Q1 2021 1-800-Flowers.Com Inc Earnings Call
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Thank you Chris good.
Good morning, and thank you all for joining us today to discuss one 800 flowers dot coms financial results for our fiscal 2021 first quarter.
But those if you have not received a copy of our press release issued earlier. This morning. The release can be accessed at the Investor Relations section of our corporate website at Www Dot one 800 flowers, Inc. Dotcom.
Our call today will begin with brief formal remarks, and then we will open the call to your questions presenting today will be Chris Mccann, CEO and Bill Schack CFO.
As we begin I need to remind everyone that some of the statements. We will make today maybe forward looking within the meaning of the private Securities Litigation Reform Act of 1995.
These statements involve risks and uncertainties that could cause actual results to differ materially flows from those expressed or implied in the applicable statements.
For a detailed description of these risks and uncertainties. Please refer to our press release issued this morning, as well as our FCC filings, including the company's annual report on form 10-K, and quarterly reports on form 10-Q.
In addition, this morning, we will discuss certain supplemental financial measures that were not prepared to coordinate with generally accepted accounting principles.
Conciliations up these non-GAAP financial measures to the most directly comparable GAAP measures can be found in the tables accompanying the company's press release this morning.
The company expressly disclaims any intent or obligation to update any of the forward looking statements made in today's call any recordings of today's call. The press release issued earlier today or any of its SEC filings, except as may be otherwise stated by the company.
I'll now turn the call over the Christmas again.
Thank you to everyone, who has joined our call. This morning.
As you can see our results for the first quarter really demonstrate the benefits of that as well.
Which is positioned to deepen the relationships we have with how.
Yes, tangible long term.
The quarter, we achieved 51 in the headset revenue growth driven by 85% E Commerce growth.
This reflects the momentum we have this as we continue to drive strong profitable growth across our three business segments. In fact Q1 represented the sixth consecutive quarter in which our three business segments gourmet food and gift baskets consumer floral I guess, I'm, saying that each recorded solid year over year.
And we see strong momentum in our business continuing based on some of the key match macro trends that we see today trends that quite frankly has been accelerated dramatically by a cautious environment contesting what may have taken five years until lets say less than one year for sure first the tremendous shifted consumers.
E Commerce shopping wherever your position as a leader with our all Star collection of brands second the increase in net as people are spending less time traveling more time at home everything centered around the hall people are seeking to add more content in convenience to the new stay in place lifestyle and third.
The prevailing sentiment set of emerge from these challenging times, specifically people need to connect and express themselves to be important people in their lives.
Without a vision to inspire more human expression connection celebration, we are uniquely well positioned to benefit from and build on these trends by leveraging our business platform, which includes our all star collection of brands are fast technology stack manufacturing distribution and logistics.
Capabilities, now walking capabilities without integrated and growing customer.
Without leadership positions in floral gourmet foods and personalized products, we can tell from all of our customers need to connect more.
Ordinary citizens for more occasions, thus increasing lifetime value.
Over the past several years, our platform has enabled us to execute well on our strategy to expand our product offerings evolve our marketing to focus on engagement accelerate our customer file growth and enhance customer loyalty.
Results illustrate that we are reaping the benefits and the investments that we've made in these areas. For example, we expanded our product offerings and actually by adding new product lines.
Such as our expanded collection house plants in such as the one 800 flowers plant shop that had been wildly popular for us Uh huh.
Indeed, gourmet line, including having ended ones and the popcorn factory tends with popular.
Now, we further Brad broadened our product offerings with the acquisition of Sharis berries last year and personalization mall this year.
We have enhanced and expanded our digital marketing capabilities and as always we remain hyper focused on delivering exemplary customer service.
Combination of strategic investment strong execution and focus on our customers has brought us to where we are today a leader in our industry driving E commerce costs at our first quarter more than 85%.
As we enter the holiday season, we will continue to leverage our platform and drive out on that.
We expect the demand for our everyday gifting suits solutions remain high and we are gearing up to satisfy as much of that demand as we possibly can no doubt will face some challenges as was virtually all retailers as a third party shipping companies are facing capacity constraints and qualified labor is not always that.
Our first levels.
We're working to proactively manage these issues and executed against that plan to start to grow that bill will discuss in a few minutes our outlook for Q2, which as you know it was asked seasonally largest quota.
