1-800-Flowers Momentum Continues To Grow As It Leans Into Corporate Gifting

Unlike personal gifting where it’s a one-to-one gifting transaction, with corporate gifting it is a one-to-many proposition.
October 29th 2021Oct 29, 2021

After seeing year-over-year growth explode in fiscal 2021, with revenues up 42.5% to reach $2.12 billion, 1-800-Flowers.com continued to make tracks in the gifting market.

First quarter 2022 revenues for the three months ending September 26, 2021 rose 9% to $309.4 million in a period when there are no national gifting holidays. Though the quarter got off to a slow start, the company saw double-digit growth in September, which carried over into October as it entered its prime selling season.

“The first quarter this year represented one of our most challenging year-over-year comparisons,” CEO Chris McCann stated in the earnings call.

“It’s important to note that our 9% revenue growth in the quarter was on top of the 51.5% growth we reported in last year’s first quarter,” he said. “This illustrates the strong growth momentum that we have been building over the past several years as we have essentially doubled the size of our company, transforming from the collection of specialty brands into unique e-commerce platform that inspires and enables our customers to express, connect and celebrate."

First quarter highlights

McCann reported the company add 900,000 new customers during the quarter while its existing customers generated 65% of quarterly revenues.

He also announced the acquisition of Vital Choice adding to its portfolio of brands in the “Better for You” food category. Vital Choice offers premium wild-caught seafood and sustainably farmed shellfish, pastured meats, organic foods, nutritional supplements and fish-based pet treats. Vital Choice brings roughly $25 million to the business.

Because there are no holidays in the first quarter, it typically is a loser when it comes to profits. This year the company reported a net loss of $13.2 million, as it saw digital marketing and other expenses rise. Yet the company remains confident it will deliver on its promised 10% to 12% revenue gains in fiscal 2022 on top of last year’s exceptional performance. It is mitigating rising expenses by selectively and strategically increasing prices.

McCann credited growth in the quarter to expanded product offerings in its PersonalizationMall.com, which as its name implies allows customers to personalize their gifted items, and a 50% year-over-year increase in membership for its Celebration Passport loyalty program that offers free shipping, exclusive member offerings and registry to manage gift lists for a $20 annual fee. The company acquired PersonalizationMall.com in August 2020.

Going into its prime holiday season – last year it generated over 40% of annual sales in its second quarter through December 27 – McCann reassured investors it has taken steps to mitigate the headwinds facing all retailers this season, including potential product shortages, increased labor, shipping and marketing costs and potential delays.

With such a wide range of brands, including Cheryl’s Cookies, Harry & David, The Popcorn Factory, Shari’s Berries and its flagship 1-800-Flowers among others, across many perishable product categories, the company has expanded its cold-storage facilities and automated more processes in its warehouse and distribution facilities.

“We are well positioned to help our customers connect, express and celebrate with the important people in their lives for both everyday occasions and the key holiday season and drive solid top and bottom-line performance,” he confidently exclaimed.

Momentum is a term that McCann used again and again in the earnings call. While he recognizes headwinds the company is facing not just comping against such strong growth last year, but also dealing with new challenges this year, he believes the company’s vision of building an integrated e-commerce platform, not just operating a collection of standalone brands, positions the company well to keep the company’s growth momentum going.

And McCann is particularly fired up about the company’s opportunity in the corporate gifting market. Ahead of the earnings call, I spoke to him about plans for expansion beyond personal into corporate gifting.

Corporate gifting goes virtual

Hardly a newbie when it comes to corporate gifting, 1-800-Flowers sees consumer gifting and corporate gifting as two halves of a whole.

“We take what we learn from the consumer gifting side of things and apply it to corporate gifting,” he says. “Just like consumers, companies are looking to build their relationships through the power of gifting. We are so well positioned there because we are about people expressing, connecting, building relationships and celebrating.”

But unlike personal gifting where it’s a one-to-one gifting transaction, with corporate gifting it is a one-to-many proposition. That is where the launch of its new corporate gifting platform called Hero, powered by SmartGift, comes in.

Through a single corporate gifting platform, a company can manage the entire gifting process to support gifts for corporate events, employee recognition programs and holiday and occasion gifts for clients and employees.

For example, the platform allows a company to store dates for recognition, such as an employee anniversary or client birthday, so future gifting opportunities aren’t missed.

On the Hero platform users get a dashboard to track all past gifting activities and to monitor engagement as gifts are delivered and thank you notes received.

And best of all, upon activating a Hero gift selection, the rest is handled virtually with the recipient receiving an instant notification via either email or text message that a gift is ready to be delivered. Then the recipient enters their own address and schedules when they’d like it to arrive. Plus, the recipient can make an exchange prior to shipping, if desired.

While there is no doubt that the need for corporate gifting picked up during the pandemic when in-person client meetings were not possible and employees were working for home, I asked if corporate gifting might slow down as things are getting back to normal. To which he replied an unequivocal “No.”

“I believe as a society, as people, we’ve learned the need to stay connected and to be expressive. That’s the whole vision of our company,” he shares. “And it’s the same thing in the corporate gifting side. Corporate gifting helps build a company’s culture, recognize employees and strengthen and maintain client relationships. That’s not going away post-pandemic. It’s actually growing.”

While corporate gifting today represents about 10% of 1-800-Flowers’ business, he says it has actually been growing faster than the consumer side of the business even before the introduction of Hero. With the introduction of Hero, he sees a long runway for the corporate gifting side of the business.

“We’ve all awakened to the realization for businesses to stay connected. And even as people are going back to work, it will be a hybrid model. It’s a virtual world we live in and work today.”

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