1 800 FLOWERS COM INC Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Jim McCann noted first quarter performance was in line with expectations, e-commerce revenue trends improved, gross profit margin grew, and operating expenses were reduced. He discussed the two halves of the fiscal year and holiday season expectations.
• Tom Hartnett reviewed segment performance, highlighted Relationship Innovation initiatives like same-day delivery expansions (e.g., Cheryl’s Cookies and Harry & David Same-Day Delivery), partnerships (e.g., LoveShackFancy collaboration, Macy’s pop-up shops), and BloomNet’s expected growth after lapping impacts.
• Bill Shea discussed financials, Work Smarter initiatives including AI in customer care and order management system implementation for Harry & David, and segment results with focus on margin improvements and operational efficiencies.

Segment Performance

• Gourmet Foods & Gift Baskets: Revenue declined 14.4% to $84 million. Profit margin increased 50 basis points to 32%. Adjusted segment contribution margin loss was $11.3 million.
• Consumer Floral & Gifts: Revenue declined 4.9% to $135.2 million. Gross profit margin increased 30 basis points to 39.9%. Segment contribution margin was $4.9 million.
• BloomNet: Revenue declined 20.1% to $23.1 million. Gross profit margin decreased 20 basis points to 50%. Segment contribution margin was $6.8 million.

Guidance

• Total revenues expected to be flat to mid-single digits decline compared to prior year.
• Adjusted EBITDA expected to be in the range of $85 million to $95 million.
• Free cash flow expected to be in the range of $45 million to $55 million.

Risks

• Macro environment uncertainties affecting consumer spending.
• Inflation and its impact on costs.
• Third-party carrier cost increases.
• Ongoing impact of system implementation costs with some spillover to future quarters.

Question and Answer

Q: Alex Fuhrman asked about same-day delivery, including past peaks and holiday season expectations.

A: Jim McCann and Tom Hartnett responded that floral side had 30%-40% same-day in peaks, non-floral had little, and they're expanding non-floral into same-day. Tom added they're rolling out more products like Harry & David gift baskets.

Q: Andy Lebiedzinski asked about system implementation costs and if they spill over to future quarters.

A: Bill Shea said order management system implementation costs were behind us, but service center platform had remaining license fees with benefits in efficiency and customer experience going forward.

Q: Michael Kupinski asked about BloomNet trends and cocoa cost outlook.

A: Jim McCann and Tom Hartnett discussed BloomNet relationship with partners and steady shop numbers, while Bill Shea talked about cocoa pricing locked in through next holiday season with moderating trends expected.

Q: Linda Bolton Weiser asked about revenue cadence and Harry & David pop-ups.

A: Bill Shea and Jim McCann discussed improved revenue trends into second quarter, media rate impacts from election, and excitement about Harry & David pop-ups at Macy’s as a potential for future brick-and-mortar expansion.

Q: Doug Lane asked about wholesale order shifts, cost trends, and pear crop.

A: Bill Shea and Jim McCann explained wholesale order shift was about $3 million timing, labor cost improvements, fuel cost impacts, and favorable pear crop with better quantity and quality benefiting the business.