EX-99.1 2 a5065326ex99_1.txt EXHIBIT 99.1 Exhibit 99.1 1-800-FLOWERS.COM(R) Reports Fiscal 2006 Second Quarter Revenue Growth of 21 Percent to $278 Million and GAAP Net Income of $10.3 Million CARLE PLACE, N.Y.--(BUSINESS WIRE)--Jan. 26, 2006-- 1-800-FLOWERS.COM, Inc. (NASDAQ: FLWS): -- Pro forma EPS grew 31 percent to $0.17 compared with $0.13 in the prior year period; GAAP EPS, which for fiscal 2006 includes the impact of stock-based compensation, was $0.16 -- Online revenues grew 24 percent to $133.4 million while telephonic revenues increased 14 percent to $125.1 million 1-800-FLOWERS.COM, Inc. (NASDAQ: FLWS), a leading florist and multi-channel retailer of thoughtful gifts for all occasions, today reported record revenues of $277.8 million for its fiscal second quarter ended January 1, 2006 representing an increase of 20.8 percent or $47.8 million, compared with revenues of $230 million in the prior-year period. The Company attributed the increase in revenues during the quarter primarily to a strong contribution from its recent acquisitions, particularly in its Food, Wine and Gift Basket category. Online revenues increased 23.8 percent to $133.4 million during the quarter while telephonic revenues grew 14.2 percent to $125.1 million. Retail and Fulfillment revenues, which are comprised of the Company's owned and franchised stores, its winery services operations and its Bloomnet(R) florist business, increased 51.6 percent to $19.3 million compared with $12.8 million in the prior year period. The Company said sales in its Food, Wine and Gift Basket category grew at a double-digit rate - driven primarily by its Cheryl & Co.(R) brand which was acquired in April of 2005. Sales in the Company's home and garden gift category also grew at a double-digit rate, continuing the rebound it began last year and including the contribution from a product-line extension in weather-themed gifts acquired during the quarter. Overall, specialty gifts represented approximately 70 percent of total revenues during the quarter compared with approximately 66 percent in the prior year period while floral gifts represented approximately 30 percent of total revenues compared with 34 percent in the prior year period. Gross profit margin for the quarter grew 40 basis points to 45 percent, compared with 44.6 percent in the prior year period. The increase in gross profit margin was attributed primarily to product mix. The Company's operating expense ratio during the quarter remained essentially unchanged at 38.5 percent, compared with 38.2 percent in the prior year period. This reflects the revenue growth achieved during the quarter largely offset by the Company's stepped-up marketing efforts, begun in January of 2005, its continued investments in its wine operations and Bloomnet(R) florist business and the impact of stock-based compensation. As a result of these factors, adjusting to exclude the effect of stock-based compensation, the Company achieved pro forma net income growth of 28.2 percent to $11.2 million compared with $8.7 million or earnings per share growth of 30.8 percent to $0.17 compared with $0.13 in the prior year period. The Company believes pro forma earnings provide a meaningful measure of year-to-year period comparative performance; however, its use and corresponding per share results do not lessen the importance of comparable GAAP results. (A table reconciling pro forma results to GAAP results is included in the tables attached to this release.) Including the net effect of stock-based compensation, the Company's GAAP net income for the quarter was $10.3 million or $0.16 per share. During the fiscal second quarter, the Company attracted 1.3 million new customers, 57 percent of whom, or 760,000, came to the Company online. These customers were attracted to the Company's "Your Florist of Choice(sm)" marketing message as well as its expanded food, wine and gift basket offerings - a unique combination that provides customers the broadest range of thoughtful gifts for all of their celebratory occasions. More than 2.7 million customers placed orders during the period of which 51 percent were repeat customers. This reflects the Company's ongoing focus on deepening the relationships it has with its existing customers by providing convenient multi-channel access as well as the products and services that make easier for them to connect with the people who are important in their lives. Jim McCann, CEO of 1-800-FLOWERS.COM, said, "We are pleased with the better than 20 percent growth achieved during the fiscal second quarter, particularly in light of the ever increasing competitive nature of the year-end holiday shopping season. In particular, our growth during the quarter reflects the success of our strategy to deepen our gift offering, particularly in the food, wine and gift basket gift category where we have already become a major player with revenues anticipated to be more than $100 million for the current fiscal year. This has enabled us to capture an increasing number of new customers as well as maintain our strong repeat-order rate during a holiday period when we are competing with the broadest possible range of gift retailers, both online and store-based." McCann noted that, during the quarter, the Company achieved progress in several key business areas: -- "We enhanced the growth of our new Cheryl & Co.