1-800-Flowers.Com Inc (FLWS) 2009 Q3 法說會逐字稿

Good day, everyone, and welcome to the 1-800-FLOWERS.COM, Inc. fiscal 2009 third quarter results conference call. This call is being recorded.

At this time for opening remarks and introductions, I would like to turn the call over to the Company's Vice President of Investor Relations, Joseph Pititto. Mr. Pititto, please go ahead, sir.

Good morning, and thank you all for joining us today to discuss the 1-800-FLOWERS.COM's financial results for our fiscal 2009 third quarter. My name is Joseph Pititto and I'm Vice President of Investor Relations.

Those of you who have not received a copy of our press release issued earlier this morning, the release can be accessed through the Investor Relations section of our website at 1800flowers.com, or you can call Patty Altadonna at 516-237-6113 to receive a copy of the release by email or fax.

In terms of the structure, our call today will begin with brief, formal remarks and then we'll open the call to your questions. Presenting today will be Jim McCann, CEO, and Bill Shea, CFO. Also joining us today for the Q&A section of our call is Christopher McCann, our President.

Before we begin, I need to remind everyone that a number of the statements that we will make today may be forward-looking under 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.

For a detailed description of these risks and uncertainties, please refer to our press release issued this morning, as well as our SEC filings, including the Company's annual report on Form 10-K and quarterly reports on Form 10-Q.

In addition, this morning, we will discuss certain supplemental financial measures that are not prepared in accordance with Generally Accepted Accounting Principles. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures can be found in the tables accompanying the Company's press release issued this morning.

The company expressly disclaims any intent or obligation to update any of the forward-looking statements made in today's call, in the recording of today's call, the press release issued earlier today, or any of its SEC filings except as may be otherwise stated by the Company.

I'll not turn the call over to Jim McCann.

Good morning, everyone. As we previously announced, the revenues for our fiscal third quarter declined 21%, primarily reflecting the continued weakness in the retail sector.

Revenues were also affected by the shift of the Easter holiday into our fiscal fourth quarter this year, and lower Valentine sales due to the holiday falling on a Saturday, rather than a weekday, which is historically much better for our business. These prime two factors accounted for approximately 25% of the total revenue decline during the period.

With revenue growth clearly challenged by the severity of the current economic downturn, we have intensified our efforts to reduce operating expenses and allowing our cost structure commensurate with the reduced level of consumer demand.

As a management team, we have a demonstrated ability in this area, having taken more than $25 million of costs out of our operating platform between fiscal 2006 and 2008. We have targeted an additional $15 million in operating expense reductions under the accelerated cost reduction program that we announced back in January. I am pleased to report that we have made excellent progress towards this goal, and we expect to fully realize these cost savings in fiscal 2010, which begins in July.

Let me highlight a few of these cost-saving initiatives, which we began in this third quarter.

We reduced our labor force by 10% across the Company. We began the downsizing of our Home and Children's category significantly -- including significant reductions in catalog marketing and prospecting. We reduced and reallocated our marketing spend across all of our brands, scaling it to lower customer demand and to achieve enhanced returns. We put in place a plan to revamp our IT infrastructure, consolidating hosting sites, and rationalizing maintenance and support applications to reduce costs.

We announced that we will be closing a Midwest service center, further virtualizing our customer service platform. This represents our second such closing this fiscal year. Importantly, we retain virtually all -- (technical difficulty) continue the high-quality service agents at these locations because they chose to remain with us and transition to our home agent network.

In addition to our focus on operating expenses, we implemented plans to significantly scale back our capital expenditures in fiscal 2010. As a result of these initiatives and others underway, we are moving quickly and efficiently to maintain profitability, while positioning ourselves to emerge an even more profitable company when economic conditions allow.

Before I turn the call over to Bill for his review of specific results and metrics for the quarter, I'd like to highlight a few additional areas.

First, in terms of our balance sheet. We finished the fiscal third quarter with more than $30 million in cash and no debt outstanding on our revolving credit facility. As we previously announced, we worked proactively with our bank syndicate, led by JPMorgan Chase, to mend our bank credit facility. As part of this effort, we paid down our outstanding term loans by $20 million, reducing a debt under that facility to $92.4 million.

We reduced our revolving credit line from a previous commitment of $165 million to a seasonally adjusted line ranging from $75 million to $125 million. This is more than sufficient to cover our working capital requirements for the calendar year and holiday season and beyond; and it reduces our planning costs on a year-round basis.

