FLWS - Earnings call transcript Q2 2022

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Operator

Good morning and welcome to the 1-800-FLOWERS.COM’s fiscal 2022 Second Quarter conference call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Joseph Pititto, Senior Vice President, Investor Relations and Corporate Communications. ahead. go Please

Joseph Pititto

thank X-XXX and second joining today us Good financial you results discuss flowers.com XXXX for to morning for our quarter. fiscal

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

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

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

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

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

Chris McCann

call our Thank morning. joining to for everyone Okay. this you

year's in in XX% for fiscal release, on we XXXX more second fiscal XX% of the reported of revenue we represents and X.X% the top As second this growth of quarter quarter. This fiscal our we growth quarter. morning's last press than solid growth with achieved second was compared reported

achieved business double-digit the Food and XX% three our in we Baskets driven David by in our highlighted quarter, an For of brand. topline Harry by across approximately our segment, Gourmet growth and increase growth Gift segments,

release we in we in the comments the at noted As October. that our This saw press our of driven success continued and mid-November carried double-digit October, into end through September growth of solid to up and early quarter. however, Consumer initiatives holiday everyday again customers pick season. ordering slowed drive for late did as demand not in until holiday well Thanksgiving the gifting, the the as by by after

a as and limited quarter, in AI to deepen result, a of ability number turning detail and escalated our relationships discussed labor, offering, party them, quarter. that global disruption using persisted ability and unprecedented continue back throughout growth to first Celebrations line minutes. to we program, shippers. But our and in higher our increased the and tremendous an solid revenue anticipated from an significant significantly our customers pace chain, of to continued increase engaging our below to product As that headwinds a These back the experience availability growth headwinds I'll our a to economy supply costs for costs had we just more the third to for moment. double-digit our new customers customers, of had for with October total our macro the loyalty the include of personalize results increasing last his the growth remarks the period. Nonetheless, machine the these in into attract overview, Passport on our topics expansion reflects learning. with was top in focus heading our And year's our the quarter on bottom will come few Bill revenue But provide

impacted As result, our expectations. in results line bottom below our came were and our gross margins a

we the quarters these While anticipate time, ahead. we will in that disappear headwinds over expect not they will moderate

will and to programs and such we initiatives impact, our initiatives us performance. an back mitigate bottom continue their line and of anticipate our components we on growth touched enable these of initiatives bringing few our help further the non-perishable that the gross automation top facilities, optimize to centric can shipping to invest items, of the distribution we -building Pre of So will longer a Jumping earlier. term line to products inventory and I in margins outbound warehouse earlier. improve import drive us in customer and that as implementing inventory over that enhanced

into lean our a focused customers to our create relationships to with engaging deepen initiatives our continue We community. true on and

measure points the content the and touch fiscal time Memories are engagements, of number the that I've As One launching we connect have programs we I 'XX, than and the themselves, into Through with What celebrate. content our connect, engagement the each Love more video with half Season said such with and to video. times customers used celebrate the created channels, in company express life's that of Throughout aims reinforce that to that we inspire storytelling year. two The in to season, through past, and most Holiday first a express, work holiday Favorite period we a specific the important is last moments. million like to shopping Our and people to created social we as way influences, holidays other, the XX same About integrate experiences, programs importance

with than opportunity holiday capabilities fully month, on holiday fun earlier attracted than their XX a have designing culminating both launched other thousand celebrities interactive more influences featuring more the celebrate floral recipe fund classes, our [Indiscernible] Facebook. million unique our people rewards, hosting strategy. engagement Table experiences. tasting, some have so. offering classes creating also bake-off sharp began series, and to our enjoyed platform, we we creative Perfectly wine doing and these as Alice's views that illustrating we for featuring announced Since program digital chefs arrangements, and added the And We this to

second product the further our better-for-you to also Choice, in category. our expanding quarter, highly During Gourmet expand offerings offerings Food with newest on-trend, acquisition, Vital our our we continued

now, holiday we work behind into integrate the With to fully us platform. will Vital Choice our

needs. Shari's And Berries subscription their expanded And with Harry from brands continue bundled for our customers Riviera bouquets with of putting Shari’s great products, providing We expand collection ability David's Royal to unique their X-XXX-FLOWERS our gifts, the create of signature, tailor such and and together Pears holiday truly some Cheryl’s to as we Cookies. programs, our Berries to subscription beautiful X-XXX-FLOWERS. to

growth platform. benefits saw more shop cohort. and AI the year and our importantly, initiatives basis when with us our experience these than than during and categories Those X.X customers add Now of reflects points cross million product total quarter. And initiatives customers combination of and engagement multiple XX% of revenues multiple for a This customers customer prior merchandising personalized a than double-digit in programs they more from our the to represented compared we the existing and in XXX the learning the best-performing period. quarter, brands. expansion on more that buy provide product new helped our Then machine up using more

key purchase quarter. which continue more added retention, loyalty of And members also growth in be value. the and a to see than We our during XXX,XXX continues driver lifetime strong to Celebrations program, frequency, new Passport

tiered recently standard and perks we beyond significantly As the enables a benefits Celebrations we've program, Passport announced, to shipping. free that enhanced members adding system, points-based unlock additional

order exclusive sense upgrades, first-party to renewal. events, collections, invitations include special designed more among new members, with reward perks capture these enhancements our personalized to discounted of a and best customers Passport Some community membership and and products access gifts, to develop of a customers birthday offer These thoughtfulness, help our and are us more data early our to complementary experience.

