Good day, everyone, and welcome to the 1-800-FLOWERS.COM Fiscal 2012 Third Quarter Results Conference Call. This call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to the company's Vice President of Investor Relations, Joseph Pititto. Mr. Pititto, please go ahead, sir.

Thank you, Tyrone. Good morning, and thank you all for joining us today to discuss 1-800-FLOWERS.COM's financial results for our fiscal 2012 third quarter. For those of you who have not yet received a copy of our press release issued earlier this morning, the release can be accessed at the Investor Relations section of our website at 1800flowers.com, or you can call Patty Altadonna at (516) 237-6113 to receive a copy of the release by e-mail or fax. In terms of structure, our call today will begin with brief formal remarks, and then we'll open the call to your questions. Presenting today will be Jim McCann, CEO; Chris McCann, President; and Bill Shea, CFO. Before we begin, I need to remind everybody that a number of the statements that we will make today may be forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the applicable statements. For a detailed description of these risks and uncertainties, please refer to our press release issued this morning, as well as our SEC filings, including the company's annual report on Form 10-K and quarterly reports on Form 10-Q. In addition, this morning, we will discuss certain supplemental financial measures that were not prepared in accordance with generally accepted accounting principles. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures can be found in the tables accompanying the company's press release issued this morning. The company expressly disclaims any intent or obligation to update any of the forward-looking statements made in today's call, any recordings of today's call, the press release issued earlier today or in any of its SEC filings, except as may be otherwise stated by the company. I'll now turn the call over to Jim McCann.

Good morning, everyone. And during our fiscal third quarter, we achieved double-digit revenue growth across all 3 of our business segments. This reflected a continuation of the positive trends that we have seen in our business for more than a year now. Most important, our bottom line growth significantly outpaced our strong top line growth, illustrating the effectiveness of our initiatives to achieve enhanced operating leverage. In our Consumer Floral segment, revenues continue to grow at a strong rate, benefiting from the increases in both order volume and average order value. Gross margin for the quarter increased 200 basis points and contribution margin increased nearly 40% to $11 million, showing the leverage that we had told you to expect in our second half. BloomNet continued to grow with a solid double-digit pace, both top and bottom line. We are expanding our market position in the wire service category through increased order volume and further penetration of our expanded suite of products and services. We are also benefiting from our initiatives to deepen our relationships with our florist members through programs such as Floriology Institute, which offers accredited training programs for our florists. BloomNet's leading growth is a testament to the better value proposition we provide for our florist members, as well as their recognition at our commitment to helping them grow their businesses profitably. In our Gourmet Food and Gift Basket business, we saw a double-digit revenue growth for the quarter. This was driven by the shift in Easter -- by the shift in the Easter holiday to early in the fiscal fourth quarter. In terms of our balance sheet, we finished the quarter with $25 million in cash and a net debt position of less than $10 million. Combined with our proven ability to generate increased cash flows, the…

Thank you, Jim. As indicated in Jim's comments and our press release issued this morning, our fiscal 2012 third quarter was characterized by strong double-digit revenue growth in all 3 of our business segments. Most important, our bottom line metrics, EBITDA and EPS, grew at significantly faster rates, illustrating the improvements in gross margin and enhanced leverage in our business model that we discussed in our earlier calls this year. Regarding specific financial results, the key metrics and continuing operations for the third quarter, total net revenues increased 13.1% to $179.7 million compared with $158.8 million in the prior year period. During the quarter, our e-commerce orders increased 9.7% to $2,039,000 compared with $1,859,000 in the year ago period. Average order size during the quarter increased 2.6% to $64.84 compared with $63.21 in the prior year period. During the quarter, we added 613,000 new customers. This was achieved while concurrently stimulating repeat orders from existing customers, who represented 61.5% of total revenues compared with 57.8% in the prior year period. Gross margin for the quarter increased 100 basis points to 40.7% compared with 39.7% in the prior year period. Operating expenses improved 120 basis points, as a percent of total revenues to 40.6% compared with 41.8% in the prior year period. This improvement reflects the revenue growth in the quarter, as well as a continued focus on leveraging our business platform. Total operating expenses were $72.9 million compared with $66.4 million in the prior year period, reflecting the operating costs associated with 3 small businesses we acquired over the past year, as well as investments in strategic initiatives we have described to you in the past, including franchising, BloomNet and the mobile and social commerce areas. As a result of these factors, EBITDA for the period more than doubled, increasing…

