Q3 2025 1-800-FLOWERS.COM Inc Earnings Call
Good afternoon, and welcome to the one 800 flowers Dotcom 2025 third quarter results conference call.
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Speaker Change: I would now like to turn the conference over to Andy Miller Boy. Please go ahead.
Speaker Change: Good afternoon, and welcome to our fiscal 'twenty 'twenty five third quarter earnings call.
Speaker Change: Joining us today are Jim Mccann, Chairman and current CEO.
Adolfo: Adolfo <unk> incoming CEO.
Tom Hartnett: Tom Hartnett, President and James Blackrock CFO.
Tom Hartnett: Before we begin I'd like to remind you that some of the statements. We make on today's call are covered by the safe Harbor disclaimer contained in our press release and public documents.
Tom Hartnett: During this call we will make forward looking statements with predictions projections and other statements about future events. These statements.
Tom Hartnett: Or based on current expectations and assumptions that are subject to risks and uncertainties, including those contained in our press release and public filings with the Securities and Exchange Commission.
Tom Hartnett: The company disclaims any obligation to update any of their forward looking statements that may be made or discussed during this call.
Tom Hartnett: Additionally, we will discuss certain supplemental financial measures that were not prepared in accordance with GAAP.
Tom Hartnett: Reconciliations of these non-GAAP financial measures to their most directly comparable GAAP measures can be found in the tables of our earnings release.
Jim McCann: And now I will turn the call over to Jim.
Jim: Thanks, Andy and good afternoon, everyone.
Jim: Just a short while ago, we made two major announcements to the market an exciting new chapter for our company.
Jim: We introduced our transformative long term strategy celebrations wave and welcomed adopt all the villa Gomez as our new CEO, who will spearhead this new strategy.
Jim: Four we dive into celebrations wave, let's take a moment to consider the journey that led us to this point.
Jim: In recent years, our company has faced several macro challenges, including the Colgate Bullwhip effect inflation bifurcated consumer markets Ocean trade disruptions and rising customer acquisition cost all during your time, when shifting technology and evolving consumer engagement preferences have made our.
Jim: <unk> marketing approach lesser factor.
Jim: He saw coupled with some newer issues, including a rapid decline in consumer confidence tariff impacts and discussions of possible recession.
Jim: These external factors are significant but we also have encountered internal challenges, notably our decision to shut in most of our retail operations during COVID-19 and recent difficulties with our order management system implementation.
Jim: These are mistakes of our own making and all obstacles that were confronting as your management team.
Jim: Although we faced certain challenges as we've outlined in our press release. This afternoon, we have developed a comprehensive plan to address it this.
Jim: This plan includes reorganizing our structure.
Jim: Reducing our course and ensuring we have the right leadership to lead us into the future.
Jim: Improving systems marketing and merchandising offer.
Jim: Optimizing our product assortment pricing and partnerships and testing new retail concepts, improving our loyalty program and maximizing our last mile capabilities.
Jim: Let's begin with leadership and the new talent, we brought onboard two which accelerates our changes.
Speaker Change: We're excited to welcome Adolfo to the team.
Speaker Change: <unk> has significant experience in leading consumer businesses digital transformations and the shift in business models.
Speaker Change: He understands our challenges and has driven transformative changes throughout his career.
Speaker Change: Through adopt hose approach to leveraging data analytics and consumer insights. He has achieved remarkable success in his previous roles.
Speaker Change: His expertise will be instrumental and continue our legacy of innovation and connecting more deeply with our customers through cutting edge digital experiences.
Speaker Change: The team and I look forward to working with him as he leaves US with this next wave of our celebration its journey.
Speaker Change: Before we conclude I'll also ask Adolfo to introduce himself.
Speaker Change: We have also recently welcomed Henry Morey to our executive team as our chief AI and transformation officer.
Speaker Change: With over 17 years of experience, leading digital innovation and AI strategy at startups as well as global companies.
Speaker Change: And if he has a proven track record in driving growth through AI driven initiatives and will ensure we remain at the forefront of innovation and transformation.
Speaker Change: Beyond enhancing our leadership team we've added expertise to our board of directors with the addition of Shelly Palmer.
Speaker Change: Shelley brings an extensive experience in technology media and marketing.
Speaker Change: Which will be invaluable as we navigate our next wave of innovation.
Speaker Change: His strategic insight and industry knowledge will guide us in leveraging new opportunities and strengthen our market position.
Speaker Change: Our company has a rich history of innovation and has consistently embraced the need to adapt and respond to structural changes in the operating environment.
