FTD 4th Quarter Numbers Out

CHR

CHR

Design matters
Nov 28, 2002
8,951
8,442
113
Anaheim
www.avantegardens.com
State / Prov
CA
Just Released: UNTD (United Online, FTD Parent Company) 4th Quarter

From the report:
“The FTD segment had a particularly strong quarter, highlighted by an impressive 9% year-over-year increase in consumer orders that served as the catalyst for the segment’s return to year-over-year revenue growth. Our continuing efforts to promote the florist-designed arrangements among our product offerings and highlight the quality of FTD florists resulted in an impressive 25% year-over-year increase in consumer orders fulfilled by our network of FTD florists based in the U.S. and Canada in the fourth quarter.”
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No doubt, a big chunk of the increased volume is from the USAA discount deal.

Did FTD members really see 25% increases Oct - Dec in incoming order volume?

There's also increased income from delayed response fees and new delivery confirmation fees.

The conference call starts at 5 PM Eastern. You can listen in here. (I'm on my way out the door for a client meeting but hope to catch it later.)
 
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I highly doubt the 25%... but I do know FTD is a master at fudging numbers.
 
There are some of us that are old enough to remember the days when your FTD statement included monthly statistics for the wire orders in/out of the city you were located in and your shop's percentage of that total.

Back then they didn't lie. Back then they belonged to us.
 
Excerpts of interest from the conference call:
Now, let’s talk about FTD’s investment performance at Valentine’s Day and it is one of the reasons why our earnings call is happening today. We wanted to make sure that we waited through the Valentine Day’s period so we could give you an update.

As you know, Valentine’s Day fell on a Sunday this year for the first time in eleven years. The combination of a Sunday Valentine’s Day and (inaudible) and the success that we have had in the US made our expectations with the company and probably with an industry more tested than we would normally expect it. However, I am very pleased to announce that in spite of the Sunday Valentine’s Day and the crippling weather across the US FTD delivered outstanding results through Valentine’s Day 2010.

Specifically, for the first 14 days of February 2010, our FTD domestic order revenue was up an impressive 7.9% versus 2009. And what’s truly remarkable is under the face of a huge competitive pressure with PVS (ph) and some other companies announcing free shipment, no service fees and low price points.

FTD’s paid focus on our enhanced brand imagery and best of class arrangement, strategy in our television advertising and in our website and we delivered in inventories an average order value of 1.9% domestically and 1.7% globally versus 2009 during the first 14 days of February. That is really remarkable that we could increase the average order value year over year in this kind of a competitive market and in this economy at arguably the biggest holiday of the year.

In addition, as I said a few minutes ago that we are very proud of the fact that during the fourth quarter of 2009, the number of FTD US consumer orders that were sent through our member florists network was up 25% year over year. That’s impressive. What’s even more impressive is the fact that during Valentine’s Day order period from February 1st to February 14, 2010 the number of US consumer orders sent through our FTD floral network was up 30% versus Valentine’s Day 2009, a year ago.

This happened despite the fact that Valentine’s Day was on a Sunday this year and half the country was crippled by all that bad weather. So this remarkable year over year performance by the FTD brand in terms of increasing overall orders, increasing the average order value and sending dramatically more consumer orders from FTD.com in to our all-important floral network that is the ultimate testament to the new strategy we created at FTD since we acquired the company 18 months ago.
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New Collection from Better Homes & Gardens -
I want to take another moment to talk about an important new publisher, who will be debuting later this month and will be available to our network of FTD florists. Announcing a new exquisite collection of branded products with one of the most respected brand names in the home and garden category, Better Homes and Better Gardens magazine. The new better home and gardens collection by FTD is being developed in partnership with this popular magazine that boasts a monthly readership of 39 million home and garden enthusiasts.

In fact, this magazine has a reach of one in every three women that have purchased flowers in the last 12 months.

The better homes and gardens collection by FTD is going to feature an exclusive line of elegant arrangements that further broadens the selection of what we believe are high-quality products available at FTD.
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First of all, I would like to discuss what we call our post-transaction advertising revenues. Last November, we disclosed in an 8-K filing that we were considering terminating and modifying our arrangements relating to post-transaction marketing in order of the US Senate Committee review of business practices of certain industry participants.

