Ftd Q3

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CHR

CHR

Design matters
Nov 28, 2002
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The numbers are out for FTD's third quarter.

There's more to this story than sales increasing from "$182.9 Million from $128.6 Million". The revenue growth was primary acheived through the aquisition of Interflora - $53.6 million of the total $54.3M increase.

FTD.com direct to consumer: Order volume up 4.1% and sales up 6% over last year. Improved margins from higher profit drop-shipped products.

Florist Services: Sales down from $52.9M to $49.1M "due to decreased clearinghouse order volume, a decrease in fresh flower sales resulting from one large customer contract in the prior year that was not renewed in the current year and reduced container sales".

UK/Interflora: Order volume up 12.9% over last year but the dollar sales figure was not provided as a comparison. Could it be the low priced V-Day and M-Day (UK Mother's Day was in March) products harmed sales overall? Hope someone asks during the conference call.

Outlook:
"Our continued focus on profitability allows us to increase our EBITDA and diluted EPS targets," stated Michael J. Soenen, President and Chief Executive Officer of FTD. "Additionally, we are reducing our revenue target for the year to reflect uncertainty around selected less profitable florist business product lines and the Mother's Day holiday," concluded Soenen.
Click to expand...
Are they expecting a reduction in US M-Day volume because of PO'd consumers from V-Day?

Operating income (loss) for the quarter before corporate allocations:
Consumer segment - 5,365
Florist segment - 18,639
International segment - 5,313

So florists are still the cash cow.

Conference call at 11 am Eastern.
 
Hmm

In a conference call with analysts, FTD Chief Executive Michael J. Soenen said he is cautious about what is traditionally a crucial day for florists, restaurateurs and jewelers.

"I have a very conservative forecast for Mother's Day," he said. "It is the biggest holiday of the year by a lot. ... A couple of good hours actually makes a difference in the holiday. I just don't know where it will be."
Click to expand...

Didn't see that one coming.
 
BigTed
800 is promoting direct shipped roses, buy 12 get 12 free as one of the MD promotions. Only the beginning.

Eric S
FTD is being cautious for numerous alleged reasons, one being the probability that florists will not be pleased with their volumn for MD and ultimately be asking for FTD's heads on a plate.
It's called Cover Your Arse!
Gotta read between the lines on that statement.



Outlook:

Quote:
"Our continued focus on profitability allows us to increase our EBITDA and diluted EPS targets," stated Michael J. Soenen, President and Chief Executive Officer of FTD. "Additionally, we are reducing our revenue target for the year to reflect uncertainty around selected less profitable florist business product lines and the Mother's Day holiday," concluded Soenen.
Are they expecting a reduction in US M-Day volume because of PO'd consumers from V-Day?

Once again, this leans heavily toward damage control. Florists just may be in for a rude awakening this MD and FTD is CYAing in advance so they have a solid leg to stand on in the aftermath.
We expect chaos after 12 Noon on the 11th as the frantic dumping will begin.



We're looking at this holiday week very carefully and have taken many precautions.
This week the major players will unleash every gimmick they can think of to sway the consumer and I for one will not be depending on their "generosity".
Our pre-orders, ("direct pre-orders"), are very strong as of today and only one WS projection will prove true for us. The other two I fully expect failure from.



*********************************************************
Heard something today and was wonderring :

Lots of shops have WS websites.
Could orders be intercepted on these sites that we pay for without our knowledge?
Please excuse the dumb question.
 
wire service intercept

Kevin,
I think the short answer is yes, they could be intercepted. Think about it......

YOu have a wire service web site. An order is placed over the website and goes to a Wire service host computer. That host transmits the order to you over the Dove or the Mercury.

We know, for a fact, that the big 2 do keep our customers email, and who knows how much other information, because some of my customers have been directly market to by both..... and have NEVER placed and FTD-com or TF-com order.

