-XXX and double-digit achieved consumer we Basket growth wholesale business in Additionally,

segment for Cheryl’s. revenues the However, impacted total comparable was of the lower growth by

to management warehouse as throughout incurred was that and fall Cheryl’s implemented and strong fulfillment final X.X%. production stop customer decision of issue, we to have not up a holiday causes the operational approximately approximately newly to demand immediately issue been to the of the on segment orders While week key a Christmas this an to led $X order million loss the in quarter. up season system in resulting revenues. taking for of behind previously with during prior would revenue Were manufacturing leading mentioned, This

and the noted have comments, stable we issue in the and along addressed increasing on-track well, Cheryl’s year-over-year the during are business inventory management to operating Chris Gift that We and with continue see his revenue As gifting anticipate upcoming Food we the Baskets growth Valentine’s Production Gourmet Cheryl’s is the solid to bottom-line of of the holiday. the everyday at will and second Cheryl’s. brands, and drive in contributions year. improve and half growth rest

but higher year second primarily following addition, basis glowing that Florida good incurred the compared basket to issue quarter year. with the cost trucking for for Comparable for profit & transportation of wholesale of hit down David Cheryl’s, first have margin XX.X% enhanced and half operational the points see the with gross business. primarily the reflecting a during Harry and Texas period, business the quarter. book at XX.X% This management hurricanes wholesale the team prior also we impacted David In & and Harry the XXX results we for was of

million, result a million, period. earlier to $XXX.X contribution with compared year X.X% down with XXX the $XX.X reflected $XX.X profit in these basis the As million compared period. This investments period. comparable prior was expand the prior Consumer to prior XX.X%, our with $XX.X million of XX.X% with revenues In the that Flowers designed Floral, for declined Gross for leadership in and initiative costs year X-XXX in grew associated increased factors, the year mentioned margin segment Chris to compared points X.X% brand. quarter the market

contribution the the XX% X.X%, margin revenue the the the to year course prior second second margin prior quarter, helped the growth the Segment we believe Flowers impacted period. XX.X% mix. $X.X and they period, its for increase and was year revenues top-line $X.X Similar segment positioning compared contribution half was compared with $XX.X Gross product While year and X-XXX quarter period was year. both $XX.X million primarily segment Floral, as fiscal to with in In million the year third accelerate year quarter growth well. flat the the which with in in for $XX.X these million initiatives contribution BloomNet’s BloomNet, Consumer of brand to during essentially period. for quarter to prior the outlook we deliver million fourth full segment accelerate compared margin for and million prior in with the $XX.X of expect increases down in were compared million reflecting contribution for

of the entire includes expense, the contribution other IT, centralized results margin with services under shared are support Finance, operated platform These management organization. company’s services our to associated corporate HR, and services; exclude a terms Executive. functions among providing platform, enterprise segment costs In which Legal

year expense second million $XX.X based prior the was including compensation period. comparable compared with in million fiscal quarter, For $XX.X corporate stock the

Turning At quarter, the cash was and $XXX.X our position million. to the end our balance of investment sheet. second

debt of our zero was term costs million Our working borrowings outstanding balance facility. deferred our capital within credit financing and line $XXX.X had revolving we net under

reflecting debt of $XXX.X total compared was year May. the the was second Fannie of end down Inventory primarily with quarter end of at result, million, of quarter up the of compared As approximately million the a $XXX.X last year. the million of $XX.X cash net million the $XX.X sale ago with period

Company of following fiscal and guidance, legislation first half Regarding comparable X% year. impact Cuts of revised its accelerate the half factors, the includes year, the The revenue the of the range billion, $X.XX rate Company's million on follows. flow to $XX to and growth $X.XX Tax results the guidance million Jobs of to the than the range the providing as free XXXX adjusted Consolidated of revenue comparable in guidance year revised for second the Company's diluted billion more the fiscal for to per EBITDA in EPS range is XXXX $X.XX factors. cash million. that $XX $XX Based and for comparable fiscal of range in the fiscal the the share, the million these the $X.XX will expectation Act during of the $XX in of

half back I third prior the As fiscal is a quarter. Easter year turn the Holiday which fell the for second this April reflect reminder, it compared year results our the quarter our Chris. Xst fiscal will fourth the with of shift into fiscal on will on now year call when of the to

Christopher McCann

Thank you Bill.