our are also content, ability have that we much multi-brand access members helpful the app very enhancements, The a to launched as engaging as more. will significantly our a first as details, app, these its we about trending membership to as addition to excited single and for experience. Celebrations designed entry to customer Celebrations destination manage tools brands. is way app enhanced products, well Passport And In serve

the Now turn call I'd to Bill. to like

Bill Shea

you, Thank Chris.

details into reiterate the for revenue important get for growth. quarter, I the to Chris think it is our I Before

drive X.X% on top growth growth billion $X consolidated on to the than of more Our year. reached solid top of the that ability last prior we XX.X%, illustrates level our year's revenue

some Marketing of orders were $X several the supply and components assemble certain of With solid lack several the Gourmet ability point, our one rates of higher holiday stores, For reopening product delivery macro which to impact million. important our totaling across environment faced labor, the the Gift disruptions which wholesale season. the the Basket segments. during than unprecedented chain. impacted from nearly XX% including was were effectiveness to Food to large our top offerings. and impacted line lead pleased to of quarter, our of that challenges products in in this some late our to and retail driving canceled segment significantly brick-and-mortar we On sites, traffic global of business X at and impacted all quarter reported example that the escalated last that of of seasonal the key planned, achieve the We customers, widely labor-intensive growth growth, upwards

due suppliers in their Another left from to the shortages resulted to labor table. than find of domestic on inability million our more example was $X sufficient in sales product some

biggest the components and Freight. clearly factors have the cost margin even percentage been several Ocean revenues Our reflected gross could including stronger. the gross in margin. on faced quarter primarily we The was side reduction within and consolidated of challenge The

As historical this five spot ten Ocean reported, having immune to for contracted despite to rates. times Freight were was We rates the increased market levels. certainly not widely

outbound cost increased in incurred than $XX to As and from year a an lack along trucking costs, than and the both to Representing costs area period. increase approximately availability and largest long half the compared increasing fuel surcharges escalated Labor, five of hourly the rates much of beyond pass the with haul more consumers. in result, including our holiday and were was short shippers able the deliveries XX% third-party associated year-ago level. the the of with An we which quarter. what our more prior-year with shipping, of which million, this first quarter, during holiday times

do in As not we away Chris the these headwinds to expect near-term. noted, go

our time. expansion and some of working diligently and early However, non-perishable strong our warehouse well Atlanta bringing next as before facilities. costs from to including components pricing higher initiatives our second up balance With highlights they of will position quarter. Breaking we products strength as cash sheet are Using automation. strategic and that pre down inventory, -build we and the the mitigate programs. new imported manufacturing through automation, our moderate DC do anticipate our over to And distribution

noted, reflecting basis already period A as Operating we X.X% compared XX.X%. improved increased the As points $XXX was included with total the profit decline period. all XX.X% prior-year $XX.X $XXX.X basis across for period percent gross margin total the prior-year or XX.X% million aforementioned our consolidated segments. the of This three business with of revenues growth [Indiscernible]. million compared compared to XX Holiday period. revenues in the points with of XXX a in to prior-year expenses million

or net diluted diluted in down for Primarily of diluted of income net million result the Net share inbound per a share factors, $XX.X period. increases, cost million period. quarter income million share XX% $XXX.X a compared the or $X.XX the of adjusted and quarter shipping, per and was diluted with $X.XX the for year-over-year marketing. digital million million share year prior prior-year the quarter $XXX.X net per period. for prior a was these significant a EBITDA labor, $X.XX the million compared per or reflecting compared $XX.X adjusted adjusted with a in Adjusted income $XXX.X or in of $XXX.X year with outbound was As income $X.XX EBITDA