I see the intercept of orders (or hijjacking of orders) happening if: you owed the wire service money..... or .... they wanted to punish you for something you have done.

Remember, we have no way of REALLY< REALLY knowing what goes on in the Host computer. We only know what we have been told goes on.

anything is possible, and probably, possible. (PS....this is coming from a couple of CMU computer geniuses that raised an eyebrow one night, as I explained to them the finer points of the wire services and the floral business. They said, at the end, that if I believed that the big 2 were being honest with these issues, they they would be happy to sell me swamp land and the Brooklyn bridge)!

regards,

Cheryl
 
CHERYL BAKIN said:
Kevin,
I think the short answer is yes, they could be intercepted. Think about it......

YOu have a wire service web site. An order is placed over the website and goes to a Wire service host computer. That host transmits the order to you over the Dove or the Mercury.

We know, for a fact, that the big 2 do keep our customers email, and who knows how much other information, because some of my customers have been directly market to by both..... and have NEVER placed and FTD-com or TF-com order.

I see the intercept of orders (or hijjacking of orders) happening if: you owed the wire service money..... or .... they wanted to punish you for something you have done.

Remember, we have no way of REALLY< REALLY knowing what goes on in the Host computer. We only know what we have been told goes on.

anything is possible, and probably, possible. (PS....this is coming from a couple of CMU computer geniuses that raised an eyebrow one night, as I explained to them the finer points of the wire services and the floral business. They said, at the end, that if I believed that the big 2 were being honest with these issues, they they would be happy to sell me swamp land and the Brooklyn bridge)!

regards,

Cheryl
Click to expand...

I have and you all need to sign up as customers of your own WS-hosted website. That way you can monitor the amount of WS-sponsored emails your customers receive.

Yes, I am my own customer at mioux.com and TF has not exploited these "customers" (me) because I have only received a brief email at the major holidays. From what I remember, these are above board email solicitations.

Yes, I do believe tf has a databse with this info, but so far they are acting in the best interest of their client. At least that is how I see it from the emails I received from tf. I may be wrong.

Joe
 
Transcript from yesterday's conference call with Soenen - http://retail.seekingalpha.com/article/34017

Here's just a bit:
Troy Mastin - William Blair
On the florist business first wanted to ask about clearinghouse volume being down. If there is anything specific you can point to there? Was that just Valentine's Day? Has anything changed meaningfully on the competitive front there?

Michael Soenen
Yes, two things. I think the clearinghouse volume was down slightly and I think there are three trends that occur, but one was with Valentine's Day. I think some of the florists just didn't have as much spending as they anticipated; the network filled up fairly quickly as large chunks, almost a third of the Northeast, was not accepting orders to even have them sent. So I think that was probably the largest driver of it.
Certainly as I look at the other dynamic on the consumer side which is the growth that we are experiencing there, some of what we see growth in at Valentine's Day is the direct ship business and a dozen roses is a very commoditized item. I think the growth there somewhat, to a much smaller degree impacted the orders going through the clearinghouse as those were extremely popular items at the Valentine's Day holiday and I think somewhat cannibalized some of the growth going through the clearinghouse. I think both those trends had an impact there.

Troy Mastin - William Blair
On the florist businesses, as you think through these low margin or no margin businesses, how much smaller should we think this segment might get? Are we talking another 5% or 10% of revenue or is it maybe a bigger share of total revenue? Just so I have an idea of where maybe the bottom is and what you've thought through this process?

