FTD Q2 numbers out

[CHR]

Here's the info on United Online's 2nd Quarter.

Lot's of attempts to spin a positive story about the quarter, like

“Highlights in our FTD segment include a 13% year-over-year increase in U.S. consumer orders during the 14 days leading up to Mother’s Day and an impressive 27% year-over-year increase in consumer orders fulfilled by our domestic network of FTD florists during the quarter. Our commitment to aggressively promote the florist-designed arrangements among our product offerings underscores our continuing efforts to support FTD florists and further increase the value of membership in the FTD network.”

but the bottom line is down for FTD by more than 40% for the quarter.

Product sales were up, but IMO the increase was primarily due to the influx of orders from their USAA deal - and those orders are "25% off retail price." Florist services income was down.

I'm listening to the conference call and most of the discussion is revolving around Classmates.com and its plan for the future. They have been seriously hurt by free social sites like Facebook.

From the conference call: Goldston said the loss of post-transactional marketing really hurt FTDs bottom line. He also blames 'irrational' competitors for basically selling flowers too cheap. Mentioned the USAA deal to bring more florist-delivered orders to member florists but said they weren't particularly profitable for the company. They are actively looking for more deals/partnerships similar to USAA.

"We told our florist we were behind them" so they promoted less direct-ship flowers. "We could kick up the volume on box ship any time we want."

One questioner asked how long FTD would be promoting florist-delivered flowers since the margins were less favorable vs drop-ship. Goldston affirmed he felt the brand was based on florists and didn't see the emphasis changing.

He flat out told one of the callers they made the USAA deal to keep member florists happy with incomings since the income/profits from florist fees more than offsets the "marketing cost" of the 25% discount per order.

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Fascinating call....

What do you think about the numbers? About FTD's assertion that they are sending significantly more orders to florist? Would love to hear.

 

[anytimeflowers]

Seems like FTD is between a rock and a hard place. If they change their advertising to aggresively marketing drop-ship, they realize that they will lose the consumer trust for the brand and probably lose out to Pro-flor. On the other hand, they have the numbers in services proving that they have lost member florists due to whatever reasons.

Because of the wash, up 6% for product and down 6% for services, it makes sense for them to continue marketing florist delivered. If they would get their heads out of their butts, they might get somewhere in marketing that segment and florists who are still feeding off of that particular bottle might see more "incremental" income.

But....as soon as you look at those numbers, it makes much more sense at first glance to just sign up more dogs.

It will be interesting to see what they pull out of their hats next.

 

[Eric S]

He also blames 'irrational' competitors for basically selling flowers too cheap.

Playing the worlds smallest violin.

 

[BOSS]

Was it not FTD that started the discount game in the first place...??

Now it's coming back to bite them in the assets.... that's rich.... to me anyway...

Their days are numbered as I have said for a while now, it's just that they and a few thousand florists refuse to acknowledge their uselessness.

 

[bootcampguy]

I've been preaching in the bootcmaps that FTD is on the cliff's edge, they have to change their business model or go "down". They in my opnion are going to have to raise "fees" (alot) to cover the offset.......and yes Boss, they we're the first to discount. Once you discount, then those who play that game want more. It's like an addiction (floral crack). We are not in a recession, we are in a "changing economy". In this model, the Mom and Pop's will begin to "build customer bases" and the others (all of them) will see their base slipping away. For the next 5 years or so, people are getting back to the basics in life (money) and relationships. That means Us (retail florists) are in the driver's seat to build and hospefully not get knocked out of the seat again. The big boys "doomed" without huge increases...............................we're quitely stocking our ponds.......

 

[anytimeflowers]

I love the "floral crack"......well.......crack you made, Rick. That really does put into perspective what the wire services have done, intentionally or otherwise. The sad fact is that the florists who depend on this type of "income" always need more orders to feed the need, in this case, just to have the same high, (sales). Just like an addict, it will slowly kill them.

No Duane, I'm not beating up on anybody, just stating facts. These are small shops I'm talking about. We have Bachman's in Minnesota. Still a family "shop" but a gigantic name, well known throughout the state. They are very much FTD, although they also fill only for Bloomnet and quite possibly TF. But they send, I believe, only through FTD. I don't believe that they have gone the way of og. I think FTD and the others definately work for them, but they can handle a HUGE volume. They actually have a department that just does permanents, they probably employ 60 or more designers.

These are the types of "flower shops" that can profit from wire service. The rest are just the minions who pay the "services" (fees) that the wire services need to keep their numbers up. They throw enough bones to keep the florists from barking too loud and waking up the neighbors and that's it. ( Many on this forum would probably be considered the barking dogs, and the florists who cannot see what they are doing to themselves would be the neighbors who we are discouraged from "disturbing their slumber".)

jmo

 

[BOSS]

BOSS's Quote of the day!

I love the "floral crack"......well.......crack you made, Rick. That really does put into perspective what the wire services have done, intentionally or otherwise. The sad fact is that the florists who depend on this type of "income" always need more orders to feed the need, in this case, just to have the same high, (sales). Just like an addict, it will slowly kill them.

Was going to quote the whole post, but that would be more redundant than even just this part is...

 

[anytimeflowers]

It may be redundant, but seems to need saying over and over again in hopes that it will sink in where it needs to.

And since I'm being redundant, I'll go all the way.

He flat out told one of the callers they made the USAA deal to keep member florists happy with incomings since the income/profits from florist fees more than offsets the "marketing cost" of the 25% discount per order.