prior this compared driven as $XXX.X quarter period, availability for points X.X% respectively. as well compared XXX offset period, was increased reflecting prior-year for down prior-year in than Regarding X.X% $XX.X $XX.X increased outbound compared points labor. digital reflecting shipping, period. with $XX.X period, period. quarter primarily profit basis margin $XXX.X the well inbound profit costs the by down for our segment was XXX and with year and margin. $XX.X in the our with XXX increased with with million the in costs as X.X% XX.X% of Harry in which shipments in Consumer well was as The of reflecting inbound prior-year X.X% segment year period. million prior labor. in the million, inbound product reflecting mix gross the shipping compared in basis primarily down contribution and as marketing increased Personalization period, primarily to costs segment, and million rates. higher rates. reflecting results. down the limited for In $XXX.X year-over-year going and and segment. and was XX.X%, margin period, wholesale with Revenues Segment Baskets and $XXX.X million in inbound XX.X% higher $XXX.X marketing increased [Indiscernible] outbound million primarily Gourmet which million, margin costs increased David, and our revenues decline basis contribution revenues $XX.X prior-year for X-XXX-FLOWERS the delivered increased million growth. compared down costs our margin X.X% margin, Gift the the at the Gross margin and in the combined in XX% margin increased digital million with Gourmet was Mall prior-year hard million outbound Food Primarily top-line increased margin Segment Growth more year for to XX.X% Gifts primarily compared largest reduced goods. primarily profit points brand, contribution shipping, Floral In with XX.X% XX% the at XX.X% million XX.X%, reduced the period, with was Gross a compared BloomNet gross brand was as with $XXX.X gross prior $XX.X compared higher period, shipping prior-year million, strong the reflecting reduced with XX.X% reflecting

balance Turning to sheet. our

down supply reflects year's was at million second $XXX.X with combined position last up second stepped end labor associated quarter. up of but the our repayment end with investment million compared of end fiscal This and chain our nearly fiscal million the XXXX, the of the $XXX offset the investments $XXX.X headwinds at inventory seasonally cash compared with cash balance at help in Our primarily quarter, our to repurchases, stock with and end the million, acquisition reflecting of Vital term with quarter, recent and debt, Inventory our is year. mitigate a year's was we have nonperishable components current used discussed. help our the in that of vast inventory approximately million second noting investments the the ambient compared fiscal the can worth the It's Choice. up that $XX of and last headwinds position $XXX.X majority be to of products during half second of

$X debt, facility. we and $XXX.X term under a In credit terms had of million in revolving debt our borrowings

We as for Regarding plans to Chris. million invest half balance support Adjusted range growth X% revenue cost the free strong inventory based with to of of results continued the range the million be We headwinds. the the now use to compared our range will year our described. as achieving our anticipate back in line for the $XXX guidance, continued will bottom flow we the a growth our cash with compared the prior to the on prior in down year. year, significantly plans in call X% the year per year we're full EPS for to continue of I updating in we've and based EBITDA share. year on and turn for to our $X.XX $XXX XXXX outlook to reported diluted first revenue have guidance well and address and anticipate sheet of dollar our the for the guidance growth the headwinds to fiscal

Chris McCann

Bill. Thanks,

program. nearly up our to than of more up, sum prior-year on in X.X% XX% with adding true quarter initiatives the We help million We in our truly our EBITDA engagement needs. to to products and help a and headwinds relationships We and of And quarter touch Passport our organically unprecedented connective that new for continue creating second we Celebrations community. fiscal and the our designed X.X second XXXX attracted our the points revenue all growth acquisition, and economy. XX% of $XXX expressive us millions original deepen added our macro XXX,XXX more we to period, compared the solve members had million top offering, customers through their hundreds pandemic. despite we product achieved loyalty expand adjusted So drove of prior growth than expanded new cost in to customers than build more

our unique on and we While are years, success and we're our associates we've have of that family challenges growth sustainable express, drive e-commerce transformed the brands, all these and past doubled a address platform longer inspires platform unique to capabilities, challenging customers marketing very see our solid and several company, as a address build of across challenges how clearly a celebrate. digital work size which term manufacturing, macro in significantly our I'd proud to which connect, This to the over In expanded like positioned bottom we we stack, to the business operating in expertise, our during achieved have of together distribution, all-star note I reflected we have team and becoming our customer and seen macro line is closing, company, includes and and environment, to and our the performance. that file. well the our the the of over that continue revenue our in enables technology who environment logistics advanced built, the to that am

your operator Thank call to like so take the the you. turn back to Now, I'd we questions. can

Operator

[Operator begin We time momentarily session. our assemble pause will Instructions] question-and-answer to At now this we the will roster.