As for record revenue and profits.
Now I turn the call Bill well I'm going to take a moment to provide you with some color on the integration of our latest acquisition personalization mall.
Put it succinctly, we could not be more pleased with the acquisition of Pmall. The great progress that we are making you know integration process.
He more offers a tremendous assortment of products that can be personalized glassware, the picture frames to throw blankets and we have a wonderful holiday assortment, which I encourage you to visit and browse. In addition, Pete Wallace among the industry's broadest range of personalization technologies, including laser engraving photos.
Well nation as well that doesn't walk capabilities.
And with that I'll highlight here [laughter] without a highly automated processing capabilities Pmall off is one of the industry's fastest turnaround times with orders often completed and shipped the same day as all that.
As you all may have already noticed we've integrated people onto our multi brand website and they try passport loyalty program in terms of cross brand merchandising, we've integrated people into our Cobranded holiday gift guide, including our holiday gift and seasons are sharing what books, well leveraging our customer file to introduce.
Im often millions of new and existing customers in our everyday at holiday season communication.
And we've already begun to leverage our digital marketing teams for PC mall with content and creative <unk> development across a broad range of digital channels. As a result, we anticipate he will be a strong top and bottom line contributor in the upcoming holiday season for sure and for a full fiscal year.
One last point I'd like to touch on another important area, where we are seeing accelerated growth.
In addition to our revenue growth, we continue to see accelerated growth in our customer files as one of the strong double digit growth in membership in our passport program and multi brand customers as we said as we have emphasized in the past. These are our best performing customer cohorts in terms of pace purchase frequency retention.
Yeah, and lifetime value. The continued strong growth in our customer files, along with the growth about passport program and multi brand customers bodes well as we entered the key holiday shopping period.
Looking ahead, we have strong momentum across our three business segments. We continue to grow our customer files at a rapid pace and our customer behavior metrics continue to improve and our latest acquisition P. mall is already proving to be an excellent fit on our platform and a great addition to our all star collection of brands.
And now I'd like to turn the call over to Bill.
Thank you Chris.
As Chris noted we have started fiscal 2021 off strong momentum carried over from last year and we are pleased with the strong top and bottom line color that we achieved in the first quarter.
First quarter was also successful.
I would point out a closing of the people acquisition and the completion of an amended credit facility provides added financial flexibility and strengthens our already strong couch.
As a result, we are well positioned as we enter the key holiday season.
We anticipate the momentum we see across our three business segments will enable us to deliver strong results for the period.
Breaking down.
Highlights from our first quarter.
First in terms of revenues.
Total consolidated revenues increased 51.5% to 283.8 million compared with 187.3 million in the prior year period.
Excluding people, which we acquired in August this year total consolidated growth increased 40.6%.
This growth was driven by strong E commerce demand, which increased 85.1% during the quarter.
Gross profit margin for the period was unchanged compared with the prior year period at 40.7%.
This will probably be increases in gross profit margin up 90 basis points and Paul the only couldn't get basket, a consumable and give segment offset by a reduction of 560 basis points in bloomnet, primarily related to product mix.
Operating expenses as adjusted improved 820 basis points to 43.5% of total sales [noise] I.
I think the strong revenue growth in the period and our ability to leverage our operating platform.
Operating expenses as adjusted exclude the impact of the Companys nonqualified deferred fall and K compensation plan and one time costs, primarily associated with the acquisition of people.
As a result of these factors, we improved our adjusted EBITDA by 128.7% or 14.5 million, a 3.2 million compared with a loss of 11.3 million in the prior year period.
Our adjusted net loss for the period also improved nicely 6.5 million or a loss of 10 cents per share compared with an adjusted net loss of 15.3 million or 24 cents per share in the prior period.
Turning to our segment results.
Recently, we named consumer floral and gift baskets that answer and gift segment, which now includes Pmall whoever you seven 8% for the quarter.
I want to go into pilots brand grew approximately 55% on the largest revenue base in the industry.
As further expanding its market leadership position.
Gross margin in this segment increased 90 basis points to 40.6% compared with 39.7% in the prior year period, primarily reflecting contributions from people.
