FLWS - Earnings call transcript Q3 2019

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Operator

Good day, and welcome to the 1-800-FLOWERS.COM, Inc. Fiscal 2019 Third Quarter Results Conference Call. Today's conference is being recorded. [Operator Instructions]. I would now like to turn the conference over to Mr. President, and Vice Communications. Senior Pititto, Investor Corporate Relations Joe Please sir. go ahead,

Joseph Pititto

fiscal thank Good X-XXX-FLOWERS.COM's for our John. you, you financial third morning, for discuss Thank to and all quarter. today joining results XXXX us

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

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

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

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

In the most SEC as over release time tables recordings to today's today's any obligation not McCann. GAAP to forward-looking guidance, our however, of turn company various GAAP issued in of press be stated company. Chris The now or financial disclaims I with addition, and the supplemental can accepted discuss filings, or will in of these otherwise for statements call, measures expressly generally any of the principles. directly the issued of be the press uncertainty intent prepared any comparable accounting Reconciliations variability measures today any the with found efforts respect accordance to that by would this necessary accompanying measures of release made call, call except in because will to this update components. forward-looking non-GAAP may earlier we financial at morning company's were the in this unreasonable figures morning. Reconciliations require certain its

Christopher McCann

everyone. all joining morning, Thank us. Good for you

press you As to saw period. with revenues for morning, X.X% drive the growth fiscal up this total third release we in net during continued strong our quarter, revenue the

in wire ability original as platforms, and our revenue our gross strong both of collection, Consumer the been pink including by EBITDA mobile position our an hits where for on in industry-leading holiday our and Easter fiscal holiday in unmatched the in the expand strong quarter big our well EPS expertise In continually for we investments our quarter. everyday X% bottom and have expectations. ahead extend improved achieved the results our our The focus line Valentine's with X-XXX-Flowers the X-XXX-Flowers as despite the of when our floral a service also business. year for customer results hot our driven occasions. floral margin enabled the product Magnificent quarter marketing, new experience truly to terms profit us our and the The the digital Day and growth fourth delivering Roses our designs, growth revenue experience making the floral last growth year our share and driven leverage, was Valentine's position and third for holiday brand Floral, throughout businesses, the fiscal by We These compared were strong achieved occasions. market for to of shift market-leading reflected BloomNet brand into gifting fell the our achieved quarter, of further everyday

quarter. online by the up This coming in also our third-party X-XXX-Flowers florists XX.X% was driven for Our strong primarily its from member momentum brand, order growth and revenues BloomNet business growth continued double-digit the with floral volumes companies.

benefited and quarter period. and from Baskets Gourmet was the the products Foods BloomNet's directory addition, revenue marketing for our segment, has point-of-sale and digital including its prior growth systems In sales, with for X.X% digital quarter Gift of down the technology services. compared in largest impact, In wholesale where offerings, advertising revenues shift the Easter the year

throughout However, thank X-XXX-Baskets well sympathy, saw increases to occasions gifting in growth we you. quarter, strong achieve the & occasions Harry as David strong birthday, with everyday such and revenue get continuing in and

our Harry continued to program. X-XXX-Flowers files David and growing our membership also We well & both customer in in as passport as grow loyalty

throughout customer lightning-fast Cheryl's new we of site. PWA we enhance our in continued designed format the quarter, mobile a to to the to site. invest And flow in for widescreen the technology our We addition, out implemented In experience. roll innovations, expanded faster-checkout Cheryl's

customer customers intelligence assistant, recent themselves. gift or launch an and interact and experimentation, app digital assistant experiment overall the Bixby This spirit And integrates link. we phone on handle satisfaction. feature available mobile what to Samsung our customers average call express we to forms virtual the artificial an application from web our reduce in increase of help launched app augmented who understanding an new iOS message the actually continue on technology to time Samsung's store. reality of interactive app. to We launched with by we seamlessly human with in message, smart We Android for launched us a choose Following

we ahead. line results. well are the turn Bill us the over revenue the years position detailed I and strong to now our more the top call quarter and solid in seeing fourth file performance of fiscal momentum for a current business and across ahead, for Bill? that will our Looking growth customer bottom review

