Post Covid drop for 1-800-FLOWERS.COM.INC

Like many companies in the flower and gift sector, American company 1-800 has reported a drop in sales and losses following the huge rises seen in the Covid Pandemic years. 

Reporting their numbers for fiscal year 2023 they had a revenue of $2.0 Billion and a Net Loss of $44.7 Million, which includes an after-tax, non-cash charge of $57.8 Million associated with the Third Quarter Goodwill and Intangible Asset Impairment Charge.

Commenting on the results Jim McCann, who recently returned as Chairman and Chief Executive Officer of 1-800-FLOWERS.COM, Inc., said “We have successfully mitigated the impact of a softer sales environment during the 2023 fiscal period through our expense optimization efforts coupled with the improvement in our gross margin.

Simultaneously, we executed on our strategic initiatives to offer customers an expanding array of gift giving options across multiple price points, we invested in our technology platform to enhance the customer experience, and we expanded our product portfolio, both organically and through acquisitions, which positions us well as a premier gift giving destination once the broader consumer environment improves.”

McCann added, “As we look beyond the current horizon, we believe that the actions we have taken to enhance the customer experience, improve margins, and optimize expenses, combined with an improved consumer environment, will enable us to achieve our historical sales growth, gross profit margin and adjusted EBITDA margin rates.”

Segment Results

The company has over 11 different brands operating in three distinct markets; Gourmet Foods and Gift Baskets, Consumer Floral and Gifts (direct delivered items), and BloomNet – orders placed through their network of florists.  In figures released at the end of August all showed a decline in sales.

Gourmet Foods and Gift Baskets: Revenues for the quarter were $120.7 million, declining 18.7% compared with $148.4 million in the prior year period. Gross profit margin was 28.1%, compared with 23.2% percent in the prior year period. Segment contribution margin1 loss was $13.4 million, compared with segment contribution margin1 loss of $23.7 million in the prior year period. This primarily reflects the gross margin improvement combined with more efficient marketing spend.

For the full fiscal year, revenue in this segment decreased 3.9% to $965.2 million, compared with $1.0 billion in the prior year. Gross profit margin for the year was 34.9%, compared with 34.2% in the prior year. Segment contribution margin for the year, without the impairment charge, was $77.5 million, compared with $64.9 million in the prior year.

Consumer Floral & Gifts: Revenues for the quarter were $248.3 million, declining 17.0% compared with $299.0 million in the prior year period. Gross profit margin was 40.6%, compared with 38.0% percent in the prior year period. Segment contribution margin1 was $30.7 million, compared with segment contribution margin1 of $26.5 million in the prior year period. This primarily reflects gross profit margin improvement combined with marketing efficiencies that more than offset the revenue decline.

For the full fiscal year, revenues decreased 13.1% to $920.5 million, compared with $1.06 billion in the prior year. Gross profit margin was 39.5%, compared with 39.3% in the prior year. Segment contribution margin1 was $95.5 million, compared with $104.3 million in the prior year.

BloomNet: Revenues for the quarter decreased 22.1% to $30.0 million, compared with $38.5 million in the prior year period. Gross profit margin was 42.6%, compared with 39.6% in the prior year period, primarily reflecting lower ocean freight costs as well as product mix. Segment contribution margin1 was $7.4 million, compared with $10.0 million in the prior year period.

For the year, revenues decreased 8.6% to $133.2 million, compared with $145.7 million in the prior year. Gross profit margin was 42.7%, compared with 42.3% in the prior year. Segment contribution margin1 for the year was $37.2 million, compared with $42.5 million in the prior year.

For the 2024 fiscal period, the Company expects revenues to remain pressured by a challenging consumer environment early in the year, but then rebound during the holiday period and into the second half of the fiscal year. The Company also expects continued improvement in gross margin.

Additionally, the guidance assumes increased compensation expense, including the restoration of 100 percent bonus payout, compared with a partial payout in fiscal 2023.

As a result, the Company expects total revenues on a percentage basis to decline in the mid-single digits, as compared with the prior year.

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