1-800-FLOWERS.COM (FLWS) 2 Feb 232023 Q2 Earnings call transcript

Good morning, and welcome to the 1-800-FLOWERS.COM Inc. Fiscal 2023 Second Quarter Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] And please note that this event is being recorded.

to President conference of like Milevoj, to now Vice Senior Investor would turn over the Andy I Relations. Please go ahead.

Good XXXX second to our call. welcome morning, quarter and earnings fiscal

and Chris Tom Joining McCann, today CFO. are Hartnett, us President; Bill Shea, CEO;

documents. to contained we some you release in on call our of Before the by public make that are we press remind covered I'd statements Safe the call, today's begin like the Harbor and disclaimer

that about future During that we statements projections make contained and press discussed on during be call. statements our any the company based forward-looking are made filings with risks this and assumptions predictions, disclaims These this uncertainties, with Securities statements and events. current obligation including to in call, of may will and to Commission. any and are statements The release or those Exchange update public other expectations forward-looking subject the

measures with earnings financial not the be discuss we were GAAP measures our the prepared supplemental found non-GAAP these that of can in accordance financial tables in measures directly Reconciliations comparable of Additionally, certain release. most will to GAAP.

now, the call over to And I'll Chris. turn

Thank you, and everyone, good morning.

quarter results from strength improving successful particularly quarter, our and curves. holiday reflect season trends sales the job and did and gross demand food benefited brands a We the for a of margins. good second consumer Our projecting related to

declined basis, revenue consolidated X.X%. On a

being relatively food been floral in decreased revenue trends Foods Gourmet segment options keeping gravitate Baskets while a solid Gift macroeconomic flat, in & consumers challenging towards past Our revenue our with which with business has environments. arrangements & from Consumer quarter, within This XX%. Gifts gifting Floral had

patterns retail and supply what in in that shop unprecedented continued much very shopping to is promotional was witnessed there throughout their October, holidays, the the due when those period. revert the we closer environment had anticipated customers ago, year experienced. we challenges, that we to an historical holiday a to and pull-forward and chain demand trends holiday would a Unlike global Beginning

price of customer, that point We reducing some price with lower utilized income not to offer customers appeal as a such sensitive be and in noticed customers, for and offers, shipping, Additionally, that throughout entice period appear economic the to more a our holiday deals. lower brands to waiting as simultaneously were other strategically that environment. while pricing impactful current free the we promotional were

us forward Black Moving to and season. and a again, Cyber November, to holiday kick-off were, for big Monday Friday once shopping the days represented

Cyber From PersonalizationMall weeks to two In some fact, on Monday. revenue days coming continue the of now, Christmas. before month see greatest ever demand we build of had the day throughout during with its biggest our volume December

that assortments up at to higher over points our price business, coming food higher were within traded value, price gains in largest the Customers $XXX. with point

We our meal their also saw make prepared towards offerings and lives that gravitate customers entertaining easier.

to to and in also and growth and appetizers family meals, less holidays as began side customers years. entertain and friends. charcuterie dishes Our allow saw couple the spend heat cheese with time for as more the again serve kitchen and of our the past once assortments nice more a customers compared And to time

Mobile have that our new into past XXXX; record resulting its its ever sales of sustaining All $X year biggest Day, breaking sale for including: customers quarter and wines, this December, mobile; pandemic in season, the Harry for David records & as few and years. seen sales of in a told, a was growth holiday award-winning set in we day first set record the million the tablet the over that desktop more from shifted brand, all record

grew earlier the new business assortment, maple helping and And benefiting softer syrup [indiscernible] cinnamon holiday the its everyday introduction from sales Wolferman's performance strong swirl in offset increase of in cookies, from X% the a cane, saw which Cheryl's customers. e-commerce part included candy quarter. in

to business. our floral Turning

and our of pairings leverage XX% to holiday assortment to over growth. various brands continue that and period saw in from meet strong strong and that and customers' floral the needs. a our double-digit prior-year include plants sweets We X-XXX-Flowers Shari's grew products offerings strong We growth Berries saw

demand does However, the the were gifting the as to the holiday, floral unable business throughout large not spike offset quarter. at have these successes everyday lower for

business while was fairly direct-to-consumer resilient pressures quarter, our our remained across the to enterprise not business Additionally, macroeconomic this immune. BXB

work year, business of opportunities holiday cut past once corporate gifting corporate began companies as hosting demand shifted parties soften expenses. as to again environments hybrid saw more looking gifting. companies Our the began for over lieu employees to And more in

corporate under see focus growth remains gains opportunities the and of today, gifting we is future. share market a ours pressure and While in it

