FLWS » Topics » Company increases its stock repurchase plan.

This excerpt taken from the FLWS 8-K filed Jan 24, 2008.
Company increases its stock repurchase plan.

CARLE PLACE, N.Y.--(BUSINESS WIRE)--1-800-FLOWERS.COM, Inc. (NASDAQ: FLWS), the world’s leading florist and a provider of specialty gifts for all occasions, today reported revenues of $334.2 million for its fiscal second quarter ended December 30, 2007, representing an increase of 1.3 percent compared with revenues of $329.9 million reported in the prior year period. Total revenue growth reflected the challenging economic climate during the key year-end holiday period with the majority of growth achieved attributable to the Company’s BloomNet Wire Service business, which grew 32.1 percent during the quarter.

Highlighting the fiscal second quarter results was the improved operating leverage the Company achieved, enabling it to reduce its operating expense ratio (which excludes depreciation and amortization) by 160 basis points to 34.2 percent compared with 35.8 percent in the prior year period. Gross profit margin for the quarter was 45.8 percent compared with 46.1 percent in the prior year period, reflecting the increased promotional nature of this holiday season.

The combination of these factors resulted in an EBITDA improvement for the quarter of $4.8 million, or 14.2 percent, to $38.6 million compared with $33.8 million in the prior year period. Net income for the quarter increased 13.8 percent to $19.3 million, or $0.29 per diluted share, compared with $16.9 million, or $0.26 per diluted share, in the prior year period.

Jim McCann, CEO of 1-800-FLOWERS.COM, said, “During our fiscal second quarter, we continued to focus on our strategy of leveraging our business platform to drive profitable growth while reducing our operating expense ratio. As a result, we were able to deliver EBITDA and net income growth of approximately 14 percent despite a very challenging consumer environment.”

McCann said macro market conditions throughout the quarter were characterized by very cautious consumer spending and aggressive promotional activity by competitors across the gift spectrum. “Revenue growth for the quarter in part reflects our conscious decision not to chase top-line growth. Throughout the period, we were judicious in our promotional efforts, limiting the use of free shipping offers to higher margin items and larger order sizes and thereby minimizing the impact on gross profit margin. This strategy, combined with our enhanced operating expense leverage, enabled us to maintain strong contribution margins in our Consumer Floral and Gourmet Gifts categories as well as significantly improve the year-over-year bottom-line results in our Home and Children’s Gifts category.”

McCann noted that during the fiscal second quarter, the Company’s BloomNet Wire Service continued to achieve strong top- and bottom-line growth. “BloomNet continued to capture market share, growing both revenues and contribution margin by more than 30 percent during the quarter. This reflects the better value proposition offered by BloomNet, as well as our expanded suite of products and services that, together, are helping our florists not just survive, but to thrive.”

During the fiscal second quarter, the Company attracted approximately 1.3 million new customers, of whom 67 percent, or more than 845,000, came to the Company through its online channels. These customers were attracted by the strength of the 1-800-FLOWERS.COM brand as well as its expanded Specialty Brands gift offerings. Approximately 2.8 million customers placed orders during the quarter, of which 54.4 percent were repeat customers. This reflects the Company’s ongoing focus on deepening the relationship with its existing customers as their trusted source for gifts and services for all of their celebratory occasions.

McCann said the Company’s outlook for the second half of its fiscal year is positive. “Unlike many other specialty retailers, in addition to our profitable second quarter, we expect to have two profitable quarters ahead of us; the current fiscal third quarter, which includes the Valentine holiday, and this year Easter, followed by our fiscal fourth quarter with the key Mother’s Day holiday as well as Administrative Professionals Week and Father’s Day. In addition, we are excited about the upcoming April launch of our partnership with Martha Stewart Living Omnimedia, Inc., in which we are creating an exclusive co-branded floral, plant and gift basket program called Martha Stewart for 1-800-Flowers.com®. This partnership will leverage the best of both brands – lifestyle icon Martha Stewart’s unparalleled design talent with our Company’s relationships with our millions of customers and our unique same-day, any-day distribution capabilities.”

CATEGORY RESULTS:

The Company provides selected financial results for its Floral and Specialty Brands business categories in the tables attached to this release and as follows:

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