1-800-Flowers.Com Inc Q4 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Anthony Lebiedzinski - Sidoti - Analyst : Good morning, everyone. And Bill, congratulations on your pending retirement. Certainly, enjoyed working with you for many years. And James, I look forward to working with you as well. So I guess first, just looking at the quarter here. So GFGB revenue decline of 13% was more surprising to us and Harry & David is the largest brand within that segment which generally targets a higher income consumer. So you guys talked about seeing weakness in lower income consumers which is understandable. But just wanted to kind of like, if you look at the different brands, maybe could you just talk more a little bit as far as where you're seeing the biggest kind of weakness and then where you're seeing some signs of strength? James Mccann - 1-800-Flowers.Com Inc - Chairman of the Board, Chief Executive Officer Good morning, Anthony. Thanks for your question. It's Jim. By the way, the best pronunciation of your last name we've ever heard.

Question: Anthony Lebiedzinski - Sidoti - Analyst : Got it. All right. That's very helpful. And just to follow up on the wholesale side. So glad to hear that you expect that component of your revenue to be up in fiscal '25. As far as timing of that, I know that can fluctuate between 1Q and 2Q. What is your general sense as to when you'll see that pickup in revenue, whether it's going to be more 1Q or 2Q or is it too early to say for sure? William Shea - 1-800-Flowers.Com Inc - Chief Financial Officer, Senior Vice President, Treasurer Yeah. It would definitely be Q2. There's always the timing at the end of Q1 into Q2. So we're still -- and that's sometimes dictated by the big box guys. But the growth will all be in Q2. A large majority of those revenues are in Q2 anyway. James Mccann - 1-800-Flowers.Com Inc - Chairman of the Board, Chief Executive Officer So the good news is, we know it's coming because we've already booked the business. It's just a question of shipping dates that they request. And that's right around the end of the first quarter. So, as Bill says, you're going to see the improvement that we budgeted for, planned, and now have come in the second quarter.

Question: Anthony Lebiedzinski - Sidoti - Analyst : Got you, okay. And then lastly for me, before I pass it on to others. So you made a small acquisition of a high-end chocolate company. Can you comment as far as like how to think about the impact of that and plus also, what is your appetite for additional acquisitions? James Mccann - 1-800-Flowers.Com Inc - Chairman of the Board, Chief Executive Officer Sure, Anthony. Our appetite -- I'll start. Well, our appetite is kind of robust and the buffet is getting nicer. What I mean is, because of the capital environment we're in, companies that have struggled to find a bottom line and don't have very close prospects of turning profitable, as you would well imagine, are struggling to find capital, that's made the inbound efforts to us quite robust of late. So I think there'll be some opportunities. I'm certain there'll be some opportunities. We always have to manage our efforts there to see if they really do pay off for us. There's always integration risk, there's obviously the capital side of things. But I think there's going to be a robust set of opportunities. What we've done in the last year and a half or so on the acquisition side is buy things that really do rev up our primary initiatives. Our Work Smarter initiatives and our platform they lever our platform. So let me turn to the one you mentioned, Scharffen Berger. This is a brand frankly, I looked at 15 years ago because of its terrific brand position, its uniqueness, its high-quality product offerings. Another company beat us to the punch there and bought that company. Fortunately for us, it came back around. So it's very small. But everything about the story, everything about the brand, everything about its recipes, its unique product are still intact, has great people there. And coincidentally, it's only 10 minutes away from our facilities in Medford, Oregon, where it was most recently located. So very easy for us to tuck in. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Anthony Lebiedzinski - Sidoti - Analyst : Thank you very much, and best of luck. James Mccann - 1-800-Flowers.Com Inc - Chairman of the Board, Chief Executive Officer Thanks, Anthony.

Question: Michael Kupinski - NOBLE Capital Markets - Analyst : Thank you and good morning, everyone. And Bill, let me offer my congratulations on your retirement. I can tell you that it's been a tremendous pleasure working with you over the years, and I'm going to miss you. And I want to welcome James as well. I look forward to working with you more closely, James. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Michael Kupinski - NOBLE Capital Markets - Analyst : Got you. And then regarding margins, obviously you're expecting some improvement, even though not as much as what we've had more recently. But some of the commodity prices, as you mentioned, have been kind of stubbornly high, cocoa, milk, eggs, and so forth. And I was just wondering in terms of commodity prices specifically, what are your thoughts in terms of how that goes into 2025? William Shea - 1-800-Flowers.Com Inc - Chief Financial Officer, Senior Vice President, Treasurer Yes. I mean, certain commodity costs, as you mentioned, have reverted back to their mean wheat, corn, actually eggs, even sugar has come down and reverted back to their mean. But you also mentioned cocoa. Cocoa is at all-time highs or was at all-time highs. We luckily did lock in some pricing. It's an increase year-over-year, but we've locked in pricing for the two -- next two holiday seasons at more modest increases, but it is an increase. Fuel continues to be high and inbound and outbound freight continue to be -- cost us more year-over-year. The inbound freight, again, we've locked in pricing that are competitive but the spot market is very high now. So it's hard if you go outside your contractual volumes in a particular month not to have increases on the inbound volume. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Michael Kupinski - NOBLE Capital Markets - Analyst : Got you. Those were my major questions. I appreciate it. Thank you. James Mccann - 1-800-Flowers.Com Inc - Chairman of the Board, Chief Executive Officer Thank you, Michael. William Shea - 1-800-Flowers.Com Inc - Chief Financial Officer, Senior Vice President, Treasurer Thank you, Michael.

