Ftd Q2

[CHR]

The numbers are out.

The Domestic Consumer Segment achieved revenue of $64.6 million in the second quarter of fiscal year 2008, compared to revenue of $69.5 million in the same period of fiscal year 2007, representing a 7.0% decline.

Domestic Consumer orders during the second quarter of fiscal year 2008 totaled 998,000 compared to 1,136,000 orders in the same period of fiscal year 2007.

10% drop in orders. Wow. But, profits were up in that segment and my guess is it's due to more higher margin drop-ship products and increased service fees & shipping fees.

The Domestic Florist Segment achieved revenue of $44.6 million in the second quarter of fiscal year 2008, consistent with the $44.6 million of revenue achieved in the same period of the prior fiscal year. Second quarter fiscal year 2008 operating income for the Domestic Florist Segment was $14.1 million, or 31.5% of Domestic Florist Segment revenue, compared to $14.4 million in the prior year quarter, or 32.3% of Domestic Florist Segment revenue. This slight decline is related to a change in product mix during the quarter.

The bright spot is Interflora:

For the second quarter of fiscal year 2008, the International Segment, primarily comprised of the Interflora U.K. business, achieved revenue of $46.3 million compared to revenue of $37.5 million in the second quarter of the prior fiscal year, representing a 23.4% increase. This increase includes $3.3 million, or 7.8%, related to favorable foreign currency movement between the U.S. dollar and the pound sterling.

I'm pressed for time this morning so other comments will have to wait. Conference call at 11 AM Eastern.

 

[felicityflowers]

Every single time I hear him speak I want to poke my eyes out with a flaming stick. (Yeah, I'm a drama queen )

"There are less florists because of more competition."
"...florists are struggling"


Uhm, DUH...you are competing AGAINST your member florists so of course there is more competition.

 

[Bigted]

Not surprised about the results. Stock's up big today. Did something change since last week when the analyst said the model is broken?

Interflora does look like a bright spot for them.

 

[MANORVILLE]

Drumroll.......................

Every single time I hear him speak I want to poke my eyes out with a flaming stick. (Yeah, I'm a drama queen )

"There are less florists because of more competition."
"...florists are struggling"


Uhm, DUH...you are competing AGAINST your member florists so of course there is more competition.

Go Heather Go Heather Go Heather Go Heather

 

[felicityflowers]

Go Heather Go Heather Go Heather Go Heather


[/SIZE]

Lol, thanks, I think. Hopefully not about the poking my eyes out part :tongue:.

In all seriousness, I am just sick and tired of hearing from these companies that take business AWAY from their member florists (cough ftd-1800 cough) talking about struggling florists and hits to their bottom line. Lol, I should have pressed one when they asked for questions

 

[BOSS]

Stock's up big today. Did something change since last week when the analyst said the model is broken?

We're in the 3 week window of Valentines...even though it's not a big wire gig, it's a pretty impotent date in FTD's world

 

[Bigted]

We're in the 3 week window of Valentines...even though it's not a big wire gig, it's a pretty impotent date in FTD's world

Yeah, but when the analyst is telling you there is a problem, I'm not sure it's time to buy. Who knows? I've never been able to figure out when to buy a stock.

 

[Joe Mioux]

Technical trends still look down.

However, stronger support is being built in that $9.00 range.

I know, most of you are interested in the Fundamentals, I just thought I would toss this into the discussion.

http://finance.yahoo.com/charts#cha...ine;crosshair=on;logscale=on;source=undefined

joe

 

[MANORVILLE]

Taking Business Away..........

Lol, thanks, I think. Hopefully not about the poking my eyes out part :tongue:.

In all seriousness, I am just sick and tired of hearing from these companies that take business AWAY from their member florists (cough ftd-1800 cough) talking about struggling florists and hits to their bottom line. Lol, I should have pressed one when they asked for questions

Hey Heather,

Keep your eyes ! Just loved the way you said that !

I know what you mean, Believe me !

