Shares of 1-800-Flowers.com Inc. (FLWS) rallied 14.6% on the index yesterday after the company reported better-than-expected second-quarter fiscal 2015 results. Adjusted earnings per share from continuing operations came in at 83 cents, a penny ahead of the Zacks Consensus Estimate, while rising substantially from 27 cents earned in the prior-year quarter.
Including one-time items, earnings per share from continuing operations came in at 68 cents, rising over two fold from the year-ago period.
Total revenues came in at $534.3 million, way ahead of the Zacks Consensus Estimate of $454 million and the year-ago figure of $266.3 million. Also, including estimated revenue loss from Fannie Mae Facility fire and acquisition costs, revenues came in at $549.7 million.
Adjusted gross profit rose over twofold to $252.7 million with gross margins increasing 430 basis points (bps) to 46%. Adjusted EBITDA including stock based compensation grew almost three times to $99.2 million.
Acquisition of Harry & David has been the primary catalyst for this Zacks Rank #3 (Hold) stock. Moreover, the company continues to employ effective marketing strategies and expand its eCommerce portal. 1-800-Flowers.com registered 62.7% growth in its online orders in the quarter driven by 40% increase in average order size and new customers. The company’s customer base has increased by 1.3 million this quarter.
Segment Details
Consumer Floral segment reported revenues of $99.6 million, up 2.5% year over year, whereas gross margin remained almost constant at 38.7%.
BloomNet Wire Service segment’s total sales grew 1% to $20.1 million while favorable product mix led to 100 bps increase in gross margin to 55.1%.
Gourmet Food and Gift Baskets segment’s revenues grew substantially to $414.7 million driven by the acquisition of Harry & David. Also, good performance of Cheryl’s and 1-800-Baskets.com brands aided growth. Gross margin grew 430 bps to 46%.
Other Financial Details
1-800-Flowers, which competes with Nautilus Inc. (NLS), Insight Enterprises Inc. (NSIT) and HSN, Inc. (HSNI), ended the quarter with cash and cash equivalents of $101.2 million, long-term debt of $124.7 million. Shareholder’s equity stood at $223.9 million excluding non-controlling interests of $2.4 million. Inventories were $70.8 million, up from $58.5 million as on Jun 29, 2014, mainly due to inclusion of Harry & David’s inventory.
Guidance
The company continues to reiterate its guidance for fiscal 2015. Revenues are expected to be in excess of $1.1 billion while adjusted earnings per share are expected to be in the range of 45 to 50 cents per share. The current Zacks Consensus Estimate stands at 47 cents per share.
Adjusted EBITDA (excluding transaction costs and adjustments pertaining to the Harry & David acquisition, the impact of stock-based compensation and impact of the warehouse fire) is expected to be around $90 million for the year.
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