results our of the enhanced segments. several accelerated bottom-line our we all drive across fiscal have help half and year, will revenue second of that business tailwinds enter As we three

businesses. both performance top are brand BloomNet X-XXX is the accelerate to going and well positioned by and second Floral bottom-line Flowers forward. half The our In dominated

year the Wednesday of to have falling and We year for additional a with for the moving benefit an a fulfillment. compared Tuesday holiday, Valentine last day on providing this sales

the for with from of and We are leading BloomNet book business wholesale orders indicators strong solid second florists already some December our a performance in seeing in half.

strong sympathy are businesses in Cheryl's continue We our X-XXX also other everyday gifting in Floral for particular & Food to and Gift just and our In also birthday Harry brands. growing and occasions. everyday see but growth Gourmet their brands, Baskets Baskets anniversary, in not David

our in three among available our achieve confident start And in loyalty. to of with off exciting one strong marketing When Norman Simply we segments this that our fiscal are as as achieve adoption back we cross we top-line customer more expanding digital year. second and And such will together, collection. earlier, to business of brand and accelerate uniquely year-over-year Max the a offerings increase half all of the customers, of improvements than continue mentioned half during Chocolate growth profitability X% I Neuhaus, discussed, Love, Bill all add discovering others new Brenner new factors the our attract businesses these our expect in consumers and As year. you curated strategies in

positions So growth and brands of across in three progress summary, good acceleration. and in we continued our growth growth brands. see expanding wholesale all good David business see in we in modernization market our of see We early segments. see indications Gourmet gifting particularly Harry & Food in our everyday We

the you Chad, would operator and I now open call the to turn our call have. questions I for you So to thank any may back

Operator

Thank Research. comes question from Please first go Our Northcoast Instructions] with you. Kara [Operator Szafraniec ahead.

Kara Szafraniec

couple everyone. questions had I on this segment morning, Good Hi. the Floral quarter. performance of a Consumer

with to your out the the that in the gross Valentine’s lower or quarter heightened how heading you third start quarter? investment in made. should cadence any investments guys want level And segment we other Day Just period? of of margin there the then activity promotional Is about and the the think than expected into drive

Christopher McCann

Sure you for questions. Kara. Thank the

holiday As step Floral look in mind if very and secondary during really season, the you think is a the holiday season that and was keep competitive guys we big at season. Floral QX, gift during business it’s during I back the

two of our Floral with on the which our of a Food scale. that’s that it’s side businesses. you you that margin just put Gourmet know is revenue when and during to period time Floral and was contribution so in Food times times four of probably out nine Gourmet season. And more the strong So we lead business half category as than compare probably

really spring two some we and promotion we Passport and So quarters, to therefore investing and pricing, the the us. made into decision three for holiday do next are some the areas; testing as falls going and season through

in look elasticity the some on rates readings we of of what we at that looked help stimulate frequency. products more and us promotions a if did we pricing if new were pricing wanted might kind So very either different of kind customer higher, would what to happen get test a promotions around a attract good pricing little I might our help us existing at what some conversion things, environment of kind some to testing What more change and see customers, bit, promotions. competitive season, lower like base promotions holiday to or to

gross looking then money I putting of an look types to had are you margin see percentage, but impact clearly And think we and on the of there we members. that Passport, long-term is margin, some with we seeing behind grow. based at gross things usage So the behavioral benefit really Passport It that of that. impacted metrics increased Passport and those a for continues that results at Passport Passport because continued

continue that the sure all that during the is help think in achieve that get we both benefits help So are and frankly I for we these season, us to X-XXX third us bottom-line combined, What of brand the moving make top grow. second half the fiscal expecting Flowers testing of the will this give to increases into really year-over-year the will full-year. confidence and and of we quarter quite

Kara Szafraniec

that And you of penetration commentary us great? of - in those are elements much. or you on customers that so some rates those And commentary promotions have then that long promotion, those term? Thanks. on investments, a brand being loyal saw your those maybe and Great. in on some the maybe promotions? the giving of growth Passport you us are how acquiring color you Do result you any just through touching on with the of as of will kind maybe Thank be up any that Passport provide can kind are acquired quantify packable customers sort cross through subscribers then end promotion