Company. Please Benchmark Dan go question comes Kurnos first The ahead. with The from

Dan Kurnos

in Top-line, Good gotten that morning. X one And questions. while. a haven't

in demand consumer the much pass And you guys from was an did issue to how you think trying perspective? through pricing? do when price question, elasticity First start

Chris McCann

morning. Sure Dan, thank you. Good

saw I increases. in in we right think October, as went season about fairly looking into October continued at the we and it we through the our price took And we was where was going in keep where slowness Friday, the into call, on pricing mind just dynamic then it, in really seeing -- into demand strategic throughout to as Then we up we September, again, get ability seeing us and talked we're consumer off we started saw Black period Cyber in Monday strong time season were do that November. come weekend some were after early dynamic The and holiday turn that. the what you that -- Bill, on we on if at can demand. the until you depending gives pricing it do and it to capability turn strong want

Bill Shea

Yeah, the overall -- Dan,

Chris McCann

--pricing

Bill Shea

of overall really price in higher-priced items. more really by that One, pricing The order, as components. we the a shift increases quarter dynamic put driven average as in a well featuring all was kind growth were We mix. X during really the the product comprised of did through,

Some labor the that of of going to be going process challenges to knew was packages be the we number had, limited. can we

kind the of and items some higher-priced items. point featured price some So of we the lower suppressed of

Some of this would have impacted top-line. impacted our overall conversion our and

Dan Kurnos

reason But confident today X% been in [Indiscernible] is, question blended versus basically that lot the guys of obvious now growth have the a a in growth growth. of long-term holiday I are the the double-digit everyone's asking you quarter. asked guidance quarter there The outlook. think a average is that understanding I double-digit is And pretty question dynamics for

rather But are And looking you the in What costs companies, all your reduced difficult. this the quarters? why longer-term revenue gives [Indiscernible] we been issue guide double-digit an your guys what sustainable that at of has right? -- are in know I Now, kind e-commerce confidence forecast? with

Chris McCann

at look late a back out We we we where guidance, consideration the X%. as down We quarter retail consumer come into what saw holiday down slowed taken we've think I saw in the during I that the think saw the period. So bit. sales report recently pulled

and that to X% to level it's the the X we're we've seeing. gives had, So of us recognizing the comfort Go forward, growth challenges that still provide cost guidance the that looking ahead.

Bill Shea

going just rate around to the skew first of bit believe year. of do our implies we in a to towards the the X%, basically growth QX. guidance year, Dan, more half a similar We grew little second and that it's have half the going we're

to back, in have of which QX. deferred bit is our impact do of in with the that QX We little a versus consumer, Easter back that in growth pretty macro January. single-digit a end revenue we the had But decrease all when believe this rebound positive. growth challenges And the high QX, shift, environment think overall is the still the double-digit environment and at with that rate we And favors we which going comes the we will consumer the growth. that to

Chris McCann

things as I quarter. think we delivered took We that, beyond us that still challenges give pointed the look Dan, as Bill to this we good just continue some out. optimism, growth

The customers so optimism we performance many positive whether we of those see things continuing in to going company are still does forward, that members going the Celebrations cohort added Passport frequency XXX,XXX to our not the customer new that of of And two we reduce purchase out the at growth, points-based look enhancing laid there, Celebrations double-digit the quarter. multi-brand, quite new new personalization We customer. average Passport customers, out. capabilities. the tiered enhance enhanced with membership We system. our We're times our app program, in three just the person. that grew store multi-category We the the

us and continue as to where challenges, our etc., these and the were. ability going that all So inflationary optimism the manage and of short-term out things get give pointed see consumer, we Bill back some forward. really is costs, through to What the we with

Bill Shea

Yeah, also rates in sharp little the unexpected -- we a marketing as digital happened that got and further then quarter. further the saw into we rise

elections. saw on lows October knew in companies we at were September marketing market. a and in national historic presidential ago, not a year were campaigns so in we June we've the because marketing that We ago recall, had quarter because many year came when around about the the you the rates If quarter talked the challenge -- self-correct them rates a

this what And ultimately against we the a got Yet well comp normalized into month marketing the caused rising holiday of That rates our had by targets we saw in had. as little digital rates we December, marketing season new so year. the us XX%. to marketing some that we and some pull on and bit acquisition to back XX% at customer surprise of caught the a us of more

Chris McCann

new million, of number, compared X.X to was year. down acquisition a customer our great prior why That's

So some the -- the considering late customer we of we was gross acquisition to had we cost felt softness that margin. quarter where invest, pressures beyond new saw And on front. it the got on just in especially then just point got the the per it was prudent the

Dan Kurnos

Got just one margin. basis it. color. That's guide Last lower. The helpful was additional then on midpoint year-over-year at points XX

a basis proof through year? to Now like marketing trying EBITDA. future XXX these the understanding investment I'm of incremental investment of can that costs digital but things balance levels sense your just the running is how against of year-over-year December the get just part is on rates, points is it's things, to on much incremental how that you much out costs, much address unexpected versus how just lower

Bill Shea

of a Ocean is of Yeah, it continuation the that saw. we the -- Freight. We headwinds lot

labor labor and the time, we're we're and to rates. a I Labor going I much some think they time. at rates, very normal. moderate access very still to still of years high to markets spot and the the probably known never ago. over I is new believe think back are the challenges But that While of seeing on that at with of where kind experts were timing going X to moderate, go think they But over they're