Speaker Change: We've conceptualize these innovations at five distinct waves, which include our retail stores the launch of the National one 800 flowers number.
Speaker Change: The introduction of e-commerce, and the shift to mobile social commerce, which ultimately became conversational commerce.
Speaker Change: The commonality amongst these waves is a recalibration of our business model and practices to reflect ever evolving technology and consumer buying preferences.
Speaker Change: We are now writing a new wave one that we are bracing and whose momentum will carry us into the future selling.
Celebrations wave is our sixth wave of innovation and we expect it to be the most transformative.
Speaker Change: Advancements in technology, and shifting consumer buying preferences demand it.
Speaker Change: Celebrations wave represents a significant evolution of our company.
Speaker Change: It integrates our strategic initiatives and brand assets that utilize advanced technologies to create comprehensive celebrations ecosystem.
Our company has always been focused on helping inspires consumers to give more connect more and build more and better relationships.
Speaker Change: We believe in the joy of giving.
Speaker Change: And recognize that expressing sentiment and an ongoing consumer need not limited to holiday periods. After all relationships arent everyday business.
Speaker Change: Now new technologies aligned with our goal to create a comprehensive ecosystem that helps customers build and deepen their relationships.
Speaker Change: <unk> waved will further our mission by developing a new ecosystem that helps customers fostered deeper more meaningful connections. These.
Speaker Change: These changes will directly elevate the customer experience and address key pressures on our financial performance.
Speaker Change: This represents the most comprehensive strategic plan in our company's history.
Speaker Change: And we believe it will directly benefit our customer experience and drive significantly improved results.
Speaker Change: We've been preparing and positioning ourselves for this opportunity through our relationship management tools sentiment first approach and recent sentiment expression based acquisitions.
Speaker Change: Most importantly, we are evolving our business model to adapt to changes in technology and consumer behavior.
Speaker Change: Ensuring our continued growth and future success.
Speaker Change: We look forward to sharing more of our plants with you on this call and when we interact in the future, but first James who will provide an update on our third quarter performance.
Speaker Change: Let's say we are disappointed with the result is an understatement.
Speaker Change: Following James' Tom will provide more details on the strategic actions, we are taking with celebrations ways to address this underperformance James.
Tom Hartnett: Thanks, Jim and good afternoon, everyone.
Speaker Change: Today I'll review, our Q3 performance the significant factors that contributed to it and our celebrations wave will help address a number of these issues.
Speaker Change: Please note that all comparisons are made to the prior year period and represent adjusted results unless otherwise stated.
Speaker Change: Our third quarter performance was challenging.
Speaker Change: We are absorbing consumers being affected by macroeconomic forces.
Speaker Change: More recently consumer confidence and sentiment have declined in response to various uncertainties, including potential tariff impacts on inflation.
Speaker Change: Softening labor market and shifting economic policies.
Speaker Change: We saw continued softening as the quarter progressed and consumer sentiment declined sharply.
Speaker Change: In addition to broader macroeconomic pressures, we are increasingly impacted by the decline of free at a low cost marketing channels as digital platform shift toward paid placements sponsored listings and AI overview responses that limit organic visibility.
Speaker Change: While this presents near term challenges, we see this as an opportunity to fundamentally change our customer acquisition and marketing approach.
Speaker Change: For perspective, our sales and marketing spend as a percentage of revenue has averaged approximately 25% over the past five years.
Speaker Change: Over the long term, we expect to reduce our marketing spend as a percentage of revenue by adopting message that are more efficient and increasing engagement and frequency with existing customers to celebrations wave.
Speaker Change: As we have observed for some time customers are more inclined to shop during holidays, which we experienced for Valentine's day by every day and just because occasions continue to face significant pressure.
As a result of third quarter revenue declined 12, 6%.
Speaker Change: This was comprised of 11, 4% decline in our consumer floral and gift segment and.
Speaker Change: And 18, 2% decline in our gourmet foods and gift baskets segment, and a four 5% increase in our bloom that segment.
Speaker Change: Our third quarter adjusted gross profit margin declined 350 basis points to 33, 1%.
Speaker Change: Which excludes $4 6 million in costs associated with the new system implementation as we work to resolve the issues identified during the holiday period.
Speaker Change: It was driven by a highly promotional sales environment and deleveraging on the sales decline.
Speaker Change: We expect to have any remaining issues with the order management system implementation.
Speaker Change: <unk> by the end of fiscal 2025.