Christopher McCann

really that on really it it's locker around - acquire the whether the to of customers different promotional work me partner specific does, that first we for give types we analysis or So of with. because you hard by part different answer, is me does a types it know differ the promotional

balance, repeat go repeat we of a ones which to then So partnerships look us higher a we all those we those of percentage customers determine want new looking relationships, are back marketing to that give always at to. metrics new and behavior at customers

types. partner by by to So type, it really the we why varies promotional and that's and test different continue

long-term go forward So go we say I that can only put as think therefore that weed the as so productive process, the testing thing learning we out dollars our thus that that really ones confidence our we ones are a and and are profitable basis, and forward. that is towards we get the we go don't through on

to our file. grew the that at good to customer mind of in as percentage, So double-digit customer we case customers look especially your question, there. look to keeping year David have we we X% lot are the file to customers business, very & at file, specifics happy at new Harry in of will part about new by see the This Harry second the continue on & customers file grew a growth of I new we in these David, we as we and

demographics. are the a new percentage acquired of We them younger large via seeing the customers

attracted seeing. wine, like categories of offering I to think kind of things & that in to those product antipasto the that. Harry offerings of we being food, are the we David are really that being are food, new the specialty the And developing brand and modernization areas attractive

in seeing that. continued we growth are where in really Passport So this customers, seeing the underlying good and are is results multi-brand continued there. And growth all we

impact quarter. example, an the margin on bode we But long-term. the So well very for confident that this are the for Passport gross the brand just behavior Floral percentage metrics of had

Kara Szafraniec

color. the for Thank you so much

Christopher McCann

Kara. Thank Great. you,

Operator

Dan will ahead. Please question Benchmark. of come go next Kurnos The from

Daniel Kurnos

morning. Good Yes.

that up assuming factor in in a mentioned north just don’t little maybe me know on wholesale accurate when Is I'm the I wholesale? you bit X% David just since Bill just was a down So Harry of you still let maybe the though little quarter. & bit. start. focus to & Harry little a David

William Shea

mentioned the We X.X%, the e-commerce about Yes, up was release overall that growth in brand but around X%. was Dan.

Daniel Kurnos

Yes, okay.

you things & So just margin just David. can about profile the two talk One then. of Harry

if strip that remaining didn't guys brands, the it business of hear lately. even kind Baskets seeing was Chris; in on I and some I making changes most some multi-branded more especially benefits leverage a and and demographic portal. the not like been so. lot about start they a color recent would Cheryl obviously, you brands of sense unfortunate you get really a lot reinvigorating of in like the organic You puts up takes. Cheryl's I are that the the you the seems was talk David back to there trend & model? low saw of core Are or kind in this if the pretty out clearly are acquisition? know been like know thought some of of single the in even a process dirt-cheap acquired when and until the all you That's there Fannie, any for of process non-Harry consistent but three-ish% with also brand probably then this was way scalable your line, corporate on have way without thought you thing the some event. was in seeing an There the upside day. Is kind - up to And reaccelerate

Christopher McCann

accelerated and improvement. growth growth & Harry clearly Harry margin that has margins a top-line on with in and getting part Well, that bottom-line contribution focus the & obviously been first leveraging David get overall. ours of with gross we and David

took talked addition first impacts Cheryl’s, on line around to we margin the product did the moving Harry of main right from and Medford, plan. to FedEx end both see built and the the the Basket of Harry issues costs and the the distribution haul long never gross after Prices down of head normalized, of so its because the last about couple we little Specifically, this We industry year a cleanup products uses that in paid the thousand rely of as the trucking seasonal into and distribution industry & at to in do the their hubs its trucking $X.X brand, also hurricanes, had for dollars both product help the that, we the to the and million country of industry. trucking to which center costs impact above probably margin of hundred wholesale we David in increase a as both trucking centers and which Oregon at & brand, product Southern handsomely move that trucking of probably it Texas first quarter. quarter use costs. well Ohio nature the to were that and industry. cost Florida the bulk ship the operational to their saw increased about quarter business Basket the the transportation It trucking they of certain out in what shortages get and the because that, states to on had our advantage bit there government with David

to the with moving We from Monday. also of of the movement day saw Christmas Sunday placement

it a us little day. shipping gave extra I wasn’t demand, While really late bump an in there

week up have leading to expedite to we more had last that going shipping. we some a Christmas thus and shipments So out of concentration

the original us Harry the Harry and getting David & that & So to caused improvement clearly we bottom-line that on experiencing, back leveraging are but to margin see David. driving we clearly for side, are growth the significant great that top-line

William Shea

little because address Let the me David a bit & Harry wholesale on there was drag a aspect the business. of specifically,

we made from away we we but We the really the hadn’t because to wholesale and well walk we channels so to evaluated just to business, made really in were we the go also a at we that changes where accounts a our decision some came to business it of a have business. make year, number some wholesale looked that. made to out personnel and we wanted accounts were not grown we determination that to the our stepped of wholesale and as market, they we in As did way in were how and last as profitable back some changes we

that lead more to business sure and towards can person taking making core be is care are first what now traditional foremost focus starting new doing but a turn we profitable. hired and we So we our of where our those retailers, to strategically

there. category grocery see sea opportunity for product the Munch changes for When us Moose in and line. those making So is in this category, especially with as as our we the new both growth store now in well -

down, in is that within So Moose product line actually the up. was wholesale was wholesale while Munch