Thanks, Bill. The fiscal third quarter marked our fifth consecutive quarter of top and bottom line growth, driven primarily by the positive trends we have seen in our 1-800-FLOWERS.COM Consumer Floral business. In this area, during the third quarter, we achieved strong double-digit revenue growth with solid increases in both order volume and AOV. In addition, we grew our gross margin 200 basis points, reflecting our disciplined approach to marketing programs during what is typically a very promotional Valentine holiday period. These results illustrate the initiatives that we've put in place to enhance our merchandising programs, where we are working directly with our BloomNet florists to emphasize our truly original product designs and our marketing programs, where we are engaging directly with our customers and deepening our relationships with them through our industry-leading efforts in the social and mobile arenas. In terms of our truly original product offerings, in addition to the great success that we continue to see from our expanded line of a-DOG-able arrangements, we are also seeing an enthusiastic customer reaction to our new exclusive offering called Vase Expressions. Simply by uploading a photo, customers can create a one-of-a-kind personalized vase to which they can add their favorite floral arrangement. We're seeing some really unique uses of this capability, including a customer who uploaded a sonogram photo to send a birthday smile to her mom with a very special message. And we've seen quite a bit of interest from our service men and women around the world, who are using this unique personalization capability to stay in touch with their loved ones and deliver incredible smiles. This product and capability is a perfect example of how we continue to develop products that help our customers express themselves perfectly. On the social and mobile front, repeating the success we had with our Valentine outreach on Facebook, once again, we've been asking our customers to vote with their likes for the best gifts for Mother's Day, allowing our customers to socially curate our gift offerings for a key holiday while simultaneously expanding our brand awareness and deepening our customer relationships. We've also launched the "make your mom proud" photo contest, asking customers to post photos to our site, where our fans can vote for the best shots. And those with the most votes win prizes with 2 winners every day, who receive a Vase Expression product and of course a fabulous grand prize trip at the end of the contest for the grand prize winner. Looking ahead, we are excited about the momentum that we have built this year in terms of positive growth rates, particularly in Consumer Floral. And as a result, we believe we are well positioned to deliver strong top and bottom line performance this year and beyond. I'll now turn the call back to Jim.

As Chris has just noted, our customers come to us to help them to deliver smiles. Our initiatives across all of our businesses are designed to help us engage with our customers, so we can help them connect and express themselves perfectly. The strong top and bottom line results that we've achieved in our third quarter and throughout the first 9 months of fiscal 2012 illustrate the effectiveness of these efforts and the fact that our marketing messages and enhanced merchandising offers are resonating with our customers. The positive trends we are seeing in our revenue growth, improving margins and hence the operating leverage, have continued for more than a year now, enabling us to build momentum in our business and expand our market leadership as our customers' florist and gift shop. To wrap up, we are pleased with our third quarter and our year-to-date results. Looking ahead, we remain cognizant of the uncertainties in the global economic environment. As such, we will continue to focus on managing those aspects of our business that we can control, including our relationships with our customers. We're expanding our initiatives and our marketing leadership in the social and mobile spaces; our operating expenses, where we are leveraging our infrastructure to reduce expenses; and working to enhance the efficiency of our marketing investments across all of our advertising and media channels; and our financial strength and flexibility, where we are strengthening our balance sheet while continuing to invest for the future. We believe this focus enables us to serve our customers with a great value proposition and thereby grow our top and bottom line results. It's simple. If we continue to invest and provide great products and services, that begets us growth. And if we manage our expenses properly, that growth turns into profitability and of course, that it equals improved shareholder value creation. That concludes our formal remarks, and we'll now open the call up to your questions. Tyrone, would you please give the instructions for the Q&A portion?

[Operator Instructions] I have a question from Eric Beder of Brean Murray.

Could you talk about some of your -- what's happening to your franchising operations in terms of both the Floral business and in terms of, I guess, the Chocolate business, too, Fannie May?