William Shea

Chris. Thanks,

our shift Food our Valentine's for Consumer reflected with expectations and Easter third results and holiday, customer are revenue our quarter. line demand was in the ahead we of segments. everyday noted, achieved of Chris very the growth of and we both X.X%. Gift This Despite holiday fiscal the the top pleased for gifting Baskets Gourmet and and Floral occasions strong Day bottom As

volume see BloomNet. order significant to continued growth we in Additionally,

the enhanced in top in we to as growth increased expectations, our and the past in for marketing accelerated flat ahead compared we've as execution investments adjusted with the growth strategy in of line associated our the Regarding year-over-year Goodsey. brand, and have These our and brands were to and the year for results drive discussed loss full accelerate calls expense increases to investment leverage newest higher the well of in the our as the the reduced platform. as payout absorbing David results for the line operating achieved & significantly the were XXXX and X-XXX-Flowers bonus quarter the bottom for quarter, well a bottom fiscal the slightly revenue assumption prior Easter of EPS illustrate payout EBITDA effective Harry launch operating also which with shift while

breaking down quarter the Now third results.

period. is revenue total revenues the strong XX.X% XX with to of shift. a XX XX.X% company. higher million increased compared our cost compared as $X.X or $X.X reflected $XXX.X basis combination loss and essentially revenues, points of quarter basis of prior EBITDA million in Baskets in In margin of for year-over-year growth, XX.X% period. year period. compared adjusted Food prior XX.X% the the Gift revenues adjusted was as unchanged million, X.X% well with in per terms with loss share, gross segment, as points margin in margins which more costs year prior $X.X reflected I year Gourmet the period. for compared quarter The grew segments. loss with Net percent resulted the noting improved total to loss Gross prior This with headwind in compared the consolidated $X.X year $XXX.X the gross in our in margin increases Consumer impacting of we $X.XX Operating increased largest second in the mentioned lower of as margins that impacted share Baskets calls by Easter gross labor, net in million which $X.XX margins the the worth prior that and impact million half per than seasonal gross earlier of expenses of not and BloomNet offset across EBITDA or This Gift an year the of the period. operating have noted the million are stable year previous our Food Floral the It Gourmet in and is

and revenues Gourmet Easter Easter holiday of down terms prior and associated compared the gifting in period. million transportation reduce our prior to with Gift everyday logistic fourth of XX.X% as in & in quarter David The of and $XX.X our this reflected to shipping initiatives Baskets well majority our results. Gross occurs quarter the million, programs. the the segment, X.X% the year. benefits growth of Harry basis continuing points for strong increased strategic margin continued $XX.X pricing this In shift year margin in was the impact segment, XXX In with with XX.X% into for category X-XXX-Baskets. the compared was costs year Food quarter which in shift, gross reflecting period, by as improved offset somewhat The the

As Floral, compared in Valentine's expense. to Consumer prior nature $XX.X year and reflected passport continued margin reflected drive basis increased X.X% of $XXX.X Valentine's as and compared million segment combined primarily combined growth. quarter XX.X% compared reflected period. prior the margin of the XXX Easter revenues of increased points BloomNet, XX loss year This $X.X continued volume with with quarter to revenue $XX.X the compared margin period, $XXX.X our increased in product bonus the compared everyday In year Segment program. reflecting was improved Goodsey growth contribution million with in Segment XX.X% $X.X mix period. strong primarily In strong strong XX.X% the drive occasions quarter contribution for the prior in in $X.X revenues to the volume compared XX.X% for marketing the year down our year, gross holiday throughout to holiday as with with increased prior in compared was period. for order these million Gross a launch order our higher with promotional $X.X $XX.X the the This for contribution $XX.X well prior in margin prior growth prior down the result the was with the Gross the with X.X% and period. million quarter. impact million This million of XX.X%, factors, in year shift, year reflecting investments to down to for the basis XX.X%, points million primarily the million, growth XX.X% with million the investments growth. Day margin gifting million of period.

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

$XX.X with compared year-over-year compensation third corporate in of year fiscal quarter, was in million performance-based expense in and compensation, compensation. stock-based to stock-based the was million corporate including increase attributable cash largely For The the bonuses expense, prior $XX.X period. increases

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

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

cash was expectations. in line a of quarter $XXX.X As the the end the was $XX.X at of the with end net management's result, total and quarter Inventory was at million. million

Regarding guidance.

the We are of fiscal guidance now Updated stated for for year expected the months quarter, and follows: the fiscal expectations includes on of XXXX in to end results Day to as of high XXXX is updating nine revenue the first our fiscal based is guidance current previously the X% range our for X%. solid and Consolidated performance of which Easter Mother's at fourth growth our strong be the fiscal holiday.