So seeing that. think there behind signs we good get are can and we some we

again, in we levels what So, see, the we businesses David. happy have past especially business but in & wholesale more are our for with this books season pretty have upcoming early than spring smaller food we the Harry in of we season, spring some had good

the I digit to that functionality response mentioned get to have. growth with and and e-commerce are sales X% the just we of for pretty mean to response that it I business X% talked that minute overall underlying this some very the happy happy core as David. that's the year we are counter In at there, happy acceleration at ago. we looking and So, in And up the customer growth Dan, We I to & growth we we that. saw comfortable categories And something that. new of look with look that gifts revenue close and The work that we were hard that. list that in pretty really a we of about. at double see X% to are I with Harry factors

us half encouragement. So season the things sales the up BXB up nicely got just of for of especially lot will really season year holiday nicely holiday gives lot strong the good have during a of we seen but first a

Cheryl's from had will profile, rate So that Again be continuing our we acceleration. contribution us. that it a at we hit, that’s of wonderful back a best brands. has performing growth are one margin Cheryl's too, for looking

Our X-XXX Basket's a expect business the to performed that side well on and the on consumer both and continue for wholesale we while.

for I Floral in a the business. to year last move we they season into business of in moved Now the from us mean keep expect like mind produced X-XXX from holiday Flowers tailwind. good Tuesday Sunday XX%, XX% a we holiday. when the side growth the

Wednesday, but and again Tuesday things. well. that BloomNet a looks a we from moving now positioned bump get bump same like and that get And its will will help We

in So signs of in seen them. accelerated a of I got couple early good spot, growth we brands good think the the a

bit to we far over is seems with we concerned this we as the have it, are out they over as incentive over a give for come for as little bump and did business, We have as get win know to their this of for we though in their consumer thank we it them to far go going are that concerned, more impacted during a Cheryl's to are them are little the Even customers get back with order. it. back program them patients, thank a

we into So little bump gives Valentine as the even holiday that bit sales in more move Cheryl's. a could at

Daniel Kurnos

just period based & Okay yes that picky that to know and net conservative trying outlook Chris. David how on kind expected revision. on it then have that's number. just be for think helpful. I'm the growth holiday really guidance trying all anybody plays an is and I'm you from don't overall you being in. to clearly Harry hurdle not I jump understand And your the price

just two it me kind Just And you have horse the a ones can. quick Consumer best as the real ask and skirted beat quickly you let side. Floral on not

I how you say will specifically. know So don't

and to them. just try say from right you take I'll share complete is to FTD So mess are a now clearly going

pressing don't are you have perspective. have SEO. particularly channels overly advertising And of worth pushing channel be have heavy aggressive they where in loyalty know FTD giving Are been and question, pretty launch guys customers an I'm advertised a the things thought you to you they basically going channels you then that the passport just a assuming if I that. of to or away from a have On you years’ trying which

So I'm just curious to opportunity. are how How trying that you is? big window that attack

Christopher McCann

move great into third So about does influence a the that's things Dan, in to of and I testing we think doing some the quarter. quarter even now of some speak the second were spoke as we I it question the

opportunities the resonating place. specifically our share. we tailwinds So testing We we different from We see with have promotional Again, in some gain landscape Passport time-to-time. those in loyalty the of program program to do well. Passport competitive think more is

months trial. will the three a XX.XX, is down more year generally we at program post sometimes send usage in to sometimes product So as XXX give that a to XX.XX will it we Passport for more incent

that with are doing we program. loyalty So

we at promote rewards And We we always our the looking are based will as always celebration thing, people points competitive positioned in with this program. do how it’s marketplace.

us So that’s really channels doing the well we will When been channel talk for specifically for you are be example Flowers mobile. pressing, about that the always on taking I we a band that. look is different mean at

by our the Mobile has X-XXX growing for recognized mobile brand they First Flowers, was But Website. and brands. is as been the come Now recently when in of leader all to Google a

to than crested basis, Flowers now have that past, than in traffic of on but is everyday what number holiday everyday an going basis X-XXX this that on its mobile traffic that half of site. means more times half now we is in our Now an more

pages, Google, AMP So higher will our Mobile rankings on progressive because for showing mobile that is richer serve up means the be customers. First our to accelerated mobile means which experience Google experience customers. the the And what best rankings the are experience their really that up making on we want mobile by pages, designated focused by search a being in they to we web

we a channels we Again, early conversational moving the at. following Learn, are And are ELAC, be that are that its to of one we Engage, Commercialize. process early that commerce. that’s making So continuing in call looking sure sure that into but world making our of we an really stage Adapt, innovator