Eric, this is Jim. Let me give you just a brief update there, I think, at the end of the fiscal year, we'll be a little bit more comprehensive in terms of how we talk about this. But what we've said to you in the past and I'll reiterate today is that, we view ourselves as our customers' florist and gift shop, and we see our efforts is multi-channel. When I say multi-channel, clearly, we're an e-commerce player. And clearly, we have a lot of expertise and capabilities there. But we think that the local component to that is very, very important, and we have chosen to focus our local activities in our Chocolate business, in our Floral businesses, around a franchising model. We think that these businesses are best run by individual operators and local operators. And we think that from a capital -- fiscal capital and human capital point of view, that's the best model for us to pursue. We've said that we were going to be very sure and deliberate about how we expanded that retail footprint with that franchising model, and we're pursuing that both as you pointed out in the Chocolate business under the Fannie May brand and in the Flower business under the 1-800-FLOWERS brand. So the Flowers business continues apace. There's an enormous interest on the part of the floral community to partner with us because clearly, we're growing. We offer great products and services. And they're looking to marry great local brands with the pre-eminent national and global brand that 1-800-FLOWERS is fortunate enough to become. So we're considering the -- many of the applicants that are coming our way and that's a slow and deliberate process and we're very pleased with how that's going. And we'll give you more color on…

Great. In terms of the Floral business, I mean, you guys have generated a significant growth in the Floral business. Do you see that as a function that the category is coming back? Or do you see that as taking share? Where are we in terms of floral industry growth right now?

Well, I'll start it. Eric, Jim again, and then ask Chris if he has any color specifically from the flower category. But I think it's probably 2 things. I don't see any robust exciting growth sparking the category. I do see that the specific products that we've introduced, I'll ask Chris to touch on that, are sparking an interesting in our customers. As Chris mentioned, this Vase Expressions product that we've just introduced, which is really popular, and our a-DOG-ables collection, there are others like our Happy Hour collection are just continuing to grow. Frankly, even our Birthday collection, which is more than a dozen years old in the Birthday Flower, they continue to grow. So when you have clever, fun, put-a-smile-on-your-face products, customers are clearly responding to them. Overall, I think there might be some growth in the category now, as a result of the at least stabilized economic environment. We're not counting on a roaring return of the consumer to fuel our growth. So I would expect based on the information that's available, and frankly that's very little, there's only one other company that publicly reports any indication what's going on in the flower business. I'd say it's a combination of 2, the customer feeling more comfortable and I think that's sparked a lot by our own efforts in merchandising and the fact that we're probably taking share as well.

Yes. I'll just add that I -- 2 things. The best lead we get in the marketplace and there is no really consolidated number that we believe we are taking market share. I just wanted to add I do think that's evidenced by the only other company that does report publicly you see. But we have significant growth this quarter and they did not. So I think we're doing a good job there, and I think it is because our customers really are resonating to the value proposition that we offer our customers. So we're looking to make sure we been bring truly original products to the table that give them good value for their money, and that's resonating, as well as our marketing initiatives, reaching out and engaging with our customers. We've been on this track now for 1.5 years, 2 years and 5 quarters of good growth, good results. I think it's proving out that we are connecting with our customers.

Okay. And finally on BloomNet, do you have -- when you look at BloomNet right now, is all of that really organic growth? Or there's still opportunity to add more florists to the mix? Are you kind of happy with the mix you are, in terms of the amount of florists you have at BloomNet?

In terms of BloomNet, Eric, I would say that we're very happy with the size of the network. We're not looking to grow the network. We've had it at the same size now for a while. It seems to be the optimum size in terms of how we can have a significant relationship with a number of shops and give us the coverage we need to satisfy our consumers' needs. So the size isn't going to change. Our whole focus is on deepening the relationship with our customers. In this case, our customers are retail florists, giving them a variety of entry points in the U.S. about franchising. Franchising is the top of that pyramid in terms of depth of relationship that we can have with a select group of qualified florists. So I think we are excited about the growth opportunities. But all of the growth will come from the deepening relationship we have at several different levels with those BloomNet members.

Our next question is from Christopher Ferris of Noble Financial.

Consumer Floral gross margins hitting 39%, when was the last time you saw that kind of segment gross margin in the quarter? Can you do better? And what could it possibly grow to over time?