(R) brand by providing them with access to our collection of leveragable assets, including our extensive online marketing programs and expertise. As a result, more than a third of their revenues for the quarter came online, up significantly compared with the prior year period. -- "In home and garden gifts, we achieved continued positive sales improvements which we further enhanced through a product-line extension in weather-related gifts which are both topical and fit the gifting profile of our Plow & Hearth customers. -- "We achieved further growth in our Bloomnet(R) florist business where we continued to expand our florist network and began to introduce new products and services designed to help our florist members enhance the growth and profitability of their businesses." Company Guidance: The Company reiterated its revenue growth guidance of 14-to-16 percent for fiscal 2006 compared with the prior year. In terms of bottom-line results, adjusting for actual results through the first six months of fiscal 2006, the Company said it expects to achieve pro forma earnings growth of approximately 40 percent compared with fiscal 2005. Regarding its current fiscal third quarter, which includes the Valentine holiday; the Company expects the period will represent approximately 21-to-23 percent of full-year revenues. About 1-800-FLOWERS.COM(R) For more than 25 years, 1-800-FLOWERS.COM Inc. - "Your Florist of Choice(sm)" - has been providing customers around the world with the freshest flowers and finest selection of plants, gift baskets, gourmet foods and confections, and plush stuffed animals perfect for every occasion. 1-800-FLOWERS.COM(R) offers the best of both worlds: exquisite, florist-designed arrangements individually created by some of the nation's top floral artists and hand-delivered the same day, and spectacular fresh flowers shipped from our growers to your door. Customers can shop 1-800-FLOWERS.COM 24 hours a day, 7 days a week via the phone or Internet (1-800-356-9377 or www.1800flowers.com) or by visiting a Company-operated or franchised store. Gift advisors are available 24/7, and fast and reliable delivery is offered same day, any day. As always, 100 percent satisfaction and freshness is guaranteed. The 1-800-FLOWERS.COM collection of brands also includes home decor and garden merchandise from Plow & Hearth(R) (1-800-627-1712 or www.plowandhearth.com); premium popcorn and specialty treats from The Popcorn Factory(R) (1-800-541-2676 or www.thepopcornfactory.com); exceptional cookies and baked gifts from Cheryl&Co.(R) (1-800-443-8124 or www.cherylandco.com); gourmet foods from GreatFood.com(R) (www.greatfood.com); children's gifts from HearthSong(R) (www.hearthsong.com) and Magic Cabin(R) (www.magiccabin.com) and wine gifts from the WineTasting Network(R) (www.ambrosiawine.com and www.winetasting.com). 1-800-FLOWERS.COM, Inc. stock is traded on the NASDAQ market under ticker symbol FLWS. Special Note Regarding Forward-Looking Statements: A number of statements contained in this press release, other than statements of historical fact, are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the applicable statements. These risks and uncertainties include, but are not limited to: the Company's ability to achieve its stated forecast for revenue and earnings growth in its fiscal year 2006; its ability to continue to improve its gross margin percentage; its ability to manage its operating expense ratio in line with prior year; its ability to maintain and enhance its online shopping web sites to attract customers; its ability to successfully introduce new products and product categories; its ability to provide timely fulfillment of customer orders; its ability to cost effectively acquire and retain customers; its ability to compete against existing and new competitors; its ability to cost efficiently manage inventories; its ability to cost efficiently integrate its acquired companies and brands; its ability to leverage its operating infrastructure and general consumer sentiment and economic conditions that may affect levels of discretionary customer purchases of the Company's products. For a more detailed description of these and other risk factors, please refer to the Company's SEC filings including the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. The Company expressly disclaims any intent or obligation to update any of the forward looking statements made in this release, the scheduled conference call pertaining to fiscal 2006 first quarter results, or Company guidance for fiscal year 2006, and any recordings thereof or in any of its SEC filings except as may be otherwise stated by the Company. Conference Call: The Company will conduct a conference call to discuss the attached financial results today, Thursday, January 26, 2006, at 11:00 a.m. ET. The conference call will be available via web cast from the Investor Relations section of the Company's website at www.1800flowers.com and through the Thomson StreetEvents Network at www.earnings.com. To listen to the call via the Internet it is recommended that interested parties go to the web site prior to the start time to download and install any necessary audio software. For those unable to listen to the web cast live, an indexed recording of the call will be posted on the Investor Relations section of the Company's web site within twenty four hours of the call's completion. A replay of the call can be accessed via telephone for twenty four hours beginning at 1:00 p.m. ET on the day of the call at: 1-888-286-8010 or 1-617-801-6888 (international); enter replay pass code: 43803378. 