Express set on a just Assistance we enhanced Google launched skill new introduced ones capabilities. Google on enabled and new We mentioned Alexa. So I

version We new GWYN. have just a reintroduced enhanced of

into and it behind to. those channel think for we So mobile plan, good on constantly taking a focus marketing area products. still look the adapting step is are to But a us competitors, the as our at competitors attention pay learnings I the where overall our

Daniel Kurnos

other for questions. Got will all thanks ask let it. some people the color. I Alright,

Operator

of Hallum Capital Alex comes Craig go Group. Please question from next Fuhrman The ahead.

Alex Fuhrman

Great. Thank you to a the sort you changed I brought you entertainment learnings David, kind are also pricing opportunities to more how category-by-category the if price or you of could gravitating items the other bit there was this your different little it could that doing very compared or what if curious of of raise mentioned us of specifics that prices whether to there much were year’s younger testing and other more of might for learned items. after at little have taking love of ask to into lower around type consorted and younger some as little younger & David the Harry if or my & or towards, of mean going up grabbing, would sense question. holiday effort more around of you follow any a customers think more was was from consistent the a I Harry item-by-item bit age wine give mentioned customers of were perhaps merchandising and marketing I then go if were some the if in was you that it also that getting you sort of color you customers? response? customer or brands then customers, a some a there And a the share were wondering younger season

Christopher McCann

Okay.

jump we conversion looking appropriate be whether we of through. for here. play into are as category, and and our that Valentine not testing, past and we Those the look obviously have maintain to certain attraction, at price still like more what a price like and price often be beginning elasticity we very higher in it season first competitive floral in to we holiday we into forward competitive testing rate a that’s But naturally play have will is holiday price in line. move reasons the at in go products as we for at learned price up some where would we things try but in let’s some that on be apply pull look want a to some on have can the from again testing We points can the a basis. So testing, have want product careful promotional it would we seen moving the move as especially to in. the Yes, have we well, more

have gift with the brand. different $XX a a piece start $XX,XXX, for up we XX year to $XX.XX from different our brands. go $XXX this year comes want the moved our to example get that to can a gift, that XX offerings And a $XX really So of for diamond with fit twice to more you bunch from of from WOW roses a of the whole if seasonal rose remainder to Chocolate of you or for get vase of Simply out our then chocolates these of in studded gifts month all ultimate family water

kind Then, customers you very table, in So taken with really what bringing there testing different was care. or promotional $XX,XXX at what so those make will and that the like sign new will of environment you attract did capability a Christmas. I three gifts look sure up we we promotional just are to helps to to four competitive of pricing

the to business to our our there to looking for to Holiday, looking the set Valentine take future good growth. again that and grow looking will grab we learning customer So, file, apply share, up

As we more we really double-digit younger look on things kind Brand, that demographics demographic core brand, rate the quarter a to but was file them in of at at Harry the younger our being some the this a after again of I base. highlighted David Flowers' both would good new & majority than bring growth and both of than say,

by past of place them attracted in digital the year. We attracted increase in we this to marketing that are seeing all, put first

coincidence. think sent they don't So I this by have

And are have marketing, can to search, products video display a you going attract where want they I digital marketing but to good you bit, that our think to with cetera. reduced marketing effort, money we We have have social, put are going customers buy. and et catalogs more and little into marketing just they're the more new

Food remember you or developing a so and this really if this So we Gourmet line. whole line started product year ago Gourmet product have Specialty

platter platter cheese fruit get When What cheese the our used you and some David our for and meals, are bottle nothing I with these that else XXXX. to think products helps entertaining, a that combined find other uses products food. & it that demographics, you of and we entertaining into like the or like But do you likes entertainment. I little it or of with prepared a certain So you last products that, core a younger for tell the case wonderful Harry like in-house cabinet. of things good and will lot antipasto at bought I with

have we So, to will wait year. till next

Alex Fuhrman

Great, very helpful. that’s much. Thank very you

Christopher McCann

Thank you.

