1-800-FLOWERS.COM, Inc. (FLWS)
F3Q10 (Qtr End 03/28/10) Earnings Call
April 28, 2010 11:00 am ET
Joseph Pititto - VP, IR
Jim McCann - CEO
Bill Shea - CFO
Chris McCann - President
Eric Beder - Brean Murray Carrett
Ronald Bookbinder - Global Hunter
Anthony Lebiedzinski - Sidoti & Company
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 F2Q09 (Qtr End 12/28/08) Earnings Call Transcript
Thanks Jonathan. Good morning and thank you all for joining us today to discuss the 1-800-FLOWERS.COM fiscal results for our 2010 third quarter. Those of you who have not received the copy of our press release earlier this morning, the release can be accessed at the Investor Relation Section of our website at 1-800-FLOWERS.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 remarks and then we'll open the call for your questions. Presenting today will be Jim McCann, CEO, Chris McCann, President and Bill Shea, Chief Financial Officer.
Before I begin, I need to remind everyone that a number of the statements that we'll 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 adjusted results and 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, any recordings of today's call, the press release issued earlier today or any of it’s SEC filings except as maybe otherwise stated by the company.
I'll now turn the call over to Jim McCann.
Good morning everyone, as you know our fiscal third quarter is dominated by our consumer floral business which represented a majority of our revenue in contribution margin for the period due primarily to the Valentines Day holiday. During the quarter we saw a number of positive trends that I will discuss in a moment. However, our overall financial results for the period were impacted by the unsatisfied performance of the promotional programs that we deployed to offset the anticipated affects of the Valentine Sunday day-placement.
As we headed into this year’s Valentine’s holiday we made the decision to step up our marketing spending and provide consumers with free shipping on no service charge promotion to incent early ordering for early delivery. On a positive note we did see an increase in order volume for the holiday period. This is a continuation of the improving trend that we have seen in our consumer floral category since the 20% decline in last year's Valentine period.
We also achieved an increase in the number of customers we attracted which were up approximately 6% for the quarter. However, the listed orders for the holiday was insufficient to offset the impact of our gross margin average order value related to these promotions. This combined with the increase in advertising spending to drive the promotion resulted in significantly lower category contribution which impacted overall EBITDA and EPS for the quarter. It is important to note that this promotional program was a one-time effort directly related to this year's day placement of Valentine's Day and not something we will repeat going forward. With that said, we drive a number of very key learning’s from the program which I'll ask Chris to describe in more detail in his remarks later on in this call.
As I mentioned earlier, this year's Valentine's holiday we have seen an improving trend in our consumer floral business in terms of revenue and gross margin. With the exception of the recent Valentine's Day we are seeing a continuation of these trend as well as some signs of gradual improvement in the overall consumer discretionary spending. We believe these trends bode well for our current quarter and for improvement in the consumer floral category results of fiscal 2011. It is also worth noting we have seen a significant boost in brand awareness and consumer engagement since our recent appearance on the CBS hit television show Undercover Boss which attracted more than 15 million viewers on its first airing. This was a tremendous experience for our company that put a much deserved spotlight on some of the great people working in our organization as well as the wonderfully talented and passionate florists in our franchise flower shops around the country.
This show also helped illustrate the unique family florist heritage of the 1-800-FLOWERS.COM brand and the importance of our efforts to engage with our customers and develop a relationship as their florist. Based on the great response we have had from our customers, we view this as a great branding event that we plan to leverage in our marketing and merchandising programs going forward. I will ask the star of the show, my brother Chris, to provide some highlights from his experience in a few minutes.