Segment contribution margin increased 125.7% or 10.7 million to 19.2 million compared with 8.5 million in the prior year period, primarily driven by the one 800 flowers brand, which accounted for more than $8 million up the increase.
In our Bloomnet business revenues increased 28.7% to 32.7 million I was $25.4 million in the prior year period, reflecting significant growth in wholesale products, including fresh fall and hard goods and both and all the volumes both on the wanting to powers brand as well as from paused to parcel is.
[noise] totally the decision we made how far it's back in the early days of the pandemic, including waving membership fees and providing various products and services that reduce price is paying off as well for us are buying more products and services from home that in addition to the filling increased <unk> volumes.
Gross profit margin for the quarter was 45.3% representing a decrease of 560 basis points compared with 50.9% in the prior year period, primarily reflecting product mix.
Segment contribution margin increased 24.7% to 10.4 million compared with 8.4 million in the prior year period.
Oh, well make when gift baskets segment.
Nobody is 26.3%.
This was driven by E commerce growth of nearly 100% offset in part by decline in wholesale load is for the holiday season of approximately 15 million and a loss of approximately 5 million in revenues associated with the closing of the Harry <unk>, David retail stores in fiscal 2012.
The strong E commerce growth was seen in each of our brands everyday occasions, such as birthday anniversary sympathy and get well among others.
Customers also continue to embrace the heavy Navy gourmet line and having David White, both of which grew significantly during the quarter and continue to attract a younger shopping to the brand.
Gross profit margin increased 90 basis points to 38.9% compared with 38% in the prior year period.
Segment contribution margin as adjusted improved 54.8% for 3.6 million to a loss of 3 million compared with a loss of 6.6 million in the prior year period.
Now turning to our balance sheet.
Our cash and investment position was $11 million at the end of the first quarter.
Inventory was 192.6 million I have an inventory of 172.5 million at the end of last years first quarter.
Only related to people.
It's just that.
We had 217.5 million in debt, including 25 million borrowed under our revolving credit facility.
In August we closed on an amendment to our existing credit facility.
Amendment adds an incremental 100 million term loan and expandable bobbing credit line of credit.
200 million to 250 million.
All components of the credit facility matures in May 2024.
The amendment provides added financial flexibility and further strengthens our balance sheet.
Turning to guidance.
Due to the continued uncertainty and your walcott being laid to the ongoing COVID-19 pandemic, we're not providing guidance for full fiscal 2021 year at this time.
The guy in the fiscal second quarter.
Strong E commerce demand that we carried into this year continued into our first quarter and through October.
First month of the current fiscal second quarter.
Based on this call Tonight until we anticipate achieving total consolidated revenue growth for a second quarter in a range of 22% to 26% compared with the prior year period.
[laughter] anticipated strong revenue growth in the quarter reflects expected ecommerce growth of more than 40%, including contributions from Pmall.
Somewhat offset by the lower wholesale orders and reduce retail revenues, reflecting the closing of the having David retail stores.
Regarding bottom line results for the second quarter, we anticipate that the strong E. Commerce revenue growth combined with contributions from Pmall will help offset certain headwinds, including increased cost from third party shipping vendors higher labor costs higher operating costs too difficult to do to the COVID-19 pandemic and the law.
<unk> contribution.
And the wholesale and retail channels during the quarter.
As a result, we anticipate driving adjusted EBITDA and EPS growth in the range of 18% to 23% for the quarter I'm having to play out.
I'll now turn the call back to Chris.
Thanks, Bill So as you can see we had and that's when we'll start to fiscal 21.
Top and bottom line results for the first quarter represents a continuation of the growth momentum that we built for the past several years.
You know go make floral and gift business. What 800 flowers brand continues to extend its market leadership position with strong ecommerce growth on the largest bit revenue base in the industry. This is now complemented by the acquisition of PC mall, which is already proving to be an excellent fit on our platform and it all star collection of brands.
Making us a leader in the fast growing category of personalized products with gifting in home decor.
In Bloomnet, we are further expanding our market share position with increasing order volumes in growing wholesale business no gourmet food and gift baskets segment, we have continuing strong E commerce demand for Harry <unk> Davids expanded product offerings as well as a growing assortment of innovative on trend products from the popcorn factory show.
Those cookies or other critical I made friends.
In addition, we're continuing to grow our customer file across the enterprise with accelerated new customer growth increased demand from existing customers and growing membership in our passport program.