Operator

from with go ahead. Linda comes Bolton-Weiser Please D.A. question Davidson. next The

Linda Bolton-Weiser

Hi.

they kind it's them the idea share So necessarily not it's from recently, lot and And each from market they about talked combating of more that these at opportunity. upstarts. of a see you analyst FTD's meeting other, smaller

like doing FTD's are Amazon, bouquets will do the just think much us because going from on So, of And what wondering market you all with us I I on upstarts guys ones. are you how like smaller some and trends you moves.com see Amazon. see Amazon. have kind refresh also you on update But if for you on share could those the was I other of can these I ProFlowers perceive don't

on just refresh you us Thanks. them? doing with of you what are can So, kind

Christopher McCann

I'll Chris Sure, this both; take for and thanks question. is the Linda.

to grow I to market continue think we as market at opportunity see looked share. good the us share, we for

or We and the competitors position against whether that we have leadership whether against have been extending start-ups it seen. some the larger be it our of be

of some think now them start-up think as we at I much them of look have hearing anymore. by not I you the or community, most are of disappeared as

be out that’s class kind always the degree dissipated will XX. that So some of of to of

on product, table, digital access that delivering innovation one we on on original truly how our we I our number customer next two be focus our way level. And the the enhancing the one focus will to focus on experience, the or always driving always brand, it on customers. think to focus that products makes

be other our with could us we don’t larger competitors, of entrenched that’s faster it So used kind the with the to competitors. world start-ups and case bigger move the think in than I

product We we designs have product ability out we and are with and come development like fast do. the to pretty moving the

We to gain position are leadership very this our in confident in that we can continue and maintain category.

wonderful is work and a us many as with ways. different far is Amazon As wonderful, Amazon Amazon concerned, in company of

As Amazon you flowers go the and us, Floral. the in back know, It’s program them Fresh but go a flowers out when. we We of not to supply with marketplace time-to-time. sell way number a years from for in when over on ways used their big work we the to on we business of marketplace

Amazon want discounted side. the are Some going don’t there. core products food over we it like Again, on out line our establish I marketplace a to as product brands cut marketplace to starting bigger put of and our they that. are cost to our work opportunities a relationship see on to differentiated that get third-party be out a there under

them. I marketplaces Amazon, Alexa. to important. develop with work ways with us we are to with just the mentioned platform. those extremely extra with again we really then But skill continue the on that enhanced work manage how other for third-party recently it’s money So We there is

We are display working with platform advertising ads. their

many a and that us So, Amazon in is a beast for ways, opportunities to presents beast with. work certain for of lots it’s

Linda Bolton-Weiser

FTD actions also also their ask I looking announced at their then they that strategic business. Thank can meeting at you. are And for creations personal

I So that sale assume a possible. imagine -

so going early you your your may far website, You be creations? on and in comment Chocolate personal didn’t new the interested Personalization is really on acquiring site then How the new comment side. you would days Personalization in

Christopher McCann

the to a think and is because start. what started highlight celebratory have we Gourmet is there in at are mainly we are the about Personalization has look seen Floral really you have the if ecosystem. category. business our It we the with been I position leadership building good I we very with category, Food didn’t but results off so pleased much it So, talking just Universe

them celebratory the all our we have Gourmet the help in Food we into. can umbrella position deliver category to Now, occasions you their what categories make with us the customers built go product on and to in if are where lives, go help of smiles look the to of the celebratory leadership sense for

have as all Personalization recognized brands, capabilities one products those we was of one clearly be in then Personalized also to and we in Universe. So launched of have us categories personalization but our for

the So as we their of early that categories the we continue with category are to into to other assortment deeper into of we needs. their more round needs, Floral our as gifting a more grow not happy go as and customers add celebratory help our launch solve that’s and and just will well out product ecosystem

Linda Bolton-Weiser

Okay. Thanks.

Operator

go from Next with question Lebiedzinski Please Sidoti ahead. & comes Anthony Company.

Anthony Lebiedzinski

thank And the questions. Good taking Yes. morning. you for

perspective you type now with gifting percentage sense of gears, you switching and over give sales the of everyday mention how to Can did couple products. give some sales last the us you success occasions of that’s as us that from those of be everyday are of had what have coming may kind your trended please? years good So gifting