Our from second our marketing quarter efforts. also benefited performance

company a are We being through customers and transforming content towards our transactional with e-commerce company relationships developing from purely deeper community.

more Our relationships meaningful customers focus lives. their on give is inspiring more build to in and to and better our

people who giving knowing it's we've We've best give, naturally that compelled that enjoy are on ones and built the most. our coincidence be a to no to found the customers company

our design programs, classes email as channels. content expanded initiatives Celebrations such Pulse include and floral development social across Our weekly newsletters, experiential multiple our

and our frequency, their Through all needs. our preferred the on with are these our multi-category nurturing gifting we purchase of as customer initiatives, our increase existing focused cohort defining growing customers' for company relationship destination customers, to

Passport net followed per expected, customers, customer our Celebrations As million by be are highest amongst could members. multi-category X.X sales our

Turning to margins. our

freight anticipated, strategic margins quarter, the second we initiatives. and costs our pricing During inbound lower improved on as

will this into Bill continue As year. second further, we expect of and this to trend next discuss in the year half

over costs few margins to return anticipate these levels will our the continue years. historical the next As that moderate, we to

substantial see in EBITDA. a As expect such, recovery we to

trends In summary, would certain help have. that macro and indeed anticipate we us they

in be improve in levels, the cost reverted to us favorable, While ability they not operating adjusted expenses, are Based to we a million. second have of in which our $XX reduction to particular, fiscal range to our 'XX their gives and quarter $XX pre-COVID confidence million be in on inputs performance, guidance and our our improvement margins in continue to gross future. increasing margin EBITDA certain

for we the focused look the year, to executing period. on As the are holiday of balance upcoming we

consumer to remain are and to unique you environment, Even continuing spend the no the for uncertain are one-of-a-kind make while reduce matter that everyday customers for. and major their in environment spend occasions, an confident gifting expect value of our we holidays. cautious this the in perfect shopping solution that We gifts in who see on

that to the do time friends, our family, to you Day they a appreciate for that all As is great spring, we we're caregivers, campaign. your life those in or and and business. Valentine's look Giving From Gift this remind beyond focused the on is family teachers you your

the Bill newest I the of I Before to turn take to wanted review, it for over brands. moment family our a addition financial to to highlight

expand to enables personalization category. Things We grows tuck-in celebrate offer personalized Things variety further Remembered PersonalizationMall is to we us a to with number to and personalized every occasion significantly to acquisition in our of leadership that excited are very products masterpieces. can and product the our Remembered all-star of welcome customers example offerings complementary the that and This position perfect roster. a our is to help

after and incorporate built complementary for and Things the platform profitably. platform we and This their perfectly ended. how certain growth, onto seamlessly brand the addition illustrates grow shortly related We rapid as second $X lists million was brands Remembered assets, customer quarter including our for our approximately them acquired IP, e-commerce

Now, Bill I'll his turn for the financial call review. over to

Thank you, Chris.

of gross adjusted As from were EBITDA business. Basket by second able quarter managing benefiting offset our X.X% our generate We of and performance Chris solid, margins Foods to highlighted, improving and our revenue the Gourmet $XXX.X structure. by was resiliency cost the & decline Gift million

optimization reduce margin strategic Baskets pricing more a which reduce freight which increase products our distribution us efforts Gourmet to costs to initiatives; improvement from enabled and continue trend our by labor basis pay; that XXX zones Gross within our lower led year-over-year network recipients. was market, & benefited that to shipping Foods deliver Gift favorably; overtime full closer business, point ocean to logistics leverages stable the and our

to Furthermore, our have us warehouse automation enabled meaningfully efficiencies. improve efforts

phase last second the we automation, Hebron, increasing to brands and fulfill of throughput Atlanta, for we since food for year million by X% the next December, XX% our our and completed And, multiple over in increase month enabled installed orders in while automation year. expenses. us Our we is that packages throughput year by Georgia over processed facility Ohio facility X.X December in last reducing of over