So and hour, $XX there's up XX% we probably to paid pre last we over -- -pandemic. an paid that's XX% up it's year what over XX% where

some that are have. challenges we there So ongoing

you some the help Hopewell less to going automate of of the did our were margin maybe dynamic to use the going we're manufacturing days we've we inventory, offset some and going the holidays to sheet some anyway, the to to the And of invest in year, sure to automation capital, sell in these. reliant with as flaw back we're that within more on as Chris to We're continue we're those to working labor. to early other period initiatives in use have half continue to challenges. facility. competitive get We some to We going continue We're play use And occasions. of our our That in the of a continue as that. inventory talked our facility continuing about the peak to core into supply we the to test that to we're offset going of and facilities and that see mentioned, But pressures bringing to place categories pre we XX% very continue labor out going as have on pricing our we're chain, investments on facility. we're distribution. of is seasonal everyday be volume strong of We've those short-term that to less continue help staff dynamic during going inventory with make ahead still market we're know holiday replenish to that to the -build to to to pricing we exist. through going we're inventory made balance XX%

Dan Kurnos

Is appreciate no just enough guys short-term you really leave Chris taken We've most it. long-term just are. with of I to of that Okay. but issues change clear, be up time. messaging the I'll here, the is you fair? in there where -- is your

Chris McCann

Dan. That's Yes. fair,

long-term optimism Our same. remains the

Dan Kurnos

Thanks, guys. Great.

Chris McCann

Thank you.

Operator

from next Please question with NOBLE ahead. Kupinski Michael Capital go comes Markets. The

Michael Kupinski

a asked side. the I couple marketing have on of I my of you. questions Dan know Thank questions, but most

to maybe I -channel bit the but about obviously like you of it seems approach gifting. the was effective the about marketing, television I talk You little the that just you everyday stepped and marketing bit have you did mentioned an -- that your with talked little a less omni was up a digital. notice advertising that whether marketing Could you I using of effectiveness to you of just know at you a in content it's a give that not the of or you maybe types could forward, maybe or and look and the marketing feel marketing? that just marketing, you sense maybe you're in content, shift look us whether in different channels going whether it's shift if how in how at plan or effective you, was

Chris McCann

Michael, you for thank that question.

some at the spend especially on the deeper we industry-wide did also even into and TV costs in pleased one OTT the increased. during more there, weekend. got on linear of we as those and to then brands, got an consumer d the strategies into quarter, funnel back Black And marketing. marketing We the looked December, during spend the channels, But more in capabilities, with both holiday marketing David of there. Harry we following softer television, but spend was said, linear Friday as top overall, especially we as As allocate consumer had we suspended food were the we going as and start return the saw, pull season, it more

effectiveness therefore, the of televisions as that So some of weakened well.

on we're as is classes, really we the Pulse we selling. customers. I with relationships this had years, and hitting content. the XX remarks, workshops, my we we our to really look going how utilizing that weekend, which how into market. so out forward is with And moved use content, accelerated about we half program build capabilities Celebrations X a contacts had as engagement pandemic, out engaging send for not million we is during with we we strategy on but year, point, about as how that you're redefining videos, why pointing out first the our times, we've past I how And highlighted It's This in measuring and engagement how It's the formal them. our of sending about how go we just the been newsletter much that's go-to-market think, two the though customers engage differently. our started,

So they multichannel, going an approach about. Passport, retention looking deepen of we get pointed a omni we're speak and frequency have Celebrations multi-product the become use while -channel we deepen Because really core that purchases, those their engagement, customer as for. cohorts then The we we often that they basis joined customers? and how do have will we the forward, you at marketing. engagement with to is we its as our out, the At category

connection, looks our think the and do It's we're more How So all to -- with and product that and to together the that promotional head. pricing comes a engaging is inspire just all that not we company celebration. you hit advertising. customer nail I on ways and simply expression,

Michael Kupinski

my you. asked Dan of questions. most Thank

So that's have. I Thanks. all

Operator

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

Linda Bolton Weiser

Yes, hi. Good morning.