Speaker Change: Additionally for reasons, we discussed our marketing expenditure did not yield the results we expected.
Speaker Change: Now, let's turn to our third quarter operating margins.
Speaker Change: This quarter, we recorded a noncash goodwill and trade name impairment charge related to the company's consumer floral and gift segment and its personalization mall trade name.
Speaker Change: While this impairment impacted earnings for the period it did not affect our cash flow.
Speaker Change: Adjusted for this charge and other items operating expenses were $167 million.
Speaker Change: Essentially flat compared with the prior year period.
Speaker Change: Based on these factors our third quarter adjusted EBITDA loss was $34 9 million as compared with a loss of $5 7 million in the prior year period.
Speaker Change: Now turning to our balance sheet net debt was 75 million compared with $9 million a year ago.
Speaker Change: Our cash balance was 85 million at the end of the third quarter.
Speaker Change: Inventory was $160 million essentially flat with a year ago.
Speaker Change: In terms of our debt, we had $160 million in term debt and no borrowings under our revolving credit facility.
Speaker Change: As compared with $192 5 million a year ago.
Speaker Change: At the end of the quarter, we amended our credit agreement as described in our form 8-K that we filed today.
Speaker Change: Now I'd like to take a moment to discuss tariffs our exposure and the strategies. We are implementing to address these issues.
Speaker Change: At present, there is an incremental 10% tariff on imported goods with a far larger tariff affecting goods arriving from China.
Speaker Change: For perspective, we have approximately $1 billion of cost of goods salt.
Speaker Change: Which approximately $70 million is imported and subject to tariffs.
Speaker Change: Approximately half of that 70 million comes from China.
Speaker Change: Based on current policies and assuming they remain in place as is we estimate our tariff exposure to be approximately $55 million with the most significant impact on our personalization and wholesale businesses.
Speaker Change: Whereas China had been the least cost provider in the past we are reexamining our opportunities based on the new calculus.
Speaker Change: Additionally to help mitigate the new tariff policies. Our approach includes working with our vendors on concessions <unk>.
Speaker Change: Change in componentry.
Speaker Change: Modifying our assortment and as a last measure how much to pass through in pricing.
Given the evolving macroeconomic landscape and the uncertainties that continue to shape. The near term outlook. We have made the decision to withdraw our guidance.
Speaker Change: This decision reflects not only the unpredictable external factors affecting the broader environment.
Speaker Change: But also our focus on executing a transformational strategy that positions our company for long term success.
Speaker Change: As we embark on this next phase.
Speaker Change: While there may be some short term variability we remain confident in our ability to enhance operational efficiencies and drive sustainable growth and create lasting value for our stakeholders.
Speaker Change: Looking ahead we.
Speaker Change: <unk> knowledge, the multifaceted challenges, we face both internal and external the fluidity and uncertainty of the current environment.
Speaker Change: <unk> consumer sentiment and tariff policies.
Speaker Change: Necessitate a tactical approach to navigate these obstacles effectively.
Speaker Change: While we are currently addressing these immediate challenges. We are also committed to our long term vision transforming how people celebrate and manage their relationships seller.
Speaker Change: Celebration wave aims to reduce costs and increase revenue by increasing frequency and restoring growth in everyday celebration opportunities.
Speaker Change: Dressing affordability for all households, while offering elegant products for higher income consumers.
Speaker Change: Enhancing engagement and using tools like personalised reminders to significantly reduce customer acquisition costs.
Speaker Change: We expect our celebrations wave strategy to substantially improve our financial performance over the next few years.
Speaker Change: By leveraging advanced technologies, we plan to operate with greater efficiency and agility.
Speaker Change: To support these investments we are implementing cost for job reductions and plan to reduce costs by approximately $40 million on an annualized basis.
<unk> 17 million in reductions already executed.
Speaker Change: We anticipate that our efforts will lead to higher profitability and cash flows.
Speaker Change: And now I'll turn it over to Tom to share some more details on celebrations wave.
Tom Hartnett: Thanks James.
Tom Hartnett: As we embark on our latest evolution with celebrations wave, we expect to transform how people connect and express themselves in meaningful ways.
Tom Hartnett: Our vision is to become the top destination for nourishing relationships through heartfelt expressions.
Tom Hartnett: The advantages of this transfer transformative shift in our business model and customer engagement are intended to directly address the key factors influencing our growth and financial performance positioning us for long term success.
Tom Hartnett: This strategic plan seeks to increase revenue, both everyday and holiday occasions, optimize operations lower cost and accelerate the pace of change leading to higher EBITDA and cash flow over time.
