• Consolidated Revenue Decline: 10% decline in Q1 revenue.
• E-commerce Revenue Decline: 8% decline in e-commerce revenue.
• Orders and AOV: Orders declined 6.5%, AOV declined 1.5%.
• Gourmet Food and Gift Baskets Revenue Decline: 14.4% decline, with $3 million of orders shifted to Q2.
• Consumer Floral and Gifts Revenue Decline: 4.9% decline.
• BloomNet Revenue Decline: 20.1% decline.
• Gross Margin: Increased to 38.1%.
• Operating Expenses: $4.3 million decline in operating expenses.
• Net Loss: $27.9 million loss.
• Cash and Investments: $8.4 million at the end of Q1.
• Inventory: $275.3 million, down from $280.6 million last year.
• Total Debt: $232.5 million.
• Guidance for Fiscal 2025: Revenue expected to be flat to mid-single-digit decline; adjusted EBITDA of $85 to $95 million; free cash flow of $45 to $55 million.

• Warning! GuruFocus has detected 6 Warning Signs with FLWS.

Release Date: October 31, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• 1-800-Flowers.com Inc (NASDAQ:FLWS) saw an improvement in e-commerce revenue trends, with a smaller decline in orders compared to previous quarters.
• The company successfully reduced operating expenses through its 'work smarter' initiatives, enhancing operational efficiency.
• 1-800-Flowers.com Inc (NASDAQ:FLWS) expanded its same-day delivery offerings, particularly in the gourmet food segment, leveraging its existing floral delivery infrastructure.
• The integration of SFN Burger chocolates into Harry and David was completed, and new product launches are expected to boost holiday sales.
• The company formed strategic partnerships, such as with Macy's for Harry and David pop-up shops, which could enhance brand visibility and customer engagement.

Negative Points

• Consolidated Q1 revenue declined by 10%, with e-commerce revenue down 8%, reflecting ongoing challenges in consumer spending.
• Average Order Value (AOV) decreased by 1.5%, indicating pressure on pricing and consumer spending habits.
• The BloomNet segment experienced a significant revenue decline of 20.1% due to a loss of orders from a business partner merger.
• Media costs are expected to be higher due to the election cycle, potentially impacting marketing efficiency.
• The company faces ongoing challenges with commodity costs, such as cocoa, which remain above historical norms despite some price stabilization.

Q & A Highlights

Q: Can you discuss the impact of same-day delivery on your business and expectations for the holiday season? A: James McCann, CEO, explained that same-day delivery is significant for the floral side, comprising 30-40% of business, but historically minimal for non-floral items. They are leveraging floral infrastructure to expand same-day delivery for products like Cheryl's Cookies and Harry & David gift baskets, which is expected to grow over the next few years.

Q: How are you planning to allocate marketing spend for the upcoming holiday season? A: James McCann, CEO, stated that they have reserved funds for the holiday season, focusing on less discretionary spending occasions like Thanksgiving and Christmas. Tom Hartnett, President, added that marketing dollars will be deployed across top, mid, and bottom funnel activities with flexibility to adjust based on returns.

Q: What is the status of your system implementation costs, and will they affect future quarters? A: William Shea, CFO, noted that the implementation costs for the new order management system at Harry and David are behind them. However, they will have a double up of license fees for the customer service platform for one more quarter, which will eventually lead to cost savings and improved efficiency.

Q: How are higher-end and lower-end customers influencing your revenue, and what risks do you see to your full-year guidance? A: William Shea, CFO, mentioned that affluent consumers continue to perform well, and they are also targeting less affluent consumers with lower price point items. The biggest risk to revenue guidance is the macroeconomic environment, but recent positive economic indicators are encouraging.

Q: Can you elaborate on the favorable pear crop and its impact on your business? A: James McCann, CEO, highlighted that the pear crop is more than double last year's size, with high quality. This allows them to use their own pears instead of sourcing third-party products, reducing costs and extending the availability of pears into the spring.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.