Christopher McCann

your we I specifically. don’t could question think answer

the you occasion if points the So it meaningful. Harry across Bill, on look XX% business take it we data but & our growing will a base year about brands start for first some seeing for I with. I’m don’t that everyday the have familiar color are brands. the growth. time I is be brand, with think half gifting or we the In been on but to we everyday have the have In some we occasions. or data if that, actually think example David so at of some of But nice small the of small, got first any on food

to a over larger since the if business, flowers much percentages. Now you flip

William Shea

times Mother’s successful makes fact the I of Yes, the of multi single its to That’s more everyday the every significant gifting day Flowers with business why discussed that over Gourmet the the the the everyday brands. birthdays, Valentine’s brand on with flowers a single we money - of the is That’s made Anthony had our at Day today. traffic Food some in that mind drive Baskets that branded and we of business nine that is the little reference we Food that felt weighted did and of floral really contribution every the terms saw Gift bit traffic because to that where segment said Serving what and and of food food heavily Gourmet side ability our that of have times Chris of four size some segment drive our numbers that sympathy. leverage Day, X-XXX we the years Flowers. margin and portal Both a site leveraged the anniversaries, to would size is in while day the is we think we X-XXX traffic second quarter. year revenue brand are year, is heavily, you the everyday and core

our Our to quarter year, channel first talk when last portal XX% the & this gifting brand the month with gifting single-digits that gave quarter specific referenced on mid but through Harry season. of occasion the that because expansion a year talk of that grow significant It’s seeing we to it holiday for X% multi the and brands during year about about was And were goal events the over of is we brands, have it’s percent tracked gifting of has grew in overall to all Easter was holiday up we growth second to of and food grew at growth. growing off about it everyday and the year our of the of last of about we and within happened basis. gifting the overall but time, holiday our to the last Chris coming David last everyday David business now the and of and are that & in up the The Everyday with everyday do & December. Harry of to point gifting. small X% David demand that XX%. all the we Harry everyday season half X.X% but consumer little year first continued year we We food opportunity examples and an

Anthony Lebiedzinski

for just sheet us you. you strong Thank a also cash. And with these folks very as added acquisitions. as very update far outlook if and your Alright. of Fannie It’s some an could have provide balance you Obviously Mae helpful wondering color.

could us helpful? would that, and be So on an very just any you wondering if that give you. update Thank color

Christopher McCann

Sure.

and pride lot that I to thank are the look recognizing foremost drive now, something position think first marketing in we And like or sheet you whether I our business in allocate in. very would new in we historically of been balance organic enhanced with we spoke for right our have it categories Chocolate our programs we Personalization capital with sure we of good stewards introducing or Universe. that have or our our brands digital help like we to across just enviable a it’s always to want And - product about of a mobile take very Simply and balance make growth sheet.

We Harry highly core have couple of the now & are business. complementary made investments a Iconic recent ago most transaction areas to David brand. The our business was our in that years to

divested what was the We we to say took that doesn't, year we fits, there because last is that and Fannie change portfolio place what a also there. always what felt are looking changed at May,

there. for are acquisitions sheet to help can we in our looking our accelerate underleveraged what accelerate to So but top-line cash our bottom-line, through shareholders our that really really our us might to to top-line balance is do, our goal but work anything for and put there us there significance focused hasn't are opportunities on for you categories been came it, us? be think And There in as again back Floral the look at the really there. I if

to and then a position build out we the round for We in job continue we to Gourmet opportunity Food that there have think more position. I celebratory and category add And that think is as can and good I done leading there us continue the leverage as we the ecosystem.

everyday is look categories, is see lives, but they celebratory think What smiles I back and at Food non-Floral, our category utilizing Personalization of as strategy us what of product Again, Universe more. are customers. utilizing as first that into lead So will are customers you expansion non-Gourmet step at we more customers. far moves looking product one will our deliver concerned. They our to our and to in kind

trying So to that's out. we are what build

William Shea

other balance strength Yes sheet. on pleased And our sheet. very balance comments are with Anthony a we the the of few just

Back increased That our net free cash year point cash saw on this this release cash and buying $XXX million. point mentioned time. new buybacks. $XX net capabilities back our half stock be Fannie that We buyback year the increased about over shares of flows. a time million at board from position September, over $X.X at the cash of debt Got would plus of stock. first half you we Our increased authorization from first debt the year in $XX Chris million $XXX our this payback growing the million sales and million May the released ago in of well that that as the a position of of proceeds combination ago press in our from a the spent in

forward. We be going have to flexibility to the continue stock aggressive in our program buyback

shareholders future. of gives are lot to with us balance it help pleased we the build value a opportunity sheet, in of health our very So the

Anthony Lebiedzinski

color. for of Best Alright, thank the all you luck.

Christopher McCann

Thank you Anthony.

Operator

go Capital Instructions]. Michael Kupinski next from The comes question Noble Please [Operator with ahead. Markets.

