1-800-Flowes.com Drops to Eight-year Low After Quarterly Results

Scott Peters
02 Sep, 2022
New York City

1-800-Flowers.com Inc declined 4.5% to $7.39 after the company reported weak quarterly results.  

The online flower and gift retailer's stock dropped to a eight-year low after the company swung to a loss and highlighted operating and marketing costs struggle. 

The online flower and gift retailer said revenues in the fiscal year fourth quarter ending on July 3 declined 0.2% to $485.9 million from $487 million a year ago. 

Excluding sales from Vital Choice, acquisition in October 2021, total revenue for the quarter fell 1.5% from a year ago. 

Revenues for the quarter increased 87.3% from $259.4 million in the fourth quarter of fiscal 2019, prior to the pandemic.

However, higher product cots and rising shipping costs negatively impacted the gross margins. 

Gross profit margin in the quarter plunged 700 points to 33.7% from 40.7% a year ago, reflecting higher costs of labor, shipping, and commodities and write downs of perishable inventory. 

During the quarter, the company swung to a loss of $22.3 million or 34 cents a share from net income of $13.3 million or $0.20 a diluted share a year ago. 

 

Segment Review

The company operates three business segments - gourmet food, flowers and gifts, and the floral network BloomNet. 

Gourmet Foods and Gift Baskets revenue in the quarter fell 2.4% to $148.4 million from $152.2 million a year ago.  

Excluding Vital Choice, which the Company acquired in October 2021, revenue in the quarter was $142.7 million. 

Revenue in the quarter was up 104.9% from the fiscal 2019 fourth quarter.

Consumer Floral & Gifts revenue in the quarter increased 0.4% to $299 million from $297.7 million in the prior year's period. 

Revenues for the quarter increased 87.2% from the fiscal 2019 fourth quarter.

BloomNet revenue in the quarter increased 3.2% to $38.5 million from $37.3 million in the prior year period. 

Revenue for the quarter was up 41.2% from the fiscal 2019 fourth quarter.

 

Annual Revenues Rise 

Total net revenues for the full fiscal year 2022 increased 4% to $2.21 billion from $2.12 billion in the prior year. 

This increase reflected growth across all three business segments, and includes the contributions from Vital Choice and Personalization Mall.  

On a pro forma basis, total net revenues grew 2.5% compared with the prior year and total net revenues grew 76.8% compared with total net revenues of $1.25 billion in fiscal 2019, prior to the pandemic.

The company acquired Personalization Mail in August 2020 for $252 million from Bed Bath & Beyond and purchased Vital Choice for $20 million in October 2021. 

Prior to the acquisition, Personalization Mall revenues in 2019 were approximately $150 million and Vital Choice revenues in 2020 were $28 million. 

 

Guidance and Outlook 

Based on the performance of the first two months of the current fiscal quarter. the company guided fiscal first quarter revenues to fall between 3% and 6% citing cautious customer reflecting higher food and energy prices.

The online retailer anticipates on an annual basis costs for labor, shipping, commodities, and digital marketing will remain high through the fiscal first quarter and estimated adjusted operating or EBITDA loss between $28 million and $33 million. 

In the fiscal year, the company estimates reduced capital expenditures as well as lower working capital needs from a year ago and generate "substantial positive year-over-year free cash flow."

In the fiscal year 2022 free cash outflow was $61 million compared to positive free cash flow of $118 million in the fiscal 2021.