Yes. We have not been at 39% probably since 2008, although we still think we can continue to grow our gross margins. We anticipate in Q4 that our gross margins will improve year-over-year. We have a nice trend line where Consumer Floral margins have been up each of the 4 quarters of this -- each of the 3 quarters so far this fiscal year, and we're seeing overall BloomNet actually -- their margins getting back in line with prior years. Overall from a company perspective and overall from the Consumer Floral segment, we think can continue to move volumes north [ph].

So my qualifier there, Chris, this is Jim, is that I think gross margins can improve and will improve, but the primary focus now is to keep a great value proposition in front of the customer, that will attract growth and that can give you the enhanced profitability, with or without margin improvement.

Got it. And what's the leverage you're seeing in your business synergy continue to drive Consumer Floral results? And hopefully, back to a peak number at some point. You should start to see even stronger free cash flow. Can you talk about your priorities for cash going forward?

I think what we've evidenced and said in the past, Chris, and I'll reiterate now is that, for the first time in this company's history, we had debt. And it was Bill's idea to have that debt and we didn't anticipate the recession that started in 2008. So our first priority was to pay down that debt. We've done that and done that very effectively. I give Bill a hard time about that but that's our inside landscape here. The -- so our focus has been on making sure we have the flexibility in our balance sheet to survive a tough period, which we've done, to have the flexibility, even during a tough period to continue to invest for the future, which we've done and are doing. And so then you turn to uses of free cash flow beyond retirement of debt and those would be return to the shareholder and secondly, give us the opportunity to continue to develop an activity that we think will enhance our position as our consumers' florist and gift shop. On the development front, you can see we've been active there. These are -- we've done activation in terms of the Vase Expressions line that Chris talked about. So we use our capital for internal and external development, where we see good opportunities to enhance our product mix and enhance our geographic coverage and our capabilities to serve our customers. In terms of the last of the 3 points: internal development activities, external development activities or development, in general; pay down debt, improving the balance sheet, number two; and number three, to return to shareholders. We've just started to become active within the last short period of time. We purchased the $2 million in stock. In the market, we'd expect that we continue to be active in that regard on a stock-buyback basis going forward.

Great. And one more question. On the social media side, you've really seemed to have a surge in users recently. As of today, you have over 429,000 Facebook followers and that's up from about 360,000 just a few weeks ago. And you've added significantly more on an absolute and a percentage basis than your key competitor over the same period. Can you talk about some of the special initiatives you're doing, what you maybe doing leading up to Mother's Day with Facebook? And what do you think has caused some of these recent increases that you're seeing? And how is it driving results?

This is Jim, Chris. Probably Chris could talk about this. It's an area we've been spending a lot of time and attention on for a long time. And I'd encourage you to go to our site today. And just take a look, I think the Mother's Day site, the focus on Mother's Day for our front page is terrific. And I think you'll see several social engagement activities right there on our homepage. They really seems to be resonating with our customer. Chris, could you give a little color on what those are? And in general, talk about how you're focusing on social media.

Yes. So just to hit on one key aspect is that we look at it very holistically, [indiscernible] platform on Facebook or other platforms and kind of on site as well, and the integration of the social graph across both our site as well as social platforms. I think to the point of the growth of the fan base, we're very encouraged by that. We will always see a growth of fan base during a holiday period, when our marketing activity picks up on those platforms, specifically on Facebook, right here. So we'll see a natural growth but I also think we're seeing a really -- a real good response to our customers from the conversation calendar that we have in place. I think the new redesigned pages, in the timeline capability that Facebook announced that we adopted early on back in February, January timeframe. It's giving us an added more in-depth capability to have more meaningful dialogues with our customers. We're learning what they're responding to. The [indiscernible] of products, the integration of pictures, quite frankly, also has really worked well for us. So we're seeing nice cross-pollination between platforms and between pictures and Facebook. So we're thinking that's helping to spur the fan base. And you're right, we are very proud of the fact that not only are we larger than any of our competitors, but our growth of the fan base is far outpacing the competitors -- the competitive landscape.

Great to see you guys do something with Instagram, given how photogenic flowers can be.

Our next question is from Jeff Stein of Northcoast Research.

Question regarding your technology platform. Maybe you could give us an update in terms of where you stand... [Technical Difficulty] The technology platform, bring us up to date in terms of where you're at, migrating all the brands to one platform and how you hope to leverage that over the upcoming holiday season?

