This excerpt taken from the FLWS 8-K filed Apr 30, 2009.
Company Reports Making Excellent Progress Toward Achieving its Target For Operating Expense Savings of $50 Million for Fiscal Year 2010.
CARLE PLACE, N.Y.--(BUSINESS WIRE)--April 30, 2009--1-800-FLOWERS.COM, Inc. (NASDAQ: FLWS), the world’s leading Florist and Gift Shop, today reported revenues of 173.0 million for its fiscal third quarter ended March 29, 2009 compared with revenues of $219.6 million reported in the prior year period. The revenue decline of 21.2 percent was attributed primarily to the continued weakness in the retail economy and, to a lesser extent, the shift of the Easter holiday into the Company’s fiscal fourth quarter and lower Valentine’s Day sales related to the holiday falling on a Saturday this year.
Gross margin for the quarter was 40.2 percent compared with 40.8 percent in the prior year period. During the quarter, the Company reduced its operating expenses by approximately $10 million (excluding depreciation and amortization, goodwill and intangibles impairment and one-time severance costs), compared with the prior year period, reflecting a continued focus on driving costs out of its business platform. The lower revenues in the quarter, however, impacted the Company’s operating leverage, resulting in an increase of 500 basis points in operating expense ratio to 41.1 percent compared with 36.1 percent in the prior year period.
As a result of these factors, and including a seasonal operating loss of $1.7 million primarily associated with the Company’s DesignPac Gifts business (acquired in April, 2008), EBITDA* loss for the period was $1.5 million compared with a gain of $10.3 million in the prior year period. (*Earnings Before Interest, Taxes, Depreciation, Amortization and goodwill and intangible impairment charges. A reconciliation of Net Income to EBITDA is included as part of the tables attached to this release.)
Net loss for the quarter was $65.8 million or ($1.03) per share; adjusted net loss was $4.0 million or ($0.06) per share, excluding a pre-tax, non-cash charge of $76.5 million for the write down of goodwill and intangibles associated with the Company’s Gourmet Food and Gift Baskets segment and excluding a one-time pre-tax charge of $1.5 million for severance costs associated with a labor force reduction completed during the quarter, compared with net income of $3.3 million, or $0.05 per share, in the prior year period.
Jim McCann, CEO, said, “During our fiscal third quarter, we saw continued weakness in consumer demand related to the current economic climate. In addition, the shift of Easter out of the quarter impacted both our consumer floral and gourmet food and gift baskets categories, and accounted for approximately $7 million of the total revenue shortfall. Also, year-over-year revenues for the Valentine holiday were lower due to its falling on a Saturday this year, rather than a weekday, which is historically much better for our online business.”
McCann noted that the Company’s BloomNet Wire Service revenues grew 10 percent during the quarter to $17.0 million while category contribution margin remained strong at approximately 33 percent. “BloomNet is focused on deepening its relationships with our florist members by providing them with the products and services that can help them in this challenging economy. In doing so, we continue to grow our market share as the wire service industry’s leader in value and innovation,” said McCann.
McCann reported that the Company has made excellent progress toward achieving the operating cost savings that it forecast for the second half of fiscal 2009. “To date, we have implemented the majority of our cost saving initiatives and we are well on our way to completing these efforts by fiscal year end in June. This will enable us to fully realize our targeted $50 million in cost savings in fiscal 2010 which begins in July.” McCann noted that, among other initiatives, the Company implemented a labor force reduction, began the downsizing of its Home and Children’s Gifts division and further transitioned its customer service platform to a home agent model. “As a result, we are confident that our lower operating cost structure will enable us to enhance our profitability in fiscal 2010 and beyond,” he said.
During the fiscal third quarter, the Company said approximately 1.7 million e-commerce customers placed orders of whom 61 percent were repeat customers. This reflects the strength of the 1-800-FLOWERS.COM brand and its expanded Gifts businesses, as well as 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.
Regarding the Company’s outlook for its fiscal fourth quarter, ending June 28, 2009, McCann said, “We continue to see a challenging economic environment in which consumers are being cautious in their discretionary spending. With that said, we believe we have some very innovative marketing plans in place for the key Mother’s Day holiday – such as our new “Spot A Mom” campaign that is utilizing social media channels to create consumer engagement – and we expect to benefit from the shift of Easter into the quarter.
CATEGORY RESULTS FOR FISCAL 2009 THIRD QUARTER:
The Company provides selected financial results for its Floral and Gifts business categories in the tables attached to this release and as follows: