Generates Revenues of $269.1 million and a Net
Loss of $31.2 million
Gross Profit Margin Improves 450 basis points
to 37.9%
Adjusted EBITDA(1) Loss Improves $5.5 million
to $22.5 million, Compared with an Adjusted EBITDA Loss of $28.0
million in the Prior Year Period
(1) Refer to “Definitions of Non-GAAP Financial Measures” and
the tables attached at the end of this press release for
reconciliation of non-GAAP results to applicable GAAP results.
1-800-FLOWERS.COM, Inc. (NASDAQ: FLWS), a leading provider of
gifts designed to help inspire customers to give more, connect
more, and build more and better relationships, today reported
results for its fiscal 2024 first quarter ended October 1,
2023.
Fiscal 2024 First Quarter
Highlights
- Total consolidated revenues decreased 11.4% to $269.1 million,
compared with total consolidated revenues of $303.6 million in the
prior year period.
- Gross profit margin increased 450 basis points to 37.9%,
compared with 33.4% in the prior year period. The gross profit
margin expansion was led by improvements across the Company’s three
business segments and most notably within the Gourmet Foods and
Gift Baskets segment, which increased 830 basis points to 31.5%.
Gross profit margin benefited from lower ocean freight costs, the
Company’s strategic pricing initiatives, a decline in certain
commodity costs and better inventory management.
- Operating expenses declined $3.3 million, or 2.3%, from $142.8
million in the prior year period to $139.5 million, as the Company
continues to optimize expenses.
- Net loss for the quarter was $31.2 million, or ($0.48) per
share, compared with a net loss of $33.7 million, or ($0.52) per
share, in the prior year period.
- Adjusted EBITDA1 for the quarter was a loss of $22.5 million,
improving $5.5 million, as compared with an adjusted EBITDA1 loss
of $28.0 million in the prior year period.
Jim McCann, Chairman and Chief Executive Officer of
1-800-FLOWERS.COM, Inc., said, “Our first quarter performance came
in-line with our expectations, benefiting from certain improving
macro trends combined with our initiatives to operate more
efficiently that led to the significant improvement in gross margin
and lower expenses, which helped offset a softer consumer
environment. Most notably, our gross profit margins are expanding
as we had anticipated, rising primarily on lower ocean freight
costs and a decline in certain commodity costs.”
McCann added, “Our fiscal first quarter is comprised of everyday
or just-because gift giving occasions, which has been challenged
over the past year as consumers reduced their discretionary
spending in response to the macro environment. As we look ahead to
the holiday period in the current environment, we expect our sales
trends to improve as our gifting business has historically proven
to be more resilient during holiday periods. Consumers tend to view
holiday gifting periods as being somewhat less discretionary. Our
platform provides gift givers with a wide variety of options at
many price points across our family of brands to help them find the
perfect gift for everyone on their list. We look forward to
delivering many smiles this holiday season.”
Segment Results
The Company provides Fiscal 2024 first quarter selected
financial results for its Gourmet Foods and Gift Baskets, Consumer
Floral and Gifts, and BloomNet segments in the tables attached to
this release and as follows:
- Gourmet Foods and Gift Baskets: Revenues for the quarter
were $98.1 million, declining 9.3% compared with $108.2 million in
the prior year period. Gross profit margin expanded 830 basis
points to 31.5%, compared with 23.2% percent in the prior year
period, improving on lower ocean freight costs, a decline in
certain commodity prices, the Company’s strategic pricing
initiatives, and better inventory management. Segment contribution
margin1 loss improved by $7.7 million to $11.0 million, compared
with segment contribution margin1 loss of $18.7 million in the
prior year period. This improvement primarily reflects the gross
margin improvement combined with more efficient marketing
spend.
- Consumer Floral & Gifts: Revenues for the quarter
were $142.2 million, declining 12.3% compared with $162.2 million
in the prior year period. Gross profit margin expanded 140 basis
points to 39.6%, compared with 38.2% percent in the prior year
period, improving on strategic pricing initiatives and lower ocean
freight costs. Segment contribution margin1 was $8.8 million,
compared with segment contribution margin1 of $10.8 million in the
prior year period. The decline primarily reflects the impact of
lower revenues.
- BloomNet: Revenues for the quarter were $28.9 million,
declining 13.5% compared with $33.4 million in the prior year
period. Gross profit margin increased to 50.2%, compared with 43.4%
in the prior year period, primarily reflecting strategic pricing
initiatives, lower ocean freight costs, as well as product mix.
Segment contribution margin1 was $9.4 million, compared with $9.5
million in the prior year period.
Company Guidance
For Fiscal 2024, the Company continues to expect revenues to
remain pressured by a challenging consumer environment, but
year-over-year trends to continue to improve during the holiday
period and into the second half of the fiscal year. The Company
also expects continued improvement in gross margin.
As a result, the Company expects Fiscal 2024:
- total revenues on a percentage basis to decline in the
mid-single digits, as compared with the prior year;
- adjusted EBITDA1 to be in a range of $95 million to $100
million; and
- Free Cash Flow1 to be in a range of $60 million to $65
million.
Conference Call
The Company will conduct a conference call to discuss the above
details and attached financial results today, November 2, at 8:00
a.m. (ET). The conference call will be webcast from the Investors
section of the Company’s website at www.1800flowersinc.com. A
recording of the call will be posted on the Investors section of
the Company’s website within two hours of the call’s completion. A
telephonic replay of the call can be accessed beginning at 2:00
p.m. (ET) today through November 9, 2023, at: (US) 1-877-344-7529;
(Canada) 855-669-9658; (International) 1-412-317-0088; enter
conference ID #: 3621353.
Definitions of non-GAAP Financial
Measures:
We sometimes use financial measures derived from consolidated
financial information, but not presented in our financial
statements prepared in accordance with U.S. generally accepted
accounting principles (“GAAP”). Certain of these are considered
"non-GAAP financial measures" under the U.S. Securities and
Exchange Commission rules. Non-GAAP financial measures referred to
in this document are either labeled as “non-GAAP” or designated as
such with a “1”. See below for definitions and the reasons why we
use these non-GAAP financial measures. Where applicable, see the
Selected Financial Information below for reconciliations of these
non-GAAP measures to their most directly comparable GAAP financial
measures. Reconciliations for forward-looking figures would require
unreasonable efforts at this time because of the uncertainty and
variability of the nature and amount of certain components of
various necessary GAAP components, including, for example, those
related to compensation, tax items, amortization or others that may
arise during the year, and the Company’s management believes such
reconciliations would imply a degree of precision that would be
confusing or misleading to investors. For the same reasons, the
Company is unable to address the probable significance of the
unavailable information. The lack of such reconciling information
should be considered when assessing the impact of such
disclosures.
EBITDA and Adjusted EBITDA:
We define EBITDA as net income (loss) before interest, taxes,
depreciation, and amortization. Adjusted EBITDA is defined as
EBITDA adjusted for the impact of stock-based compensation,
Non-Qualified Plan Investment appreciation/depreciation, and for
certain items affecting period-to-period comparability. See
Selected Financial Information for details on how EBITDA and
Adjusted EBITDA were calculated for each period presented. The
Company presents EBITDA and Adjusted EBITDA because it considers
such information meaningful supplemental measures of its
performance and believes such information is frequently used by the
investment community in the evaluation of similarly situated
companies. The Company uses EBITDA and Adjusted EBITDA as factors
to determine the total amount of incentive compensation available
to be awarded to executive officers and other employees. The
Company's credit agreement uses EBITDA and Adjusted EBITDA to
determine its interest rate and to measure compliance with certain
covenants. EBITDA and Adjusted EBITDA are also used by the Company
to evaluate and price potential acquisition candidates. EBITDA and
Adjusted EBITDA have limitations as analytical tools and should not
be considered in isolation or as a substitute for analysis of the
Company's results as reported under GAAP. Some of the limitations
are: (a) EBITDA and Adjusted EBITDA do not reflect changes in, or
cash requirements for, the Company's working capital needs; (b)
EBITDA and Adjusted EBITDA do not reflect the significant interest
expense, or the cash requirements necessary to service interest or
principal payments, on the Company's debts; and (c) although
depreciation and amortization are non-cash charges, the assets
being depreciated and amortized may have to be replaced in the
future and EBITDA does not reflect any cash requirements for such
capital expenditures. EBITDA and Adjusted EBITDA should only be
used on a supplemental basis combined with GAAP results when
evaluating the Company's performance.
Segment Contribution Margin
We define Segment Contribution Margin as earnings before
interest, taxes, depreciation, and amortization, before the
allocation of corporate overhead expenses. See Selected Financial
Information for details on how Segment Contribution Margin is
calculated for each period presented. When viewed together with our
GAAP results, we believe Segment Contribution Margin provides
management and users of the financial statements meaningful
information about the performance of our business segments. Segment
Contribution Margin is used in addition to and in conjunction with
results presented in accordance with GAAP and should not be relied
upon to the exclusion of GAAP financial measures. The material
limitation associated with the use of Segment Contribution Margin
is that it is an incomplete measure of profitability as it does not
include all operating expenses or non-operating income and
expenses. Management compensates for this limitation when using
these measures by looking at other GAAP measures, such as Operating
Income and Net Income.
Free Cash Flow:
We define Free Cash Flow as net cash provided by operating
activities less capital expenditures. The Company considers Free
Cash Flow to be a liquidity measure that provides useful
information to management and investors about the amount of cash
generated by the business after the purchases of fixed assets,
which can then be used to, among other things, invest in the
Company’s business, make strategic acquisitions, strengthen the
balance sheet, and repurchase stock or retire debt. Free Cash Flow
is a liquidity measure that is frequently used by the investment
community in the evaluation of similarly situated companies. Since
Free Cash Flow is not a measure of performance calculated in
accordance with GAAP, it should not be considered in isolation or
as a substitute for analysis of the Company's results as reported
under GAAP. A limitation of the utility of Free Cash Flow as a
measure of financial performance is that it does not represent the
total increase or decrease in the Company's cash balance for the
period.
About 1-800-FLOWERS.COM,
Inc.
1-800-FLOWERS.COM, Inc. is a leading provider of gifts designed
to help inspire customers to give more, connect more, and build
more and better relationships. The Company’s e-commerce business
platform features an all-star family of brands, including:
1-800-Flowers.com®, 1-800-Baskets.com®, Cheryl’s Cookies®, Harry
& David®, PersonalizationMall.com®, Shari’s Berries®,
FruitBouquets.com®, Things Remembered®, Moose Munch®, The Popcorn
Factory®, Wolferman’s Bakery®, Vital Choice®, and Simply
Chocolate®. Through the Celebrations Passport® loyalty program,
which provides members with free standard shipping and no service
charge across our portfolio of brands, 1-800-FLOWERS.COM, Inc.
strives to deepen relationships with customers. The Company also
operates BloomNet®, an international floral and gift industry
service provider offering a broad-range of products and services
designed to help members grow their businesses profitably; Napco℠,
a resource for floral gifts and seasonal décor; DesignPac Gifts,
LLC, a manufacturer of gift baskets and towers; and Alice’s Table®,
a lifestyle business offering fully digital floral, culinary and
other experiences to guests across the country. 1-800-FLOWERS.COM,
Inc. was recognized among the top 5 on the National Retail
Federation’s 2021 Hot 25 Retailers list, which ranks the nation’s
fastest-growing retail companies, and was named to the Fortune 1000
list in 2022. Shares in 1-800-FLOWERS.COM, Inc. are traded on the
NASDAQ Global Select Market, ticker symbol: FLWS. For more
information, visit 1800flowersinc.com or follow @1800FLOWERSInc on
Twitter.