Well, I'll ask Chris to give you the specifics, but just to give you the context, what we've been saying for the last couple of years is that we're pleased that even though we went through a tough period a couple of years -- over the last few years, emerged from the last couple doing well and seeing growth again. Throughout that period of time, we've made it an effort to make sure that we're able to continue to invest in our technology and to give us the platforms that we anticipate we'll need in the future. And I think the question that Chris just answered -- Chris is from Noble [ph] , speaks to that. The fact that we've been able to make investments in mobile when it doesn't have a payback yet, and we continued to invest and focus our efforts around the social space, particularly around Facebook. And Chris does have a set of glasses that says everything has to be looked at through a Facebook lens. He speaks to the fact the we're pleased that we've been able to continue and invest quite aggressively and continuously throughout this whole period in the platforms for the future. So Chris, give Jeff some update on the timelines of where you are.

Sure. And I think specifically, Jeff, you're hitting on some of the migration on our e-commerce platform that we've been involved in, making good progress there. We've moved a good number of our brands right now on to the -- on to our new Fresh Digital 2 [ph] Platform. Just last week actually, we had an upgrade on to that. That's performing very well for us. Post Mother's Day, because now we're kind of in a lockout, in a freeze period. We'll migrate some more business on to that platform, and then you'll see a continued migration on -- we will have a continued migration and development effort throughout the summer. It's where -- a time when we do a lot of heavy lifting in technology area to kind of move [ph] on in to the September time frame. So we're on track. It's moving well. We're very pleased with the results that we're seeing. And that's just one component. As Jim mentioned, we're constantly looking at all components of our technology platform on where we can provide enhanced value and mostly, how we can deepen and engage that relationship and activity with our customer base.

Chris, are you intending to kind of marry that technology initiative with any marketing initiatives to try to improve the cross-brand marketing, as we approach the holiday selling season? And I guess, are you going to complete this soon enough and have programs in place soon enough, so that it might be able to move the needle this coming holiday season and get more customers to buy multiple brands?

So a couple of things to that, Jeff. I think, one is the underlying technology platform, which gives us enhanced capability, scalability, et cetera. But really, that is not impeding our progress on kind of our multi-brand, cross-brand approach. So as you've seen, we've been moving in to that direction with our multi-branded multi-tabbed site on our current platform. So we'll be migrating that. And we continue to experiment. We continue to learn from our customers on how to merchandise at multi-branded site like that appropriately, how to work with our customers from a marketing perspective and the navigation flow perspective within the site. So those learnings are continuing. We do hope that the new platform will enhance those capabilities and then once we are on that new platform, I do think it will give us an enhanced capability from the CRM perspective of managing customers across brands. As I said all along, that is a somewhat slow steady growth. You can't automatically dictate changes in consumer behavior, but we can try and lead them down that path. And over time, that's what we're seeing so far, over time, is that we can influence our behavior.

Okay. And one last question, wondering if you could just talk a little bit about your fruit bouquets initiative and what you've learned from that and if that's going to be expanded over the next 12 months?

On the fruit bouquets, we began our program late in the fall, at the end of the calendar year. We think fruit bouquets and the different fruit products that we're in become a very important part of our mix this year and in the years ahead. So we're investing a great deal now. We think it's a good investment. Our early read on that is that we were right in anticipating that the customer would really like this product. And it is a role for us to play in the marketplace. So we're going to continue to invest. It's going to be a big investment, and we think it's going to be a big payoff for us.

Yes. And I'll just say, we're continuing to expand our capabilities within our BloomNet franchise florist network there and we love the feedback we're getting. The florists are seeing tremendous impacts to their business. And as you know, we firmly believe in helping our BloomNet florists to be more profitable and compete better in their local space, and fruit bouquets gives them a great capability to do that.

What we're doing there Jeff is just leveraging the infrastructure we already have. In terms of our delivery capability, our florist [indiscernible] capability, a market for same and next-day delivery. So we think this is a great product category. It's one that we'll continue to jump into deliberately. And certainly, over the quarters and years ahead, we think it becomes a big business for us. And as Chris just mentioned, more importantly, our customers love it and other customers, our florists, really love it and benefit from it. And it helps them to grow their businesses, and they grow it quite profitably, satisfying the needs of our customers.