Tom Hartnett: To achieve this we are developing a celebrations ecosystem that is sentiment led to help our customers build stronger and more meaningful relationships.
Tom Hartnett: This ecosystem is comprised of a newly launched celebrations app.
Tom Hartnett: A content rich approach that includes a new celebrations website that will be launched in the coming weeks and a re imagined celebrations passport loyalty program.
Tom Hartnett: Celebrations away, we will utilize a ladder approach to drive sales growth and offer customers tailored experiences using personalized suggestions based on the nature of their relationships and their historical spending patterns.
Tom Hartnett: The customer journey begins with free and low cost greeting card options.
Tom Hartnett: <unk> printed that are expected to increase overall engagement and frequency.
Tom Hartnett: And of course customers can always start there experienced by selecting a gift from our family of brands, our marketplace offerings and attach a green card to the gift.
Tom Hartnett: North American card market is greater than $6 billion and our capabilities to fulfill gifts attached to those cards in many cases on this on a same day or next day basis is a significant differentiator.
Tom Hartnett: By offering a wider range of products and price points that cater to various occasions and budgets, we expect to attract attract a broader audience and strengthen customer loyalty.
Tom Hartnett: The enhanced celebrations ecosystem will enable us to increase engagement and frequency amongst existing customers and attract a younger more diverse customer base, allowing us to rely less on traditional bottom of the funnel marketing to acquire new customers, which has increasingly become more costly and less effective.
Tom Hartnett: As James mentioned earlier, our sales and marketing costs represent approximately a quarter of our revenues.
Tom Hartnett: We anticipate that our new celebrations ecosystem will meaningfully reduce our customer acquisition costs and enhance customer lifetime value over time.
Speaker Change: Beyond our well known brands.
Speaker Change: Our customer list floor partners and last mile delivery capabilities are significant assets.
Speaker Change: These assets collectively form the foundation of our strategy to drive future growth and elevate our presence in the market.
Speaker Change: As we build on our foundation data is central to advancing our strategy and driving growth.
Speaker Change: These components are combined with new and emerging technologies, such as <unk> AI will provide a hyper personalized sentiment first approach to help our customers nurse their relationships.
Speaker Change: This personalization strengthens our ladder strategy and positions us for continued relevance in a rapidly evolving consumer landscape.
Speaker Change: Celebrations wave advances our vision of becoming the premier relationship destination for heartfelt expressions.
Speaker Change: Business model that aligns with future technological advancements and consumer purchasing preferences.
Jim: Look forward to keeping you apprised with our progress and now I'll turn the call back to Jim.
Jim McCann: Thanks, Tom before I provide my closing thoughts I'd like to take a moment to introduce Adolfo villagomez to our investor community Adolfo, which all I can say a couple of words.
Adolfo Villagomez: Thanks, Jim and good afternoon, everyone I am truly honored to step into the role of Chief Executive Officer of one 800 flowers com.
Jim McCann: During such a dynamic period for the company.
Adolfo Villagomez: I am excited to be here and I am deeply optimistic about the future.
Adolfo Villagomez: With the company's exceptional portfolio of brands innovative ecosystem and forward thinking relationship building strategies. We're on the verge of a transformative digital revolution in relationship building.
Jim: I am eager to collaborate with Jim Tom James and the entire leadership team to drive growth unhealthy MTB those forge deeper more meaningful connections.
Jim: Whether we will still have the future of e-commerce and established our prominence as a leader in expressing sentiments and nurturing meaningful relationships.
Jim: In the coming more in some quarters I look forward to meeting with many of you sharing our vision and discussing the impactful progress we are making.
Jim: To support this invaluable as we embark on this journey of transformation and growth.
Jim: Thanks, Rodolfo as we move forward with celebrations wave ambition is clear to improve people's relationships by enhancing the way they connect and share their sentiments.
Jim: By leveraging innovative strategies cutting edge technologies, and a robust collection of assets, we are creating a celebrations ecosystem that anticipates and meets the evolving needs of our consumers with.
Jim: With celebrations wave, we expect to improve revenues by increasing engagement frequency and retention of our existing customers.
Jim: At the same time, we plan to reduce cost and improve efficiency through embracing new technologies.
Jim: Positioning us for sustained and profitable growth.
Jim: We thank you for your continued support and we look forward to sharing more about our progress I'll now ask the operator to open the call for your questions.
Jim: Operator, thank you.
