1-800-FLOWERS.COM Q2 Profit Surges, Beats View; Reaffirms Outlook

(RTTNews) - 1-800-FLOWERS.COM Inc. (FLWS), a multi-channel retailer of gifts, on Monday reported a profit for the second quarter that more than doubled from last year on higher revenues, reflecting the company's acquisition of Harry & David.

Adjusted earnings per share for the quarter beat analysts' expectations. Looking ahead, the company reiterated its financial outlook for fiscal 2015.

Jim McCann, CEO of 1-800-FLOWERS.COM, said, "During the fiscal second quarter, we more than doubled our revenues and tripled our bottom line results year-over-year, reflecting contributions from our Harry & David brand, which we acquired at the start of the period."

The company's second-quarter net income was $45.77 million or $0.68 per share, up from $18.03 million or $0.27 per share in the year-ago period.

Excluding certain items, adjusted earnings from continuing operations were $0.83 per share, compared to $0.27 per share in the year-ago period. On average, four analysts polled by Thomson Reuters expected the company to report earnings per share of $0.80 for the quarter. Analysts' estimates typically exclude one-time items.

Net revenues for the quarter doubled to $534.28 million from $266.34 million in the same period last year, reflecting the company's acquisition of Harry & David brand. Analysts expected the company to report revenues of $538.63 million.

In September 2014, 1-800-FLOWERS.COM completed its $142.5 million acquisition of Harry & David Holdings Inc., a multi-channel specialty retailer and producer of branded premium gift-quality fruit, gourmet food products and other gifts marketed under the Harry & David, Wolferman's and Cushman's brands.

Adjusted net revenues for the latest quarter were $549.74 million, including estimated lost revenues of $13.8 million due to the Thanksgiving-day fire at the company's Fannie May warehouse and a $1.6 million purchase accounting adjustment to deferred revenue related to the Harry & David acquisition.

Excluding Harry & David, revenues grew across all three of the company's business segments, adjusted for the impact of Fannie May warehouse fire.

Consumer Floral segment revenues for the quarter grew 3 percent to $99.6 million, while BloomNet Wire Service revenues edged up 1 percent to $20.1 million, and Gourment Food and Gift Baskets revenues almost tripled to $414.7 million.

The company's gross profit margin for the quarter increased 330 basis points from the year-ago period to 45.0 percent, primarily reflecting the contributions from Harry & David.

Looking ahead to fiscal 2015, 1-800-Flowers.com reaffirmed its guidance, which includes anticipated benefits from the acquisition of the Harry & David business.

The company continues to expect adjusted earnings for the full year in a range of $0.45 to $0.50 per share and total net revenues from continuing operations in excess of $1.1 billion.

Street expects the company to report earnings of $0.47 per share for the year on revenues of $1.15 billion.

The company noted that its guidance for top and bottom-line results for fiscal 2015 does not include Harry & David's results for the fiscal first quarter of the year, which is typically their lowest in terms of revenues and includes a substantial bottom-line loss.

McCann said, "We now have a variety of initiatives underway across our operating platform which we believe can generate operating cost efficiencies in excess of $15 million over the next 36 months, adding to the already highly accretive nature of this acquisition. Achieving these savings will likely require some investment during the second half of fiscal 2015 which would offset any savings during the current fiscal year."

The company expect the full benefits of these operating synergies to be realized over a three year period beginning in fiscal 2016.

FLWS closed Friday's trading at $7.89, up $0.24 or 3.14 percent on a volume of 507,537 shares.