We also eliminated a network covenant that had been included in the previous agreement, thereby removing any issues related to the write-down of goodwill and intangibles, which Bill will discuss with you further in his remarks. Overall, the revised agreement provides us with the flexibility to manage our business in the current economic environment.

Second, on the customer front, despite the weak economy, we attracted more than 650,000 new customers during the quarter. We also achieved a repeat order rate of 61%. These metrics illustrate our continued focus on deepening the relationships we have with our existing customers, as well as the strength of our brands in attracting new customers even during these difficult times.

We believe this bodes well for our spring holiday season, particularly for the upcoming Mother's Day holiday, the largest floral holiday of the year, for which we have launched new merchandising and marketing initiatives focused on providing our customers with excellent value and convenience. I will touch on this further in my closing remarks.

I will now turn the call over to Bill.

Thank you, Jim. During the fiscal third quarter, significant weakness in the consumer economy impacted both our revenues and gross margins. While we reduced our operating expenses by nearly $10 million before one-time charges, lower revenues impacted our operating leverage, resulting in an EBITDA and EPS loss for the period.

Additionally, during the quarter, we wrote down $76.5 million of goodwill and intangibles related to our gourmet food and gift basket business. It is important to note that this statement is performing relatively well in the current economic environment and is a key component of our future growth.

The non-cash impairment charge reflects the significant contraction in valuation multiples, our market capitalization, and recent performance, resulting from the economic downturn. More on this later.

Regarding specific financial results and key metrics for the third quarter, total net revenues were $173 million, down 21.2%, compared with $219.6 million in the same period last year. During the quarter, our e-commerce orders totaled $2.1 million compared with 2,740,000 orders in the year-ago period. Average order size during the quarter was $62.90 compared with $64.79 in the prior-year period.

During the quarter, we added 651,000 new customers. This was achieved while currently stimulating repeat orders from existing customers who represented 61.2% of total revenue compared with 59.4% in the prior-year period.

Gross margin for the quarter was 40.2%, down 60 basis points, effecting a combination of product mix and increased promotional nature for the Valentine holiday. In dollar terms, total operating expenses for the period were down nearly $10 million compared with the prior-year period.

This is before depreciation and amortization, goodwill and intangible impairment charges and severance costs of $1.5 million, but it does include operating expenses of approximately $2.9 million associated with our recent acquisitions. This reflects our ongoing cost reduction program in an accelerated effort to reduce costs during the quarter. In addition, this includes stock-based compensation expense of $578,000 compared with expenses of $1 million in the prior-year period.

Lower revenues in the quarter, however, impacted the Company's operating leverage, resulting in an increase of 400 basis points in operating expense ratio to 40.1% for the quarter, excluding one-time charges.

For the quarter, depreciation and amortization was $6.1 million compared with $5 million in the prior-year period. The increase is primarily attributable to our recent acquisitions. As a result of these factors, our EBITDA loss for the quarter was $1.5 million compared with an EBITDA gain of $10.3 million in the prior-year period.

Our GAAP net loss for the period was $65.8 million, or a loss of $1.03 per share. GAAP net loss for the quarter includes a pretax non-cash charge of $76.5 million or $0.95 per share for the write-down of goodwill and intangibles related to the growing food and gift basket businesses.

In addition to a one-time charge, $1.5 million of severance costs were incurred during the quarter. Excluding these one-time charges, adjusted net loss was $4 million or $0.06 per share compared with a net income of $3.3 million or $0.05 per share in the prior-year period.

In terms of category results, in alignment to flowers.com consumer floral business, during the quarter, revenues were $105.3 million, down 25.3% compared with $141 million in the prior-year period. The lower revenues primarily reflected the continued weakness in the consumer economy, and to a lesser extent, the combined impact of the Easter shift into our fiscal fourth quarter and the Saturday placement of the Valentine holiday.

Gross profit margin for the quarter was 35.4%, down 260 basis points compared with 38% in the prior-year period, primarily reflecting the promotional pricing during the Valentine holiday. As a result of these factors, category contribution margin was $7.8 million compared to $17.2 million in the prior-year period.

We defined category contribution margin at earnings before interest, taxes, depreciation and amortization, and goodwill and intangible impairment, and before the allocation of corporate expenses.

In our Bloomnet client service business, revenues increased 10% to $17 million compared with $15.4 million in the prior-year period. The increase reflects the contribution from the small products business that we acquired last summer.