Question: Alex Fuhrman - Craig-Hallum - Analyst : Hey guys, thanks very much for taking my questions. Bill, congratulations on your retirement. It's been great getting to know you over the last decade or so. Wanted to ask you guys, what have you been seeing in terms of customer acquisition costs? Obviously, there's been a lot going on this year with the Olympics and now the election. Curious if you think there might be an opportunity to accelerate efforts to go after new customers after the election. James Mccann - 1-800-Flowers.Com Inc - Chairman of the Board, Chief Executive Officer I think that's very much the case. We've -- looking historically, we've been at this for a long time. Elections, especially when they're very contentious and I can't remember the last one that wasn't -- or distraction. They're a distraction from a public attention point of view. And there's so much money pouring into the markets to buy media space in radio, TV, and certainly in every online media. So we're not expecting much of a change in our trend lines before the election. But we do think there's a significant opportunity post-election for us to step into the market more meaningfully. Overall, I think, as we said, our marketing spend is budgeted to be up this year. And we think there's real good reason, a real opportunity there. We continue to gain market share in our core businesses, and I think the cost of acquisition of customers is one of the reasons for that because it is historically high and likely to stay there. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Alex Fuhrman - Craig-Hallum - Analyst : Okay. That's really helpful. Thomas Hartnett - 1-800-Flowers.Com Inc - President Yes. We see -- Alex, we see it moderating, but it won't be universally moderating. We -- I mean, obviously, we have a tremendous amount of lines in the water all the time, and we're measuring each one of those activities. So we have a pretty good idea what our playbook is going to be, post-election year.

Question: Dough Lane - Water Tower Research - Analyst : Yeah. Hi. Good morning, everybody. And congratulations, Bill, on your retirement. Just want to drill down on guidance here a little bit. The wholesale orders are encouraging for the December quarter. It's important for that quarter. And you mentioned the first quarter. The September quarter is likely to be sort of continuing the trends of the second half of the last fiscal year. So that implies we'll see hopefully positive signs in front of some sales numbers in the last three quarters of this fiscal year. Do you think it could be as soon as the December quarter? William Shea - 1-800-Flowers.Com Inc - Chief Financial Officer, Senior Vice President, Treasurer Yeah, we thought -- we expect that the trend lines will start -- will improve in the second quarter. Yes.

Question: Dough Lane - Water Tower Research - Analyst : Okay. William Shea - 1-800-Flowers.Com Inc - Chief Financial Officer, Senior Vice President, Treasurer We're not ready to declare victory yet, though. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Dough Lane - Water Tower Research - Analyst : No, right, I get it. It's still a very uncertain environment out there. And also on the margins, I think it was asked earlier about commodity costs. And certainly, in the June quarter, the margins in the Gourmet Foods & Gift Baskets were below what I was expecting. I just wondered how much of that was because the sales were lower than expected or how much of that is because of some sort of a rise in the input cost front that you were unexpected -- that you were not expecting? William Shea - 1-800-Flowers.Com Inc - Chief Financial Officer, Senior Vice President, Treasurer Well, again, I would say margins came in where we were expecting it. The top line was softer than we hoped for. But margins, for the year came in very nicely. We're comping against in the fourth quarter already nicely improved margins a year ago in the fourth quarter. So the moderation of the improvement was expected on our side. Certainly, as with greater sales, there's some leverage of fixed costs that help margins, but much more the impacts of margins are everything from commodity costs, inbound and outbound, freight, labor, et cetera.

Question: Dough Lane - Water Tower Research - Analyst : Okay, fair enough. Yeah, that makes sense. And then you haven't really talked about PersonalizationMall. That was a big acquisition for you, maybe it hasn't worked out quite as well as you anticipated, but still a big business. Can you just comment maybe, Tom, on how PersonalizationMall is going? What your outlook is there for fiscal '25? Thomas Hartnett - 1-800-Flowers.Com Inc - President Yeah. So certainly the PersonalizationMall brand was more impacted than many of our brands by the stratification of customers where we did have -- we do have a higher portion of customers who are in that lower household income, who are -- for customers in PersonalizationMall. We've been starting to see that gain traction and I think the introduction of Things Remembered in the product portfolio where both brands, and even though we go to market with both brands as separate brands, the product line is pretty fluid between those brands. And that's where we've also seen a nice pick up here. So it provides some more aspirational products for the PersonalizationMall customer. And then like we said, we're seeing great promise for the Things Remembered brand and products in general. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Dough Lane - Water Tower Research - Analyst : Okay, fair enough. Thank you. Thomas Hartnett - 1-800-Flowers.Com Inc - President Thanks, Doug.

Question: Linda Weiser - D.A. Davidson - Analyst : Yeah, hi. So, Bill, congratulations on your great career, and I certainly will miss you as well. And welcome to James in the new role. So I was curious about just two questions for me on BloomNet. Can you remind us kind of when that impact of the loss of that customer or partnership or whatever, when does that anniversary like, what's the timeframe when that will be anniversary? And then my second question is what your outlook is for kind of like the holiday labor situation this year, both in terms of rates and availability. Thanks. William Shea - 1-800-Flowers.Com Inc - Chief Financial Officer, Senior Vice President, Treasurer Linda, on the first one, basically January 1. That contract ended December of last year. So we expect -- so the first two quarters BloomNet will be down because of the lower orders. We're building more flaw orders into BloomNet and we think second half of the year BloomNet will grow. With respect to the labor situation we've had last year it's been -- it was strong and we're anticipating it being strong again. Early signs are that it is that seasonal labor force will be readily available for us. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Linda Weiser - D.A. Davidson - Analyst : Okay. Thank you. James Mccann - 1-800-Flowers.Com Inc - Chairman of the Board, Chief Executive Officer Thank you, Linda.