And just one last comment on this. When we say fruit bouquet, it's an extended line, right? So one of the great benefits that our florists that were in the fruit bouquet business already realized is that Valentines Day is a great opportunity they had on a local basis in chocolate-covered strawberries. So add-on of a 6 box -- a box of 6 strawberries, a box of 12 strawberries shows us a great market opportunity for our florists in that category.

Our next question is from David Kanen of Williams Financial.

First question is, what was the average price paid on the stock that you bought back?

I'm not sure. Bill, do you know that?

I think we typically don't break [ph] that out for you but I can certainly find that out. We've been active in the market since the beginning of the fiscal -- of the calendar year. And so you've seen the average prices, when we generated the market since January [indiscernible].

If I'm gonna take a I guess, this is purely a guess, it's 250, 260 in that range.

Okay. And then a follow up on the Fruit Bouquet business, can you tell me, based on your market research, what is the size of that total addressable market? And then if you can quantify the number of shops that currently are equipped within your network. And then how much room is there to grow between your total network to equip them or retrofit them for fruit bouquets?

David, it's difficult to say how big the market is because there's only one significant real big player in the fruit bouquet side of the business or a couple of other people around the fringes of the business. So I think anyone else entering the market, bringing marketing dollars, bringing a huge customer base to the market, is going to grow that market and grow it quite substantially. So if this is the case where more marketing and category will create more business for all of us. So I think it's probably a $0.5 billion to a $1 billion business today. If you look at all the different players in the marketplace, somewhere in that range, I think our entry will grow that category. I think that new products that we have in the queue, to bring into that space, will grow the category further. So that should add to the size of the market. I think it's a multi-billion dollar market, and I think we can have our fair share of it. And I think every player that enters will grow that market. Certainly, I think that we're early into the game. We have -- as Chris mentioned, a group of our franchisees have already entered into the performance side of this business. As I mentioned on the last phone call, it takes a while to get this done there. I think it's an opportunity for several 100s, perhaps a 1,000 of our shops to equip and be in that market place. In addition to the fact that our Fannie May shops are also in that performance business. So that could be another several 100-plus shops fulfilling those products. It's all about having the market grows and our ability to service that customers in the same and next-day capability, leveraging our Fannie May shops and our 1-800-FLOWERS and franchise and BloomNet shops along the way.

So at this point, though, the number of shops that can deliver fruit bouquets is small or it's expanding. Can you give me some quantitative sense?

It's small and expanding.

Okay. So there's definitely room for growth there. Okay. And then, I was surprised by the strength in Consumer Floral, the year-over-year growth, is that...

Is that because you thought that Chris and his team couldn't do that, David?

I don't even know why. I'm pretty much clueless, but if you could give me a sense as to how much this franchisee model is responsible for that growth and the stores that have converted to this co-branded or franchisee model. Can you give me a sense as to what kind of same-store sales growth they're seeing, if any?

The -- I don't know what impact the few stores that we have allowed into the franchise program are having to the overall businesses. It's too early for us to get an accurate measurement. Clearly, we have outdone on the pulse trying to get a read of that. And clearly, I think it's a win-win proposition, a win for the consumer, a win for our local franchisees to get to carry that national banner into their marketplace. And clearly, I think it's beneficial to 1-800-FLOWERS as a company as well. I think that all we have is anecdotal information, so far, in terms of the impact it's having on the shops, and it's 100% positive. Every shop, much to my surprise, frankly -- you were surprised about the -- Chris and his team's great performance in the flower brand, I'm surprised at how much of a positive impact the re-branding, the re-merchandising, the site improvement plans that all of these shops go through, it's had on their local business, their cash-and-carry business. That's been a delight for us to see. We just had some convergence of some shops in the midwest this last week. And we had a team out for about 80 [ph] Different grand openings of our shops that had converted to the 1-800-FLOWERS franchise co-brand. And they said the reception in their towns is terrific. It just -- it gives them a great shot of adrenaline and it gets fun and excitement in their communities. It draws the people's attention and people have been so complimentary about the fact that they brought this national brand to their communities. It's creating a great deal of pride. So anecdotally, every single shop that's converted and done the site improvement plan as prescribed has reported not only their top line going up in the aggregate but significantly on a cash and carry and local basis, and that's just been a pure delight for us to see.