per guidance now diluted a cash turn EPS $XX a Chris. at be expected increasing million to to to to end to free flow per at our is to the of now previous share. to $X.XX million share $XX for $X.XX $X.XX the to our back $XX be stated of I end of range range range will call EBITDA the of stated previously and of is are high our now $XX previously diluted million. million, high range We from Adjusted of expected $X.XX

Christopher McCann

Thanks, Bill.

and for results fiscal line So with to quarter. third are sum our we bottom top up, pleased the

In brand terms BloomNet. Valentine growth of further our with share revenues, growing for expanding strong X-XXX-Flowers our holiday, market we for the market-leading and achieved position

the of for gifting Easter In these & continued offset X-XXX-Flowers, the throughout the see of in growth than quarter addition, combination Harry everyday The areas X-XXX-Baskets. and occasions to we in more David growth strong shift. impact

customers providing Importantly, self-service focus the in as the on customer our to to This solid we the from which revenue quarter, digital as mobile enhancements customer file across industry-leading platforms to clearly well our our reflects our also grow experience continued products, addition growth file growth our truly are original the customer revenue in portal. with, enterprise. and resonating to innovative

In are months the increasing cash we our helping of for well as enhanced expectations. returns fiscal This marketing nine our the both seeing model with our our first achieve as results, terms of combined leverage continuing good on growth and investments, bottom with quarter us line earnings. the in increased business to have year, we is the enhanced exceed flows

strong As we gifting our which includes with Day list head three holidays across spring momentum business occasions, and quarter, into all our growth fourth a Mother's Easter we fiscal long everyday have and along of of segments.

to all a company to including full our shareholder the to John? and fiscal the we to I'd their connection questions. deliver result, customers. on vision, help to value and our more of a smiles ecosystem, for your human - our moment can the so thank deliver take let are year. passion call well positioned for to deliver our we celebration across continuing enhanced thank us over and and to a As team, like that on John, for associates celebratory quarter moment their our turn take for inspire me expand With help focus the that, expression,

Operator

[Operator now Alex question of Craig-Hallum Fuhrman Group. Instructions]. take our And we first Capital will from

Alex Fuhrman

give of where year, more to it a difference guidance more sense really and you the side, from us get nice the the your coming the coming you Gift then segments. a related and start year just kind business Gourmet that's pretty questions. Obviously, floral revenue has Can on talked Food Is And love profitability about nicely. on here. I'd come from? for up side? from a Congratulations of, sense Baskets of calendar to the both full

impact the how fast the trying March all far fast June shift, of about those Easter to and growing two of have you units, of larger in a together, been kind As you your then we the as give kind us how BloomNet think XXXX? of segments can quarter in I if guess, of the and quarter eliminate sense layer well, so business

Christopher McCann

ask the I'll I'll where And to thank across It's combined. you, coming and start take stab the then a Bill and begin, on from. news really us quarters is the that Alex, Sure. platform. with I'll The two to is for at good cover growth BloomNet.

nice we're seeing, As getting you're growth in BloomNet.

to consumer first side, Food that Gourmet to was come the the continue as is, saw, of really We on some expect the yet. really time it side driven you year business. for half And the by of our fiscal

being The side second you're business. half floral now of the the seeing driven by

customers. we giving focused us our we probable passport we gives is, - the really our cross-brand getting for opportunities with out nice again, did it seeing good file merchandising customers customers, balance that customer there. and creating things a were metrics focus behavior So as said, that programs And sign other multi-brand on to we in were

us in in customers half the ecosystem, really of that new into in category, half the the Food the impetus the Gourmet So by top really and the funnel bring now the category. invest by driven more floral gave being it's to driven first second really

you're two that really that's those a start Bill, work. the And of quarters kind So comment effects to propelling combination want seeing flywheel the on you what's combined? of growth. to it's things

William Shea

Yes.

performed above the to half we for how overall X% the you of when growth. of at in at now X% X% Alex, giving we the year, guidance that end were look high year little So the we're first growth,

top consistent line the in of half So second the showing growth pretty year.

where business does that Easter the on QX in probably the - BloomNet Floral side concentration it the eliminate just QX it's second of to if is Consumer and revenue mid-teen and But you year. overall the floral was of mentioned, that from of GFGB half range Chris in combined, with the in As X% it's - nonseason. range. their is swing an is an

like consistent the more of adjusted saw the what you probably are Easter range. it's those holiday. And for QX So around in X% numbers pretty

in have have GFGB a Easter. range, little seen seen and Consumer adjusted would you higher You would that, that than Floral probably for