So can pricing to we understood. just I the go I'm back not because sure

higher skews take did You just just raise average for apples But on intentional of price you if me price percentage higher items. That you point towards pricing item? did kind to apples like actually So the highlighted that that mix point. did some price the of in raise mentioned some like price you us or what and that like item, in as to can was driver did you place. had us a give average idea Thanks. or what give increase you price idea what that, percentage about points

Chris McCann

Linda. Yes,

items think drive merchandise to you're both the did orders, AOV. accounts. I right position higher-price on higher-price in We

there. be optimize color. sure would constraints would it's capacity AOV, raise certain say you on certain. knew, we we We addition, we wanted to As prices Bill, in did make

Bill Shea

split, real-time can that evenly repositioning is, we X.X% What saw again, pretty monitor is can always and pricing pretty our of and the pricing other with stock. brands it's evenly say that saw and growth split on we pull David -- between items. in that did we of higher-priced would to In areas, I some higher some the we Harry our and we and pricing of have back. food this dynamic particular

went the the reduce and getting we and as consumer to sure right. pricing back, as the make have saw the were we to As did consumer we pricing with the on orders back on holiday conversion play pull

marketplace It marketplace -- Mall. very there, and example a very out there. Personalization it particular in saw was competitive was big promotional we out So

So we weren't wanted. while of rates we the we December, that conversion pricing, try back month to the increase having to getting in pricing up wind we pull because

Chris McCann

of example for on there that example. is the and in the Harry flip Another side David Linda, business,

items. price clearly us that for is up lessons ability product coming sold we sold scale point have price -- in an to the we the our the of tells the have and merchandise very there us One of What category $XXX And higher. to holiday $XXX to learned it out ability well. we point offerings expand

Linda Bolton Weiser

etc., analysts a I'm year. that Okay. following are concerned comparisons just of consumer I just stimulus, last about little thread, I us lot versus wonder, -- a less consumer, bit the more consumer the this of the with getting higher items, they not marry How the of points, idea dollars, is do did? you that higher price expensive hundreds that idea benefits stimulus

Bill Shea

I -- to was access labor. think the holiday without access season what labor though, challenges the with some we we of did factor during the had other

the only had we units. is we through number So x funnel knew capacity of

labor-intensive So more offering. back we product scaled on

but Own very the of products have popular, that labor-intensive. some that So we they're Your Create are

So we we we because units. higher only And pulled featuring price for pulled those. back points number price capacity had back we lower points the knew on X of because we're the on

some tried know throughput we we both demand of get did and held will to bottom which the we we're back optimize things best from that for what think optimize. on can us. achieving. we We top the would've overall perspective, But a drive So the results we line

Chris McCann

we offerings we And attract want offering -- who to made, base. enough large have and always customers. of of about of to customer your a price, points broad your our our XX% the we we demographic sure with There customers, do that broad saying care making always is there's XX% adage all don't sure a strategy make the customers is we're price and have you're for but enough of old they

Bill Shea

points have price holiday from away constraints as that, for move consumer. offering on a season we have we will the -- the we as and board And less of

Linda Bolton Weiser

And another then question the side. just on kind cost of

even months FedEx giving in October. you've pressures, you've talking been you've the well were labor, been and of in September, cost very all many and a about something the for known were said charges like You these and increase quantification aware

to you actually offset. try to could plan So

when it very, -- what it So your what what like street the your different because had was the surcharges? very most you the what FedEx in different? gross Was labor? one that it the think plan, what area was Was significantly about the you was shipping Was came really expected. different what than from in margin is

Bill Shea

could point built in wish that being about they we increases were We into the Freight, the I certainly clearly contracted ones which to to Spot on buffers holiday for significant choking had the one, rates and go There to and are basically has were plan rates. talking to So X ignored and times, everything throughout there And of season. are but escalated on [Indiscernible], We the it Ocean XX we Ocean. spot labor, market. market our several out-balance shipping, we're impacts. headwinds. are all had I contracted

So in even have it October one course and up. kept going call, in Fuel our we exceeded of set mind dramatically. that

increases An these that. the package few residential per knew labor wage we from $XX increase labor. So yes, we and years were all up to cost cost well concerned a relatively -- to labor that low have surcharges, we access about below surcharges federal between, our wanted are of went because to we kept carriers the single-digit rising. just added yes that in We year-over-year. we ago; and the so up going holiday contracted minimum about were surcharges, with paying But rates third-party surcharges double-digit fuel

were paying going we paying $XX. we're $XX. and a this into under well Now, year ago, -- And

with And guys mentioned delays after inventory just numbers remarks supply that had some those for the we the of million an We in the the formal guys deadlines because write-off got escalated So our inventory chain, some that and of dates due and write had big for products in in impact. box had the orders We that us. on significantly. inventory, We box inventory wholesale they about we've deliver to got canceled on the after to. off. a incremental we the big $X

top So margin. both line both impacted and

come where off levels our growth, of levels, the the holiday where line these lines a would greater a November had at we from trend were double-digit at were had on we top some built the top these over perspective. cost perspective. just the top in good we certain escalated line and a into very obviously, dramatically two line -- costs. of of But with end So consecutive the from December. feeling months would confident And number And up were of it absorb We just and buffers. of end were October

Chris McCann

of And that as the some Bill impacted of top-line mentioned, also business.

the strong growth guess Cyber As then off had X% time points. during Friday a well. going probably I'm to labor up double-digit because that inventory we of challenges, that. after as orders. I challenges table. probably and right we pull canceled had we to to at some least mean, it the back We we saw But on tailed period ramping on demand Bill of left said, Black a good, significant the Monday,

the So that top-line as was challenges on caused well. that

Linda Bolton Weiser

Okay.