few we leverage of our levels Longer-term, restore gross drive top-line the that to we bottom-line growth years gradually margins believe results. historical will past the their to significant and

months. You may past impacted by most Baskets Gift negative the recall inputs & Foods business cost was that for the the XX macro Gourmet the

to subject Our & its trends Gifts that have was thus is Floral yet and less not improved. Consumer impacted, certain macro segment recovery

revenues net Total quarter. second the $XXX compared million prior the for metrics X.X% key in our revenues review to $XXX.X let's of Now, to million declined year. as

XX%, XX.X% aforementioned quarter margin for profit Gross to Baskets Gourmet our driven from improved by basis the the improvements & XX business. Gift Foods in points

as as to $XX.X return declined reflecting XX.X% the Operating million, On marketing of primarily XX.X% expenses investment total expenses our on to of in shifted marketing funnel. dollar the investments areas operating prior-year higher a compared advertising we basis, were period. lower lower sales costs, cost,

second year EBITDA adjusted our $XXX.X as As of adjusted $XXX.X a quarter a was with compared EBITDA result, million ago. million

and of prior-year per income share, $XX.X net or net or the in income with was million per period. and share, of share share $XX.X per adjusted or million adjusted net was $XX.X $X.XX income $X.XX $XX.X or $X.XX income million $X.XX million Net compared per

results. Regarding our segment

year. segment our Foods helped with our of business. $XXX.X prior of the the in gifting revenues Gourmet softness the some decreased corporate Revenue million food million gifting $XXX.X & to in from businesses, benefitted Gift which compared resiliency Our mitigate consumer Baskets X.X%

This strategic $XXX.X labor XX.X%, increased million from compared a points margin profit ago. This and costs, improved basis our availability was benefiting automation our to lower $XXX.X segment's with initiatives, XX% efforts. margin from XXX pricing segment's inbound transportation year contribution million gross

softness in our revenue Consumer Floral & gifting food towards the and gifts million our is $XXX.X XX.X% been in customers experiencing with segment, Gifts million floral during everyday gifts a have compared $XXX the the reflective to decreased gourmet shift from period. period. prior-year holiday of This our decline we by In

transportation with was Gross to and $XX.X compared in XX.X% compared margin the $XX.X profit period. contribution fulfillment due the with prior-year costs XX.X% Segment in million margin costs. decreased primarily million to outbound prior-year higher period,

decreased year. quarter million $XX.X $X.X $XX.X BloomNet was XX.X% with Segment segment, the of margin the In $XX.X with for prior-year the million contribution revenues the Profit was in flat with compared prior-year million XX.X% in compared to period. margin period. million our prior

to balance sheet. our Turning

at Our second quarter. position end at cash the million was quarter. Inventory the $XXX.X $XXX.X and last of was with of and year's $XXX.X million the inventory million of investment second end

we debt, our under term $XXX.X million of revolving borrowings in terms credit no In had facility. and debt

increased we our XXXX morning, [Providing] guidance This on for fiscal (ph) guidance performance. quarter second based fiscal XXXX. our

important certainty behavior economy Before this current our note unpredictable, I the views, to with making it share difficult in forecast environment. it's any that macro highly still is consumer to

over the mid-single-digit After growing consumer to last three behavior. revenues range on we fiscal the XX% XXXX in fiscal in expect years, cautious decline revenues

impact our business pricing revenue the certain We cost decline and our moderation the and a expect to of to investments on of have our programs, we through: in strategic platform. the mitigate earnings continue make inputs,

As to a year. the to margins during continue and we of bottom-line improve the gradually half current latter expect gross fiscal results result,

we the $XX $XX Based our performance, to on to expect these be now in assumptions million EBITDA adjusted year-to-date million. of range and

$XXX an $XX year generate improvement through flow inventory representing We as than sell continue as million cash compared million free expect in to than a we ago year, to our more the balance. in of more to current

