Sign in

    1-800-Flowers.Com Inc (FLWS)

    Q4 2024 Earnings Summary

    Reported on Feb 18, 2025 (Before Market Open)
    Pre-Earnings Price$9.00Last close (Aug 28, 2024)
    Post-Earnings Price$8.22Open (Aug 29, 2024)
    Price Change
    $-0.78(-8.67%)

    What went well

    • The company expects revenue trends to improve as the year progresses, with initiatives expected to start coming to fruition this year, contributing to an improving top line.
    • The company anticipates a rebound in its wholesale business, as partners have already placed and increased their gift basket holiday season orders compared to fiscal 2024, contributing to revenue growth in upcoming quarters.
    • The company is increasing its marketing spend to drive top-line growth, leveraging its pricing elasticity and relationship innovation efforts to attract customers across different income segments.

    What went wrong

    • The company expects flat to low single-digit revenue decline for fiscal 2025, indicating they do not anticipate significant top-line growth despite potential improvements in consumer confidence. This cautious outlook suggests persistent challenges in driving revenue growth.
    • Commodity costs, particularly cocoa and fuel, remain high, which is expected to limit gross margin improvement. The company acknowledges that certain input costs have not reverted to historical norms, impacting profitability.
    • The company plans to increase marketing spend, but acknowledges uncertainty about the return on this investment. If increased marketing efforts do not yield the expected revenue growth, this could pressure EBITDA margins.

    Q&A Summary

    1. 2025 Revenue Outlook
      Q: What gives you pause in your revenue outlook for 2025?
      A: Despite improvements in consumer confidence and timely rate decreases, the company remains cautious due to hearing others be cautious about the fourth calendar quarter, our second fiscal quarter, in the last three weeks. Our guidance is based on internal initiatives, not on expected macroeconomic improvements.

    2. Commodity Costs and Margins
      Q: Thoughts on commodity prices into 2025?
      A: Certain commodity costs like wheat, corn, eggs, and sugar have reverted to the mean. However, cocoa is at all-time highs, though we've locked in pricing with modest increases for the next two holiday seasons. Fuel costs and inbound and outbound freight remain high, impacting margin improvement expectations.

    3. Sales Trends Improvement
      Q: Will we see positive sales trends in upcoming quarters?
      A: We expect trend lines to improve starting in the second quarter, with meaningful improvement possible. However, we're not ready to declare victory yet due to the uncertain environment.

    4. Marketing Spend and Customer Acquisition
      Q: Is there an opportunity to accelerate customer acquisition after the election?
      A: Elections are distractions with high media costs. Post-election, there's a significant opportunity to step up marketing efforts. Overall, our marketing spend is budgeted to increase this year.

    5. BloomNet Revenue Impact
      Q: When does the impact of the lost BloomNet customer anniversary?
      A: The contract ended in December of last year, so the first two quarters will show decreased orders. The impact will anniversary around January 1, and we expect BloomNet to grow in the second half.

    6. Personalization Mall Outlook
      Q: How is Personalization Mall performing and what's the outlook for fiscal '25?
      A: Personalization Mall was more impacted by customer stratification due to a higher portion of lower-income customers. We're starting to see it gain traction with the introduction of Things Remembered, offering more aspirational products. We're optimistic about our personalization businesses this year.

    7. Small Acquisition Impact
      Q: How will the small high-end chocolate company acquisition impact results?
      A: The acquisition is small but expected to double or triple sales immediately, though still inconsequential compared to our overall size. By leveraging our customer base and facilities, it could become substantial in 3 to 5 years. We have a robust appetite for additional acquisitions due to the current capital environment.

    8. Labor Availability for Holidays
      Q: What is the outlook for holiday labor rates and availability?
      A: We anticipate the labor situation to be strong again this year, with early signs indicating the seasonal labor force will be readily available. We're expecting steady economics in terms of labor costs.

    9. GFGB Revenue Decline
      Q: What caused the 13% GFGB revenue decline?
      A: The shift in Easter placement skewed results, with all Easter sales happening in the third quarter. Additionally, our advertising efforts weren't as effective, leading us to adjust the marketing schedule. E-commerce trends are improving, with declines reducing from 9.8% in '23 to 7.5% in '24.

    10. Wholesale Revenue Timing
      Q: When will wholesale revenue pick up?
      A: Growth in wholesale revenue is expected in Q2, as the majority of these revenues occur then. We've already booked the business; shipping dates are requested around the end of the first quarter.

    11. Key Initiatives Impact
      Q: Which initiatives will be most impactful on revenue improvement?
      A: Our relationship innovation efforts are expected to be the most impactful, focusing on how we interact with customers and enhancing direct marketing and engagement. Operating efficiency efforts, including our evergreen "Work Smarter" initiatives, will also contribute significantly.

    Related Publications