Jim: We will now begin the question and answer session to.
Jim: Ask a question you May press Star then one on your Touchtone phone.
Jim: You are using a speakerphone please pick up your handset before pressing the keys.
Jim: If at any time your question has been addressed and you'd like to withdraw. Your question. Please press Star then two.
Jim: At this time, we will pause momentarily to assemble our roster.
Speaker Change: And our first question will come from Anthony <unk> with Sidoti and company. Please go ahead.
Anthony: Good afternoon, everyone and thank you for taking the questions and welcome aboard.
Speaker Change: Look forward to working with you. Thank.
Speaker Change: Thank you.
Speaker Change: So yes, so first I guess I know Jim you touched on this a little bit.
Speaker Change: As far as how the quarter progressed, but maybe if you could just give us a little bit more detail as far as you know January to March I know you have now.
Speaker Change: <unk>, which fell on a Friday, which I think was a favorable day placement.
Speaker Change: So maybe you could just speak to that and also whether the Easter shift had any meaningful impact on the quarterly sales.
Jim McCann: Jim Yes.
Jim: I'll ask James to give you the color, but just a overview of the quarter the quarter was a.
Jim McCann: Book a bookend.
James Tom: Bookended on each side of Valentine's day, Yes, Friday is a good placement of Valentines day and holiday wasn't bad but the softness in January on the everyday business and then the softness again in March with the everyday business is what hurt the quarter.
James Tom: The Easter shift of course does make a difference that's why we always suggest that we'd be viewed as a two half company because you have the summer quarter, which is our first quarter, which is your big inventory build in your labor build for the holiday season, The Christmas holiday season, Thanksgiving Christmas and then you have the Easter shift in the second half of the year, which.
James Tom: Always confuses a quarter so the Easter shift did have an impact and Jason Quad.
Quantify that some point and but the tail of the <unk>.
James Tom: The first Oh.
James Tom: Calendar quarter third fiscal quarter for us was softer everyday pretty good holiday business and overall just too expensive on a marketing song James So Anthony with the Easter shift.
James Tom: Revenue was down reported revenue was down 12, 6%, but if you adjust for the Easter shift we would have been down eight 9% and as Jim mentioned.
James Tom: January and March were much weaker because thats, the everyday business compared to February which held up better in the quarter due to the Valentine's day placement.
Speaker Change: Got you okay.
Speaker Change: And then in terms of the system implementation issues. So I know you called out around the $4 6 million gross profit, but in terms of just overall thinking about the.
Speaker Change: How much.
Speaker Change: Sales that you lost because of these issues that any way to put a number on that.
Speaker Change: James will give you the number this is Jim Anthony.
Speaker Change: The implementation of the order management system was a colossal screw up on our part.
Speaker Change: The numbers are one thing, but I think it was even worse than that where we're coming to the end of that impact.
Speaker Change: In the near term so by the end of this fiscal year at the end of June we'll be through that cleaned up but it was a miss.
Speaker Change: <unk> handled by US in every way imaginable and yes is the raw data on that but what I'm concerned about most is we disappointed a lot of customers on the Harry <unk>, David sides of food group side of things during that holiday period, we're doing our best to make it up to them now calling them seeing what we can do to remediate apologizing, explaining what happened in China.
Speaker Change: They are consideration back I think that's going reasonably well I'm just sick that it happened in the first place and.
Speaker Change: And it had an overhang on us because it hurt us across our brands because we have an enterprise wide customer solution customer service solution.
Speaker Change: It got overwhelmed by the demands of the Harry <unk> David.
Speaker Change: And so it hurt all of our brands. So James will give you the numbers, but that doesn't tell half the story.
Speaker Change: If there's any good news that is coming to an end the system is.
Speaker Change: Neely.
Wrapping up on all this amendment it'll be a good system going forward, but it should never have happened my mistake James Yeah, So Anthony as Jim mentioned.
Speaker Change: We've in the past few months, we were working through were mediating most of the complex order issues and we're through most of that so we believe theres some clean up still will have that.
Speaker Change: Taken care of by the end of our fiscal 2025.
Speaker Change: From the topline obviously Q2 is the significant holiday period for the food group and we believed US back 20 plus million dollars of top line at a minimum.
Speaker Change: That we could we could quantify.
Speaker Change: In Q3, there was probably some residual hangover, but it hasn't haven't measured that.
Speaker Change: And obviously the Q3 is not a food holiday period. So there is a lot less out there, but there definitely was a residual.