1-800-FLOWERS.COM, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (In thousands) January 1, July 3, 2006 2005 ------------- --------- (unaudited) Assets Current assets: Cash and equivalents $60,872 $39,961 Short-term investments - 6,647 Receivables, net 15,536 10,619 Inventories 38,967 28,675 Deferred income taxes 7,149 10,219 Prepaid and other 6,027 5,289 ------------- --------- Total current assets 128,551 101,410 Property, plant and equipment, net 56,555 50,474 Goodwill 67,692 63,219 Other intangibles, net 14,580 14,215 Deferred income taxes 17,161 17,161 Other assets 6,647 5,473 ------------- --------- Total assets $291,186 $251,952 ============= ========= Liabilities and stockholders' equity Current liabilities: Accounts payable and accrued expenses $93,053 $57,121 Current maturities of long-term debt and obligations under capital leases 2,243 2,597 ------------- --------- Total current liabilities 95,296 59,718 Long-term debt and obligations under capital leases 2,388 3,347 Other liabilities 2,606 2,553 ------------- --------- Total liabilities 100,290 65,618 Total stockholders' equity 190,896 186,334 ------------- --------- Total liabilities and stockholders' equity $291,186 $251,952 ============= ========= 1-800-FLOWERS.COM, Inc. and Subsidiaries Selected Financial Information Consolidated Statements of Income (Unaudited) (In thousands, except for per share data) Three Months Ended Six Months Ended ------------------- ------------------- January December January December 1, 2006 26, 2004 1, 2006 26, 2004 ----------- -------- ---------- -------- Net revenues: Online $133,362 $107,686 $195,635 $160,772 Telephonic 125,122 109,570 163,504 147,156 Retail/fulfillment 19,345 12,758 31,455 19,600 --------- --------- --------- --------- Total net revenues 277,829 230,014 390,594 327,528 Cost of revenues 152,837 127,402 219,576 185,344 --------- --------- --------- --------- Gross profit 124,992 102,612 171,018 142,184 Operating expenses: Marketing and sales 87,874 72,841 126,098 102,733 Technology and development 4,797 3,292 9,566 6,396 General and administrative 10,357 7,954 20,993 15,556 Depreciation and amortization 3,809 3,770 7,333 7,666 --------- --------- --------- --------- Total operating expenses 106,837 87,857 163,990 132,351 --------- --------- --------- --------- Operating income 18,155 14,755 7,028 9,833 Other income (expense): Interest income 141 275 356 657 Interest expense (113) (124) (197) (265) Other (143) 21 (137) 25 --------- --------- --------- --------- Total other income (expense), net (115) 172 22 417 --------- --------- --------- --------- Income before income taxes 18,040 14,927 7,050 10,250 Income taxes (7,704) (6,223) (3,340) (4,256) --------- --------- --------- --------- Net income $10,336 $8,704 $3,710 $5,994 ========= ========= ========= ========= Basic and diluted net income per common share $0.16 $0.13 $0.06 $0.09 ========= ========= ========= ========= Weighted average shares used in the calculation of net income per common share: Basic 65,065 66,061 65,076 66,135 ========= ========= ========= ========= Diluted 66,395 67,637 66,395 67,627 ========= ========= ========= ========= Calculation of Net Income Before Share Based Compensation Charge: Net income $10,336 $8,704 $3,710 $5,994 Less: Share based compensation expense 819 - 1,546 - --------- --------- --------- --------- Net income before share based compensation expense $11,155 $8,704 $5,256 $5,994 ========= ========= ========= ========= Basic and diluted net income per common share before share based compensation expense $0.17 $0.13 $0.08 $0.09 ========= ========= ========= ========= 1-800-FLOWERS.COM, Inc. and Subsidiaries Selected Financial Information Consolidated Statements of Cash Flows (In thousands) (unaudited) Six Months Ended ----------------------- January 1, December 26, 2006 2004 ---------- ------------ Operating activities: Net Income $3,710 $5,994 Reconciliation of net income to net cash provided by operations: Depreciation and amortization 7,333 7,666 Deferred income taxes 3,070 4,256 Bad debt expense 160 146 Stock based compensation 1,997 - Other non-cash items 166 - Receivables (4,455) (11,078) Inventories (8,190) (7,719) Prepaid and other 264 (620) Accounts payable and accrued expenses 33,334 15,765 Other assets (1,576) 1,592 Other liabilities 54 296 ---------- ------------ Net cash provided by operating activities 35,867 16,298 Investing activities: Purchase of investments - (32,866) Sale of investments 6,695 40,903 Acquisition of business (6,171) (9,674) Capital expenditures, net of non-cash expenditures (13,083) (5,653) Other 86 2 ---------- ------------ Net cash used in investing activities (12,473) (7,288) Financing activities: Acquisition of treasury stock (1,324) (2,175) Proceeds from employee stock options/purchase plan 179 645 Repayment of notes payable and bank borrowings (603) (654) Payment of capital lease obligations (735) (856) ---------- ------------ Net cash used in financing activities (2,483) (3,040) ---------- ------------ Net change in cash and equivalents 20,911 5,970 Cash and equivalents: Beginning of period 39,961 80,824 ---------- ------------ End of period $60,872 $86,794 ========== ============ CONTACT: 1-800-FLOWERS.COM Investor: Joseph D. Pititto, 516-237-6131 invest@1800flowers.com or Media: Jennifer Caccavo, 516-237-4990 jcaccavo@1800flowers.com