Alex Fuhrman

being next and Just pulsing with lower you've about other view marketing? That's to for helpful. forms doing program prices per couple How of during you just periods? that key you here, testing year. And see Okay. opportunities couple a about market that curious over the basis the last that thinking $XX price about been price the think years years. be to the passport full is something of take as price at permanent different the more you Is really then promotional of still passport points continue share of versus

Christopher McCann

Yes. continue customers different to experiment we run in into will time, price what in fold, bring do the more a the passport at it $XX.XX optimal points. with Passport, to points we we then At promotion Alex, $XX.XX.

seeing We are what we value. in can price higher test add points at how looking as can else maybe well, we

it's thrilled the program development what up, continued continue of there. then hold you that metrics is to combine ongoing Holy passport. retention So brand customer behavior rates and kind growth Grail, we fantastic. And we're management that's XX% up really seeing see range. But and customer program. really of an just a right, than for that is one buying in joining the get more to The those to and XX% the that's We're when of

we'll kind more that the behavior, accelerate the growth So our drive more rate. of we can

Operator

from will now D.A. take next our Linda We Davidson. question Bolton-Weiser from

Linda Bolton-Weiser

a Congratulations strong on quarter.

compensation the it a was segments. But So increases to were did because year-over-year - saw increased et corporate compensation, line, can was the ask, the expense a you of I cetera. up in lot think, just I little business I note of that allocated it

bit mainly it that the in anything made it the corporate high? a comps? Or there else expense just unusually is little line was So

William Shea

comp. mainly Linda, the it is

again some actually with well, a bonus is sits - we a corporate ago ago, the stock-based really allocated sits there in this - expense. dollars in to a corporate expense performance And increased all year just of compensation as the so our performance stock-based granting all and our back shares year our year weren't individual of piece segments, While any that it's has in compensation of gets big that corporate. and

Linda Bolton-Weiser

growth Okay. on I can mean, just good. pretty GFGB. you then I And ask was

little the it's particular was which a it can bit we than think Is rank And that's good, there which were growth in about quarter. shift. right? and X% anything about excluding give a fastest just less the that's slowed down? Is less I you And fast? that saw last order little but branches little grew a us

Christopher McCann

GFGB, Easter... it'll details. think and Easter for start see if add mid-single-digit from adjusted you in if that some adjust again, So Bill I range, was

William Shea

X%. to X%

Christopher McCann

just About had X% that's little of to season. growth year is it X%. slowest And coming GFGB, quarter, the that expectations. for down from a of see the to yes, slowest our momentum off thrilled during exceeding again, the last season, bit the holiday - quarters the the great while one We were holiday the we

in quarter we this than So not as QX expected bit for clearly little it better if was line, a well.

William Shea

Yes. David overall And continues GFGB driver the to extremely of continue X-XXX-Baskets drivers big a & the of be perform well. Harry to that and is

the overall So leaders the in kinds those two growth. are of the

Christopher McCann

e-commerce David & Harry the especially, growth. And

Linda Bolton-Weiser

us this why you're terms be to information may as position out Terra you taking ownership know know does landscape, tell can Okay. be you the And in taking like Do in to FTD. in all this do this there - at then have effect, in like you what minority on competitive of company about a - any about suspicion Terra development? called Flowers some you they a seems FTD? thinking And And Flowers?

Christopher McCann

Sure.

So Flowers Terra grower. a is

worked that's at only in but we we the them Sole growing point, that are they're years. really all the know this industry, Farms, Farms the with Sole over and

as So at over competitive I really see else competitive new anything always change time. don't to we going landscape know landscape, the And there. look we're the

taking past and we and share and that shifting, If do now, that. several market we've years been us the been continue landscape you look has at for to changing

best. do We continue focusing we to really do on by what that, Linda,

team products, truly customer of with bringing Our that A to great service. the customer experience caring people obsessed are original table.