Okay, very good. And let's see, on BloomNet, just in analyzing it carefully, I know gross margin dollars were up almost $1 million year-over-year. However, the percentage was lower. Do you see at some point later this calendar year or over the next 12 to 24 months for opportunities to grow the gross margin within BloomNet -- further enhance the gross margin dollar contribution?

I'll let Bill give you the specifics on that, but again, this is our intention. We have the right number of the shops servicing our customers in this country, but if we grow the number of shops that will probably just be because we're expanding our footprint into other countries, we don't want to grow the top line. There are just x numbers of shops that we think are qualified to be part of BloomNet and there's a subset of them that will be able to get to a qualified state to be part of our franchise program. So our focus is on how can we help those shops with great products and services to help them grow their local businesses. And sometimes when we bring products to the table, that will look like we're compressing the margin in BloomNet. And then we'll introduce new service opportunities, which are by definition going to be a bigger margin percentages because it's not a specific good as a part of our cost of goods there. So Bill, could you give David some color in terms of where you think it will go over the next year or so?

Yes. So David, I think as we've explained in prior quarters, our focus is not necessarily on the gross margin percentage. It's on growing both the top line and the gross margin dollars, which help contribute to the contribution margin of the business. So we're obviously -- as you mentioned, gross margin dollars were up $1 million, even though the percentages were down 270 basis points. If you look back over where the trend line has been over the last 5 quarters though, the year-over-year spread between margins is getting much -- is much closer, and that will continue. But BloomNet's margins will always be, as Jim was describing, as we introduce new products, as we create greater penetration of our products and services into BloomNet, depending on how well the mix of products and services are, those margins can change, so our focus is driving gross margin dollars and ultimately contribution margin.

Okay. And then on the wholesale basket business, I recall in the December quarter, it was very weak, which I guess, we're getting close to annualizing here. Based on your sort of early order book indications, do you think we're going to comp positively this year? Is there -- do you have any indications? Can you even answer that?

This is Jim, David. We've been disappointed and have had a drag for the last couple of years now on the wholesale side of our basket business. Frankly, that's been offset by the good news and the good performance we've had on the retail side under the 1-800-FLOWERS basket brand, and that goes back in some ways to Jeff Stein's question about what kind of success we're seeing there in terms of our cross-pollination, cross-branding efforts. So if the consumer side continues to go strong and we see that as being every business that we thought it would be over time and we're very pleased with that. The wholesale side has been a disappointment for the last couple of years. We're in the throes of the marketing period now. I would expect that by -- in the next 30 to 60 days, we'll have a real good indication of what that business will look like in the next fiscal year. So I'd expect to be able to report to you at the -- on the fiscal year-end call, what we -- what we'll see in the wholesale side of the Gift Basket business for the next calendar year. I will tell you that my anticipation is that it will not be a drag, and I hope that the trends we're seeing will turn in a positive direction and that we'll be able to tell you or give you some good color on the year-end call, as to whether or not that's the case. That's my anticipation. It's my expectation that it will no longer be a drag from the declining sales, and I will be able to report to you that it will stop to be accretive from the sales point of view.

Okay. This is my final question. I'll let someone else ask after this. Social media and mobility, what kind of growth -- I know it's a small number, but in percentages, what kind of growth did you see this quarter, if you can answer that? And how big of an opportunity do you see that as in the -- like in the future, let's say, over the next 12 to 24 months?

I assume you're speaking here specifically about mobile efforts then?

Yes, both social media as well as mobile.

I'll take on the mobile and ask Chris to touch on the social. I will tell you that we've been investing in mobile for the last couple of, few years and it's been a significant investment. I'm glad that we're in position and we can continue to do that. There is not a return on that investment yet. We just -- it's just our long-term point of view that mobile increasingly will be important to us both domestically and internationally. The whole world is going mobile. And as price differences between smartphones and the regular mobile telephones decreases and as you've seen in different developing markets now where it had previously been illegal for carriers to subsidize the purchase of the equipment because of service plans in China just a week before last, that rule has changed. And now service providers can underwrite the cost of the handset. Customers are going to migrate towards smart platform. We, to service our customers as our florist and gift shop, need to be there to be convenient for them, to be accessible, to help them act on their thoughtfulness. So we will continue to invest and invest quite aggressively in the mobile space because we just think from a macro point of view, from a domestic and international point of view, that mobile will be the platform of the future. But you're right, I'm not going to get into specifics of what we're seeing in growth on mobile platform. I'll ask Chris to talk about the impacts on social.