Perhaps most important we have begun to engage with our customers differently through an open two way dialogue such as a weekly celebrations poll sweaters that Jim and I send out to custom is designed around empathy any motion rather than a transaction.
These efforts are hoping to deepen the relationships, we have with our customers and build customer loyalty of the customer.
Customer file evolved into an interactive customer community.
So as we head into the key holiday season, we're very well positioned to deliver again, an excellent customer experience and drive continued strong top and bottom line results.
With that I'll turn it to Chris to open the call for questions.
Chris would you please repeat the directives against as of today.
Of course, and ladies and gentlemen, we will now begin the question about was essentially.
Okay, great shouldn't, but pretty star and then one on your typically keypad.
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Our first question comes from Dan Kurnos off the benchmark company. Please go ahead.
Yeah. Good morning, Chris just on the K P. Eyes, you gave around passports and multi brand I just wanted to be clear, where those year over year growth rates and if so is there any color you can give us on a sequential improvements and maybe some color around again.
I'm like you did last quarter the profile of new customers coming to the site are they taking our you know what's what's the percentage chance they take passport and become multi brand and then on on T Mall. It sounds like you're probably further along the integration path and I think you were talking about on the last.
Corridor, that's a good thing I think especially if there's reduced mobility you feel like personalization should do well. This holiday period is there anything I know, it's super early and you just closed and integrated it is there anything you can kind of tell us and what you're seeing from that particular customer channel how they behave.
Behave relative to sort of your traditional customer sat and.
Whether or not they are more or less inclined.
To browse or other brands.
Sure. Thank you very much for the question.
You know as we look at the numbers that I gave you on the passport, we're seeing double digit growth for that is year over years not sequentially. We don't really report on quarterly sequential numbers is without seasonality business year over year comparisons we can feel much better what we're seeing is good double digit growth in both people, becoming multi brand customers as well.
People joining the passport program.
As we do that and with the accelerated growth that we're seeing and new customers. We're also seeing and I think I mentioned this last quarter as well were also seen increased conversion rate or take rate from both existing and new customers very importantly into the passport program and a nice lift on that increased conversion rate year over year, we don't.
Publicize the number but it's been a nice lift that we're seeing so all that's very encouraging for us and what we're seeing in the everyday customer file is a larger percentage of our customers every day being passport members and all multi brand customers and with that drive fee increase frequency increased spend that comes along and Youre following that.
The first purchase so working very very well for us that we're seeing on the passport and the multi branded goods and still I would say it was still early stages on some about cross brand merchandising capabilities and cross brand marketing capabilities. So that leads me, let you answer on your question on personalization mall.
But it's very early we're very pleased with the progress that we're making on the integration.
Thrilled to have it up on our website, we just got it up this week. So I really don't have any strong indication of cross.
Cross brand migration you know, we got the 10 above that what we did see was a good response to the communication, we sent out to a passport members as well as to the general customer database as we have to inform them of them New walk and all the factors that walking capability will now work you do people.
Again, great credentials would work on one 800 flowers platform as well and we saw some good feedback and response to that so the people business on its own is performing ahead of our expectations and the early very early indications. We know that we have all that goes to the product when I will be very well received by the one 800 flowers exist.
And customer base.
Got it that's helpful. And then maybe just one quick follow up and then and then one for for Bill just in terms of sort of the the forward growth trajectory, Chris because this is becoming sort of more of a talking point I know that you guys still here you know it feels like your customer base, you're just starting to scratch the surface. How do we think of the balance between gross.
Going to your customer file and expanding wallet share do you have a sense of kind of what wallet share. You you have currently as a percentage of your existing customers gifting budget.
No we don't really supposed to the wallet share so much what we're focused on really is our internal metrics to customer behavior metrics, we're seeing a frequency retention and lifetime value. So that was a move that actually you know in the right direction and that's what really gives us really good strong confidence and sustainability without growth rate going forward.
Okay Fair enough and then just for Bill I'm. Obviously, you know you mentioned kind of the plethora of headwinds.
That you're facing is there any way to quantify kind of what you think the margin impact is from co bid and sort of what are you putting in place are you, giving up maybe some margin to try to get a either you know I know you usually do that they had to like Valentine's day, but are you, giving up some margin to try to get sort of pull forward in demand.