So shift as ecosystem, perhaps starts our those we on the we're to into that we're and focus focus really our as competitive and things change. landscape of growing well on driving some customers positioned,

Linda Bolton-Weiser

ask And of change trend seeing on then in decrease the the a you BloomNet yet? florist I of in increase continues or change very to of just finally, number which there any your trend the that strong. you business, kind be members? can Is occurring in Are

Christopher McCann

No. real see wouldn't I any we've membership. change trend the of in say

the BloomNet products know time our we'll shops, happening more in orders more I of growth In orders there. seeing to is get and sales - earlier to BloomNet our seeing membership product think where digital remarks of more those into start We're goes in digital that increases about we're seeing and spoke some into there. some as services as seeing past And increases in my coming some sell our start into what we're formal we spoke to I the on, happen marketing I to which services, we're we're wholesale directory system. start then attracting the shop and sales.

members do order help with to So really BloomNet we're and we that what as products markets. those, forward our see compete we to need local in flow their services more is and monetize now starting as go increased we to that's effectively

Operator

Kupinski our from now will We question Markets. of NOBLE to Capital next move Michael

Michael Kupinski

on a great Congratulations quarter.

change it question believe, at dynamic last it the FTD. up of that that the I asked and last following all? was fragmented in thought Just know the some about move Flowers a that move the prospect market. you, I Terra by quick, taking guys a Does of at with maybe I look real on Flowers quarter you the growers, Terra by

Christopher McCann

grower Mother's doesn't. Day have and long-term our forward, that ago, weeks at of go season, primary with as making ready really and just well. relationships strategic I looking couple we at for Tom of but way our a sure look growers visiting relationships we just we things business with as the course, No, were community. to and great it were Hartnett Strategically, the have

move that plans it of being any the So not with but I'm familiar again, change not referenced. I'm all. sure is, wouldn't at exactly what our strategic

Michael Kupinski

in how said I it. that. And have the repurchase may quarter? I latest you don't shares Got terms you. if did may in know have of missed company the

William Shea

We Michael, purchased and million we on thought half our stock about quarter. market the in at point X.X actually was shares. about current had shares million spent it of not thought were We time undervalued back was good the investment $XX the a in the year. this in that first in and the part to buy

bought So it needed compensation, goal, did offset we just back is more first than to stock-based the half which always the and our our we shares we of in year.

Michael Kupinski

that you And repurchase under you. your right? share have Is million still Got authorization. $XX

William Shea

correct. That is

Michael Kupinski

Okay. And know I been building color And cash add flow your pipeline. there. thought then? at your thoughts? you this capital that allocation pretty company's a some What you've on the then are on your what M&A is if point sizable maybe can

Christopher McCann

Sure.

cash really really look initiatives, cetera. we now, our allocation it accelerate we've we're we've - that with marketing investments organic to using as new the brands think our made that into our capital using I help So we're right at launched, et growth

base at helping for expanding So and we see good stewards we're the our of continue our But with are their that out we've we and add focus our the well for time, as to as been And turn Really think needs. so. as we'll to again, M&A serving I customer number same all the be looking can ecosystem. them. we're our acquisition of as years, new expanding thorough balance ecosystem ecosystem our that. over we're will with judicious and doing constantly gifting opportunities looking can to doing our We sheet, their of very opportunities. the we're look We'll opportunities at and customers times or do our on doing the customer base at as customer well leverage there,

utilizing underbalanced value seems where that working But focused to we to our sheet be focus our M&A well are in - the mind, keep our really shareholders. and on that return underleveraged So make to continue investments. sure we'll that's we to balance

William Shea

And not Michael, in I to mean forward. the does market not we're to did - going that we say, just in not third was buy going be just going to quarter just the

any buy to continue will promise we'll our - back of offset sort creep. We is shares share

So we market will in fiscal 'XX, as be we enter the again.

Michael Kupinski

couple going development and up as and a about past of that technology wondering trends expect expenses quarters. And trended more know know as years. of you as spending Got I could interesting that marketing that have revenues the and company And marketing dynamic as Floral. you to if been and guys have talk is forward, percent slightly percent you But for little in I sales you. may just total And was the revenues revenues. what's has subsequent that percent go lower your bit I Consumer of been a that be you into your the a consistent a of expenses actually

Christopher McCann

of expectations acquisitions. the due we on increasing the ahead seeing think what investments that returns and we're stated to I our new little Yes, on investments, is that's and we're of fact behind year customer a marketing the good first

It's returns. platform appropriate is the moving. customer the you're technology with the experience, our to seen how that producing our clearly And So customers, our again, we're referencing. increase focusing good platform, we utilizing increase constantly customer the we where how those on work customers, percentage mobile we have attract to

fruitful. new I will that which more in investments makes much while, acquisition in experience, continue technology think then the a investments trend the So our customer help enhance really customer where for