Just kind of a -- one just more thing. housekeeping

I Just fairly shifts, know. don't on big. thought was it Easter the actually I

of in right Can So and thinking I or don't third be get quantify a I double-digit you revenue down even it can am our bit organic, might strong at in so model? at quarter least we quarter. all the know, sort then shift the fourth in pretty the

Bill Shea

we because some QX. is million fully bigger QX. piece Easter the half capture think of second or in the the do of in into similar $XX But to holiday it is guidance will the the implies Easter from the QX will we of have grow revenue. towards we weighted year. of goes that some what growth more Again, in It an would into QX. in half QX QX of be the We revenue year Yeah. so the -- heavily incremental go of as first the still doesn't food QX But to as shift than well. brands

Linda Bolton Weiser

for year could Okay. slightly is possible but And yet, I last one it one is didn't run flow cash free profitable through the negative, just a model negative. I be promise, free, my

Chris McCann

Bill.

Bill Shea

to will going free year-over-year. to free on line it's from perspective is gave we our that best there our sheet. balance line is cash unknown to put flow big guidance year. position a our We It's top strong be The to flow. And use want want cash significantly cash position in working bottom guidance possible revised strong a the investment for revised in obviously impact from down The the -- We us next capital. perspective. use

capital, in that advantage extent the that cash that. see working we free to going we're flow. where opportunities to of So investing And we're take impacts inventory obviously, to get early,

really depend positive where up. position ends a it inventory for So because as us sort of in for that a puts any decrement us the it with year. really associated does is on next better But

Linda Bolton Weiser

guys. lot, Okay. Well, thanks a

Chris McCann

Thanks Linda

Operator

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

Alex Fuhrman

like Mother's it going Hey, taking company of in e-commerce my aren't chain capacity. picture, sounds you obviously day -- you're start least about seasonal shipping these from day, you're get every for what and to Day a as at big and and guys. against Valentine's talk not wanted workers for supply big Thanks and really for But the for for competing pressure other holidays headwinds away. necessarily labor Valentine's Mother's terms seeing up I day question. gearing

the season versus holidays how a curious pressures then kind wondering of the think year. that your those you those pressures kind the ease holiday about Just gifting about just major of all and versus the holiday up everyday season Just more other you the little component. towards of how during as important bit? get we rest of Do think

Bill Shea

is the floral the Well, half Alex, of first second than centric the of half more year year. the obviously

we that for with that [Indiscernible] of they're part as While the impact standpoint. to the discussed, cost [Indiscernible] susceptible. the have least a large much doesn't these the product, model pressures not we've of fulfilling distribution it [Indiscernible] -- flow to At from as that immune is us not

with of Ocean in will the year, it the second the the of half mix while into our changes half challenges the of year. some higher second sales continue Freight, So labor,

gross gross be on as margin, the not impacts So consolidated margin will great.

year. in the we of from position I head significant flow the we're that years think in and based floral supply of good supply, a industry we as floral standpoint in upon the to that second the contacts from the holidays access standpoint we've made many over size of half feel into a a all this

Alex Fuhrman

Okay. That's Bill. great. Thanks,

Operator

The Lane with Research. Please comes Doug next Lane ahead. question from go

Doug Lane

works? granularity March quarters. increases the and through go have in Yes. and talk on you can't the the pricing morning, everybody. us Hi. Maybe you in Good feel where take and a June specific give Can some on businesses price can with really what you forward-looking

Chris McCann

thank Doug, question. your think I you for

As I a really we pricing, at the is into. think that move dynamic it we look environment

testing David of higher-priced of were earlier, Harry out able point utilization more are be cock. increases get we elasticity, into dynamic see price view to the where But price where with successful to a pointed really Bill point. example, we more on able while dollars, price some more lower margin for us for really But and we -- business. year, increase it we'll is is as we move into everyday the gross see the second pull manage going which a by It's AB we by if less And thus we were items. constant the way driven half throughout of and a competitive the you we have then As take price decrementing opportunity decrementing environment. conversion the we back. that day. and some tests and price rate,

what with on see to. set it's that we're initiatives, customers our it forget real-time happens opposed effort as and and it's to kind of, it working So pricing a the

Doug Lane

think me? Well, at pricing for I'm of that makes go you you the talked Mall, hear actions missed up ended and quarter? I that of the again this, I you Personalization Can then that your sense. implemented just but pricing them if about back over did end I And pulling sorry

Bill Shea

we Yes, did.