Gross profit margin was 55.3% compared with 54.6% in the prior-year period. As a result, category contribution was $5.5 million compared with $5.6 million in the prior-year period. It is worth noting that contribution margin in this category remained very strong at 32.7%.

In the gift category -- Home & Children's Gifts segment revenues reflect the overall weakness in the Home Decor segment as well as management's planned downsizing of this business. As a result, revenues for the quarter were down 24.7% to $18.5 million compared with $24.6 million in the prior-year period. Gross margin in this area improved 360 basis points to 42.5% compared with 38.9% in the prior-year period, reflecting continued enhancements in product sourcing and shipping initiatives.

Reflecting management's focus on reducing costs in this segment, operating expenses declined $2.6 million or 22% during the quarter. A combination of strong gross margin and reduced operating expenses resulted in a $1.1 million improvement in category contribution to a loss of $2.1 million, compared with a loss of $3.2 million in the prior-year period.

In the Holiday Food and Gift Basket category, revenues declined 16.2% to $33.3 million compared with $39.7 million in the prior-year period. This reflected the shift of Easter into our fiscal fourth quarter, as well as the continued weakness in consumer demand. Gross margin for the period was 45.6% compared with 45.9% in the year-ago period.

Lower revenues during the quarter impacted operating leverage and combined with a seasonal operating loss of $1.4 million associated with our DesignPac's Gift business, resulting in a category contribution in this segment of $918,000 compared with $3.3 million in the year-ago period.

As I mentioned earlier, in this category, we took a write-down of $76.5 million for impairment of goodwill and intangibles. This reflects the dramatic contraction of valuation multiples and the steep decline in public company market caps that we have seen as a result of the current economic downturn. Combined with recent results in this category, these changes dictated that we take a non-cash impairment charge during the quarter.

It's important to note that during the past several years, we have made a number of acquisitions in the Gourmet Food and Gift Basket business, designed to help us become a leading company in this category. These acquisitions were all made of valuations appropriate to the economic environment at the time of their closing.

Importantly, until the recent economic downturn, we successfully enhanced the growth and profitability of these businesses by leveraging our business platform and, among other initiatives, providing them with e-commerce capabilities they did not previously have. In doing so, we have quickly become one of the leading players in this category, with revenues expected to exceed $200 million during fiscal 2009. We continue to see excellent potential for growth and enhanced profitability in this category going forward.

As I stated earlier, category contribution margin results exclude costs associated with the Company's enterprise shared services platform, which includes among other services, IT, HR, finance, legal, and executive. These functions are operating under a centralized management platform, providing support services to the entire organization.

For fiscal third quarter, corporate expense, including stock-based compensation and the $1.5 million in severance expense, was $13.7 million compared with $12.6 million in the prior-year period.

Turning to our balance sheet. Our cash and investment position at the end of the quarter was $31.7 million, and we had no borrowings outstanding under our revolving credit facility. We do not anticipate any need to use borrowings under the revolving credit line until the first quarter of fiscal '10, when we prepare for the year-end holiday season.

Inventory of $80.5 million reflected lower sales in both our fiscal second quarter and third quarters, as a result of the weak consumer economy, in addition to the inventories for the Easter holiday, which shifted into our fiscal fourth quarter this year. We have thoroughly evaluated our inventory, and we are confident that we will be able to sell into our normal channels without any significant impact on margins in the next several quarters.

Total long-term debt at the end of the third quarter was $118.4 million. As previously announced, subsequent to the end of the quarter on April 14, we entered into an amended credit facility with our syndicated banks. As part of the revised agreement, we pre-paid $20 million, reducing our outstanding portion of our term debt under the facility to a current level of $92.4 million.

The amended agreement also reduces our revolving credit lines from a previous commitment of $165 million to a seasonally adjusted line, ranging from $75 million to $125 million. This reduces our year-round carrying costs for the revolver, as we typically do not draw off on it until August, when we begin to prepare for the year-end holiday season.

We currently have $0 borrowings under the revolver, and we believe that credit lines will be more than sufficient to fund our working capital requirements for the calendar year and holiday season and beyond.

The amended credit facility also provides a certain financial and nonfinancial covenants, including maintenance for certain financial ratios. These details can be found in our recent 8-K filing with the SEC. Under the amended agreement, the consolidated net worth covenants that had been included in our previous agreement, has been eliminated, thereby removing any issues related to the write-down of goodwill and intangibles.