Michael Kupinski

we and wondering X,XXX you you in to then also little was the bit you your X-XXX-Flowers. I that thought where I BloomNet a started network grow I what wondering And about you stand that's have think as be opportunity you then on that? mentioned being know talk the an your talk number number that? the on if just in do and might network? that. there bit network, a grow was that a and stand just you can had about that shops Or point, you one florist - contributing could of about function in - of trends there? little up to at the borrowings your do Have I Where to - is

Christopher McCann

our keep the usually the start that we in focus and product of membership for where the membership, of a customers. And has that's that's while. gets when we on focus want to So X,XXX the turn to to I our user, it that we in too, membership mentioned number where who're generally And recipients manage been the kind ultimately we quality network the delivered that's quality because with the really our is, to what of sure to why stable range, X,XXX markets, the more systems. is, and end the earlier okay, to the local of whether to wholesale can websites product it it's marketing have. making it SEO compete purchases, marketing, products search we to with getting help like to engine whether it's where it effectively them the amount be be or all they table with bring in then orders help technology, optimization services their happy our the them And point-of-sale good leveraging and scale is or for a to services membership want everybody stable could

rate and to participation looking other with that's that in services. doing really products then we'll our memberships, we're we the is range have keep So stable and - what increase

Operator

on Benchmark move The now question will of Dan We next from to our Kurnos Company.

Daniel Kurnos

answer sort deeper little question track of I a tech you guys know, have a here. get segue the to of here it's to want of Chris, you on good I to into something pretty bit a great perfect Mike the ask but Look, a sort of path forward. stack. wanted I kind M&A, gave on on record his

we're well. what the point are sort a touch name. taken space getting right the example shares, question e-com lot seeing of were the And phenomenally particularly merchant in integrated? now, One, in plays bunch now, hospitality now, more right to the of is vertically kind of You've your two, other in stocks of points. And guys

five on know are merchant as have sort sort deal point-of-sale and And you so a more you the merchant get that the are versus, to tenants. points sort sheet side on be more getting your on say, am side? We I that as expanding customer make how to willing equation? your key involved touch remind you weighing involved So of analytics. with integrated spending you processing? And money and curious would larger that balance of you you deeply the get profiles and/or just of of touched flexing customer of kind us, the more Is

Christopher McCann

No.

we strategy, of very judicious I look be we As in a it look in think, look how we at our at M&A always it. we And we to series adjacencies. as are going at mentioned,

fits cause. So is really the kind of in first what

as into at other in with Personalization into adjacencies, the Food Simply well. those next In move And category - there product are other of are products and adjacencies product always seen if that clearly, are to those opportunities there look us Gourmet brands for make there we'll more the Gourmet Universe, opportunities looking So adjacencies. add space? sense, more to the opportunities for floral floral to makes in Goodsey, start and acquisitions. what us We've are and it category, Food moving level we're Chocolate

get what to X our the customers can service have that tools, even them will begun and is help to to capabilities us. that to we start gift what that products bring looking at we've through inspire we or you'll a do with for floral that of And we so are is we X Goodsey, platform. to see besides adjacency be themselves and level starts we relationship which attractive. And more customers celebration, we can us the express that types where, pay for offerings marketplace other stick is off vision our have see further. tools of if Again, to connection deepen expression that find will to start look us think, you of I technology the it human or to As

we're So don't ecosystem but look our that doing look M&A bring platform at strategy. brand that it's allows of expect Goodsey so at to and/or onto put much as that, it as a more customers. through product marketplace an either see us our a categories through to front more, And as to the in concept and grow more would you

Daniel Kurnos

use plenty find a I right just willing could deal came larger, you to if but Harry that mean, not But from anything balance the you to if you of to almost that base. sort that you & to along, look are buy would perspective? much at value want something something Has shareholder which obviously, have the fact as I that now And there, exists, an you're the be to of of be sheet. equity on know you M&A go currency hypothetically? room the parameters after out Has existing plus your diligent willing David would that changed accretive? saying it

Christopher McCann

that of term, if really both as get done if was to would not We would to opportunity, opportunity value-creation what we open that. shareholders, a to necessary a deal that. we think, the responsibility certainly, short would combination and stock a look the but in immediate best certainly to cash, the big that it's us we for value, provide could and term, was love I at utilize create feel be in the our if

William Shea

cash our underleveraged significant Yes. have But balance have, on of we performance we sheet company. the borrowing do Dan, capacity just the that the combination balance the of the have sheet based we plus upon

the there and needed. a very sheet transaction our to ability leverage is balance cash with just So transact if to large