Michael Soenen
It's about a $50 million business, all the wholesaling. All the containers, the direct, all that kind of knicky knacky stuff and it's a very low margin business. So could it be half that size someday? Sure, it could be half that size. I could easily maintain it and it would have no impact on the revenue. I just struggle with deploying firm resources on things that don't generate a tremendous amount of strategic value. So I'm a little bit torn. It may not get a whole lot smaller, but on the other hand as I get to these cross points and I know that I am not going to make any money and I know that I am going to be tying up money in inventory and I'm going to be taking risks on getting the stuff resold and florist fulfillment, sometimes I think let's let it shrink a little bit at a time. Hopefully, once we get through some of the phases we're in now getting the growth out of what we are seen in fresh flowers and grocery and other stuff will more than offset that longer term. In the near term, we are still ramping up the fresh and the other categories, but they don't always come as quickly as you want to take down some of the unprofitable stuff.
Click to expand...
Emphasis mine. Elsewhere in the call, Soenen explains how webhosting and online marketing services are the profit drivers on the florist side.

Happy reading.
 
Cathy
Am I interpreting the part about 1/3 of Northeast florists not accepting orders correctly? Guess I missed something being the only eastern shop that stayed open. " We certainly didn't get the FTD overflow".


ManorMan
 
Finally, our grocery initiative. You know we have a 13% increase in the number of grocery members versus the prior year which is nice. We don't give that number out with the relative stat. It is something that is growing quite nicely. We have seen revenues increase over 17% year-to-date coming out of that channel so we are starting to see the success there that we had looked for. We have new products that we are launching in Q4, for competitive reasons I won't be discussing, but I also think based on what we know today should help allow us to have some improved growth rates coming out of that sector in Q4 as well.


Who's is getting the new product?
 
Inka said:
Who's is getting the new product?
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Groceries will be from the sounds of it...

From what I have been told, the ***average*** grocery only sends 2-3 orders per month,(there are exceptions of course) revenues must be based on membership numbers.

Can't be containers? As I don;t see any in the grocery here, but maybe elsewhere.

Interesting drop in florist numbers, that will continue, also interesting the Mercury debacle at VD did not hit the radar...or did I miss it?
 
Flying under the radar

mark smith said:
Groceries will be from the sounds of it...

From what I have been told, the ***average*** grocery only sends 2-3 orders per month,(there are exceptions of course) revenues must be based on membership numbers.

Can't be containers? As I don;t see any in the grocery here, but maybe elsewhere.

Interesting drop in florist numbers, that will continue, also interesting the Mercury debacle at VD did not hit the radar...or did I miss it?
Click to expand...




STEALTH FLIGHT OPERATIONS !
 
It Says Under The Florist Section That Revenues Are Down Because One Vendor Did Not Renew The Contract. Was This An Order Gatherer That Went To Teleflora??if So Who Was It?. Were They That Big Of A Sender That They Could Really Hurt Ftd??
 
CHARLIEEVERGREEN said:
It Says Under The Florist Section That Revenues Are Down Because One Vendor Did Not Renew The Contract. Was This An Order Gatherer That Went To Teleflora??if So Who Was It?. Were They That Big Of A Sender That They Could Really Hurt Ftd??
Click to expand...

I suspect it was 800flowers.. as they quit FTD within the last4-6 months when their network got up & running
 
CHERYL BAKIN said:
Kevin,
I think the short answer is yes, they could be intercepted. Think about it......

We know, for a fact, that the big 2 do keep our customers email, and who knows how much other information, because some of my customers have been directly market to by both..... and have NEVER placed and FTD-com or TF-com order.

Cheryl
Click to expand...

I don't know Cheryl,, I signed up as a private customer at my website when I first signed on with FTD on-line. The only emails I get are those generated by my site and reference my site not ftd.. I have never purchased from ftd.com .. which probably proves that FTD.com is not or has not mined email customer data from my ftd website.. since if they did over the years I would probably have received emails from ftd.com. I still get reminders (birthdays) from my ftd web site so that proves the data is still active on my website..which I assume shares a server with ftd.com and no cross over yet.

Would I bet my life on it... nope ... but I kind of wonder if your customers who say they got email from the WS did not realize it was from you site hosted by the wire service and if they responded it would respond to your WS hosted site and not the WS.com site. It is funny sometimes what we remember and they may have noticed the WS logo and not your site name.
As Joe said...anyone who has a WS hosted site needs to sign on their site as a private customer and monitor emails coming to them
 
I believe it was a buyer (mass marketer) of cut flowers through their wholesale division, and not an OG.