During the current fiscal fourth quarter, we expect to incur charges of approximately $3 million related to the expensing of fees associated with our previous and amended credit facility agreements. Taking charge now rather than amortizing it across the life of the agreement will benefit future quarterly results.

Providing guidance -- as we stated in this morning's press release, we expect economic conditions for consumers will continue to be very challenging throughout the current fiscal fourth quarter. Based on this outlook and combined with our results for the first nine months of fiscal 2009, we anticipate that revenues for the full fiscal year will be down approximately 5% to 10% compared with the prior year. As such, we are continuing to adjust our operating costs appropriate to the lower revenue expectations.

As Jim described earlier, we continue to make excellent progress in our operating expense reduction program that we announced back in January. We expect to complete the implementation of these initiatives by the end of the current fiscal fourth quarter. This will enable us to [meet] the full $50 million in cost benefits in fiscal 2010, which begins July.

Turning to bottom-line results, we expect to be profitable on an EBITDA basis for this current fiscal fourth quarter, and profitable on an EBITDA and EPS basis before any one-time charges for the full fiscal year.

In summary, while we anticipate continued weakness in consumer economy, we are confident in our ability to reduce operating costs and position our Company for stronger results in the future.

I will now turn the call back to Jim.

Well, to sum up, during the fiscal third quarter, our total revenues were $173 million, down 21%. In dollar terms, we reduced our operating expenses by $10 million. We made significant progress in achieving our operational cost reduction target of $50 million through the initiatives I described earlier.

We expect to complete the implementation of these cost reduction programs by the end of the current fiscal fourth quarter and thereby realize the full $50 million savings in our fiscal 2010, which begins in July. And we revised our credit facility, providing flexibility and reducing our term debt by $20 million.

Looking ahead, we believe the consumer environment remains very challenging. With that said, our Company will be profitable for the full year, and we are well-positioned to weather the current economic headwinds, emerge as an even stronger and more profitable business in the years ahead.

To achieve this goal, we continue to be focused on three key strategic priorities that drive our business in good times and in challenging times.

First, know we take care of our customers, providing the right products and services to help our customers express themselves and connecting with the important people in their lives. Here we think we're already best in category, and yet we can be better.

Second, maintain our financial strength and flexibility; aggressively reduce our operating costs and strengthen our balance sheet, and add flexibility to our capital structure.

And third, continue to innovate and invest for the future -- investing in technology, investing in our brands, and investing in new growth areas that position us for enhanced future results. We believe that these strategic priorities are the keys to weathering the current economic environment and emerging a stronger business that is poised for increasing profitability and thereby build long-term shareholder value.

And that concludes our formal remarks, and I'll ask Erica if she will now open the call to your questions. Erica, please restate the instructions for the Q&A.

(Operator Instructions). Kristine Koerber, JMP Securities.

First, so can we -- with the Easter shift, can we assume we'll see a $7 million bump in the fourth quarter?

Yes, Kristine, clearly Easter shift will result in that. Obviously, what we've been seeing is a trend down in overall topline. So you've got to take that into consideration. But there clearly will be a shift from the Easter season of $7 million from Q3 to Q4, yes.

Okay. And then second, can you just comment on Bloomnet and the members? Have you seen any fallout as far as the membership because of the economy?

And then just another question -- is the $50 million of cost-saving you realize most of that in fiscal 2010 -- I mean, if things don't improve, are there more opportunities to bring down the cost structure?

This is Jim. I'll start with the latter part of your question there and then Chris will touch on Bloomnet.

Yes, I think that we've demonstrated the flexibility. We're taking our best guess at what the environment will yield, and we're sizing our costs appropriate to that, giving us some room to increase our profitability and continue to invest for the future.

So if it were worse than we're anticipated it being, and we're certainly not planning on an uptick in this environment, then yes, I think we'd have more room to respond to that even greater challenge in the future. And as regards to Bloomnet, Chris?

Regarding Bloomnet, membership has held up recently well I think because of our good value proposition. And what we're doing to make sure -- I mean, the retail florists clearly are feeling the pain in this economic downturn as well. So we're really focusing on making sure that we are aggressively promoting our florist design product line; do our good/better/best merchandising strategy and thus drive more and more orders into our flowers network.

We're working very closely with them on local marketing campaigns, such as working with them on radio and radio promotions networks opportunities; testing co-op advertising; outdoor advertising with them; email campaigns that we're working on with them with the website hosting capability that we bring to the table.