In late January 2010, we terminated all of our domestic post-transaction marketing contract. During 2009, these contracts generated approximately $26.5 million of which $20.8 million was in Classmates Media and segment revenues and an additional $5.7 million in FTD segments revenues domestically. These revenues were almost all profits and as a result our revenues and profitability in 2010 would be negatively impacted by the termination of these contracts a few weeks ago.

While we continue to believe that our practice is legally appropriate, we terminated these contracts for a number of reasons including disclosure of industry practices that came to light as a result of the Senate review and changes in practices by industry participants. So while we do not intend to offer the same products or services as we did in 2009, we do intend to offer consumers complementary services and products at the end of our registration or sale processes.
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Emphasis mine.
$26M is a little over 20% of UNTDs income for 2009.
Second, we believe that FTD will continue the trend of growing its top line in the first quarter and throughout 2010. However, in addition to the post-transaction revenue loss discussed above that will hurt FTD as well, Q1 FTD adjusted OIBDA results were also adversely impacted by the initial television spend that we did for Valentine’s Day which was absolutely the right thing to do.

One-time costs associated with certain internal cost savings initiatives and a number of other items, all these items collectively are likely to cause adjusted OIBDA for the FTD segment in Q1 2010 to be below what we achieved in Q1 of ’09 resulting in adjusted OIBDA margin to be 11% to 12% range for Q1 2010.
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Again, emphasis mine. Were the 'cost savings' the Philippines call center move?

And then did you say that you had a $2.3 million reserve for a pending legal matter, is that related to post-transaction advertising as well, or is that something separate?

Mark R. Goldston

I am sorry. Can you tell it again?

Mike Crawford - B. Riley & Company

For the advertising.

Mark R. Goldston

I think it was $2.2 million, not $2.3 million.

Erik Randerson

Yeah. That’s correct.

Mark R. Goldston

And we are not ready to discuss what that matter is.
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What's the legal matter? My guess it's a Classmates.com class action suit.

Mark, I''m trying to reconcile a couple of things you said. So I know this is not guidance, the $220 million you''re talking about is internal budget number, but if I look at the number you did this year, about $248 million, and I just subtract from that the referral business of $27 million, I basically get there. Now, I know you''re hoping to make up some of it by selling other products. If I look at the -- so the components of that, Classmates, communication and the FTD business, it looks like the Classmates and communications businesses may both show year-on-year declines in cash flow. If that''s the case, is whether you make the $220 based on FTD mostly?
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Good question.
The ISP business is a declining business so we are going to try to grow FTD. We have shown through the first month-and-a-half and year, as I pointed out we had a great Valentine’s Day. FTD did a great job but we are going to have an investment spend in that business to grow because we are in a category where a lot of people do ridiculous, irrational things in terms of how they spend their money and what they offer consumers and we are not going to succumb to that but we got to show up a fight and to do that we got to spend money.

A lot of people said in this economy, we didn’t think anybody could grow and it certainly looks my public competitors, without going into names, their numbers are out there, and look what they put out and look what the FTD team put out, net-net and even if it is a bad economy we are managing to show increases in our business so our feeling is let’s keep strong logs in the fire while we got the fire rolling.
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Without going into names? LOL Anyway, I kind of agree with him that 1-800 is discounting itself into a mess - but FTD is giving USAA members 25% off...

I know this post is for the real geeks. Lots of info to glean from the conference call transcript.
 
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Hmmm... Goldston says they are up for 2010 to date... but many florists are bemoaning the fact that incomings are down...

Seems odd to me.
 
steve said:
I don't buy the incoming or out goings at all unless their strength is somewere else in the country it certainly is not the northeast
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Top 50 markets is where the bulk is as far as I can tell.
 
Bigted said:
It always disappoints me that there is so little interest here about the results of the WS. What they do has a serious impact on all of us--EVEN IF YOU ARE WIRE SERVICE FREE. It impacts the industry.
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That's true Ted...

Also true, is that most folks are tired of hearing other bemoan the wire services. Simple truth is, nothing regarding wire services will ever change for the better for florists. Another truth is, that in the next couple years, wire services will be irrelevant to the long term profitability of retail florists.

As many continue to give away their *same day delivery* function that ONLY florists have, they continue to make the wires look good, and blur the lines as to whom is whom, and consumers in many cases no longer disassociate the wire service from the local shop. That in itself in perhaps the biggest issue with being a member, when you market their services you are marketing them and not you. Too few see the forest for the trees, until the tree falls on them anyway.
 
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BOSS said:
That's true Ted...

