August 16, 2006, 12:00 AM

1-800-Flowers.com plans efficiency measures

Though it grew overall e-commerce sales by 19.2% in fiscal 2006 to $430.3 million, 1-800-Flowers.com will implement a number of efficiency measures to improve operating results in fiscal 2007. Measures include consolidating e-mail marketing programs.

Though it grew overall e-commerce sales by 19.2% in fiscal 2006 to $430.3 million, 1-800-Flowers.com Inc. will implement a number of efficiency measures to improve operating results in fiscal 2007.

The initiatives include consolidating diverse e-mail marketing systems onto a single platform, consolidating catalog publishing and streamlining call center operations. “As we begin fiscal 2007 we are very focused on improving our bottom line performance,” 1-800-Flowers.com CEO James McCann told analysts during a recent conference call. “We have put in place a number of initiatives designed specifically to enhance gross margins and reduce cost across all of our businesses.”

For the 2006 fiscal year ended July 2, the company reported online revenue of $430.3 million, up 19.2% from $360.9 million for the 2005 fiscal year. GAAP net income for the year fell 59.4% year-over-year to $3.2 million from $7.8 million. Pro forma net income for the year was $6.4 million, down 18% from $7.8 million in 2005. “We’ve consolidated our non-catalog printing utilizing an agent whose compensation is tied directly to the level of cost savings,” McCann told analysts. “With e-mail an important element of our marketing efforts, we are consolidating all of our e-mail programs onto a uniform platform which we expect will yield significant cost savings.”

I-800-Flowers.com, No. 78 in the Internet Retailer Top 500 Guide to Retail Web Sites , says cost-cutting measures will be offset by new revenue from recent acquisitions such as Fannie May Confections Brands Inc., which the company purchased in May for $85 million in cash. “In our food, wine and gift basket category, the Fannie May acquisition significantly expands our offering in an area where we are rapidly becoming a market leader,” McCann contends. “By building on a tremendous base of costumer loyalty, Fannie May offers an excellent growth potential, particularly to the leveraging of our assets and capabilities in the online and direct marketing space.”

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