And also with the renewed efforts behind Bloomnet products, making sure that we're providing good, low-cost, value products for them to help make their business more profitable, especially a recently-launched value-priced glass line at the florist. It's been well received by our florist community.

So I would say in closing on the Bloomnet question --Kristine, this is Jim -- that we identified that there were probably one dozen investment areas that were things that we were pursuing at the beginning of this fiscal year.

As we hit the latter part of the second quarter, we realize that the environment had changed and we fall back on probably seven or eight of those initiatives. And one of them that we frankly added to our investment portfolio is Bloomnet; although it's been around for four years now, clearly, we see a lot of opportunity here to grow it even bigger than we thought. And so it's one of the areas we're investing in.

So Bloomnet has held up well. We continue to expect that it will do even better in the future, and we're investing behind that to make sure it continues to be a big driver of our future success.

Eric Beder, Brean Murray.

Could you talk a little bit about Martha? I know you rolled out the cookies and some other things for the holiday season. How has Martha continued to go now that you're almost at, I guess, about a year of doing it?

Well, Martha overall has been a good learning experience for us. I would tell you that performance to date has been below our expectations. And I think the headwind we ran into there was we introduced a higher-priced product point into an environment that demanded value pricing.

We work closely with the team at MSO to redo our recipes, to provide better value for our customers. They're taking some of the broad -- breadth of their product out and focusing on some real winners there.

Martha is a strong brand with a loyal customer base, and it teaches innovative product design and strong brand affinity. So we need to take better advantage of that.

This is a multi-year deal. We think we're taking the right steps to make it a better deal for both Martha Stewart's Omni Living and for us. And we're very positive about the future. But year-to-date, it's not been what we expected but we think we've taken aggressive steps to make sure it is for the years going ahead.

Okay. In terms of some of that DesignPac, how is the integration going with DesignPac for your other units in terms of gifting? And what are you seeing in terms of Christmas orders and orders for the holiday season for DesignPac?

Well, Eric, DesignPac continues to do well. We disclosed the seasonal loss that we had, but that was obviously expected. But year-over-year revenues and profits are up. We continue to work on new integration plans with our other businesses.

Eric, this is Bill. The integration is doing well. I think we're integrating it nicely into our product development processes across the food category, to do more and more for the flowers category as well. And we're looking forward to, as we mentioned early on, that really being the product development engine behind 1-800-BASKETS.

So, the first year, integration is on pace. Product is ahead of pace. They grew nicely on the topline and the bottom-line during this year. And the integration, in terms of projecting its merchandising capability across the other brand. So all in all, I'd say it's an A on our report card.

Okay, I know I might have missed this and I apologize ahead of time, what are you doing in terms of flowers and herbs, in terms you've been trying to stabilize the business. What's the thought process going forward in this kind of economy downturn?

In terms of what we call our Madison Brands, which includes (inaudible), I'd say to date we've made significant progress in implementing our plans to downsize this business -- reducing headcount, cutting back on circulation, redeploying marketing spends in areas that we think will provide better returns. I think you saw that it's improved results in this third quarter.

As we said in the past, we are proactively exploring all of our options for this category and we are working with the appropriate internal and external resources in that process.

(Operator Instructions). Anthony Lebiedzinski, Sidoti and Company.

I had a couple of questions here. Could you guys maybe try to quantify the impact of Valentine's Day shifting to a Saturday? How much of a headwind was that in the quarter?

Bill, I think what you said -- maybe you'd have more color here -- what you said in response to Anthony's question here is that the combined Easter shift and the Saturday-day placement was about 25% of the change?

Yes, that's correct. We think it's about 10% [of our] $5 million of the impact related to the Valentines placement on Saturday.

Got you. And also back in January, you had lowered your guidance for revenue, you were keeping the revenue guidance here unchanged. However, in January, you expect to be profitable in the second half of fiscal '09. Looks like that's no longer the case here. What are the reasons for that?

The major impact on that is really gross margins. It continues to be a very promotional environment that we are operating in. And as you saw in the consumer floral business, margins were down 260 basis points due specifically to that.

As we're moving into the fourth quarter of this year and to Mother's Day, we've introduced a number of value-priced products to help with consumer demand. But we do feel that there still will be pressure on gross margin for the next several quarters.

And really, that's an outgrowth of our strategy, as Jim mentioned earlier -- knowing and taking care of our customers; making sure we're giving them the right value price point that they need in this economic environment.

