FTD Q2 Financials

[CHR]

The numbers are out.

You can tune in at 10AM Eastern, 7AM Pacific to listen to the executive team spin the numbers and explain how they intend to grow the company in the near term.

A few numbers of note:

second quarter fiscal year 2006 consolidated revenues grew approximately 1% to $109.2 million, compared to revenues of $108.3 million for the same period of fiscal year 2005.

Specialty gift orders, which include all orders delivered via common carrier, comprised 37.0% of total orders for the second quarter of the current fiscal year compared to 30.4% of total orders for the same period of fiscal year 2005.

Average order value decreased slightly to $59.33 in the second quarter of fiscal year 2006 from $60.31 in the same period of the prior fiscal year, in line with management expectations.

Emphasis mine.

Provision for doubtful accounts - 1,769
Provision for obsolete inventory - 1,197

The numbers are expressed in Millions.

Advertising and selling (expenses):
Florist segment - 14,055(2005) 14,040(2004)
Consumer segment - 7,835(2005 7,441(2004)
---------- ---------- ---------- ----------
Total advertising and selling - 21,890(2005) 21,481(2004)

Will try and take a closer look later and hope to catch the conference call.

Bottom line right now - just about the same amount of sales to consumers with less orders being transferred to florists for fulfillment.

 

[CHR]

A few notes from the conference call...

FTD showed a slight decrease in florist side revenues and in part cited a decline in 'directory income.' The explanation was that fewer florists were buying ads in the F2F directory. Part of the exchange implied that the lowest volume 20-25% of florist members were cutting back on spending and Soenen said he's watching that group carefully.

A few follow-up questions asked about the percentage of grocery store members to florists. Soenen decline to answer for competitive reasons. One questioner asked if grocery stores bought directory ads and brought in the kinds of fees at the level of florists. Soenen danced and said some chains do and some don't but that the level of volume the stores brought the network was positive.

FTD intends to grow its affinity marketing programs so be on the lookout for every club, school, company or other type of group to be approached with a deal.

The elephant in the tent as far as the 'florist side' goes was 1800. Several questioners alluded to changes in the florist sector. Soenen finally mentioned Bloomnet late in the Q&A segment. He said FTD had not experienced a decrease in membership and they were aggressively competing in the traditional WS area.

He mentioned both TF's and Hallmark's participation in Christmas holiday PPC's as the possible reason why the cost sky-rocketed in December.

They were very pleased with the growth in direct ship (and improved margins) and will continue to focus on that area. One questioner asked if decreased volume to filling florists would lead to dissatisfaction in the florist side of FTD's biz. Soenen said the effect would be negligible because the decrease was slight when spread over 20,000 shops.

It seemed more questions were focussed on the florist side than any other aspect of the company today.

 

[BOSS]

One questioner asked if decreased volume to filling florists would lead to dissatisfaction in the florist side of FTD's biz. Soenen said the effect would be negligible because the decrease was slight when spread over 20,000 shops.

Read: Of the 20,000 only a handfull of FlowerChat Radicals will even notice, and that we will continue to sign up groceries to edge out the drop in florists.

It seemed more questions were focussed on the florist side than any other aspect of the company today.

I would atribute this to the spread of information available on the web, in the RealFlorist Blog, Floristdetective, FlowerChat and various other venues where we have been successful in getting attention, and from florists spreading the word locally.

 

[sfox]

The real question is why?

The most interesting part of this is that so much attention was focused on the florist side of the equation. The real question is why? And another interesting thing to know is if it is possible to find out who these people that were asking the florist questions were?

If the people asking the questions about FTD and it's florists were stock analysts, it could finally mean that Wall Street understands a little about the flower business and understands that it is the florists footing the bills and if they leave FTD is in a heap of trouble.

And FTD.COM is looked at as just another internet company and to show a 1% increase in sales is like the kiss of death in the minds of Wall Street, especially when the reports are showing big gains being made by other internet companies. Big Mike should be feeling a lot of heat at his heals because it seems that outsiders are finally seeing through the bull that FTD has been slinging and are starting to see cracks in that vaunted BRAND.

Could it be that the Mercury is just Gold Plated and he is starting to peel?

 

[CHR]

All the questioners were stock analysts and they may indeed be 'getting it'. I can't recall all the firms but the first question came from Goldman Sachs.

Wow, Wall Street didn't like what it heard. Shares dropped 5%. I don't know how much or how long their stock buyback program can help prop up the share price.

Kinda warmed my heart to hear a few questions about the amount of grocery stores as a percentage of 'florist members'. Seems even the analysts know that supermarkets aren't good for FTD's image.

 

[mlou]

Volume today: 232,900
Avg Vol (3m): 70,322.2

Looks like lots shares are selling and investors are getting out...

 

[Joe Mioux]

Kinda warmed my heart to hear a few questions about the amount of grocery stores as a percentage of 'florist members'. Seems even the analysts know that supermarkets aren't good for FTD's image.

I wouldn't put too much stock in Stock Analysts caring if a grocery store has a flower department and that it is an FTD member.

I am just on the outskirts of a large regional grocery chain who is also one of FTD's largest WS senders. They run a very good ship, with design center and good training center. It is very hard to compete with something like that.

Now on the flip side.... If you mean that these analysts are better understanding our industry, then yes it does warm something in me.

Joe

 

[Kristine]

joe

not every grocery store is as you describe.

here in our area, we see a 1 door cooler crammed with stuff next to the veggie section.

