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1-800-Flowers.com, Inc. (FLWS)
F3Q09 (Qtr End 29/03/09) Earnings Call
April 30, 2009 11:00 am ET
Joseph Pititto - VP of IR
Jim McCann - Chairman and CEO
Bill Shea - SVP, Finance and Administration, Treasurer and CFO
Chris McCann - President
Kristine Koerber - JMP Securities
Eric Beder - Brean Murray
Anthony Lebiedzinski - Sidoti & Company
Jennifer Watson - Goldman Sachs
Previous Statements by FLWS
» 1-800-FLOWERS.COM Inc. F4Q09 (Qtr End 06/28/2009) Earnings Call Transcript
» 1-800-Flowers.com F2Q09 (Qtr End 12/28/08) Earnings Call Transcript
» 1-800-FLOWERS.COM, Inc. F1Q09 (Qtr End 09/30/08) Earnings Call Transcript
At this time for opening remarks and introductions, I would like to turn the call over to the company's Vice President of Investor Relations, Joseph Pititto. Mr. Pititto, please go ahead, sir.
Thanks [Lotha]. Good morning and thank you all for joining us today to discuss the 1-800-Flowers.com's financial results for our fiscal 2009 third quarter. My name is Joseph Pititto, and I'm 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 the structure, our call today will begin with brief formal remarks 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 maybe 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 are 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 the recording of today's call, the press release issued earlier today or any of the SEC filings except as maybe otherwise stated by the company.
I will now turn the call over to Jim McCann.
Good morning, everyone. As we previously announced, the revenues for our fiscal third quarter declined 21%, primarily reflecting the continued weakness in the retail sector. Revenues were also affected by the shift of the Easter holiday into our fiscal fourth quarter this year and lower Valentine sales to the holiday falling on a Saturday, rather than a weekday, which is historically much better for our business.
The factors, in fact accounted for approximately 25% of the total revenue declined during the period. With revenue growth clearly challenged by the severity of the current economy downturns, we have intensified our efforts to reduce operating expenses and allowing our cost structure commensurate with the reduced level of consumer demand. The demand we're seeing, we have a demonstrated ability in this area having taken more than $25 million of cost out of our operating platform between fiscal 2006 and 2008. We've targeted an additional $50 million in operating expense reductions under the accelerated cost reduction program that we announced back in January.
I am pleased to report that we have made excellent progress towards this goal and we expect to fully realize these cost savings in fiscal 2010, which begins in July.
Let me highlight a few of these cost saving initiatives which will begin in this third quarter. We reduced our labor cost by 10% across the company. We began the downsizing of our Home & Children's category significantly, including significant reductions in catalog marketing and prospectus.
We reduced and reallocated our marketing spend across all of our brands, scaling it to lower customer demand and to achieve enhanced returns. We've put in place a plan to revamp our IT infrastructure, consolidating hosting sites and rationalizing maintenance and support applications to reduce costs.
We announced that we will be closing a Midwest service center, further virtualizing our customer service platform. This represents our second fiscal closing this fiscal year. Importantly, we retained virtually all pertaining to high quality service agents at these locations because they chose to remain with us and transition to our home agent network.
In addition to our focus on operating expenses, the we implemented plans to significantly scale back our capital expenditures in fiscal 2010. As a result of these initiatives and others underway we are moving quickly and efficiently to maintain profitability while positioning ourselves to emerge an even more profitable company when economic conditions allow.
Before I turn the call over to Bill for his review on specific results and metrics for the quarter, I’d like to highlight a few additional areas. First concerns our balance sheet, we finished the fiscal third quarter with more than $13 million in cash and no debt outstanding our revolving credit facilities. As we previously announced, we work proactively with our bank syndicates led by JP Morgan Chase to mend our bank credit facility. As part of this effort, we paid down our outstanding term loans by $20 million, reducing debt under the facility to $92.4 million.