So you can make sure you get everything out or are you doing other things to try to increase the flexibility of shipping dates like you had around.
Mothers day, which is a lot tougher around the holiday season, obviously.
Yeah, Dan you know as we've mentioned that went out like what were very similar to many companies out there that faced the headwinds that we have mentioned you know those headwinds being higher you know higher shipping costs.
Higher labor costs and cauldron.
Always related.
Expenses, so that has an impact on us with yeah, we've demonstrated significant leverage in the model in Q4 and Q1 of this year, our our guidance.
Not show that same you know that same level about oh, yes up leverage I still showing kind of record numbers and you know and I'll second what a couple of topline out you know as well as as bottom line the ability to move yes, we you know as much as you'd like to incentivize customers to buy early.
With the perishable products, it's hard for them to you know to to accept shipping handling and shipping only and that's where the challenges are shipping you know with a third party shippers is having that liberate.
During that during the months of December and as we get into them up to December. So we continue to look at a incentives to do that but it doesn't move the needle that significantly.
All right. Thanks for all the color guys and another nice print.
Great. Thank you Dan.
Thank you.
The next question is from Alex Fuhrman, Craig Hallum. Please go ahead.
Great. Thanks, very much for taking my question I wanted to talk also about about just the shipping issue and of course being a lot about this rounds that there's going to be on the supply chain. This year, just wondering how much visibility you have into delivery times, and and what I'm sort of estimates in terms of times your.
You're quoting customers versus what you normally what is there any concern that that could result in a shorter shopping in this holiday season.
Yeah, you know I think it was a significant shift in consumer see E. Commerce as quick you know quite a bit of strain on you know the capabilities of the third party shippers, you've heard and I've been reading. Many stories about you know the you know Fedex U.P.S.U.S.P.S. and well documented in you know in the intermediate so.
All retailers, including ourselves are pacing <unk> basin knee. So you know these constraints higher cost constraints on you know on volume we built that all into you know our guidance you know wouldn't navigating through these challenges are very closely with our primary shipping partner, which is which is fedex.
And even with the constraints on on shipping.
Capacity as well as the higher cost what kind of help we anticipate record top and bottom line results in the second quarter and I think you know based on the fact that we work so well and so closely with our primary shipper Fedex specifically I.
I think Alex we do have very good visibility into shipping times that we're able to do that and should we see a challenge just a communication in a right into our customers' expectations around that that's always tried to manage so I think the answer is yes, we have good visibility into it what have you.
On the team that manages that extremely well, we're very confident that we can navigate through the challenges in this holiday season produced in numbers that Bill gave gave it a we gave as guidance for this holiday, which is no four X or y or whatever growth rate was last year and still provide a great customer experience.
Great that's terrific. Thank you very much.
Thank you else. Thank you.
The next question is from Linda Bolton Weiser of D.A. Davidson. Please go ahead.
Oh, Thanks, Hi.
So I think there's been some investor questions around how well you think you can maintain or retain the customers that you're gaining here during the pandemic.
So maybe you can comment on that in terms of kind of retention and also I think your average purchase rate is about 1.7 times per year, maybe at least for Florida.
Is there any indication that that's actually increasing because people are participate participating more in E Commerce giftgiving.
Thanks to that thank you Linda thanks for that question.
As we looked at our business and the momentum that weve built over the past few years, you know, it's very encouraging to see that does continue to grow so.
So it's been several years out of a new building growth momentum, increasing our customer file new customers. As you pointed out then we'd look at once they've been they've been the impact of the pandemic on business in general and it's really been a binary impact of certain businesses like restaurants bars retail brick and mortar retail flows. It's just been devastated by it.
Then there's businesses like Us E Commerce business is that fair to reap the benefits of it but as we said earlier, we we've been leaning into that opportunity to grow our customer file even more aggressively with some fantastic new customer acquisition growth rates that we're seeing and why it's because it's behind the three trends that we see coming out of this pandemic the trends of it.
Dramatic shift to consumers to E commerce shopping from offline to online.
Well when you combine all of those factors together.
Great. Thank you and then also can you I think in the past periods at least you had given some concessions to bloom that Flores, maybe some waving or something of fees or something of that nature can you update us on if that's still going on or.