I call the back Chris. turn will now to

Bill. Thanks,

performance season. holiday we To recap a had this successful our quarter,

variety macro throughout trends will be to the bundle high-value challenged compelling environment appeal our year inflationary We of are pressures. challenging fiscal the customers. assortments a continue by addressing wide to these consumers and that remain believe However, proactively remainder with that of

about bullish our very prospects. remain long-term we Nonetheless,

seasonality. mitigate built environment on is provides of our well family to as positions perform all-star portfolio to the our and resiliency improves. and foundation The helps Our strong brands of macro us diversification

marketing and Our and we loyal, with through efforts. relationships our them deepen engagement customer innovative to core continue our remains

us with customers. our the nurturing we is relationships in about our This marketplace, distinguishes what care because

is found As are brings the joy most. compelled naturally involved, single and who why to we we've I to everyone built Giving it the best giving, noted that runs all enjoy that thread earlier, through company on customers give, A that's be Gift. to we the and the knowing giving it's people coincidence our no say, ones the

like any to the that I'd questions open have. you may Now, you. call Thank for

Company. We Please Kurnos will Instructions] question-and-answer now [Operator Benchmark question begin come first And go the today session. our The ahead. from with will Dan

bottom-line, guys, mix just the noise morning. around of here. job the for Great. some Nice in things maybe quarter. Thanks. me, Good on the Couple of on

did you talk pricing having talked the PMall kind how we've talk PMall. Cyber I strong quarter? about the You think did of in (ph) about it And past, just Monday. in the Can some within [inelasticity] overall

which for or gifting the PMall, now, thinking pricing but keep about got we like consumer you've and with built bunch of backdrop? in up go general, a about On some backdrop just all uplift, Consumer promotion are side, right e-comm? kind How excess you as can into Floral of how separate activity are thinking given price we inventory QX the kind kind that of of throughout you either now

throughout quarter quarter. happy on Dan. We're had, how you. Thanks, Good and structure managed the the performance cost company Sure. especially with we very the the the we to that hear from of

for So, thank that. you

we Cyber to perspective, being a As PMall day for we from Monday a thrilled record were PMall. that look see forward,

And Bill, overall PMall performance?

mid-single of December, seeing of of every top-line Again, range Monday, that the business kind part then same perspective. the little the soft. strong strong a and in very we're was from Cyber trends a it's softness Yes. a finish. that PMall had early and seeing It down day throughout digit a is kind

looking we we Consumer initiatives really as now? are the pricing what point view and from of forward PMall Tom, from at And look a Floral

bit we where are Yes. -- challenged PersonalizationMall, this those pricing I our initiatives our whether be little incomes morning, Tom. a of environment. Cheryl's good products, it'd price strategic point in It's on Shari's, talked more Dan. household mean lower Certainly, consumers -- Cookies, their some the about

We past. away have promotional, the to his mentioned remarks, pull be we've need the Chris been of in the to as shipping discounts seen some able done but from in we've

margins been well that. pretty able maintain So, we've on to

of them incomes, create demographic I pricing we brands -- where and and us with allows largest Harry blessed in Flowers mean consumers. -- & consumers, and with advantage broad-ranging those and on and of higher we and value a move that so prices David Flowers household are increase and products take our own to your we're have to that customers certainly have up bundles the to many

where pricing And you more to there quarter, items, we well a price good AOV look think were example I at through past it's merchandising point strategic and initiatives as featuring bundles I when as able by lift think initiatives pricing higher mix this just -- and X%.

about that seeing strategic half due being pricing Probably higher order of our the and was to we kind average of very that due So, more was up X%. our in And to mix. priced $XX, up and and put initiatives around affluent consumer half place, bundles the buying is about of attractive. items of some it

the things returns, consumers isn't wanted and Got were really That's for we're into free Funny whereas those now how helpful. to better. willing recession it it. shipping and going things pay when they most were

for a & Harry And that, record great Obviously, Alternatively, from of talked been important. brand it's the vast think order came majority about the you GFGB. really in is guys. you upside for that guys David. I And

any relative rest sort of Harry just Bill, outperformance GFGB? to of color on the David So, & incremental

last shipping? on improvement year guys be of you you control whether you] lower helpful. versus much I and kind of you you that sort that for it'd then, of little to that costs before, really out upside remarks, out the how Like, if think in are of organic of like or would of the the [what how be from drove a this kind your was And Bill it versus did helpful your of us, of took repeat your super (ph) action margin have input sort kind optimization early to exercise much parse it's prepared understand avoid the kind guys bit but touched

certainly a off, performance low perspective, from & first Well, biggest top-line and from year-over-year. single-digit of -- our the all of brand, of performed perspective. the best the what food drove growth David quarter Harry from brands, a was certainly flat David Harry the and relatively is kind top-line &

certainly We more we inventory to operation. for more in was allowed had, having access efficiencies investments year. having that and inventory much experienced because both made availability that there, It's on supply operational offset the labor, did last hand challenges to efficient the the to make us a labor chain we