Also true, is that most folks are tired of hearing other bemoan the wire services. Simple truth is, nothing regarding wire services will ever change for the better for florists. Another truth is, that in the next couple years, wire services will be irrelevant to the long term profitability of retail florists.

As many continue to give away their *same day delivery* function that ONLY florists have, they continue to make the wires look good, and blur the lines as to whom is whom, and consumers in many cases no longer disassociate the wire service from the local shop. That in itself in perhaps the biggest issue with being a member, when you market their services you are marketing them and not you. Too few see the forest for the trees, until the tree falls on them anyway.
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Careful, we have Bloomex here in Canada which is 1-800 and has warehouses in every major city. We just have to focus on what we can control, our business, rather than worrying about what the national brands are doing. There will always be fillers in your town and mine!
 
duanermb said:
You could be right, but not in our lifetime.
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I do not believe that either.

Perhaps for the top 50-100 markets. But we know the membership numbers are dropping, we know florists are getting wise to the scam, and we know they are getting fed up. It's only a matter of time...

Oh and I plan to live a long long time... I'll see it happen...
 
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Just as many florist are at the cross roads I do believe the wire services are approaching the same cross roads and with the recession hanging on there will be some fall out in those wire services. For us its the battle of the local customer we need to win that and we need to not allow the drop ship to get deeper market penatration. Sugaring season is starting here and I am headed off to camp to start boiling tonight so that will give me something to ponder while boiling
 
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The only way to be a profitable "filler fool" is the way that first one, and now two, are doing in my backyard. They closed their shops and kept their WS affiliations. Now they just don't have all of that over-head anymore, and I can surely bet that there will be many more of those popping up.

Clearly with all of the different quotes Cathy inserted from FTD is that these are business people, not floral people. As a result, I would say the road is going to get rockier for us. They plan on throwing a whole bunch more money out there to snag business, they are going to war with their competition.

The problem I see here is that they don't seem to factor in the actual florists. I would LOVE to see these WS/OG giants going head to head on who has THE BEST FILLING FLORISTS! Wouldn't that make so much more sense? The reality is that these companies DO NOT SELL FLOWERS, they just found another way to make money, and with shareholders, they have to continue to find new ways to bring their earnings up. It has ZERO to do with flowers.
 
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anytimeflowers said:
The only way to be a profitable "filler fool" is the way that first one, and now two, are doing in my backyard. They closed their shops and kept their WS affiliations. Now they just don't have all of that over-head anymore, and I can surely bet that there will be many more of those popping up.
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That's what I've been trying to say! There will always be fillers, just maybe not retail florists doing the job. So, forget that business, unless you are a $1M plus shop and focus on providing the services that a Retail Shop can provide and they can't. It is NOT same day delivery that sets us apart, it's our ability to serve, serve, serve and provide true VALUE, let the warehouses, wholesale florists and grocery stores take care of cheap. Focus on VALUE on all fronts and stay alive.

We shouldn't fear the low prices and massive discounting in the market right now. They are here to stay. though, we SHOULD react accordingly.

http://en.wikipedia.org/wiki/Customer_value_proposition

Our number 1 job is to make sure that everyone knows the value of our product and services. Many consumers will pay to have it done right and done right the first time. Be that go to shop.

Of note: Interesting that there is a link to the market share definition in that Wiki article! :)
 
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duanermb said:
That's what I've been trying to say! There will always be fillers, just maybe not retail florists doing the job. So, forget that business, unless you are a $1M plus shop and focus on providing the services that a Retail Shop can provide and they can't. It is NOT same day delivery that sets us apart, it's our ability to serve, serve, serve and provide true VALUE, let the warehouses, wholesale florists and grocery stores take care of cheap. Focus on VALUE on all fronts and stay alive.

We shouldn't fear the low prices and massive discounting in the market right now. They are here to stay. though, we SHOULD react accordingly.

http://en.wikipedia.org/wiki/Customer_value_proposition

Our number 1 job is to make sure that everyone knows the value of our product and services. Many consumers will pay to have it done right and done right the first time. Be that go to shop.

Of note: Interesting that there is a link to the market share definition in that Wiki article! :)
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That's what I was trying to say, too! (well, not the link, thanks for that.) I also want to thank you from a different thread that you posted the apps link. Mine brought up a whole page of reviews. In reading them, I totally got a whole new understanding of why my customers are my customers.
 
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