with from perspective. we're to throughout Just we pricing all business that of doing playing our were our trying and versus conversion segments, like optimize optimize pricing revenue to

was and of it very the category, month a that in So especially competitive in promotional environment, December.

in, playing we were we with did have back. that some pricing pull to So putting and

Doug Lane

where take then raise you And to some prices? that is make businesses pricing? an opportunity have it catalogs difficult when And catalogs, you the you there to Okay. reprint there have doesn't other

Chris McCann

adjust catalog with or what on have us the can't to pricing always compliance our with we been customers. that the So you're give from testing still so on -- is in done to catalog we're matter will web calling published us that accessing fair marketing web. the But to is we've what from a specifically dynamic mechanism the we've a we catalog price pricing catalog be it. the we're so ability and the and sure if know able being on what the No make would number, have

our from we saw next pricing forward, we take learnings look plan the we and as season. as pricing that into apply So we'll that online the catalog holiday the dynamic

Doug Lane

Okay, you. Thank great.

Chris McCann

you, Thank Doug.

Operator

question The Research. comes from Please ahead. Tim go Northcoast Vierengel with next

Timothy Vierengel

Thank have could you you wondering some pressures [Indiscernible] coming could explaining for if been but the taking you more my bit just some specifically of I Freight. was spend chain if from a answered, question. time Most build specifically of already Ocean supply

if also some anything out P I specific or was delays gift the Floral Mall called segment. segment. impacted the through government for Consumer You the wondering

of was revenue. the I think in that terms surprise biggest

that if kind of in So that Thank you. wondering would there's of unforeseen segment. sort just delays fall there call any

Bill Shea

Yes.

had. standpoint, it's of So that it. from tremendous two that price an door-to-door. aspects Ocean you increase contract when we Freight, Freight One, for Ocean Normally, in

You to get it Asia right your from facilities.

The Port as dramatically. see up there's But and went a then you up So still like markets the those if of it, you spot rates today, dramatically. follow L.A. XXX of tankers went outside

incur we lot to trucks a Because we of product ability the increase business own in and us where to that the of products. than the an So the as dock delays prior that And this a been congestion, cases having in million our assemble wind on our that's component problems. in up grab impact in created those why saw got on million, late, we're spending cause number delays costs did more But of that we significant the $XX our years. well. the costs incremental we had in of have $XX and because unexpected having product bring did port at

So later year. labor the pushed to challenges in we back everything got had and that the with

products pick to -- about our we all was wanted the And side. wholesale to the had and wholesale the choose up side and remarks orders on we side, Chris on consumer we of we That to wind that the wanted having side. we the business. canceled formal food talked in So really of the on mentioned types build within

the and On the product impact in food really demand have didn't we fall on in. delays PMall But -- like ultimately, the getting -- side, impact did it we of side had business. the didn't it

Timothy Vierengel

is a segment noise falloff demand maybe clean at, some in I opposed as clarify, and it looking Floral just through the guess Okay. fulfillment Mall with was to P capacity the to on correct? Yes. Consumer It's [Indiscernible], I

Bill Shea

Yeah.

are [Indiscernible] They this, category, of product a I just very that think price they for tough product very market over on under promotional they the point that holiday environment. And year-ago a a have comp grew PMall lower it and grew in comping X% that time in XX% period. in competitive category. kind was competitive

Chris McCann

the categories, out Even we shares our see personalization with that it and the I still we point gain or categories growth data whether operated think the the across our to bullish Bill, in of product including the macro optimistic environment from remain challenging of in, we headwinds environment It's that faced. the our view and and very gained that very we future in best key PMall. that on Personalization category, be is in it'd it's categories. our estimates be share in we our quite important major best whether floral, to product frankly all

Timothy Vierengel

promotional? guess driving I Thank are -- right. the you. established that maybe just haven't Thank just yet the you players do eye there it see competition? more increased is All being that lastly, are caught that really you. our competitors Or new just

Chris McCann

promotional. More of Certainly the players established being the more latter.

to went early. be. we of - season Customers have as into most retailers I to -- think not think we early. holiday forward promotional turned I --a would some that Because lot purchasing and pull e tailers saw out be expecting it consumers as this

it environment. us key as competitive category a season, for became hit especially. Personalization out Bill the we the holiday as pointed very And in So

Timothy Vierengel

All right. Thank you Chris and Bill.

Operator

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

Chris McCann

Great. morning. you all joining Well, the this opportunity. us thank appreciate We for

urge to the forward. we I opportunity please remain much. that we to the corner of the see, remember Thank your early to to and so accomplishments connect, orders Right can around inspire we've all Valentine's have that for is optimistic the you us platform the place business, you gives going As extremely very you Valentine's. that the Day, people future celebrate, on express, had, and

Operator

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

disconnect. may You now

1-800-FLOWERS.COM (FLWS) 27 Jan 222022 Q2 Earnings call transcript