Good day, everyone, and welcome to the 1-800-Flowers.com Incorporated Fiscal 2012 Fourth Quarter and Full Year Results Conference Call. This call is being recorded. At this time, for opening remarks and introduction, 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.

Thanks Karen. Well, good morning and thank you all for joining us today to discuss 1-800-FLOWERS.com's financial results for our fiscal 2012 fourth quarter and full year. For those of you who have not 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 email 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 everyone 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. Reconciliation 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, and a recording of the today's call, the press release issued earlier today or any of its SEC filings except as may be otherwise stated by the company. I will now turn the call over to Jim McCann.

Good morning, everyone. The strong top and bottom line results we achieved in fiscal 2012, coming on top last year's strong results, reflect the positive trends in all 3 of our business segments, which we have described to you in past calls. In particular, our core Consumer Floral business continued to perform well with revenues growing nearly 8% or $29 million to roughly $400 million for the year. Gross margin and average order value in this category also increased again with gross margin on -- up 90 basis points on top of last year's significant gains and AOV, or average order value, up 5% to $71 for the year. These results illustrate the effectiveness of our marketing and merchandising programs focused on engaging directly with our customers to deepen our relationships and help them deliver smiles. We accomplished this through our truly original product designs, such as our exclusive, customized Vase Expressions arrangements and our hit, a-DOG-able line; through our marketing, messaging and emphasizing wow-ing recipients, never settling for less; and through our advertising programs that leverage our industry-leading efforts in the social and mobile arenas. As a result, category contribution margin increased almost 20% for the year to $39 million. We believe these results, coupled with last year's strong results, have enabled us to further expand our market leadership in the Consumer Floral category. Our BloomNet Wire Service business achieved double-digit growth, both top and bottom line, for fiscal '12, representing a second consecutive year of strong results. BloomNet established itself as the growth leader in the wire service category with unsurpassed innovation in the expanded suite of products and services it offers, including our unique digital directory with its enhanced search and advertising capabilities, and Floriology Institute, which provides industry-accredited educational and community building programs through our training…

Thank you, Jim. As we noted in our year-end press release and conference call last year, because we follow a retail calendar, our fiscal year varies in length by 1 week every 4 to 5 years. As a result, our fiscal 2012 full year included 52 weeks of business compared with 53 weeks in the prior year, and our fiscal '12 fourth quarter included 13 weeks of business compared with 14 weeks in the prior year period. In addition, our fiscal 2012 fourth quarter results include the impact of the shift of the Easter holiday to early April this year. As we reported in our third quarter press release, the shift increased revenues in the third quarter while reducing revenues in the fourth quarter, particularly in our Gourmet Food and Gift Baskets segment. We have provided our revenue results for the year and the quarter on a comparable non-GAAP basis, adjusting for the aforementioned factors, as well as providing results on an as-reported basis. We believe this additional information provides a clearer picture of our performance for both the full year and the fiscal fourth quarter compared with their respective prior year periods. Regarding specific financial results and key metrics from continuing operations. For the full year, revenues grew 7.6% to $716.3 million on a comparable non-GAAP basis, excluding the 53rd week in fiscal 2011 compared with 52 weeks in fiscal 2012. On a reported basis, revenues grew 6.6% compared with $671.6 million in the prior year. Gross profit margin was 41% compared with 41.2% in the prior year. The consolidated gross margin reflects year-over-year gross -- higher year-over-year gross margin in our Consumer Floral business, offset by lower gross margin in BloomNet and Gourmet Food and Gift Baskets resulting from product mix as well as higher commodity costs and…

Thanks, Bill. As Jim and Bill have noted, our fiscal '12 results reflect the positive trends that we have been seeing in our business for the past 2 years. In particular, in our core 1-800-FLOWERS.COM Consumer Floral business, we have extended our market leadership by delivering solid revenue growth with efficient marketing spend, increased average order value through effective merchandising programs focused on truly original products, strong growth in gross profit margins through a combination higher-margin products offerings and disciplined promotions and reduced operating expense ratio by continuing to leverage our business platform. As a result, we achieved significant improvements in category contribution in this area. These results have been driven by a number of initiatives designed specifically to help our customers to deliver smiles. In merchandising, our focus on new product development, working directly with BloomNet professional florists and our design council has resulted in several great hit products, including our expanded line of a-DOG-able floral baskets and the irresistible floral puppies that we have described to you in the past; our new and improved Happy Hour Collection of hand-designed floral cocktails, perfect for toasting any celebration; our new, exclusive Vase Expressions line of uniquely customizable vases, including easy-to-use photo and graphics uploading capabilities for truly personalized gifting; and our store-within-a-store collections featuring exclusive artisanal [ph] offering of orchids, sunflowers, roses and even some one-of-a-kind bonsai plants for the true gifting connoisseur. This focus on offering truly original gifts, designed to wow their recipient, is clearly resonating with our customers. In marketing, we continue to focus on deepening our relationships with our customers through our messaging that emphasizes delivering smiles mantra as well as our floral heritage. Throughout the year, we expanded our industry-leading position in social and mobile with innovative customer engagement programs on Facebook Twitter, Google+, Pinterest and thousands of influential bloggers. These programs enhance the relevance of our brand messaging by reaching customers via their preferred mode of communication at the right time with the right products to help them deliver smiles. Building on this concept, we kicked off fiscal '13 by launching our Summer of a Million Smiles campaign, a community-based outreach program involving associates across all of our brands as well as our BloomNet florists participating in volunteer efforts in their local neighborhoods and then sharing their smile stories with our customers via our growing social networks. The Summer of a Million Smiles program illustrates our holistic approach to integrating social and mobile communications into all facets of customer engagement. And I'm happy to report that we have already significantly exceeded our goal of delivering 1 million smiles this summer. Now I'll turn the call back to Jim.