Speaker Change: Hangover and you could see the top line was down in.
Speaker Change: And our expenses and then you have the so then you have the.
Speaker Change: Incremental cost in margin was about $4 6 million Anthony so they cost over the two quarters was close to $11 million of cost.
Speaker Change: Incremental cost on the implementation of Oems and then the inventory question yes.
Speaker Change: Yes.
Speaker Change: Which included inventory write offs.
Speaker Change: Right.
Speaker Change: Last question before I pass it onto others. So they're looking at these celebrations wave program. It is a multiyear initiative as you called out maybe if you could just kind of talk about the timeline like what's kind of the maybe easy or low hanging fruit so to speak what can you achieve first and.
Speaker Change: In the first year of implementation of this new program, what's kind of going to be more on the back burner.
Speaker Change: Speak.
Speaker Change: The primary focus of the celebrations wave is something you've heard Anthony you've heard us talk about for a while.
Speaker Change: <unk> capabilities, but now we have the ability and the tools. So when you think of what the impact of AI is on US. It's really twofold. One is how do we how do we reengineer ourselves now, which we're doing to be much more efficient to be much more of.
Speaker Change: Leanne and too.
Speaker Change: Improve the level of service, we provide our customers. So that's on an internal facing how do we do what we do better and cheaper and then externally facing customer facing AI gives us tools now to do things that a year ago two years ago, we only director being able to do you factor that in with a couple of the acquisitions that the team has done in the last.
Speaker Change: A couple of years to position us to really go. After this sentiment first capability to sentiment first philosophy around the celebrations wave have really come to fore. So last year, we purchased a greeting card capability, including a wonderful team of people that have us there at the DNA of this whole sentiment.
Speaker Change: Tom maybe you can touch on how many Cogs were already selling and how we're just getting into that readout celebrations.
Speaker Change: Ecosystem is a mentality of how do we serve our customers with free inexpensive and high quality ways of expressing their sentiment and oh by the way when they want to attach a gift we have a beautiful assortment there, but then Tom maybe you talk about how we will introduce it primarily with our existing inventory of media.
Speaker Change: Our house media.
Speaker Change: First step.
Speaker Change: Yes, Hi, Anthony Tom just a couple of things.
Speaker Change: We start off in so first piece is a relationship management capabilities. We talked about are our new app. That's out there we have an enhanced capabilities with our address book and are lobbying capabilities and its utilizing our first party data now.
Speaker Change: <unk> team to define and look at the social graph around relationships and occasions, I think a big piece of this is also our occasion reminders that we've been doing fairly well, we keep growing that data repository.
Speaker Change: Also our personalized experiences on our platform we continue to make good.
Speaker Change: Good progress.
Jim McCann: Special with ml and AI in personalizing all of our experiences on our platforms as Jim alluded to.
Speaker Change: It is now with the acquisitions of our celebrations card business and some of the other attributes we have in the businesses, we have implementing our latest strategy, having a low cost free.
Jim McCann: Environment, where we can bring people so.
Jim McCann: Reduces the.
Jim McCann: The barrier to buy the barrier to engage so with free reading, a free reading cards and gift cards and things like we've talked about in the past like multiples as well as premium gifts alright, that's all part of the journey here.
Speaker Change: And then as Jim mentioned, the use of AI, the use of AI and personalization and our content development and Gentex shopping in.
Speaker Change: And how we're bringing to bear.
Speaker Change: And utilizing FERC for advancements in our customer care.
Speaker Change: That kind of rounds out what we're trying to achieve here and bring all of that foundational elements, which a lot of them are already built in this forthcoming year.
Speaker Change: Got it thank you very much and best of luck. Thanks, Andrew.
Speaker Change: Our next question will come from Michal Krupinski with noble capital markets. Please go ahead.
Michal Krupinski: Thank you and thanks for taking my questions I welcome of alcohol as well.
Speaker Change: Couple of questions.
Speaker Change: So you've been dealing with a bifurcated market for some time and I was wondering if the revenue weakness that you've seen in the last quarter was related to any of you know like maybe the higher end or the lower end customers was there a shift towards lower and pricing products.
Speaker Change: Let me add some color to what we had seen prior to this particular quarter related to the <unk>.
Speaker Change: <unk> themselves.
Tom Hartnett: Hi, Michael It's Tom I think.
Tom Hartnett: <unk> continued the trends with the macro economic environment, we are seeing.
Tom Hartnett: More challenges with our lower income consumers.
Tom Hartnett: Where there are discretionary spending is.