-- a gross helped -- the in improvement that point of basis So, margins XXX certainly we was component helped saw on brands. the that food

looking Okay. everything, I'll you that ahead ask but more on the like Chris, me last get way with away. side If Consumer of progress? more be I step just mean, and good oriented you margin that how the that kind The I'll And perspective. too. potential you've the of of to consumer revenue there's always follow-up were that offline. one it between understanding pricing for for out from initiatives, this, I view Food, on out to would sort just would confidence if Thanks. versus want you Floral stable, you parse a kind things top-line uncertainty, helpful

Dan. Sure,

as I as a forward lot we with look our our think, I business, in of confidence remarks. mentioned we have

that With go seeing we're the confidence showing, the improvement spend, in OpEx providing us the we leverage as operating some and build, really gross improvement, gives benefits margin we that coupled forward. we're with platform the the

or we're off years. of that his comments over is Bill last mentioned grown the And the like the size XX%. of built the customer base. what doubled in we're three of over that couple We've years, we've last strength two our we've doing building

newest the we're and moving continue to to that that into personalization our certainly expand capability with acquisition we So, leveraging deeper product catalog category.

at are week, still be XX Day environment -- But a and Valentine's point. we holiday have in everyday pulling it forward, whatever this stated, we next might see the bit. still days, softness back see that's a customers look, even challenging as going we as we we So, business where in

the come for periods then holidays and consumers And like graduations and back seeing Mother's we into move we're the spring et the so, Day that holiday of cetera. still

to in where So, anticipated out a we position the good year we we're would. think finish really we

the Thanks All all Appreciate right, color. it, great. and again. for congrats

Thank you.

And Noble Michael Please Capital will our with question Kupinski come Markets. from ahead. go next

Can than your of less and more promotional solid on has for Can time? you congrats economic Is Are the the thank market? it your just quarter. more Yes, of of Valentine's kind you, being past? market tone of couple rational, A competitive Or tone about Day? it the promotional? being questions. a me talk competitors the you warned give this conditions years

this Tom is pre-pandemic see tone could he the shopping same a give see the that we as turn if you Christmas thing. to curves, to and trends our Valentine's holiday in Keep to And last-minute saw to I'll just back of we during customers revert mind market. the holiday. expect the

still So, holiday seeing are in what we is the in Tom, us. the But, front marketplace? of

mean, Yes, is it I early.

in same think a -- we I'd some competitive I environment, the but player. cases it's are say, it's always seeing

it's say the expected, we I many apply et for the and on the So, what cetera. would more there's say out just tactics I'd think years. -- rules focus uncertainty this playing the we've have of funnel bottom I'd that's consumer, same been of on

So, obviously, our overall marketing strategies taking that into account.

you very And reminiscent I Shari's but talk bit the you opportunity in forward? Berries you. type acquisition, it's there? of acquisition, Got have was successful. it little that anticipate about of going seems Remembered? a Things relatively you know talk what margins And a can Can revenue you which about small

margin manage small we but a as maybe have as acquisition, well leverage And that you and put I'll the standalone the platform, our [indiscernible] how can built on like inject much as Michael. business, we there, one growth platform bring can that, give our demonstrates as working appropriately it's we've we and really have them a that as capabilities. the Well, right, color of acquisitions that capabilities then them with relatively OpEx we gross some them into can you're

move good a example along. we it's these do can how we So, of acquisitions tuck-in as

