Online Gifting Gets Personal and Profitable
E-commerce got a boost in the pandemic economy, and 1-800-FLOWERS.COM, Inc. (FLWS:NASDAQ) was poised to capitalize. The company’s flagship line-up of gifting products, such as Harry & David®, The Popcorn Factory®, Cheryl’s Cookies®, 1-800-Baskets.com®, PersonalizationMall.com®, and Shari’s Berries®, generated record revenues in 2021, bolstered by innovation in digital outreach and messaging. The company is positioning itself to remain a market leader in 2022 by continuing to build its customer base and by bundling gift offerings across its brands.
- 42.5% revenue growth in fiscal year 2021
- Total 2021 revenues surpassing $2 billion
- 6.5 million new customers added
Advisor Access spoke with Chris McCann, president and CEO of 1-800-FLOWERS.COM, Inc.
Advisor Access: How would you describe 1-800-FLOWERS.COM, Inc. and its strategic initiatives in the gift marketplace?
Chris McCann: We are the leading provider of gifts designed to help our customers express, connect, and celebrate with the important people in their lives. We are also focused on becoming an engagement company, and are working on communication and content development initiatives to create more frequent interaction with customers beyond transactions with our signature brands.
These initiatives include our weekly Celebrations Pulse email newsletters, along with experiential programs such as floral design and charcutier classes, as well as dinners designed to promote our Harry & David® gourmet foods brand. Through this expanded content development and deployment across a broad range of social channels, we are creating a customer community that we expect will generate extensive growth and strong shareholder value by enhancing customer loyalty and building repeat business.
AA: 1-800-FLOWERS.COM, Inc. recently announced record revenues for its fiscal 2021 fourth quarter and full year. To what do you attribute this success?
CM: Most important, we are very proud of the dedication of all our associates. They worked diligently throughout the year to overcome the unprecedented challenges of the global pandemic to help millions of customers deliver smiles.
For our fiscal 2021 fourth quarter, which ended June 27, 2021, we reported continued strong revenue growth of 16.5% compared with the prior year period — and we achieved this success on top of the more than 60% revenue growth we achieved in the fourth quarter of 2020, when the pandemic first took hold in our country and consumers began to work from home, shifting much of their shopping online.
For the full fiscal 2021 year, we drove revenue growth of 42.5% and achieved a significant milestone by surpassing $2 billion in total revenue. We have basically doubled the size of our business over the past three years, and we anticipate continued double-digit revenue growth in our current fiscal 2022 year.
These successes reflect our focus on providing our customers with an expanded range of solutions designed to help them stay connected and express themselves, combined with our ability to leverage our unique e-commerce platform, which includes:
- Our all-star family of brands;
- Our advanced technology stack;
- Our manufacturing, distribution, and logistics capabilities;
- Our digital marketing expertise; and
- Our growing customer file.
AA: 1-800-FLOWERS.COM, Inc. has three business segments. What brands are in each segment and what are the revenues by segment?
CM: Our Gourmet Foods and Gift Baskets segment features a wide array of iconic brands, including top quality fruits and other gourmet items from Harry & David; gift baskets and towers from 1-800-Baskets.com®; cookies and baked gifts from Cheryl’s Cookies®; popcorn and specialty treats from The Popcorn Factory® and Moose Munch®; dipped berries and other gourmet treats from Shari’s Berries®; carved fresh fruit creations from FruitBouquets.com®; premium English muffins and other breakfast treats from Wolferman’s Bakery®; premium chocolate gifts from Simply Chocolate®; and top-quality steaks and chops from Stock Yards®. Fiscal 2021 revenues in this segment increased 21.6% to $955.6 million.
Our Consumer Floral and Gifts segment is the category leader and our 1-800-Flowers.com® floral brand has powerful brand equity. The business model is largely virtual, with thousands of local professional florists across the nation confecting and delivering floral gifts made to our creative design and high-quality specifications. Deliveries are often on a same-day basis. 1-800-Flowers.com is very strong in the “everyday gifting” business, with efficient customer acquisition and highly leverageable everyday site traffic, which we are using to build sales throughout our brands. Fiscal 2021 revenues in this segment increased 72.8% to $1.03 billion.