Christopher McCann

help at stock so it, that. Right. sometimes But might would look behind we model value-creation the

Daniel Kurnos

the cash. front, get to Clearly, looking investment the your me one Yes. I term. from got trying then term, with most of short at, question could was the you of stuff just long last sense on I you're And a at. it. where one do head's just

gas stepping revenue the Day year taking of of a around remainder the got. implied the Mother's sort looking account your into like conservatism marketing Just with seem of for on and kind the guide of It to the guide little bit on the at high-end to historical that you're get you've the does here.

about to seeing Or growth guess, does better-than-expected to And - does keep of through term, When Chris, keep you longer you're spend ramping translate when volume I So do that line. level? revenue more sort wanted of obviously the incremental that into to just area of I ask, spending X sort in line could into in leverage? period year there short-term that mean, bunch X long-term investment to money efficiency of that talked whole a a dump that distribution. is where the a return get I push? and distribution enhance you kind of an have then significant - and process? returns of on top at same the item, Is over if uplift you we've

Christopher McCann

Yes.

we're a move comp as we bit the really into think mature marketing a as that view. think fiscal of from to year I our you'll we next look So start seeing, I investments point little see that and at

produce why to As keep again, the at returns, I side, should specific tried the And margin. that We a should or customer from now produce am investment the floral expect than I reference earlier, and levels doing decreased last we're for what then to we're two really little, expected it we an on metrics. we're which gross margin the the better with and right that's our seeing we fine increasing same seeing quarter we gross behavior percentage.

change better to, will Longer short the we I from that it comp starts top line you term, continue us trajectory all. forward, term, the the at investment on think what as but So don't perform Bill? do to now. that again, going line see can bottom think, doing we're I

William Shea

incentive upgraded year, in done Easter we the updating that and and guidance with for guidance, solid our fourth couple Dan, based updated this that in quarter. year our of months of One, this and we into and upon - for guidance time guidance all We've the have strong obviously, in talked great plans past, expectations of That's second be guidance. Harry nine our fiscal plus the Day we performance investing baked updated we've behind and points. outlined our investment we this launching first again, some X-XXX-Flowers Mother's about just the the the Yes. We've a the performance year. behind David, with & and the into to updated quarter it's our baked in our we've we had our for that the Goodsey, comps guidance year-over-year investing comps have. that

top 'XX discussed million what's of line Day, of between target growth towards out and take we to while in there going & year of 'XX what as also at on we bottom the $XXX fiscal David that drive think we continue Harry advantage that we initial be the want kind year, our better and to beginning march in the line two marketplace, returns X-XXX-Flowers start was I we seeing will in even and back and years. the this to more of investment stated year Investor

more line. will the come bottom start of So you it to seeing down

Christopher McCann

at the we've we're that file there us investments that, gives the contributor customer customer added well big so sustainability. getting building is, been a seeing that then have going behind And been performance the and file saying today,

Daniel Kurnos

marketplace get sense, I'm I make sure All stickiness. it. that are in - you position mean, you right. dominate it I have guys. makes just to the a and that

off, for quarter? of trying it's appreciate or Bill, I worth just I'm And & growth get color. the not return. upfront So Harry little what e-com - sense longer-term mention David a bit all And was before of the so that jump invest now to in whether just a sort I more did to it actually you

William Shea

high shift trend kind it's has for continues the if the you Easter back growth have It very below account it's be growing of you still shift year, Easter We it's did because line out - not. to e-commerce or almost of Obviously, Easter, that from been. it a of kind rate. But strong. still double-digit at very single-digit pace, where of last - nice

Operator

[Operator Instructions].

our take & Lebiedzinski now will We Anthony from Company. of question next Sidoti

Anthony Lebiedzinski

actually obviously, has be in quarters And I you'll from So few the lot sales orders. last think growth increased double here. come florist all florist done a great particularly segments, of in three you've BloomNet soon that anniversarying your job pretty that growing, to digits, a of

how segment orders? big go-forward past the surge grow we get in as basis after beyond move florist you a that, your to of florist view that So should kind in on

