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1-800-FLOWERS Q4 total net revenue up 61.1% thanks to growth in all three business segments

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Although faced with the coronavirus, 1-800-FLOWERS Q4 total net revenue increased 61.1% to $418.0 million, compared with $259.4 million in the prior year period. The strong performance was driven by net revenue growth in all three business segments, with Gourmet Foods and Gift Baskets up 112.3%, Consumer Floral up 46.5%, and BloomNet up 10.7%, compared with the prior year period. 1-800-FLOWERS.COM CEO Chris McCann joins The Final Round to break down the details.

Video Transcript

MYLES UDLAND: All right, let's turn our attention now. We talked earlier about Wayfair, maybe a company that's done quite well in this market underneath the radar. And another company in that basket would be 1-800-FLOWERS. The stock has almost tripled from its lows back in March. And joining us now to talk about their most recent quarter is CEO Chris McCann.

Chris, thanks so much for coming back on the program. So, you know, last time we spoke, it was right around Mother's Day. We had talked about how strong your business had been once you've been able to kind of get things back on line after the most-- the scariest days of the pandemic. But, clearly, the summer has also been friendly to your business as well. What kind of trends are jumping out to you through this period?

CHRIS MCCANN: Yeah, what we're seeing, Myles-- Mother's Day was a challenging holiday-- turned out to be a fantastic holiday for us, operationally challenging, business-wise, turned out to be a fantastic holiday. And the trends that we're really seeing from the consumer is first and foremost, the shift to e-commerce. And we're so well-positioned for that.

Second big trend we're seeing coming out of this pandemic really is the need for people to stay socially connected to reach out and express themselves. And as a company whose vision is to inspire human expression, connection, and celebration, we're so well-positioned for that.

Then the other big trend that we're seeing really is nesting. We're all doing more and more around the home and celebrating around the home. So whether it's our plants that are doing so well for that category, flowers, as well, gourmet food is fantastic. Harry & David business, Cheryl's Cookies, Shari's Berries business just doing great there.

And then our most recent addition, the acquisition we did just a couple of weeks ago-- personalization mall-- where you can personalize blankets and pillows and picture frames for your home, drink wear, and everything else. We're just so well-positioned right now for the macrotrends that we've seen coming out of this pandemic that the momentum will just continue to carry us forward.

MELODY HAHM: Chris, I feel like this is an opportune moment for you to dub an index. I'm just thinking about Estee Lauder originally had the lipstick index, which sort of indicated, you know, in a very anecdotal way, wow, during hard times, women can still afford to buy lipsticks. Now, we know they've pivoted to moisturizers and the skin care index.

If you had to sort of sum up all of your portfolio, what would you say is the theme here-- small luxuries, you know, something that puts a smile to your face? I'm curious if there's a moment or if there's a phrase that really comes to mind as you think about what really sells right now?

CHRIS MCCANN: I would think it's the expression and connection index. And that's what people are really turning to our products for, turning to really help them express themselves to connect with the important people in their lives. And it's really managed our direction-- our strategic direction about what product lines we expand into. So we like to say, our vision is to inspire connection, expression, and celebration. And our mission statement is to deliver smiles. So maybe it's a smile index, Jen.

JENNIFER ROGERS: So I'm on your app right now. I was looking through for some plants that I wanted to get-- Peaceful Wishes Dish Garden. I downloaded this on the Apple App Store. And I'm curious. The app store right now is getting a lot of pushback about how much they take for purchases, some 30%.

So Facebook is in a big fight with Apple. We've got a video game maker. Do you guys pay them? Like, if I buy this for almost $55, does Apple get 30% of this? And does-- is that right? How does that work for you guys?

CHRIS MCCANN: No, it's not 30%. It's a much more reasonable commission and one that we're very happy with because Apple gives us such great distribution in such a great partner to ours, whether it be working with them on the app store or whether it be working with them on Apple Business Chat, which is really growing-- key piece of our conversational commerce strategy.

So we're very happy with the relationship in the Apple store. It works very well for us. More importantly, again, is the partnership. Apple Business Chat, just giving people a way to interact with us in a very automated fashion is fantastic and very convenient for our customers.

DAN ROBERTS: Chris, Dan Roberts here. Thanks for joining us.


DAN ROBERTS: Myles mentioned at the top they we're just talking about Wayfair, which is seeing huge gains amid the pandemic because of people dying. First, you're online. All the e-commerce companies just seeing a big bump because everyone's doing all their shopping online. You mentioned some of the examples for you guys that are selling well because of this time.

And I would just ask you, there is a little bit of concern among some analysts on Wall Street that some of these names won't do as well next quarter or the quarter beyond that this is just a momentary pandemic bump. Are there any product categories for you guys that you think might be surging the way they are just because of this weird time we're in and that the momentum might not last there?

CHRIS MCCANN: Not really. I think that our products are really working well in this environment and beyond that. In the product categories, like the Harry & David gourmet line. Our plant line has been hot for a while. So that's just accelerated. Any products that have a sentiment attached to them, now cookie cards tend to have papa doing really well.

But I think the underlying question, Dan-- and I heard you hitting on this before when talking about Wayfair is the customer file. And we've been accelerating our new growth. Now, new growth customer file through the first nine months of our last fiscal year, we were growing at about 10% new to file-- 10% growth, new to the file.

That accelerated dramatically during the pandemic the last fiscal fourth quarter. It's where our annual run rate of new customer acquisition now is growing at more than 30%. But most importantly when we dig in and we do some quick early analysis, we're seeing the purchase frequency, the retention rates, you know, of those new customers acquired since March actually outpacing the average frequency rate.

So we think that this great sustainability there for us and what we're seeing. We're also seeing a larger percentage of people convert and buy our passport program-- our free shipping loyalty program and utilizing that more and more and more people buying from multiple brands for us. So the customer file really gives us great confidence in the sustainability of the growth rates that we're seeing.

MELODY HAHM: And Chris, of course, we talk about different supply chains and a lot of those sort of disruptions that happened mid-coronavirus. I've been monitoring what's been happening even in Ecuador, which is the largest rose producer and exporter. They've had to lay off thousands of workers. They're only at 70% capacity right now.

Can you speak to where you're getting the most-- if you had to rejigger where you're getting your flowers from? How have you been able to sort of streamline that process as we try to see the recovery here?

CHRIS MCCANN: Oh, I'm so proud of our team and overall in this managing the supply chain. But really to step back and so proud of how the team has really managed, overall, through all of the challenges that have been thrown at us through this pandemic. And they keep coming left and right. The team just keeps responding.

On the supply chain side of things, we've had interruptions but not major disruptions to the supply chain and have been able to manage through them. So whether it be the flowers coming out of Ecuador or the majority of the product coming out of Columbia or Ecuador high on the roses, as you point out, the majority of floral product in this country coming from Colombia, as well as domestically grown, especially in the California region.

So the supply of floral hasn't been an issue at this point in time. It was very early on, as the pandemic hit in March. And it wasn't because the supply chain was challenged. The demand chain was challenged. So we had to watch that. And then as we really look at on the food side, as well, we manufacture a lot of our own food, our own bakery, our own candy kitchen, grow our own apples and pears and peaches.

So we're watching that, the more commodity to raw ingredients on that. And there's ups and downs. But the team is managing it very well. And we don't see that as a disruption going forward.

MYLES UDLAND: All right, Chris McCann is the CEO at 1-800-FLOWERS. Chris, always great to get your thoughts. Thanks so much for joining the program.

CHRIS MCCANN: Great. It's always great to be here with both of you. Thank you very much.