Tom, versus little the positioning PersonalizationMall. Remembered just bit why of a don't you market about talk Things

very point, at weddings, occasions, I around closely looking is brand And than Certainly, anniversaries, so focused of now. positioning graduations. it whether Remembered of a religious, it tier PersonalizationMall. product at right price Things is be from important a many Yes. life's think pricing different milestones, We're

the in So, whole overall space. to really this as enterprise well fit customers. It catalog it fits we product bring our also our our will personalization assortment bear and benefit

all have and So, PersonalizationMall we to that into existed to Remembered the good about lever Things a and that at bring team operations we be facilities strong their in feel And such that. operations that able up. take

I some guess color. just

e-commerce over With the are transaction, X -- we getting customers. e-mail million active

it's nicely. our be So, be that we site, that's to but this And to to days, But be platforms. leveraging, leverageable. e-commerce as creating able going we're grow bullish a we're we're think we're we'll revenue obviously, starting, going very early which brand-new

months So, we're couple in the again. the next of looking to brand launch

Michael, land to we with And we as I Berries, stain, with out, the what to with Vital we you personalization of [indiscernible] the did in food to what expand with similar space Shari's to category. here, did key did similar fact -- Choice, Shari's what ability is, similar the kind in point as food and the this mentioned, gives us the in

So, personalization we're capabilities well. and and appended that built now to as platform, the of the leverage able as our expand part to platform we

think opportunities complemented balance growth as PersonalizationMall, And the like with we we can to organic affordable last sheet and based when a it's cost good on see as tuck-in the I business do we our continued opportunities. strategy, growth at of did where to we're that strength M&A strength see in with overall opportunity of just that we position have. And consistent we these the larger and well with get the

Thanks the reflected for is distribution quarter? all that The color. facilities, company of this that their behind is the now or last in fully automation

for us. opportunities the us, automation big will spend but behind is there Michael, always be

of our higher And Last This were year, the that in million. at there. $XX kind major averages. our of of historical there half were bringing it ago, phase million back about those two In during still we with years As past our million. discussed, at year, completion million. automation we're $XX down the Atlanta, we were first $XX was year, of capital, about than this we've to $XX Georgia the

whether always and So be ways our service center, to whether continue there our be we to improve our improve centers, have -- will that just projects in it it but operations, but be distribution to in automate operations. our

Or then the debt or allocation, just And you. you is the us both? still regarding of Got Or focus we reduction, can is buybacks? will allocation capital share a see there? capital flavor give what

Yes.

either I and to been of then we bring we the But shareholder M&A at bring discussing as up and is the investments just always think our of first business where foremost, how our We shareholder this look we've stock buybacks best always performance can had so, value. CapEx strategic performance, and value capital allocation. component we've last is but in see, in we can grow best repayments, drive way business; or just help the operating debt are first couple the to that think believe M&A, we priority. a years, smaller drive the acquisitions

I you. all That's Thanks. Great. Thank have.

Thank Michael. you,

Please with ahead. And our next question Alex Berman come will from Craig-Hallum. go

Great. much trajectory on getting congratulations margin historical Thanks I longer levels to holiday question, over season. the about and the of gross term. very ask a wanted nice back for to taking my

that, will the terms to going to there anticipate historical start As margin, your a number compare what the going things a of gross of normalize same freight, like the to for to levels Or you being within be components different kind how is it in product historically? in future, to labor? you about you kind to when of margin similar that things be think Do you? get mix to way is what had

Alex, for thanks question. the

our to First Dan, brands. just pricing before inflection XXX quarter the of continues see mentioned I in strategic certainly the automation in that and XX would the from as got to that improvement margins. combination improvement achieved the anticipated our we favorably labor We and I -- reduction to second food of initiatives, basis margins an allowed that costs, inbound points was points have. all, for and we point trend a we improvement operating do respect we've in with We which that. That think hit of stabilization for availability, gross basis just us, efficiency, overall, freight

expect to -- the to gross beyond. and going in will the we into improvement show year-over-year. continue to half over think continue Certainly, second that's I this going margins of fiscal 'XX year

margins. you we over out, term, get expect gross to to I point As think our back long the

drops If over year, we in that XX the we gross to XX or prior back range. give points, take look anticipate were basis years last to XX% inbound that. getting combination be a already That's They're back normalized their seeing we coming freight, into going to Inbound are high. still more you margin commodity costs range. very of significant in and And freight.