Yes. I think the most important thing as we kind of look at social, mobile, social [indiscernible] mobile is really a consumer-changing behavior, behavior-changing platform, technology driven by technology. So we don't really look at it...

And would it be fair to say that mobile accelerates people's adoption of the social activities [ph]?

No question. I mean, we see that all in -- all the data statistics -- all the statistics. But I think, really, we don't look at it so much as channels, right? We look at it as part of our marketing mix, part of our interaction with consumers. So as you see, we're doing lots of things from a marketing perspective in social. It's hard to track exactly what channel that those sales ultimately come in. So we couldn't report to you any kind of percentage increase in social, mobile. It's not really how we manage it.

We look at it holistically.

Okay, all right. Well, FYI, this Mother's Day, I'm going to go thegift.com. I'm looking forward to enhancements on that site, even though you haven't spoken about it today. I think it's a great site because, generally, around the holidays, I have no idea what to buy and I find it very helpful.

That's music to our ears, that you're one of those people who have no idea, so you'll wind up with us [ph] . Thank you, David.

[Operator Instructions] Our next question is from Anthony Lebiedzinski of Sidoti & Company.

Earlier in the year and also late in fiscal '11, you made a couple of small acquisitions, just was wondering if you have an appetite for additional acquisitions. And if so, which areas of the business would you be looking at?

Mentioned in the response to Chris' question earlier about use of our excess free cash flow that we're able to generate, Anthony, that we look to use our money in 1 of 3 ways: improve our balance sheet, heretofore, that's been paying down debt; development efforts and now in returning some of that cash to our shareholders. So the middle point to your question around development area, we continue to be active in looking for opportunities to expand our product lines, expand our geographic footprint and deepen and enrich the services that help us to connect with our customers, helping them to connect with the important people in their lives. So I would say, we're always active in the development area. I don't think there are -- I think that the deals that we do you'll see that there are risk-light [ph] , not risk-free, but risk-light [ph]. They help enhance the product line. They help us enhance the capability. It doesn't always have to be that we're acquiring something. Sometimes we're just doing a license to broaden the range of products and services. I think the things that David just mentioned in terms of our celebrations efforts, in terms of our stationery product offerings, in terms of our gift search services, are all examples of how we use our development efforts to deepen and enrich the services we provide to our customers. So, yes, we'll stay active there. And I think you'll see it both in terms of internal development efforts and periodically something that we think is worth acquiring that deepens our capability.

Okay, that's helpful. And then within the Gourmet Food Basket segment, your gross margin percentage was down slightly. What drove that?

Bill?

Yes, again -- there's 3 multiple channels to our Gourmet Food and Gift Basket. They have e-commerce [indiscernible] e-commerce but they have fairly significant wholesale as well as retail. So it really is just mix between -- a sales mix between those channels. The margins on retail are significant in the 60%-plus range. On e-commerce, they're in the 40 -- mid-40% range. And on wholesale, they're in the 20% to 30% range, so really, it's matter of mix.

Got it, okay.

Thank you. There are no further questions at this time. I would like to turn the call over to management for any closing remarks.

Well, thank you all for your time and attention. Clearly, we're pleased with the results of this quarter. We're pleased with how we've done in the first 9 months of this fiscal year. We're in the throes of a very busy and important period of time, when we're helping our customers for Mother's Day to express themselves perfectly to the moms in their life. And I encourage you to visit our website. As I mentioned earlier, I think the team has done a terrific job. It's really well done. The product offering is good. We're as sharp as we can be on the pencil -- on our pencils to make sure that we have the right prices and the right products. And if we continue to serve our customers well, they'll reward us with increased wallet share of theirs and that will allow us to grow the value opportunity for our shareholders. So I thank for your time and attention today, and I look forward to seeing you put -- express yourself to the moms in your life perfectly with 1-800-FLOWERS. Thanks.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may now disconnect. Have a wonderful day.