Tom Hartnett: It's been reduced we've.
Tom Hartnett: We've seen good retention with our best and better customers, it's where we're losing the retention are you losing.
Tom Hartnett: The buying right now is with those customers that are.
Tom Hartnett: Most challenging struggling.
Tom Hartnett: Gotcha.
Tom Hartnett: Just a few higher price points.
Tom Hartnett: 500 to $500 price range of frankly sold other Brian all the items, we introduced so the.
Tom Hartnett: The comparable customer continues to spend and spend well our average ticket up over the last couple of years and I think thats a function of.
Tom Hartnett: Having a broader range of price points and be.
Tom Hartnett: Losing customers at the lower end.
Tom Hartnett: Income grade.
Tom Hartnett: Taking those lower price points out, which is artificially propped up our average order value.
Speaker Change: Yes, you mentioned that the competitive landscape in the core business increased you mentioned.
Tom Hartnett: Mentioned that was highly promotional do you believe you lost here.
Tom Hartnett: In the core business.
Tom Hartnett: We don't believe so we look at our market share annually.
Tom Hartnett: With our larger brands, we don't believe we have either maintained or gained share in the last year.
Speaker Change: Okay, and you mentioned that personalization mall as well as your wholesale business are to those that are most impacted by tariffs.
Speaker Change: Surprised that you Didnt mentioned bloom net there because it seems to me like some of your <unk>.
Speaker Change: Products. There are also a source.
Speaker Change: Maybe in Asia I was just wondering if you could just talk about the impact on bloom yet yes.
Speaker Change: So that when we said wholesale Michael we don't actually including the NAPCO and Bloom net aside of NAPCO is a big piece of it. The wholesale so that was that was always had wholesale that did include the NAPCO bloom that wholesale business as well as the food wholesale business around the bloom that as it related to our fulfillment partners, our retail floral and gift fulfillment partners.
Speaker Change: Less affected because it's their their tariffs are going to be for South America, which are in the 10% range versus 145% on component tree, we're importing from China.
Speaker Change: Gotcha, and then I was just wondering in terms of since we're already through that.
Speaker Change: Fiscal fourth quarter can you kind of give us a sense of how April revenue trajectory did it worsen from where you were in <unk>.
Speaker Change: In March I was just wondering if you can kind of give us just a general trend that you saw in April.
Speaker Change: So in April will be.
Speaker Change: Obviously will be up because of the Easter shift in April. So obviously the holiday buying was where we thought it would be still seeing the softness in the everyday business and for the quarter.
Speaker Change: We believe that will be slightly better in potash the Easter shift and obviously, we're getting close to mother's day, we got to see Katherine mother's day, but for the quarter will be slightly better than we were in Q3.
Speaker Change: Thank you for that that's all I have thank you. Thank.
Speaker Change: Thank you Michael.
Speaker Change: Our next question will come from Doug Lane with water Tower Research. Please go ahead.
Doug Lane: Yes, hi, good afternoon everybody.
Speaker Change: Jim I think in your earlier comments, you mentioned that exiting retail during the pandemic was a mistake can.
Doug Lane: Can you elaborate on that what you have done differently.
Speaker Change: Harry <unk>, David retail stores NIM.
Doug Lane: Are you discussing retail can you give us nearly read on long Island store.
Doug Lane: Sure happy to.
Doug Lane: My opinion is that.
Speaker Change: When when a hair was on fire at the beginning you shouldn't make scheduled.
Speaker Change: Things are going wild at the beginning of Covid.
Speaker Change: When we were growing 100% or thereabouts, and our E Commerce business and we had no idea how long we closed our stores, which sold a lot of perishable products.
Speaker Change: <unk> two to walk away from those now.
Speaker Change: With the benefit of 2020 hindsight that $50 million of solar revenue that we've walked away from I would still like to have because I'm a believer in a multichannel kind of approach we go along.
Speaker Change: And so a mistake.
Speaker Change: I'll admit to it that we've made that mistake. We also shut at other retail plans that we had in development because.
Speaker Change: It was all hands on deck to keep up with the explosion of growth in the E. Commerce side that being said if I could wave a magic wand I still have those stores I still have the other experiments we have going on in retail, but now we're getting back to it.
Speaker Change: We'll do we did have a dozen holiday stores. This past Christmas. We really are pleased with the results of that from a brand point of view from a sales point of view from a exposure of our different brands that one well we're going to be bigger. This team will have a bigger opportunity to do holiday stores. This year, we opened up the.
