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Valentine’s Day: ‘We’re in very good shape,’ 1-800-FLOWERS CEO says

1-800-FLOWERS.COM CEO Chris McCann joins Yahoo Finance Live to discuss company earnings, consumer spending, social media trends, and the outlook for Valentine’s Day gift-giving.

Video Transcript

[AUDIO LOGO]

RACHELLE AKUFFO: 1-800-flowers.com reported an earnings beat before the bell with help from its gourmet foods and gift basket business in the holiday quarter. Well, now it's gearing up for Valentine's deliveries as consumers look to spend an average of nearly $200, that's according to the National Retail Federation. Now, that's much higher than last year's $175.

Well, let's get to 1-800-flowers.com CEO Chris McCann for more on what he's seeing this season. Good to have you here. I mean, we're seeing the stock price certainly coming up roses based on what they saw and that upbeat forward guidance. We knew that margins was going to be a big theme here when it came to earnings. How was 1-800-flowers.com able to navigate this?

CHRIS MCCANN: Well, Rachelle, first off, thanks for having me on. And you're right, it's great to see the stock performing like it is today after our earnings announcement. And I think that's really because people are seeing a long-term position of strength that we as a company are in.

So to your question of how are we managing through gross margin, last year with all those inflationary inputs that we all got caught with in the retail industry, especially on the supply chain side, we've been able now to start to begin to manage through those. So we told the investment community we would stabilize gross margin this past quarter, and we did better than that. And we look to now start to improve gross margin as we go forward, getting back to our historical highs over the long term.

RACHELLE AKUFFO: As we look at some of these bumper events as well, though, how you fared on Cyber Monday, and then, of course, now coming into Valentine's season, are you surprised that consumers are not pulling back on their spending here?

CHRIS MCCANN: Oh, Rachelle, what we've been seeing, really since holiday of last year, is the consumer has started to pull back more and more on the everyday business, the birthdays, the anniversaries. So that's the softness that we see in the market. But the consumer still comes back for the holidays, as they did for this past Christmas holiday season. And we expect the same for Valentine's Day, and then going forward into the Mother's Day holiday.

And for Valentine's Day, like you said, we're very encouraged by the data put out by National Retail Federation, expecting this to be an important holiday. When you have a holiday like Valentine's Day, we all have people in our lives that are valentines of one form or another. And we need to reach out and express ourselves to those people. So we're the company that helps you do that.

RACHELLE AKUFFO: And it's interesting because we are seeing a lot more gift giving outside of, say, your traditional partner. I know I always get my daughter flowers on Valentine's Day, make her feel a bit special. But you also have, of course, social media giving people that fear of missing out, people sort of upping the levels when it comes to how they give these gifts, especially around things like Valentine's Day. How has social media played into how the success of 1-800-flowers?

CHRIS MCCANN: Well, it's just a great way to promote the wonderful products, and not just the products, but the story behind the products. So social media gives us a way to interact with the consumer differently than we have in the past. And as a company, we're really transforming ourselves from a transactional e-commerce company into a relationship company.

Our goal is to help our customers build and maintain the important relationships in their lives. And to do that, we have to have a deep relationship with our customers and give our customers a broad breadth of product from 1-800-flowers and Harry & David and Personalization Wall and all of the other brands that we have, giving you plenty of choice whatever the Valentine Day need that you might have may be.

RACHELLE AKUFFO: And we did see the National Retail Federation also talking about really more spending on services than anything else when it comes to gift giving. How does 1-800-flowers navigate that?

CHRIS MCCANN: Well, we believe that giving is really the gift. And that's why our best customers are those who purchase more often and realize that they take a lot of pride in the ability to give and to make an impact on someone's life. So as we look going forward, part of it is to make sure we're bringing all different types of products to the table, personalized products.

We recently made another acquisition in the personalized product category of a small business called Things Remembered, which will just plug onto our platform, or experiential marketing programs like floral design classes, charcuterie board design classes from Harry & David, giving our customers different ways of interacting with our brands and products.

RACHELLE AKUFFO: And in terms of what you're expecting to be the best-selling trends going into this Valentine season, what are the standouts for you?

CHRIS MCCANN: Well, of course, it's Valentine's Day. It's always going to be roses. But then we have different kinds of flowers, lilies. Tulips are very popular. But also very popular this year for us, and actually for the last several years and growing, is Shari's Berries and our chocolate-covered berries and the pairings that we have of berries and flowers, and berries and wine, and berries and cookies, and berries and berries. So we take all these wonderful products from our platform and bundle them together to give you a great option for Valentine's Day.

RACHELLE AKUFFO: Now, of course, we know it's a tight job market out there, trying to get all these deliveries. Any issues in terms of supply chains or any sort of hiring that you've had to do to ramp up to really get ready for this Valentine season?

CHRIS MCCANN: Yeah, we think we're in really good shape. This past Christmas holiday season, we did well on the labor front, and a lot of that was due to better availability of labor for the season, and also automation capabilities that we've put in place to reduce the need for labor that we may have in some of our distribution centers. But again, at Valentine's Day, so much of our business is floral related, and really where we work with a network of the best local florists in the country, around the world to make sure that we get the best quality product for you. So we're in very good shape for this Valentine's Day holiday.

RACHELLE AKUFFO: Well, there you go, people, no excuse to not be receiving something. A big thank you there. 1-800-flowers.com CEO Chris McCann. Thank you so much, and Happy Valentine's Day in advance as well.

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