FLWS–COMP
FLWS-FN
Special Note Regarding Forward Looking
Statements:
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. These forward-looking statements represent the Company’s
current expectations or beliefs concerning future events and can
generally be identified using statements that include words such as
“estimate,” “expects,” “project,” “believe,” “anticipate,”
“intend,” “plan,” “foresee,” “forecast,” “likely,” “will,” “target”
or similar words or phrases. These forward-looking statements are
subject to risks, uncertainties, and other factors, many of which
are outside of the Company’s control, which could cause actual
results to differ materially from the results expressed or implied
in the forward-looking statements, including, but not limited to,
statements regarding the Company’s ability to achieve its guidance
for the full Fiscal year; the Company’s ability to leverage its
operating platform and reduce its operating expense ratio; its
ability to sell through existing inventories; its ability to
successfully integrate acquired businesses and assets; its ability
to successfully execute its strategic initiatives; its ability to
cost effectively acquire and retain customers; the outcome of
contingencies, including legal proceedings in the normal course of
business; its ability to compete against existing and new
competitors; its ability to manage expenses associated with sales
and marketing and necessary general and administrative and
technology investments; its ability to reduce promotional
activities and achieve more efficient marketing programs; and
general consumer sentiment and industry and economic conditions
that may affect levels of discretionary customer purchases of the
Company’s products. The Company undertakes no obligation to
publicly update any of the forward-looking statements, whether
because of new information, future events or otherwise, made in
this release or in any of its SEC filings. Consequently, you should
not consider any such list to be a complete set of all potential
risks and uncertainties. For a more detailed description of these
and other risk factors, refer to the Company’s SEC filings,
including the Company’s Annual Reports on Form 10-K and its
Quarterly Reports on Form 10-Q.
Note: The following tables are an integral part of this press
release without which the information presented in this press
release should be considered incomplete.
1-800-FLOWERS.COM, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (in thousands)
October 1, 2023
July 2, 2023
(unaudited)
Assets
Current assets:
Cash and cash equivalents
$
8,375
$
126,807
Trade receivables, net
44,239
20,419
Inventories
280,621
191,334
Prepaid and other
49,347
34,583
Total current assets
382,582
373,143
Property, plant and equipment, net
229,193
234,569
Operating lease right-of-use assets
120,499
124,715
Goodwill
153,376
153,376
Other intangibles, net
138,773
139,888
Other assets
26,925
25,739
Total assets
$
1,051,348
$
1,051,430
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
$
51,764
$
52,588
Accrued expenses
142,695
141,914
Current maturities of long-term debt
45,000
10,000
Current portion of long-term operating
lease liabilities
15,580
15,759
Total current liabilities
255,039
220,261
Long-term debt, net
184,071
186,391
Long-term operating lease liabilities
113,278
117,330
Deferred tax liabilities, net
30,555
31,134
Other liabilities
25,514
24,471
Total liabilities
608,457
579,587
Total stockholders’ equity
442,891
471,843
Total liabilities and stockholders’
equity
$
1,051,348
$
1,051,430
1-800-FLOWERS.COM, Inc. and Subsidiaries
Selected Financial Information Consolidated Statements of
Operations (in thousands, except for per share data)
(unaudited)
Three Months Ended
October 1, 2023
October 2, 2022
Net revenues:
E-Commerce
$
209,911
$
238,922
Other
59,139
64,682
Total net revenues
269,050
303,604
Cost of revenues
167,122
202,146
Gross profit
101,928
101,458
Operating expenses:
Marketing and sales
82,518
89,139
Technology and development
15,304
14,740
General and administrative
28,489
26,245
Depreciation and amortization
13,194
12,694
Total operating expenses
139,505
142,818
Operating loss
(37,577
)
(41,360
)
Interest expense, net
3,482
2,821
Other expense, net
474
922
Loss before income taxes
(41,533)
(45,103)
Income tax benefit
(10,291)
(11,411)
Net loss
$
(31,242)
$
(33,692)
Basic and diluted net loss per common
share
$
(0.48)
$
(0.52)
Basic and diluted weighted average shares
used in the calculation of net loss per common share