Had an opportunity of a lifetime today to make a difference, I would hope, but had to second guess myself for a number of very valid reasons.
Made the right decision for " the moment ", but it's eating away at me that I was unable to take the shot.
I don't react well to suppression, but my responsibility to others managed to level my sometimes passionate and outspoken head .
Very, very, very frustrating indeed.

Kevin

 

[CHR]

You can now read the transcript of FTD's Wed. Conference call online.

A few items of interest:

Mike Soenen:

Our fresh flower program showed 25% revenue growth in the quarter versus the prior year quarter. We continue to get very broad acceptance from our customers yet the penetration levels are very, very small yet, so we think we have a lot of room to run with the fresh flower program. Technology, we sold several hundred POS systems in the quarter, more than 15% of those systems are actually conversions from Teleflora or other competitive systems. We think that’s important, in fact when we look through the data that we’ve been tracking, it’s our belief that nearly 2.6 tech customers were acquiring, for everyone one that we’re losing

From the Q & A:

Megan Friedman – William Blair & Co.
Just a couple of questions, first of all can you talk a little bit more about the florist segment and what some of the underlying causes were for the stronger than expected performance there?

Michael Soenen
Well as I tried to lay out, we’ve just continued to have good growth both in grocery, both in fresh flowers sales and in our technology. All of our new product sets are being very well received and they’re just more than offsetting the declines in some of our legacy businesses and the declines that we’ve created with some of the product lines and customers who are no longer maintaining. So it’s just simply new product innovation outpacing legacy businesses.

Justin Post – Merrill Lynch
Could you talk about the florist business, how do you see the overall environment for florists right now? Is the total number of florists coming down due to competition or how is that environment on a macro level?

Michael Soenen
Well look, I said this a couple times, there are less florists. Florists are struggling and you really got to ask yourselves which florists and how does it impact us? Okay so if I took my customer file and I broke it out into core tiles, you’d see that 95% of my revenue and earnings come from my top two core tiles, okay. If I pull my average florist in the top two core tiles, they’re actually doing okay to better than last year, okay. If you were to kind of go after florists who were my bottom two core tiles, core tiles three and four who really are very small in terms of total revenue and total earnings, I’d say they’re struggling.

I’d say there’s lots of consolidation, that they’re suffering through and I’d say that they’re having a very challenging time. The strategy that we have at FTD has been a very focused on our top two core tiles, making sure that those florists who are going to benefit from consolidation are the ones that we’re closest to and that we’re able to garner a larger share of wallet from those florists. So far I’d say that strategy has played out very well for us and though I would say nothing is going to be easy, it’s a much better strategy than somebody who is probably focused on all four core tiles if you will.

Mark Mahaney – Citigroup
Okay, secondly, Mike I know you made some comments about signs of consumer softening. The average order size increased and I’m sure there was a mix shift there, but was that a bit of a surprise to you that the average order size in the US increased given the consumer softness, would you expect to see the average order size maybe come down in a weakening consumer environment?

Becky Sheehan
Let me try to take a stab at that and Mike can jump in if he’d like. You know if you look at our average order value in the second quarter it was relatively consistent with what we’ve seen in the first quarter. It was not a surprise to us. We have seen consumers continue to choose products at the higher price point and more florists fulfilled as well which helps support the average order values. So not a surprise at all and I think historically the company has seen very consistent pricing over time as well. So we’re not surprised and we’re very pleased with where we are.

Michael Soenen
I’d say my only key learning I’d add on to what Becky said is if we’re seeing any softness or any challenges it would be in everyday discretionary purchasing, we’re not seeing it so much, we don’t anticipate seeing it in Valentine’s or you don’t see it in funeral orders or weddings or anniversaries, and so those tend to be very high ticket items where people are not shopping for price.

