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1-800-Flowers.com, Inc. (FLWS)
F2Q09 (Qtr End 12/28/08) Earnings Call
January 29, 2009 11:00 AM ET
Joseph D. Pititto - Vice President of Investor Relations
James F. McCann - Chairman and Chief Executive Officer
William E. Shea - SVP, Finance and Administration, Treasurer and Chief Financial Officer
Christopher G. McCann - President
Jennifer Watson - Goldman Sachs
Jeffrey S. Stein - KeyBanc Capital Markets
Kristine Koerber - JMP Securities
David Coven - Midwood Capital
Ronald Bookbinder - Global Hunter Securities
Previous Statements by FLWS
» 1-800-FLOWERS.COM Inc. F4Q09 (Qtr End 06/28/2009) Earnings Call Transcript
» 1-800-Flowers.com, Inc. F3Q09 (Qtr End 29/03/09) Earnings Call Transcript
» 1-800-FLOWERS.COM, Inc. F1Q09 (Qtr End 09/30/08) Earnings Call Transcript
At this for opening remarks and introduction I would like turn the call over to the company's Vice President of Investor Relations, Joseph Pititto. Please go ahead, sir.
Joseph D. Pititto
Thanks Kim. Good morning and thank you all for joining us today to discuss 1-800-Flowers.com's financial results for fiscal 2009 second quarter. My name Joe Pititto, and I am Vice President of Investor Relations.
Those of you who have not received the copy of our press release issued earlier this morning, the release can be accessed at the Investor Relations section of our website at 1800flowers.com or you can call Patty Altadonna at 516-237-6113 to receive a copy of the release by email or fax.
In terms of structure our call today will begin with brief formal marks and then we will open the call to your questions. Presenting today will be Jim McCann, CEO; and Bill Shea, CFO. Also joining us today for the Q&A section of our call is Chris McCann, our President.
Before we begin I need to remind everyone that a number of the statements that we will make today may be forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995.
These statements involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the applicable statements. For a detailed description of these risks and uncertainties, please refer to our press release issued this morning as well as our SEC filings, including the company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.
In addition, this morning we will discuss certain supplemental financial measures that were not prepared in accordance with Generally Accepted Accounting Principles. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures can be found in the tables accompanying the company's press release issued this morning. The company expressly disclaims any intent or obligation to update any of the forward-looking statements made in today's call, and recordings of today's call, the press release issued earlier today or in any of the SEC filings except as may be otherwise stated by the company.
I will now turn the call over to Jim McCann.
James F. McCann
Good morning, everyone. For our fiscal second quarter total revenues came in below our expectations due to the unprecedented economic weakness, that forced consumers to dramatically reduce their spending during the key holiday shopping season.
Revenue for the period, revenues were $329.3 million down 1.5% compared to the prior year. This included the contribution from DesignPac Gifts which we acquired last April, which performed well during the quarter. Excluding these contributions revenues declined 14% compared to the second quarter last year.
Despite this we were able to achieve solid profitability including adjusted net income of approximately $50 million or $0.23 per share and an EBITDA margin of 10% or $33 million during the period in which many retailers were reporting losses.
During the quarter we improved our operating expense ratio by 210 basis points. This reflects a combination of lower operating cost associated with the DesignPac Gifts business that was continuation of the programs that we initiated more than two years ago to reduce our operating expense ratio.
These programs have enabled us to make more than $25 million, of fixed component $25 million of cost out of our operating platform. There by reducing our annual operating expense ratio by 290 basis point between the fiscal 2006 and 2008.
We accomplished doing a number of initiatives including consolidating the service and supply vendors and the renegotiation of contracts, and by optimizing our customer service platform by expanding our home agent network and reducing our fixed utility and labor costs.
I will tell though but we are better positioned to weather the current economic downturn and emerge being a more profitable company when the macro economy begins to improve. With I said we expect our current conditions will remain very challenging going forward. Therefore, we are taking additional actions necessary to scale our operating expenses appropriately.
We expect these efforts to provide an additional $50 million for cost savings in our fiscal 2010 year which begins this July. Among these initiatives are; a 10% reduction in salaried, full-time labor force implemented earlier this month. As well as reductions in our variable labor costs.
We are significantly downsizing our Home and Children's gift business segments including reductions in catalog marketing and resizing the business in accordance with the continuing weakness in the overall home sector.
We are adjusting our marketing spend across all of our brands, scaling appropriately to lower consumer demand and redeploying spending to achieve enhanced returns. We are revamping our IT infrastructure, consolidating hosting sites and rationalizing maintenance and support applications to reduce costs while maintaining performance and availability. And we're working to further virtualize our customer service platform using technology to expand our home agent network that help further reduce our service costs.