On a go-forward basis, I think you'll see that as we move into next year, we'll see gross margins start to come back.

Okay. And as far as the cost-cutting initiatives, it sounds like you could very well do more than the $50 million in cost reductions. Is that fair to assume?

Well, what we said was that we're confident that we'll achieve that $50 million target. And in response to a question that Kristine asked earlier, I said that if the environment would turn worse than forecast are currently, that yes, we still think we have the flexibility to do it.

But rest assured, as we finish this process, if we find other opportunities to lower our cost bases, even with the forecast that we are assuming for the next fiscal year, we'll take every opportunity to do that.

And then where specifically do you think you would be able to cut costs further?

Pretty much Investor Relations.

And Anthony, as we look at our cost-cutting initiatives, they really cut across four key areas -- equal weighting it, just about.

It's the headcount reduction that we announced earlier; it's marketing spend and the reallocation of that marketing spend appropriately; cutting back on catalog prospecting, which is beginning to return right now, especially in our Home and Children's category, which we're intentionally cutting back on customer acquisition efforts. The downsizing of that category overall.

And then the other area is really to -- it's a reengineering of the operations throughout the Company, including the virtualization of our customer service platform, as we announced closing this year of two brick and mortar call center facilities; the revamping of our IT infrastructure; we're continuing to gain improvements there. And then just our overall -- what we call -- performance enhancement program, which drives efficiency, operation efficiency improvements throughout every single process of the Company.

For example, Anthony, on the service center platform, we anticipated this year closing one of those facilities. We did that. It was out West. And it went so well, it gave the team confidence that we could go to another service center and eliminate all that brick and mortar expense related to that; because we saw in each of those cases that the vast majority in that -- and high 90s from a percentage point of view, of our really high-scale, qualified and tenured service people stayed with us, because they opted to work in a home-based environment for our home region network.

So that gave us the confidence -- that wasn't part of the original plan, but we were able to take that second center out. So there's lots of things from a headcount performance basis. And we're also exploring other growth areas that these cuts have highlighted for us as opportunities, particularly within Bloomnet as we go forward, that we can really have other growth initiatives that we can initiate the next fiscal year.

(Operator Instructions) Jennifer Watson, Goldman Sachs.

It's [Fred calling in] for Jennifer Watson. Can you please just talk a little bit about the pricing trends and ROI changes you have seen across the media, namely digital and how this is impacting your marketing budget allocation going forward?

Well, Chris will have much more color on this than I will. I think that the indications that you'd see are sort of barometers of what's going on in the e-Marketing environment is that the category has suffered.

When you see keyword search traffic, overall, I'd say that the category has suffered from a traffic point of view, and then what we do is we allocate our marketing resources to keep it within the percentages that we've allocated for acquisition customers through those vehicles. So that's why it's even been able to reduce marketing and still maintain our market share.

And I'll tell you it's a strange and challenging dynamic, right, the media marketplace right now, whether it be in the digital marketplace or in the off-line; whereas we can get more impressions for our dollar today then we could a year ago. So that's good news. But at the same time, with consumer confidence and consumer demand being down, you're getting less return on those impressions. So there's a counterbalance pull on each side there.

Great, thank you. And then just a follow-up. Could you talk a little bit about your decision to partner with various supermarket chains? What are the benefits and do you plan to partner with other e-commerce sites in the future?

Well, as we look at the supermarket chains, I mean where that's happened is really within the Bloomnet network. And our decision there and our focus there, it's working nicely, is to make sure that these supermarkets are gathering orders to be delivered into the flower community. We want to make sure our Bloomnet partners are getting their fair share of orders. So we play in that supermarket area with Bloomnet to the benefit of our retail florists.

Great, thank you.

It appears there are no further questions at this time. Mr. McCann, I'd like to turn the conference back over to you for any additional or closing remarks.

Thank you, Erica. Thank you for all your questions and your interest today. If you have any additional questions, please contact us.

And in closing, I'd like to offer a reminder -- the Mother's Day holiday is just around the corner and there are millions of mom's out there that deserve your recognition and appreciation. To help out with this, 1-800-FLOWERS.COM has launched a Spot a Mom movement, including our Spotlight a Mom sweepstakes.

Numerous blogs, as well as Facebook and Twitter entries help make sure that no mom gets left behind. I encourage you to visit spotamom.com and spotlightamom.com to show your appreciation to all the mom's in your life. Thank you.

That concludes today's conference. We thank you for your participation.