So that’s kind of our core bread and butter and so I think if we are seeing weakness or if there’s orders where we aren’t doing as well as we would like, it’s really in the everyday very discretionary, I didn’t have a very compelling reason but maybe I just missed you or was thinking of you or whatever, and that market has historically been a lower price point market. So I think, A, our customers are continuing to move to the higher end, especially on the new product designs, but I also think the marginal customer, the one who shopped at low price points was probably a very discretionary shopper anyway and that’s probably where we’re seeing some of the losses in terms of customers purchasing from us on an everyday basis.

In a few spots, Soenen also mentions how the company is extremely happy with the sales of Vera Wang and Todd Oldham products and that the same-day delivery test of Harry & David gift baskets did well at Christmas.

FTD is gearing up for a strong V Day.

 

[theRKF]

Our fresh flower program showed 25% revenue growth in the quarter versus the prior year quarter. We continue to get very broad acceptance from our customers yet the penetration levels are very, very small yet, so we think we have a lot of room to run with the fresh flower program. Technology, we sold several hundred POS systems in the quarter, more than 15% of those systems are actually conversions from Teleflora or other competitive systems. We think that’s important, in fact when we look through the data that we’ve been tracking, it’s our belief that nearly 2.6 tech customers were acquiring, for everyone one that we’re losing

Interesting that he tied tech and fresh flowers together. The installers on the tech team are trained to demo the FTD fresh flower program with the shop owner. It's mandatory that they spend at least an hour with them going over the fresh flower program, how to buy, etc.

It's clever - they have the shop owner's full attention (ideally) and leverage that into promoting another program. The Merc POS systems even ship with the FTD Fresh Flowers link preinstalled.

Ryan

 

[RJD]

Okay so if I took my customer file and I broke it out into core tiles

I think "core tiles" should be "quartiles". All he's saying is that the top 50% of florists are doing well or hanging in there, and the bottom 50% aren't doing so well.

DUH!

 

[Eric S]

Michael Soenen
Well look, I said this a couple times, there are less florists.

Michael Soenen
Our customers are continuing to move to the higher end, especially on the new product designs

Becky Sheehan
We have seen consumers continue to choose products at the higher price point and more florists fulfilled as well which helps support the average order values

I think these quotes say alot. So why continue to keep them in business? Especially since they only care about the top two tiles!

you’d see that 95% of my revenue and earnings come from my top two core tiles

 

[bloomz]

I think these quotes say alot. So why continue to keep them in business? Especially since they only care about the top two tiles!

All the more reason to be in the top two tiles perhaps?

He's said this before.

We try to focus on our best customers too.

But you knew that. *wink*

:handball:

 

[sfox]

Actually

I think these quotes say alot. So why continue to keep them in business? Especially since they only care about the top two tiles!

I look at that a different way. The top two tiles are where the money is still at. And if these two two tiles have money and can't see that FTD is trying to remove their money and their business, Man FTD deserves to go after it.

The real reason FTD is able to grow their profits, is that florists still think they can use FTD to make money and can't see that FTD's goal is to milk them of their money and their business. FTD has openly stated they see their growth in grocery stores, yet florists cling to this idea that FTD has something to offer them.

When a CEO openly states that he is moving his corporation in another direction, it means he will not be spending money on goods and services in the sector he is leaving. Think about your own business. If you decide to cut back on wedding work, but customers still come in, you will most likely not turn their money away, but since it is not a area you feel necessary for your business to grow, you make sure you price the wedding accordingly. The customers get their wedding flowers, but if they had done their homework, they cold have gotten a better deal maybe in price and quality.

But if it makes you feel better that FTD is openly chasing you for your business, enjoy it while you can, because it means they intend to part you from your money.

 

[Bigted]

And if these two two tiles have money and can't see that FTD is trying to remove their money and their business,
But if it makes you feel better that FTD is openly chasing you for your business, enjoy it while you can, because it means they intend to part you from your money.

Frankly, I think the same can be said for most of my vendors.

 

[bloomz]

The real reason FTD is able to grow their profits, is that florists still think they can use FTD to make money and can't see that FTD's goal is to milk them of their money and their business.

We can't?

I can't?

hmmmmm, news to me

Thanks for the update - I'll look into that