If that's something in the past and can you quantify that and does that affect the revenue line or the gross margin line of bloom that or can you just give a little more color on that.
Well, thank you very much ago.
And his remarks back in queue for the pain doesn't really first dog.
He gave some concessions introduced pricing dropped forest waiver of some fusion.
All the way marketing programs that we can help the forest.
That's what we do.
This is to help out for his computer to grow and then they have some small I'll focus was to make sure we hope that far survive, which they got very nicely.
That's turning around and benefiting US now as we pointed out with a group of people choosing to send their orders to team that as opposed to some of the other competitors in the market and purchasing more from blue National wholesale products again as opposed to the other competitors in the market. So we're seeing that customer loyalty go on that show up at three.
To five in the last quarter right.
Yeah.
Back in queue for that's the reason why you called.
Talking low double digits and the bottom line.
Dubuque margin was was negative in the fourth quarter, but you know as you saw in Q1 is we just reported in Q1 with growth almost 29% in the in the corner of my contribution margins up <unk>.
$2 million and a quarter clearly.
A decision to be made that Edward what are the right ones.
Yeah, it's a good team that bloom their team is really doing a good job taking care of the flowers.
Thank you that's all for me. Thanks, Thank you Linda.
[laughter].
Thank you. The next question is from <unk>.
For security and code. Please go ahead.
Yes, good morning, and thank you for taking the question. So I may have missed us, but as far as the customer file growth has been sent so are you seeing this well with a cross Lola of your brand or is there any one man.
And that stands out and then as far as your customer file just just wondering when you looked at the customer smiled for people can you give us an ending any indication as far as the the incremental growth the customer problems because of.
Female acquisition.
Thank you Anthony.
We looked at the customer files first of all it is across all brands.
That's important.
Keep in mind to leave brands in customer acquisition efforts are out two largest brands to data two largest brands of one 800 flowers and Harry and David but the cough is across all brands and really also the same thing that we're seeing what's the growth, obviously multibank customers, but a task for customers. The group is also.
Crossover and where they are really recognizing the value and the total solution that we're bringing to the market for that.
So it was very very pleased with the visibility we have that as we look at the few more numbers.
I forget the told the 12 months act of numbers about 1.5 1.8 million in that range 154, 1.8 million 12 months access customers from team all that will be adding into a file and again, what we see there and one of the things. We're very excited about is Avi expanded product line that helps us off a more about <unk>.
He needs the broad range of price points from the Pmo's product line is more lower price point guidance in there that all that the expanded product line lower price points. We believe will help drive the frequency of usage across our customer base. Even further as we give our customers more products to meet more with every ship.
<unk> at more price points.
To really just helped drive a lifetime value for us.
Got it okay. Thanks, Chris so so as far as those 1152 1.8 million active customers for for people do you have a sense as to what the overlap is with your current customers just want to get a sense of like picking up new custom brand new customers or not yeah.
Yeah.
This is enough turn it over there to to this just like Harry and David There was enough crossover in the file to give a strong confidence in our ability to grow multibank purchasing.
So.
Enough crossover not a significant amount.
January of those customers really all new to file.
Got it okay. Thank you for that and then and then as far as the wholesale and retail headwind that you saw in queue wanted <unk> can you give us maybe maybe bill maybe just the breakdown between the the headwind that you. So if you could just separate wholesale versus retail <unk>.
<unk>.
<unk>.
Yeah, I'm, having some on queue. One it was about $20 million combined about 15 million for wholesale down year over year and about $5 million by not having having David stores.
Okay. This call.
Got it okay, alright, well, thank you best of luck.
Thank you.
Thank you and the next question is from my uncle Kopinski off normal capital markets. Please go ahead.
Thank you and congratulations on your quarter and thanks for taking my questions I know that in the past or during the midst of Covid that you indicated that you weren't seeing any product disruptions from China and I know that this is a big inventory quarter. So I was just wondering if you can just give us a sense of the whether or not.
You have shifted products.
Your suppliers for away from China, and what the type of increases in your inventory that you've seen.
Yeah, Michael Thank you I think as we look at the inventory.
We've been very fortunate that first off.
Imports from China for Us not a significant part of our supply chain and even early on we saw some disruption not a lot more just late shipping.
