Shari’s Berries, Harry & David hoist 1-800-FLOWERS in latest earnings

By Kristine Sherred

- Last updated on GMT Inc. bought Shari's Berries in August and quickly added them to its online retail. Inc. bought Shari's Berries in August and quickly added them to its online retail.

Related tags ecommerce Seasonal Earnings Call Holiday season Christmas Candy Millenials Online shopping online retail 1-800-FLOWERS

The gifting retailer benefited from targeting younger consumers and everyday occasions, with its food and basket sector gaining 18% ($10.7m) in the first quarter of fiscal 2020.

Overall net revenue jumped 10.5% to more than $187m, compared to $170m in the first quarter of 2019. The company expects total consolidated revenue growth around 8% to 9%, with free cash flow of $45m.

Importantly, its gourmet food and gift basket division gained 17.7%, led by an early rise in wholesale orders and everyday gifting – including for birthday, sympathy, thanks, and new ‘get well’ offerings. Sales here jumped to more than $71m, compared to $60.5 last year in the first quarter of 2019. Inc. also enjoyed double-digit growth in its customer database, thanks in part to its ‘passport’ membership program.

“As we enter the important holiday shopping period, the strong growth in our customer files positions us well to continue the momentum we have built across all of our business segments and deliver a strong holiday season,” ​said CEO Chris McCann.

Harry & David holiday gift tower

He also stressed strategic investments – from Harry & David to Shari’s Berries, which the company acquired in mid-August​ – as essential to ongoing growth.

The integration and development of the Shari's brand is moving along swimmingly, said McCann in a conference call with investors last week. The company has also reworked some of the brand's existing messaging and marketing, testing refreshed concepts in certain channels ahead of the holidays.

“It’s still very early, but we are encouraged by the demand and interest,”​ added McCann. “It’s worth noting that we had the Shari’s Berries brand up on our multi-brand platform…literally within hours of having closed on the acquisition. This is a real testament to our culture of teamwork and our focus on execution.”

Broadly speaking, these positive first-quarter results “represent a continuation of the growth we started last year,”​ McCann told investors.

CFO Bill Shea added that the first quarter is the company’s smallest, with the second by far its largest. The gifting and gourmet division enjoyed ‘outsized growth’ this quarter, he said, while the floral and BloomNet segments also grew about 6% each.

Short holiday season invites early sales

Typically, 1-800-FLOWERS sees a bulk of its holiday wholesale orders during the second quarter. With only 25 days between Thanksgiving and Christmas (and only four weekends) this year, those sales arrived a bit early.

This truncated season affects the timing of marketing initiatives, inventory levels and seasonal hires, McCann said. Asked if the company expected a boon as consumers have less time to shop in-person, he said, “I’ll hope along with you.”

“Christmas will be a promotional holiday,” ​he continued. “It always is, and we’re well positioned to work within that environment.”

Shea also acknowledged the tight labor market, especially for seasonal labor, and higher wages. The company hires thousands of seasonal workers​ for roles in production, gift assembly, distribution, fulfillment, customer service and retail. It has strived to retain many of these employees through various incentive programs, such as bonuses or public transit passes. 

1-800-FLOWERS fully digital (less catalog)

Wolfermans 1800FLOWERS
Wolferman's rebrand focuses on the experience of bakery.

Originally a phone-order catalog business, 1-800-FLOWERS has fully embraced the digital reality. Addressing investors’ queries regarding the cost of labor, McCann stressed that the company has only slowed its spending in catalog marketing as it migrates “more and more into digital, where there are better returns and better flexibility in market responsiveness.”

Harnessing innovative technologies to enhance the customer experience has in turn increased customer engagement, he said. For instance, previous customers can now login to their account in one click, even if they don’t recall their password, and thhe mobile experience is better than ever.

On a brand level, the company completely overhauled the branding for Wolferman’s Bakery​, a move that has already attracted new customers.

“The new positioning reflects how Wolferman’s has evolved from a brand best known for its super thick English muffins to a full online bakery, offering sweet and savory items baked from scratch daily,” ​said McCann. “As a result of its repositioning, Wolferman’s is already seeing some of the best customer demand that we have experienced in a while.”

Future acquisitions?

Looking into and beyond the 2019 holiday season (and the company’s second fiscal quarter), he emphasized a customer- and brand-focused mission: “It gives us great confidence that this momentum will continue no matter what the competitive environment is,”​ said McCann.

The acquisitions of Harry & David in 2014 and Shari’s Berries this year exemplify how other well-suited brands could blend with the rest of the 1-800-FLOWERS portfolio.

“It’s a contributor really to the overall momentum that we have of the 10.5%, almost 11%, growth for the quarter in the gourmet food category – what we’re seeing across all three of our businesses,” ​explained McCann. “So what we do is really, we have this celebratory echo system, this platform that we built, and we look for businesses like that – ​and you’ll continue to see us do this ​ that we can tuck in nicely [to] leverage the platform and contribute to our overall growth rate. Strategically, that’s what we’re looking to do.”

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