Our BloomNet® Wire Service segment is the category leader in quality and innovation. BloomNet’s revenues are generated through membership fees, as well as other products and services sold to local florists. Our BloomNet network of professional florists provides design and delivery on a local basis, and BloomNet offers its member florists innovative technologies and services designed to help them grow their businesses profitably. Fiscal 2021 revenues in this segment increased 27.9% to $142.9 million.
In addition to those three segments, we significantly expanded our product offerings with the recent acquisition of PersonalizationMall.com®, adding thousands of personalizable gifts items, from wine glasses to picture frames; a dozen personalization technology options, from laser engraving to custom embroidery; and a highly automated operating model that provides industry-leading order-to-ship delivery times. The acquisition of PersonalizationMall.com substantially extended the capabilities of our operating platform and positions us as a leader in personalized gifting.
And we’ve only scratched the surface in terms of what we can do with PersonalizationMall’s unique capabilities and broad product offering. For example, this fall, we will roll out personalized products across our brand sites, showcasing our new capabilities to millions of customers. And we are equally excited by the tremendous opportunities we see in corporate gifting, where personalized products can help corporate customers stay connected with both their clients and their employees.
AA: You mentioned that 1-800-FLOWERS.COM, Inc. is focused on engaging customers beyond transactions. Can you expand on what that entails?
CM: We are deepening the relationships we have with our customers by offering them a combination of highly relevant content, interactive experiences, and platforms that promote two-way dialog, which will enhance our position as our customers’ go-to resource when they want to connect or express themselves with a gift. One way we measure success in this area is through specific touchpoints with consumers across a broad range of communication and social channels.
In fiscal 2021, we created nearly 80 million consumer engagements. Many of these happened around key holiday periods, such as Mother’s Day and Father’s Day, where we built programs called MVP Moms and MVP Dads, featuring popular chefs like Antonia Lofaso and well-known athletes like Ali Krieger and Ray Allen, with video profiles showcasing their roles as the heart of their families. These videos reached more than 10 million consumers.
Throughout the year we also created a growing range of online events through social channels like Facebook and Instagram. For example, our “Breakfast at Wolferman’s”series was a great success, It was watched by nearly 2 million consumers and effectively introduced a new, younger demographic to our Wolferman’s Bakery brand with a mix of lifestyle tips, personal experiences, and live recipe demonstrations.
We also continued to innovate our digital experiences to better mix content with commerce, improving both our desktop and mobile channels. These and many more interactive engagements helped us introduce millions of people to our broad range of solutions for their gifting needs. We plan to continue to broaden these efforts and extend our reach going forward.
AA: Which 1-800-FLOWERS.COM, Inc. customers do you consider ‘best performing,’ and how do you capitalize on that cohort?
CM: Our best performing customer cohorts are customers who purchase from more than one product category or brand, and customers who belong to our Celebrations Passport loyalty program.
In both cases we saw solid growth in fiscal 2021. Customers who bought from more than one product category or brand, excluding PersonalizationMall, made up more than 13% of total active customers and represented approximately 29% of total revenue for the year, up significantly from the prior year. The average amount spent by these customers in fiscal 2021 was $330, more than double the spend of an average customer, excluding PersonalizationMall.
In terms of our Celebrations Passport loyalty program, membership surpassed the one-million mark during the early spring. For the year, membership grew more than 112% to 1.3 million members. Passport member revenue per customer was also up for the year at $284, nearly double that of average customers.
Our customer metrics and Celebrations Passport successes illustrate the tremendous value of our customer file, a key asset and growth driver for our overall business and one that we will continue to develop going forward.
AA: Can you tell us about any new 1-800-FLOWERS.COM, Inc. products?
CM: Throughout fiscal 2021, we focused much of our product development efforts on creating more cross-brand and cross-category bundled gifts, leveraging our platform to create original and compelling gift combinations.
For example, for Mother’s Day we bundled Shari’s Berries, roses from 1-800-Flowers, and award-winning Harry & David wine, creating a hit product we have now expanded into a growing collection we call our Deliciously Decadent Series.
We’ve also created shop-in-shop experiences to take advantage of brand affinities, such as the 1-800-Flowers Shop on the Harry & David site and the Moose Munch Shop on The Popcorn Factory site, introducing customers to our expanded product offerings.
And, for everyday gifting occasions, we expanded our Birthday and Sympathy Collections to feature more multiple brand combinations.