64,785
64,538
1-800-FLOWERS.COM, Inc. and Subsidiaries
Selected Financial Information Consolidated Statements of
Cash Flows (in thousands) (unaudited)
Three Months Ended
October 1, 2023
October 2, 2022
Operating activities:
Net loss
$
(31,242)
$
(33,692)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
13,194
12,694
Amortization of deferred financing
costs
180
345
Deferred income taxes
(579)
(381)
Bad debt expense
586
265
Stock-based compensation
2,364
1,555
Other non-cash items
270
326
Changes in operating items:
Trade receivables
(24,407)
(25,416)
Inventories
(89,287)
(95,038)
Prepaid and other
(14,764)
(19,425)
Accounts payable and accrued expenses
(42)
11,742
Other assets and liabilities
(157)
702
Net cash used in operating activities
(143,884)
(146,323)
Investing activities:
Capital expenditures
(6,974)
(11,033)
Net cash used in investing activities
(6,974)
(11,033)
Financing activities:
Acquisition of treasury stock
(74)
-
Proceeds from bank borrowings
35,000
140,000
Repayment of bank borrowings
(2,500)
(5,000)
Debt issuance cost
-
333
Net cash provided by financing
activities
32,426
135,333
Net change in cash and cash
equivalents
(118,432)
(22,023)
Cash and cash equivalents:
Beginning of period
126,807
31,465
End of period
$
8,375
$
9,442
1-800-FLOWERS.COM, Inc. and Subsidiaries
Selected Financial Information – Category Information
(dollars in thousands) (unaudited)
Three Months Ended
October 1, 2023
October 2, 2022
% Change
Net revenues:
Consumer Floral & Gifts
$
142,194
$
162,180
-12.3%
BloomNet
28,870
33,367
-13.5%
Gourmet Foods & Gift Baskets
98,109
108,228
-9.3%
Corporate
270
44
513.6%
Intercompany eliminations
(393)
(215)
-82.8%
Total net revenues
$
269,050
$
303,604
-11.4%
Gross profit:
Consumer Floral & Gifts
$
56,322
$
61,919
-9.0%
39.6%
38.2%
BloomNet
14,498
14,487
0.1%
50.2%
43.4%
Gourmet Foods & Gift Baskets
30,907
25,113
23.1%
31.5%
23.2%
Corporate
201
(61)
429.5%
74.4%
-138.6%
Total gross profit
$
101,928
$
101,458
0.5%
37.9%
33.4%
EBITDA (non-GAAP):
Segment Contribution Margin (non-GAAP)
(a):
Consumer Floral & Gifts
$
8,826
$
10,810
-18.4%
BloomNet
9,387
9,517
-1.4%
Gourmet Foods & Gift Baskets
(11,028)
(18,710)
41.1%
Segment Contribution Margin Subtotal
7,185
1,617
344.3%
Corporate (b)
(31,568)
(30,283)
-4.2%
EBITDA (non-GAAP)
(24,383)
(28,666)
14.9%
Add: Stock-based compensation
2,364
1,555
52.0%
Add: Compensation charge related to NQ
Plan Investment Depreciation
(504)
(906)
44.4%
Adjusted EBITDA (non-GAAP)
$
(22,523)
$
(28,017)
19.6%
1-800-FLOWERS.COM, Inc. and Subsidiaries
Selected Financial Information (in thousands)
(unaudited)
Reconciliation of net loss to adjusted
EBITDA (non-GAAP):
Three Months Ended
October 1, 2023
October 2, 2022
Net loss
$
(31,242)
$
(33,692)
Add: Interest expense and other, net
3,956
3,743
Add: Depreciation and amortization
13,194
12,694
Add: Income tax benefit
(10,291)
(11,411)
EBITDA
(24,383)
(28,666)
Add: Stock-based compensation
2,364
1,555
Add: Compensation charge related to NQ
plan investment depreciation
(504)
(906)
Adjusted EBITDA
$
(22,523)
$
(28,017)
(a) Segment performance is measured based on segment
contribution margin or segment Adjusted EBITDA, reflecting only the
direct controllable revenue and operating expenses of the segments,
both of which are non-GAAP measurements. As such, management’s
measure of profitability for these segments does not include the
effect of corporate overhead, described above, depreciation and
amortization, other income (net), and other items that we do not
consider indicative of our core operating performance.
(b) Corporate expenses consist of the Company’s enterprise
shared service cost centers, and include, among other items,
Information Technology, Human Resources, Accounting and Finance,
Legal, Executive and Customer Service Center functions, as well as
Stock-Based Compensation. In order to leverage the Company’s
infrastructure, these functions are operated under a centralized
management platform, providing support services throughout the
organization. The costs of these functions, other than those of the
Customer Service Center, which are allocated directly to the above
categories based upon usage, are included within corporate expenses
as they are not directly allocable to a specific segment.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231102546820/en/
Investors: Andy Milevoj (516)
237-4617 amilevoj@1800flowers.com
Media: Cherie Gallarello
cgallarello@1800flowers.com
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