And that caused a little bit of problems back into March April time period.
Things got better since then.
The Big concern was as we moved into this holiday season, what would happen as far as inventory coming in components that we bring in from China.
While they run a week to two weeks late sometimes does not cause a major disruption.
We've been able to do that in service our customers appropriately without any major interruptions. So that's worked out well for us.
We've looked at shifting some capabilities of sourcing out of China, and we've done a little bit of it but even really as we started it more and more.
The other other geographies, just really honest setup like China, so even with some of the challenges even with some of the tariffs coming out of China was still better off sourcing there than many other places around the world. Although we continue to look at mitigating any risks that might exist.
Gotcha and in terms of the <unk> I was just wondering in terms of the revenue trajectory there given the the impact that it that does this is probably seen in terms of Covid and then also if you could just talk a little bit about I know that the governor of Illinois placed additional restrictions in certain areas of the state whether or not.
Any of those restrictions add affected tmall given that it's based outside of Chicago.
In Q1, we kind of gave that the.
The results kind of pre with them without <unk> also kind of go through the math and and the standards about 10 points of our health related.
Related to Pee Marshalls about.
$20 million and a quarter Q2 is by far it's it's biggest biggest quarter almost 50% of its revenues are in.
Q to one of the attractiveness of the mall is that it is EBITDA positive contribution positive in all formats.
For the school is but certainly this this upcoming quarter is is very important to us and we have to have the user are doing this corner, we have not been any disruption.
In <unk>.
<unk> and saw it since homeownership is has gone very nicely.
Have you over here.
What really since we've owned pinball it started to real started the integration process and I'm really looking at as I mentioned getting the digital marketing team involved looking into created the content et cetera, where seeing nice brokerage ahead of our expectations and people.
As far as the announcements and governor prescript.
They are not affected on facilities in the Chicago land area at this point and we think we're very well positioned.
Have any interruptions of course, and this pandemic you'd never down the.
The visibility we have right now is we're confident that we will not be interrupted.
I no longer term that you had dissipated that there would be some consolidation among our your facilities and that's P. Malls state of the art facilities offer some opportunities to move some of your inventory and products to that location does that does the covid situation and the and the and the issues with Governor Pritzker.
Given the fact that I would always been probably more restrictive in many ways than other markets does that kind of derailed that plan in terms of any of the potential consolidation into that facility.
Michael not so much as far as especially anything to do with Illinois or any of the restrictions in Illinois.
Mentioned previously some of the efforts that we had planned for this.
Calendar year, while delayed early on by the pandemic, some automation facilities and automation projects and some of our facilities as we just weren't able to bring the people into the facility back into March April may timeframe to do the work that was needed. So so that will pick up more post holiday now as we move in January we will be.
Able to do that.
But that that really was not Illinois specific quite frankly, most of that work was focused on our facilities.
<unk> newest facility in Atlanta, So all that was a delay we see those picking back up again now.
Holiday and that was unrelated to people.
Sure.
Well congratulations again, thank you thank.
Thank you Michael.
Thank you.
It makes questions is from designated 96.
Yes, hi, Thank you. Good morning, everybody you mentioned that the people acquisition contributed about 20 million do you have a number for what the sales were lost from closing the Harry and David stores.
Yes, it's about 5 million in the corner.
$5 million in sales in the corner.
We're about 20 million down in the kind of retail wholesale.
Channels of our business $15 million being all sale and 5 million being.
Retail sales.
Okay and.
And then have you haven't talked about any numbers around P mall since it was announced way back pre cold. It do you have any updated kind of numbers. We can look for from sales and EBITDA met acquisition this year.
Yeah, we don't provide guidance on a on a brand my brand basis, we have filed an 8-K, a so there is filings out there with respect to the historical.
Profitability and size of up P mall for the year ended.
February 29th 2020 $170 million in revenues.
And just on the $25 million and contributed or EBITDA.
And as I stated earlier, we're very pleased with the growth there were saying since we've been operating business.
No.
It sounds like the business has come back add or better than where it was before it was shut down in the spring that's for sure.
Nope can we focus on the the December quarter here, obviously, you're going through your seasonally smallest quarter to your seasonally largest quarter and Chris how do you look at the biggest constraint in the growth in December quarter is it January that the demand, which seems to be there or are you more concerned about capacity cause.