FTD has hired former flower division heads from Alberton's and Kroger and it's clear from Soenen's talk that he believes grocery stores will be a big part of their future.

It's sort of stands at odds with his plans of getting out of wholesaling, but I think her mostly means elimintaing florist supplies.

Supplying supermarkets with flowers or containers is hyper-competitive and the margins are thin. I believe USA Bouquet, supplier to Wal-Mart and others, is somewhere in the mix and they just got funding for expansion. Based on the call, FTD clearly has big plans to supply supermarkets with flowers:

once we get through some of the phases we're in now getting the growth out of what we are seen in fresh flowers and grocery and other stuff will more than offset that longer term. In the near term, we are still ramping up the fresh and the other categories, but they don't always come as quickly as you want to take down some of the unprofitable stuff.
Click to expand...

My take-away from the conference call is that FTD only wants florists who utilze all their services (after hours, web, marketing) but I did find his remark about the quality of the florists that are leaving as odd:
So when I am eliminating them, it comes in two ways. One depends on which bucket they are they in. If they are in the bucket that is not contributing revenue or EBITDA in any meaningful way, than I would say it doesn't impact us at all and we believe that it allows us to get more orders filled by the higher quality florist and strengthen our value proposition to them.
Click to expand...
So only the 'low quality' florists are leaving and all the 'high quality florists' are lining up to fill for dot com. Mike, if they're low quality, why did you trust your customers' orders to them in the first place?
 
It seems like a pretty risky bet to place so much emphasis on the supermarkets. That segment is all about cheap prices and thin margins. And, while some supermarkets are making big gains in weddings and other traditional florist areas, I don't believe that it's the norm.
 
mark smith said:
also interesting the Mercury debacle at VD did not hit the radar...or did I miss it?
Click to expand...

Michael Soenen
 Yes, two things. I think the clearinghouse volume was down slightly and I think there are three trends that occur, but one was with Valentine's Day. I think some of the florists just didn't have as much spending as they anticipated; the network filled up fairly quickly as large chunks, almost a third of the Northeast, was not accepting orders to even have them sent.
Click to expand...
Think Michael got around it by blaming too many florists for putting their mercs on suspend during the snow storm.............
 
Carol, I was answering a theoritical question Kevin asked about the Possibility of orders being hijacked or diverted from a given member's web site that is hosted thru a wire service. The short answer is: yes, the technology is there & this can be done without a great deal of effort. Computer programmers can do the most amazing things!!

The email stuff: when our web site was hosted thru a wire service, we KNOW FOR A FACT that our customers were marketed to directly by the given wire service. How? they brought the emails & direct mail pieces in for me to see. In all cases, they had NEVER placed a web order thru FTD.com or TF.com -- only thru my hosted website. We verified this thru various credit card transactions & statements.

the above was one of the reasons that our website was moved to an independent provider. Your customer data is your own customer data. It should not be "mined" for someone else's purposes. (IMHO)!!

Regards,
Cheryl
 
I also believe he said they chose not to renew a contract with a large flower customer.(not profitable enough for them) I think FTD has big plans to supply supermarkets, retail florist, and direct shippers of ftd.com with flowers. It sounds like he wants to get away from the container business. I heard him say a couple of years ago that he wanted to eliminate marketplace but he wasn’t allowed to. During the call he stated that he wanted to move away from business that wasn’t contributing enough to the bottom line. As flower sales increase it would off set the decrease in hard goods numbers. His last conference call he stated that the flower exchange would be FTD’s next big thing. He said it would be as big as FTD.com
I don’t believe FTD has ever e-mailed to my FOL e-mail list. They have too much to loose by doing that. It is one of the most successful parts of FTD. Mike mentioned that FOL and tech were part of FTD’s profitability.
 
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