Christopher McCann

and based going you their achieve over brand, online BloomNet forward BloomNet's order we attract this capabilities. on if finding from monetize programs new BloomNet growth our to directory - order programs, companies strong volumes florists, do different of the several well time, shop-to-shop SEM hard sources, are offering third-party like, volumes. sending. And utilizing is digital again, orders. offerings look will that. mentioned, BloomNet think the increased marketing growth X-XXX-Flowers incoming useful I that the as florists, through Anthony, rising features these at Well, these provide the can from opportunities again, add scale further that our to Expanded our we subsequent enhance SEO as anticipate very floral we've attracted We to local florists strong we've members Digital that benefiting and good

market diligent the forward service growing in we to take the and So this allowed if on X-XXX-Flowers doing focus brand, and have factors the to which and momentum or share capture space, on be helps helps we'll carry stay BloomNet focus well. market able believe wired to we're what as share will these we brand continue - BloomNet grow

you continue. think that see I will So

Anthony Lebiedzinski

any AOV gave Got it. about your color more any was but at I I file And some numbers. details provide times you also mentioned that grown, specific growth a the could you has if metrics. don't you think that And wondering customer on also few

Christopher McCann

Yes.

metrics. we sure yes, I that. So the turn have But we I'm don't any AOV, not on to I'll just - specific have didn't Bill, if know it

quarter, that new enterprise, XX% growth overall from because last existing who's I at is very this that feed of skew any it which the file the customers continues way. like about buying by at customer customers. couple the with we're to of behavior a we're really join one multi-brand passport for I XX% customer that seeing quarter. customer us. good we're the acquisition. end, in a range, strong that and increase just they didn't new quarter, update efforts metrics as what gave also the the phenomenal. high to said, the a the would than get shift up growth, fed more up for our passport, growth around we're from you brand re-activated We of then we seeing last end We're And growth, customer seeing again, well seeing file we customer good combination But as XX% into seeing, being efforts for But Easter trend customer the the think

so seeing now. the at rate top to clearly that's it that, we like and we're metrics seeing so, growth time. our the more through to it very of the the Now the what we're takes and contribute drive do behavior is But to ability But the pyramid. do file

So with And happy come. what that years seeing. we're what pertains to the we're for very future

William Shea

AOV, we at I When slightly AOV look brand. within up, the is mean, each of

mix, Harry it's an with particular, a So that up if you there's & is up growth so. in X-XXX-Flowers compute like of others result at enterprise or look some as it's David, more. wide, when up brands, you in There X% or of actually a while probably bit some little

we It's So it's points. a couple wanted of to where it up be.

Anthony Lebiedzinski

Got out And that seasonal pressures your as call cost far about? I to mentioned also, that as want should labor you very it. we That's that Bill, helpful. issue. else think, you is biggest think Anything

William Shea

for our labor headwind, rising even while rates labor wages because as our facing minimum steps well. biggest overall, is Well, we're a core is seasonal headwind

of now. continues labor and year, obviously, throughout right seasonal biggest the QX the effects is headwind been a to QX. Tariffs that, one abated be labor kind and have So

in tariffs for in So we've the half second year. second inventory case on it address kicked strategies. on the to took implemented in of the some early We quarter

looked have but how we'll headwind is XXXX, in that, continue strategies to mitigate to deal off, to second the the that if kind on play if we've covered, the into got the pushed that have with year but QX issues we come And So various play, back tariffs, half at that - back of we round obviously the of three into ultimately, covered those and monitor. tariffs. of kind of those come

Anthony Lebiedzinski

it. Got

taking expect strategic go-forward Should So a initiatives. pricing you about these GFGB more basis? we on or also talked actions some of

William Shea

within we could whether those we Floral increases, Consumer increases as will face we pressures such GFGB demand. continue impact at see the ourselves, cost Well, we strategic to what how and look does within as just be that price take to always described, it where or

if we it that. during do strategic it the see at various demand times So - to price continue how we look test to impacts to some and year increases

Christopher McCann

Yes.

for It Let's that us we efficiencies the has answer, be part the keep all to in that operating answer in be the mind too that cost. bring as never of will table. to that mitigating of can be

Operator

back session. like I to any would closing question-and-answer our McCann, President Mr. for concludes to CEO, the turn and over This remarks. conference now Chris

Christopher McCann

joining your all for the for questions. today call and you Thank us on

have additional to questions, don't If hesitate you any contact us. please

As everything here, around Day just corner, to you have special. need a it Mother's the make reminder, is and we

make us So channel, favorite and visit on all social or device moms your loved. to Thank your your the life mobile you. in online, feel us trust through

Operator

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

1-800-FLOWERS.COM (FLWS) 30 Apr 192019 Q3 Earnings call transcript