 

[flowerknife+us]

Lets see if I have this right?

25% of the members are unhappy.

The members are realizing the directory is a waste of money.

Supermarkets send more outgoing orders.

Supermarkets pat less than florists.

Management doesn't give a rats#ss if the members don't like the supers as members.

7% growth in converson from flowers.

Management manipulates the distribution so the members can't see a disernable trend.

The membership isn't bright enough to figure it out.


GEE, Wonder what would happen if distribution problems started effecting the other 63%. All at once.

I am a Shark and smell blood in the water. I's just too much for me to eat all by myself.

 

[Joe Mioux]

not every grocery store is as you describe.

here in our area, we see a 1 door cooler crammed with stuff next to the veggie section.

My point is, small, medium and large grocery chains have more resources and money to properly train a large and fund (i.e. pay and provide better fringe benefits) a floral department. If they desire!

In addition, they can run a floral department as a loss leader while we as traditional florists can't.

Joe

 

[CHR]

War of the Roses

War of the Roses

Analyst Eric Beder of Brean Murray Carret expects Bloomnet will undercut FTD's pricing by as much as 30% in 2006, giving more florists a reason to jump from FTD's 20,000-plus member network

This should put pressure on FTD to drop, not raise, florist service prices in the long term.

The nonfloral area is surging: Nearly 70% of 1-800-Flowers revenues for the fiscal second quarter, ended in January, came from nonfloral specialty gifts.

Emphasis mine. Expect that percentage to increase for not only them but for FTD, too. Does anyone doubt that TF will expand into this area? (I have no proof but the trend makes it look like a gimme.)

Downers Grove (Ill.)-based FTD is burdened by a long-term debt that now totals about $233.1 million, vs. a paltry $2.3 million debt for 1-800-Flowers.

FTD's executive team has to hope that Green and Partners remembers the debt they saddled FTD with when they conduct performance reviews.

Soenen said FTD pulled back on such ads during the holidays because competitors were bidding up costs. Analyst Beder says 1-800-Flowers managed to handle the headache more effectively. "It's hard to understand why FTD had these problems and no one else did," says Beder.

Answer - "FTD is burdened by a long-term debt that now totals about $233.1 million, vs. a paltry $2.3 million debt for 1-800-Flowers."

Look like this reporter really did his homework.

 

[Tom Carlson]

Wall Street Knows

All the questioners were stock analysts and they may indeed be 'getting it'. I can't recall all the firms but the first question came from Goldman Sachs.

Wow, Wall Street didn't like what it heard. Shares dropped 5%. I don't know how much or how long their stock buyback program can help prop up the share price.

Kinda warmed my heart to hear a few questions about the amount of grocery stores as a percentage of 'florist members'. Seems even the analysts know that supermarkets aren't good for FTD's image.

Capital management firms have been asking questions and they are getting an ear full.

 

[BOSS]

"FTD is burdened by a long-term debt that now totals about $233.1 million, vs. a paltry $2.3 million debt for 1-800-Flowers."

Something I don;t think even Green can cure at this point without a huge cash influx out of pocket.

I do not see much light at the end of the FTD tunnel with regard to them competing with 800flowers. Heck 800 could have bought FTD if they wished, McCann is too smart for that, he's simply going to take away market share, florists, orders and let FTD dry up and blow away in bankruptcy...

Makes one wonder, why Green bought in the first place... sure is obvious, they never talked to any florists....

 

[sfox]

Why talk to florists when

Boss, why would Green talk to florists when they have Mike Soenon. Big Mike knows everthing there is to know about the floral business, and if you don't think so just ask him.

Can't you see how well his plans are coming together and what a positive direction FTD is moving in?

Boss, this is a funny industry. In it we have "florists without a clue" and at the same time "leaders without a clue" I think that qualifies us for that old saying....the blind leading the blind

 

[BOSS]

sfox, I concur... (you weren't saying "I'm" blind were ya?)...

I do see that Mike really has no clue, unless his model is to remove the florists from FTD...which appears to be the case....and partner with krogers and Walmart...then he is right on track...

More to follow...'bout time for another "Commentary on the Industry" from me...

 

[BOSS]

Boss, this is a funny industry. In it we have "florists without a clue" and at the same time "leaders without a clue" I think that qualifies us for that old saying....the blind leading the blind

I had a dream last night, I won the $360MM PowerBall....Hired Bill, Doug and a few of "The Credibles" and started a whole new gig...oh yea, I hired sfox, Hal, CHR and all the members of the FlowerChat Community too

 

[flowerknife+us]

I had a dream last night, I won the $360MM PowerBall....Hired Bill, Doug and a few of "The Credibles" and started a whole new gig...oh yea, I hired sfox, Hal, CHR and all the members of the FlowerChat Community too

So we would join the Fat Cat Parade??? Sounds good to me. Big money, Big Trips, Big Vacations and best of all, Big Expence Accounts!

Some how I see a future where falling trees and ripped up roofs come to play instead. Giving new meaning to the term "Bucket shop" and burning the day time oil.

 

[BOSS]

So we would join the Fat Cat Parade??? Sounds good to me. Big money, Big Trips, Big Vacations and best of all, Big Expence Accounts!

Now K... I did not mention any of those....

More over, it will be RUN BY REAL FLORISTS!

BTW... I have you on my "short list" for the Board of Directors!