We the P&L, bought we haven't yet, the to that has because That got levels. full through of that gotten still some but benefit that. we've flush higher at benefit on

comes labor do not back, Pricing high labor of the we're initiatives, our back. and as capital spending we're out we consumer that. of able out to have some our we'll rates are driving to certain pricing labor initiatives economy hours that -- be coming improves But and as we've through, they're the but been drive able Labor, to of -- it model.

will bit little rates come be costs a I because back Inbound come are were freight be a mix will freight labor back. still is high just will those not think are Outbound higher of there years and few labor back high will high. Outbound they than down. shift a come So, ago. freight today, down. Commodity XX% will

offset of as the as components come So, to to margins other initiatives pricing to back our that some we through have down well operations -- drive drive some not efficiencies and will to historical levels.

All right.

And back margin just said, time forward. we as as improve over OpEx expect a -- in to position our expect you with Bill margin us our see, we our coupled to puts now So, then, going management gross strong can historical gross levels.

Great. you That's both. really helpful. Thank

Linda Weiser from And D.A. question our with ahead. Please go Bolton will next come Davidson.

you. Thank Hi. Yes.

point the but said floral that food on gifts. in higher -- Just I lower in that business freight, can and think, were just the you costs with you had freight

and Can the So, difference between I inbound guess you outbound that? freight. clarify that's just

-- being as prices gasoline wouldn't that cost and outbound oil freight well? lower -- the gasoline with being of just kind make also, why lower, And

you you Yes, bit. could little why down don't Bill, break a if that see

Yes. below that a ago. some containers what of into what on replenish it even more saw second head even of Inbound the certainly we -- P&L, freight fiscal were year see is benefit will year. in QX. we 'XX, we're be down dramatically. -- paying That that we today And yet is fully paying And saw flushed significantly lower. we there through the as in certainly, will inventory, as be We'll hasn't

the floral, business impacts Outbound freight the brands, PersonalizationMall, X-XXX-Flowers. it's affects brands food inbound freight, the because the not it by It side are. more as freight as affects everybody. affects food much inbound impacted of it the food just affects as It and on

a than still -- the surcharges paying we're higher From a perspective, but high, fuel quarter off ago. its still in a they higher were second fuels fuel were year

maybe highs in and off but their again, higher of they -- where So, December April, ago. March, year still certainly were of than significantly of November a December

second through quarter. as we we a that the went still went the as So -- was second through headwind

of the everyday the competitive operations, seen small of that floral they're in Okay. seen out gifting? that coming, of there? have curious and I what out go you. because That's guess, in have you in some all capital-backed of like, type about, up any venture have this there, Like, landscape helpful. you side some kind Thank that kind just them away I of softness been know mostly I'm And of small, these but then, competitors and these

Linda. Sure,

away, we've always over -- new of you've seen with up of wind if in us few entries time think a years, come be floral industry seen fading we and I in couple a over go seems time, back that there and with to businesses. that as number a the

status, now, now, that's Some there if is that going current their of dearly going right don't now but to think, to And to raise it. I there need out you're startups the you're know right pay for needs cash to trouble. cash, business any out I in raise

personalization in side see of category have it and that we well, So, for some I could the for could, that the on think just kind yet, or we space saying I'm the hamper us. of that it's competition food matter, across not on floral even as side seen but

be said, players seen past Tom the we're in not last or Nobody really as scenario. It's year. come year. has a -- gone So, in the continues same the Valentine's competitive Day seeing new to we've

question competitive real viability this change I in the But So, their landscape. no environment. go-forward on

Thank you it. I appreciate much. very Okay.

Thank you, Linda.

conclude our like remarks. to this And to will turn question-and-answer any conference session. closing McCann Chris I'd for back the over

this Cole, all thank time you, your thank and for and morning. participation you

than we're were As well very pre-pandemic, of been positioned we holiday season on well stated, stronger bigger, as company company. successful and positioned very better, had outlook bullish we're the and future saying, a a the to we we we've --

So, your I thank you for time.

again, have lives. orders, a early all not Valentine's And our Valentine's many to in and we reminder, too order it's your

So, you. we're here it. Thank if need to help you you

for now today's Thank has attending conference you concluded. presentation. The

lines You may now disconnect at your this time.