1-800-FLOWERS.COM(US:FLWS)2022-01-27 16:36Financial Data and Key Metrics Changes - The company achieved a revenue growth of 7.5% for the fiscal second quarter, totaling $943 million compared to $877.3 million in the prior-year period [21][29] - Adjusted EBITDA for the quarter was $133.1 million, down 19% from $164.3 million in the prior-year period [22] - Net income for the quarter was $88.5 million, or $1.34 per diluted share, compared to $113.7 million, or $1.71 per diluted share in the prior year [22][23] - Gross profit margin for the holiday period was 40.1%, a decline of 530 basis points compared to the prior-year period [21] Business Segment Data and Key Metrics Changes - Gourmet Food and Gift Baskets segment revenues increased by 9.8% to $590.9 million, driven primarily by the Harry & David brand, which saw over 10% growth [23] - Consumer Floral and Gifts segment revenues increased by 3.2% to $315.1 million, with the 1-800-FLOWERS brand growing by 2.8% [24] - BloomNet revenues increased by 11.4% to $37.9 million, reflecting increased wholesale shipments of hard goods [25] Market Data and Key Metrics Changes - The company faced significant macroeconomic headwinds, including supply chain disruptions, labor shortages, and increased shipping costs, which impacted gross margins and overall profitability [8][20] - The company noted that consumer demand slowed after the Thanksgiving holiday, affecting revenue growth expectations [7][36] Company Strategy and Development Direction - The company continues to focus on customer engagement and expanding product offerings, including the integration of the newly acquired Vital Choice into its platform [12][30] - Initiatives to mitigate cost pressures include automation of warehouse operations and strategic inventory management [9][20] - The Celebrations Passport loyalty program was enhanced to include a tiered points-based system, aimed at increasing customer retention and purchase frequency [15][16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing challenges in the macroeconomic environment but expressed optimism about long-term growth potential, citing strong customer engagement and loyalty program performance [30][38] - The company anticipates revenue growth in the range of 7% to 9% for the fiscal year, with adjusted EBITDA expected between $140 million and $150 million [27][28] Other Important Information - The company added over 1.8 million new customers during the quarter, with existing customers accounting for more than 66% of total revenues [14] - The cash and investment position was $271.1 million at the end of the second quarter, reflecting investments in inventory and stock repurchases [26] Q&A Session Summary Question: When did the company start trying to pass through pricing, and how much was price inelasticity an issue? - The company began implementing strategic price increases early in the season, with dynamic pricing allowing adjustments based on consumer demand [32][34] Question: Why is the revenue guidance reduced for the next two quarters? - The guidance reflects observed consumer pullback and ongoing cost challenges, with expectations of high single-digit growth in the near term [36][37] Question: Can the company discuss the effectiveness of its marketing channels? - The company shifted some marketing spend towards television advertising but faced rising costs and decreased effectiveness as consumer demand softened [46][48] Question: What specific pricing increases are planned for the upcoming quarters? - Pricing strategies will be dynamic, with adjustments based on real-time consumer response and market conditions [72][73]