Online sales at 1-800-Flowers.com Inc. totaled $124.4 million for the fourth quarter, ended July 2, up 14.6% year-over-year from $108.5 million. The increase in online revenue helped boost total Q4 revenue 13.4% to $211.1 million from $186.1 million a year earlier.
GAAP net income for Q4 fell 73% from a year ago, to $1.1 million from $3.9 million, as the company took on about $10 million in additional marketing expenses compared to Q4 2005. Pro forma net income for the quarter was $2 million, down 49% from $3.9 million a year earlier.
“Revenue growth of more than 13% for the quarter, while good, was below the level we targeted with our increased marketing programs,” says Jim McCann, CEO. “In addition, gross margin did not improve as we had planned and therefore was insufficient to offset the increase in marketing spending.” 1-800-Flowers.com is No. 35 in the Internet Retailer Top 500 Guide to Retail Web Sites.
Also contributing to the revenue growth for the quarter was the company's retail and fulfillment operations, which increased 51% to $26.1 million due primarily to the acquisition of Fannie May Confections Brands Inc. and the continued growth of the Bloomnet business, the company says.
But costs associated with the company’s acquisition of Fannie May Confections also impacted earnings, McCann says.
During the fourth quarter, 1-800-Flowers attracted 887,000 new customers, 70% of whom came to the company online. Repeat orders represented 58% of revenue.
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.
The difference between GAAP and pro forma net income for both the full year and Q4 was due to stock-based compensation expense.
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