1 800 FLOWERS COM INC Q3 FY2025 earnings call

• Jim McCann introduced the transformative long-term strategy 'Celebrations Wave' and welcomed Adolfo Villagomez as the new CEO. - The company faced macro challenges like COVID bullwhip effect, inflation, consumer market bifurcation, etc., and internal challenges such as order management system issues. - Celebrations Wave is a sentiment-led celebrations ecosystem including a new app, content-rich website, reimagined loyalty program, aiming to increase engagement, frequency, and customer lifetime value while reducing customer acquisition costs. - Plan to reduce costs by approximately $40 million annually, with $17 million already executed.

In the third quarter, the company's performance was challenging. The Consumer Floral and Gift segment saw a 11.4% decline in revenue. The Gourmet Foods and Gift Baskets segment experienced an 18.2% revenue decline. Conversely, the BloomNet segment had a 4.5% increase in revenue.

• The company withdrew its guidance due to unpredictable external factors and focus on executing the transformational Celebrations Wave strategy. - Anticipate Celebrations Wave to substantially improve financial performance over the next few years, with efforts leading to higher profitability and cash flows. - Plan to reduce costs by approximately $40 million on an annualized basis, including $17 million in reductions already executed.

• Macro challenges: COVID bullwhip effect, inflation, bifurcated consumer markets, ocean freight disruptions, rising customer acquisition costs, declining consumer confidence, tariff impacts, potential recession. - Internal issues: Order management system implementation difficulties. - Competitive landscape: Highly promotional environment in the floral business, impact of tariffs on personalization mall and wholesale businesses.

Q: Could you give more details on how the quarter progressed, including Valentine's Day placement and Easter shift impact?

A: The quarter was bracketed by Valentine's Day (Friday placement which wasn't bad) and had softness in January and March (everyday business). Adjusted for Easter shift, revenue would have been down 0.9% with February holding up better due to Valentine's Day.

Q: Can you put a number on sales lost due to system implementation issues?

A: There was a $4.6 million hit to gross profit, and by the end of fiscal 2025, the system issues cleanup will be done. The order management system implementation was a mistake, hurting multiple brands.

Q: Timeline for Celebrations Wave, low-hanging fruit vs back burner?

A: Primary focus is celebrations capabilities. AI is used for internal efficiency and external customer facing. Relationship management capabilities, enhanced app, address book, login, occasion reminders, personalized experiences are initial focuses. Long-term, more advanced AI and other elements will be developed.

Q: Revenue weakness related to customer segments, shift to lower-end pricing?

A: More challenges with lower-income consumers due to reduced discretionary spending. Best and better customers have good retention. Average ticket up due to broader price points and losing lower-end customers.

Q: Impact of tariffs on BloomNet?

A: Wholesale (including NAPCO, BloomNet) is impacted, but BloomNet fulfillment partners less affected as their tariffs are lower (South America vs China componentry).

Q: Revenue trajectory in April, comparison to March?

A: April up due to Easter shift. Quarter slightly better than Q3, with Mother's Day upcoming.

Q: Elaboration on exiting retail during pandemic as a mistake, and retail plans?

A: Exiting retail during COVID was a mistake. Now doing holiday stores, opened Harry and David store with various brands, plan to do bigger holiday stores, and repurposed assets for celebrations experiences. Plans to have full year-round stores and expand holiday store concepts.