Speaker Change: Carrie next door, which is a representation of.
Speaker Change: Several of our food growth grants Scharffenberger section there we have a big shareholders' section there is a beautiful stage and retail from distribution to retail and make a couple of blocks got it.
Speaker Change: Free marketing because customers see your brand to engage with you and you remember quite a very small company a couple a few years ago called Atlas's table right before COVID-19 Mark with timing.
Speaker Change: By a lot of events company, but we've repurpose those assets and those relationships.
Speaker Change: Celebrations experiences brand and Youll see at the Huntington store of Harry <unk>, David and one 800 flowers Youll see scharffenberger chocolate as Youll see Moose Munch.
Speaker Change: Vital choice.
Speaker Change: Harry <unk>, David brands on new not nut line from from Beaver Creek.
Speaker Change: Under the hiring of David umbrella all of them represented there and we did a big Grand opening party afford into there are a couple of weeks ago was fantastic at about 100 people in the store great experiences and we have a section in the front of store right upfront, where you can see in the window and this is one of the most highly traffic intersections on long island and all these colleagues driving by.
Speaker Change: All of these people taking classes in that day and night, we're building a whole program. They are all of the different classes. So people come in Iraq, you have a great experience.
Speaker Change: We can make a couple of bucks of that and then they all get a little low.
Speaker Change: Gift bag that they can walk around the store and Philip or different kinds of items, our shareholder cooking products as our best selling item in that store right. Now. So we are and have been retailers from most of our 50 years made a mistake shuttering those were coming back in a deliberate and tested fashion with holiday stores with different kinds of concepts and <unk>.
Speaker Change: I believe that if we are deliberate about that and it will play an important.
Speaker Change: And meaningful.
Speaker Change: Role in our marketing scheme slash sales going forward, but most especially we get interact one on one with our customers and they have a different sense of our brand when that happens.
Speaker Change: So this year over the next 12 18 months or are we looking at just expanding.
Speaker Change: The holiday stores or do you think youll.
Speaker Change: Take your learnings from long island store and start to expand that concept.
Speaker Change: What do you think yes.
Speaker Change: Our plans are.
Speaker Change: A handful of full year round stores as we test into those maybe a little bit more certainly over 18 months Morris and obviously, we're looking at up.
Speaker Change: High traffic locations.
Speaker Change: And then yes, we will continue to.
Speaker Change: The doubling down on the seasonal seasonal stores also I pointed out one of the year.
Speaker Change: One of the good hires that we've made in the last few months with our Colorado real estate efforts for it. So it has a real deep retail knowledge and great contacts.
Speaker Change: Frankly, I just I was just chatting with him this morning about some of the opportunities.
Speaker Change: Or is he has become a real asset very quickly, but he is he knows retail inside out and you've got this little jazzed about the opportunities.
Speaker Change: So don't tell them I said that the lesser worries alright.
Speaker Change: Alright, Thats our secret. Thank you guys. Thank.
Speaker Change: Thank you.
Speaker Change: With no further questions. This will conclude our question and answer session I would like to turn the conference back over to Jim Mccann for any closing remarks.
Speaker Change: Well.
Jim McCann: Been a pleasure to interact with you I look forward to continue to do that but I really look forward to adopt wellbeing.
Jim McCann: However, because I'm excited about him being here and excited about the new additions to the team that we have made lately.
Jim McCann: <unk>.
Jim McCann: I'm getting out of Tom's ways, bringing someone in that has a lot more to offer than I do that's exciting to me.
Speaker Change: Tell that we're disappointed in our performance of late some of it's macro yes with hundreds of our own do you have gone up to that and indeed, we do but I couldnt be more excited about what our future looks like.
Jim McCann: With our celebrations wave initiative. This is the sixth wave for us so five decades with six ways, probably hit stores embracing the 800 number than online social and mobile.
Jim McCann: Conversational Commerce. This one now is the most exciting for me because it comes closest to enabling us to be able to fulfill that dream. We've had for a long time are playing a more important role in our customers' lives by helping them to have more and better relationships and that starts with our engagement with them and the tools, we can help them to be genuine.
Jim McCann: About their investment.
Speaker Change: <unk> better and deeper relationships. So darko I welcome you as well and congratulate you I Couldnt tell you how excited I am to have you.
Speaker Change: <unk>, what I think is not a shift but a rocket ship. Thank you I agree with you or Jim and I'm Super excited to be here. So looking forward to working with you guys. Thank you.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect connect.
Speaker Change: [music].