This is a big quarter and and and these are big growth numbers from a sales standpoint, and we know about the the the bottlenecks at the third party shippers, but then even internally at Harry and David and and and just your whole infrastructure how should we.
Think about just like.
Excellent capacity standpoint.
Doug I think as I mentioned earlier as we look at the things developed in this pandemic and some of the trends that we've seen.
We've seen things we've seen this accelerated change more than anything else in so many different fields.
We've seen this accelerated growth and E commerce, not just for our business for many businesses, we've seen it accelerates changes in health care and everything else.
So I think what we've seen as an accelerated growth rates for our business and they're putting certain challenges with I'm sure. We have the third party shipping challenges that bill spoke about that would've been mentioned, we have all the labor challenges out there, but we are also at the same time accelerating our internal capabilities.
So so far was planned for five years ago now has to be planned for one year from now we're doing that the team is built for that the team is responding well to that and we're driving as I mentioned to capture all of the demand we possibly 10 at this holiday period.
Yeah.
No other vitamins.
Indicating al we expect.
Top and bottom line numbers and in the second quarter.
Right, it's not the same as Q4 and and Q1, but looking at our business on sequential basis, not really relevant as you indicated with the kind of the size of the second quarter shifted helping out the holiday gifting is by far the second quarter is our largest.
Is our largest quarter, but we continue to see very strong comment E. Commerce demand, we anticipate that carrying forward it to the holiday season.
But as we stated.
To watch at eight.
Revenue declines and I'll wholesale and retail channels the challenges.
And you mentioned with a third party shepherds with some internal.
Labor.
Unlike.
Every.
Hello, and ecommerce company out there.
But with that said the angel providing.
As far physical second quarter to be.
Strong both in the second quarter, the midpoint of a range of $150 million worth of with a growth in the corner and as a reminder, forecasting 22% to 26%.
At four times the growth rate that we achieve and Q2 last year the holiday quarter last year. So we're anticipating a very strong second corner.
Okay. Thank you that's very helpful.
Okay.
Thank you me thinking.
Our next question is from Kim bilingual Bill Cosby said HM HM.
Thank you just one quick question for Bill on the wholesale portion.
Gives us excitement.
Typically there is a lot of noise between when the your partner's take delivery of the gift baskets.
And I was wondering if you could help.
Clarify.
If they're worthy shifts between the first and second quarter do you expect a similar.
15 million.
Last number in the second quarter any more clarity there would be great. Thank you.
Yeah. So as we indicated wholesale was down $15 million and a quarter I think raspberry kind of alluded to.
Many of us have conversations prior to this.
That we have some insights into where wholesale demand was going to be for this holiday season, the big box guys make decisions in the spring. So we really and that kind of a heightened the pandemic and all I mean very conservative.
And they're buying for holiday holiday gift baskets, and so that that channel for us was going to be down and then E commerce was going to.
Make up make up for that so way in queue to both retail and wholesale will be down more than a worthy and Q1.
The start of the kind of a wholesale season is September and it lines through September through November.
November we saw the impact of wholesale being that about 15 million in and.
In September.
It's going to be down slightly more than that and Q2 and retail will be down.
Significantly more than 5 million it was out in Q1 because of the whole.
Just because of the holiday nature of this of this quarter.
With that being offset by the strong ecommerce growth that we've been talking about.
That will certainly help us to offset those those decline yes.
Again all of this is built into archive, so the 22% to 26% growth that we have the over 40% ecommerce both offsets the declines in and wholesale and retail facilities again.
Topline numbers.
Thank you.
Thank you very much.
[laughter] Christiansen Mccune, that's on to end the call back to the management, so sometimes in Vermont.
Great. Thank you Christmas. Thank you everyone for joining us on the call.
Let us know if you have any additional questions. Please don't hesitate to contact us certainly we'd like to wish everybody was very happy and different Halloween this season.
And I would encourage you to visit a lineup of overstock brands to see what we have been a fall season, the holiday season, especially I mentioned to create lineup of products that we have.
And people for this holiday.
And we just sort of these studies. So thank you and we look forward to any follow up questions you may have.
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Because this conference call has now concluded thank you for tuning today's presentation excuse.
Excuse me time.
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Okay.
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