Michael Kupinski

Thank on & David. accelerated revenue congrats the growth you Harry and at

how much that the revenues of into have decision wholesale was I'm third-party may decision contribution? of to not from products have revenue distribute all, lights of terms significant just trying been in to and of to variance First corporate Macy determine other how distributors. in

William Shea

was actually year. program Michael this very successful Macy's

those sell the - on and was fact enough of product decided counts the of as sold to Really programs, through certain from away amazing. line our store customers. we at move wanted retailers other making I down they more contribution their Moose we that and the decision out evaluated Macy's. were Munch we While great was

out some infrastructure of team David. have the wholesale We our made investments and & management at wholesale Harry into

focus the new some supermarket to in a we whether channel increase have of or it drive be wholesale half have on into second momentum channels half of some growth some We the we going that second of and able be for a year kind think we specialty the the channel, renewed will year. retail

Michael Kupinski

you. Got

things the of around you had center past this, couple it’s in think when a some whether on-track. that issues to I it’s typically in back fire get terms of quarters the whatever Cheryl’s but on at you or In operations disruptions business taking the

Cheryl’s for Can us some received been putting thoughts that color marketing give in so should looks like revenue are You coming how dollars on it’s indicated we bouncing you receptive that. Cheryl’s? back terms opportunity the nicely, of quarters but model pretty behind in some had efforts these you far and your how

Christopher McCann

Yes, Michael.

at holiday. doing in look that August, but through major technology we implemented worked, and right of we challenges as In planned under Halloween think some we thought had and had since some we of you as the then product with we when when knew our it technology to case, changes, control we back away, as this it project had operating I early into. are nothing made implementations, the know used I we that mentioned Cheryl’s always run challenges we implementation you all and the deal again, ever there’s the while it the worked technology major

are some working the As the we just the of though, challenges rest system. used getting a it had into the they showed that the team we with went really volume holiday other of new to was matter and

So needed and it. to couple was make challenge customizations to that we the of that a

of really of of out efficiently, holiday, team process some the the elsewhere coming but past. types in making manual worked the their these a to but bringing used it, that the process. the people Cheryl’s systems it So coming of with production, out run it was was in notes in run Cheryl’s that from Halloween through not,

right of is coaching So the staff probably right implementing a the new system job far really good putting didn’t and behind we support and today enough them.

out it really working is supposed inventory to are right The a day where done have now. on be basis in well. management that day We Things and now.

behind the confident really We are we into and going Valentine’s think it’s with position we have us. Day

we as the previously back going can the now year, I far So right deliver. in you think as half Cheryl’s out to of what second get forecasting would

Michael Kupinski

Got you.

looking of back score acquisitions acquisitions near-term Harry to Going question the are wondering, for can you likelihood David? transaction more M&A you tuck-in and the like more just transformational was the possible at a us in & or I

Christopher McCann

it, couldn’t what always placed. score the conversations at never certainly you because having know happens we I that are

to are we a of another trying both acquisition a and scoring pipeline We I most. you. even say we move really & that always Harry with at are look would would good type where like build don’t of But what needle that’s David we we the think I to the share transformational enough combination

and enough too if gets didn’t because to, it There is However, easy no we a can has do the been of it’s said tuck-in and both. for comes but to little that we that tuck-in out the appropriate that. we process, complex value will the potentially along several acquisition, realized evaluate real a will get tuck-in just pay we you

I from think perspectives. it it’s both healthy to evaluate

Michael Kupinski

Thank you much. Okay. so

Operator

Ladies and our to the turn I question-and-answer over closing McCann gentleman, session. like would conference this concludes to Chris remarks. for any back

Christopher McCann

sure urge questions of all your a you gift. absolutely that thrilled I be year year it loved us to and all there more a one your with you joining answers. month. it, and all So thank I’m for consider for $XX,XXX along today a twice Valentine will be will

joining love you us ones Day. loved this Valentine’s to call. again forget for on all Thank don’t your So, the

Operator

attending has presentation. concluded. Thank for now you The conference today’s

You disconnect. may now

Joseph Pititto	Senior Vice President, Investor Relations
Christopher McCann	President and Chief Executive Officer
William Shea	Chief Financial Officer
Kara Szafraniec	Northcoast Research
Daniel Kurnos	Benchmark Company
Alex Fuhrman	Craig Hallum Capital Group
Linda Bolton Weiser	D. A. Davidson
Anthony Lebiedzinski	Sidoti & Company
Michael Kupinski	Noble Capital Markets

1-800-FLOWERS.COM (FLWS) 1 Feb 182018 Q2 Earnings call transcript