AA: In what key ways is 1-800-FLOWERS.COM, Inc. positioned for continued growth?
CM: Over the past several years we have significantly transformed our company, growing from a collection of specialty brands into a unique e-commerce platform that inspires and enables our customers to express, connect, and celebrate. We are well positioned to continue to deliver strong growth going forward by focusing on the following:
- We see significantly increased recognition and relevancy for our brands and products for everyday occasions, including birthday, sympathy, get well, new baby, anniversary, and ‘just because’; and
- We’ve further expanded our already broad product offerings to provide more solutions for our customers through the acquisitions of two strategic and highly accretive business: Shari’s Berries and PersonalizationMall.com.
We also grew our customer file significantly during fiscal 2021, and saw positive customer behavior metrics in terms of frequency and retention. Our customer file is one of our most important assets and a driver of strong growth going forward. Some key metrics that illustrate the strength of our customer base include:
- In fiscal 2021, we added more than 6.5 million new customers;
- One of the strongest areas of new growth was in millennials, which increased at a double-digit pace and now represents approximately 24% of our total customer file;
- Existing customers also grew at a strong pace, resulting in more than 13 million total active customers for the year; and
- Coupled with strong new customer growth, existing customers represented approximately 64% of our total revenue.
AA: How would you summarize what’s ahead for 1-800-FLOWERS.COM, Inc.?
CM: In fiscal 2022, we will continue to focus on engaging with our customers through increasingly personalized content, enhanced customer care initiatives, and a growing range of experiential programs designed to deepen our relationships and build a true customer community.
AA: Thank you, Chris.
Chris McCann, President and Chief Executive Officer, 1-800-FLOWERS.COM, Inc., is responsible for the company’s operations across all of its brands and businesses. He oversees the company’s strategic, operational and organizational processes, including the development, implementation and execution of annual and longer-term strategic, operating and budget plans.
Chris joined the organization in 1984, helping lead the disruption of the flower industry with the company’s innovative use of 800# watts-line technology and subsequently helping transform the company with the adoption of online technology as a pioneer in e-commerce. He served as President of 1-800-FLOWERS.COM, Inc. for several years and was named CEO in 2016. Chris has played a pivotal role in building 1-800-FLOWERS.COM, Inc.’s reputation as one of the leading e-commerce and mobile commerce retailers in the country. He is well-known for embracing technology innovations that enhance customer engagement, particularly in the areas of social, mobile and conversational commerce. Chris believes strongly in the company’s mantra that its “best product is the customer experience.” As a result of his leadership, 1-800-FLOWERS.COM, Inc. was recognized among the top 5 on the National Retail Federation’s 2021 Hot 25 Retailers list, which ranks the nation’s fastest-growing retail companies.
Chris currently serves as Vice Chairman of the Board of IGHL, a facility dedicated to the enrichment of the lives of developmentally disabled adults, a cause that is near to his heart. In 2005, together with his brother Jim, he helped found Smile Farms Inc., a non-profit organization dedicated to providing meaningful job opportunities for individuals with developmental disabilities. Today, Smile Farms operates eight campuses and employs over 140 individuals. Chris also serves on the Board of Trustees of Marist College and is a member of the Board’s Diversity & Inclusion Committee.
Chris earned a Bachelor of Arts in Political Science from Marist College.
“We believe that FLWS’s portfolio of e-commerce brands are well positioned for continued growth in sales and profits, and the company has executed well over the past decade and particularly since the onset of the pandemic.”
— Alex J. Fuhrman, Craig-Hallum
Aug. 26, 2021
“In FY21, FLWS added >6.5M new customers. Millennial customers increased double-digits and are now 24% of the total customer file, and they are proving to be stickier.”
— Linda Bolton Weiser, D.A. Davidson & Co.
Aug. 26, 2021
“We continue to view 1-800-Flowers as a strong e-commerce platform, built for growth, with a huge opportunity, estimated $20 billion and growing double digits, to grow organically into new gifting categories and through bolt-on acquisitions.”
— Tim Vierengel, Northcoast Research
Aug. 27, 2021
“In our view, the company’s financials will remain in excellent shape. … 1-800-FLOWERS.COM, Inc. remains well-positioned to benefit from the pandemic-accelerated shift to e-commerce.”
— Anthony C. Lebiedzinski, Sidoti & Co.
Aug. 26, 2021
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