As you've heard this morning, fiscal '12 was a good year for 1-800-FLOWERS.COM. In addition to the strong financial results and positive trends that we've discussed with you today, we also achieved a number of important strategic objectives. We sold a nonstrategic asset in our winery services business for $12 million in cash and recorded an after-tax gain of $4.5 million. This enabled us to focus on growing our direct-to-consumer wine business under the winetasting.com and Napaconnection brands. We executed a 62-store deal with a leading national franchise operator of our Fannie Mae Fine Chocolates business, significantly accelerating our efforts to expand this iconic brand nationally. This deal is already providing benefits in terms of new store openings as well as attracting additional multi-store agreements, both signed and in development. We expanded our floral franchising initiative where we continue to hear from BloomNet florists who would like to elevate their relationship with us, becoming 1-800-FLOWERS franchisees. We launched our fruitbouquets.com business, a new line of beautifully handcrafted fresh fruit arrangements. We believe fruit bouquets represent a significant incremental growth opportunity for us and for our franchisees and select BloomNet florists, a product line that our customers expect us to offer. We continue to plant seeds for international growth where -- with our equity investment in Flores Online in Brazil. Combined with our ongoing investments in iflorist in the U.K., we are excited about the opportunities we see internationally as well as customers being increasingly global. We continue to evolve our 1-800-FLOWERS baskets brand where we see customers increasingly embracing our expanded product offerings for their everyday gifting needs. And we've launched a new baskets program for our BloomNet professional florists and handling their same-day gift offerings. We made changes in management as well as sourcing and sales processes and improvements to our wholesale basket operations, resulting in the outlook for a return to positive growth in sales and contribution margin, as I already mentioned. And we continue to make investments in our multi-branded portal and our industry-leading social and mobile programs to further enhance our customer engagement and customer experience. Looking ahead into fiscal '13, we feel good about the positive trends we're seeing across all of our 3 business segments in terms of revenue growth, enhanced gross margins and increasing contributions. We also feel good about our financial strength, including our balance sheet with essentially 0 net debt, and our outlook for growing cash flows, which positions us well to invest strategically for future growth. And we feel good, too, about our deepening relationship, the ones we have with our customers, based on unique -- our unique ability to help them deliver smiles. Now that concludes our formal remarks. And I'll ask Karen now to give you all the instructions in terms of posing any questions. Karen?

[Operator Instructions] Our first question comes from the line of Eric Beder from Brean Murray.

When you look at your guidance and what you're thinking, how are you seeing the consumer? And how are you thinking about the consumer landscape in terms of their desire to spend?

Eric, we -- our guidance that we gave this year is very similar. It's consistent with the guidance we gave last year. We feel good about the trends we're seeing. We're feeling good about the margin improvement that we've seen. We feel good about the fact that our customers are embracing the new product introductions we've done warmly and enthusiastically. So from an overall point of view, we're not expecting or anticipating any dramatic growth in our category or in consumer spending. So our forecast are based on "With what we know today, let's be cautious about the consumer," but we have to recognize the fact that we have very positive trends in all the measurable areas of our business, so that's why we gave the guidance this year consistent with what we gave last year.

In terms of the floral projects, and a great job of creating these kind of very differentiated items, is there a -- are we going to see further lines besides your a-DOG-ables and kind of like cocktail collection being added to that mix? And are -- I guess we'll start to see [ph] -- are we going to see some further extensions all on those lines?

Sure. Eric, this is Chris. Yes, I think you'll continue to see us, we always have been, the innovative leader in product development, especially in the floral space. So we'll continue to come out with new products like that. But you've also seen us expanding our product line that really resonates with our customers, and you see that in some of the boutiques that we launched. So our boutique into the valentine collection, the art collection, the sunflower spectaculars that we've run. It's a fairly new line that we've introduced, taking on the success with our plant category of trees, and especially trees used for memorial capabilities, right? And then we're really happy with a recent introduction. Exclusive only to us is the Vase Expressions products, which really give the customers the ability to personalize gifts that help them express themselves perfectly. So I think you'll just continue to see us innovate not only in the floral category but in our food categories as well. We have some pretty good product innovations happening there as well that we're pretty excited about.

Yes, I think in particular there, Chris, are some of the everyday basket collections that have been introduced that seem to be well embraced by our customers.

Yes. And then the premium chocolates that we've -- that we introduced this year, and some of the development going on there in other parts of the food business, so.

Speaking of -- speaking of baskets. You talked about how you have renewed confidence that your wholesale basket division will start to bounce back. Is that just a function of the chain of orders you're seeing or what you're hearing from your buyers? How -- what gives you the confidence that Christmas will see the wholesale basket business start to rebound?

Well, you might recall, Eric, from other calls that we've done is that the wholesale side of our basket business has a selling cycle that happens throughout the spring. So we do develop, and in the winter, we sell through the spring, all of which is going to be manifested in sales this fourth calendar quarter, our second fiscal quarter. So for the first time in a few years, this has been a disappointment for us. But now I can tell you that based on what we see from our key accounts and orders that we have already booked, that we're going to have positive revenue year-over-year, top line growth on the wholesale side of our basket business, as well as improved contribution margin there. So we think we've turned the corner there, and we -- the evidence of that is our book of business that we already have for the second fiscal, fourth calendar quarter.

And last question. In terms of tying together the different brands online, I know you've done a lot of work in terms of getting these halves all together and having a single basket. How has that changed your business? And how do you think that will change it going forward?

Yes, so I think again, it's still fairly early in our efforts there, right, especially in the consumers' mindset. So we kind of introduced that expanded, multi-branded presence as our focus. But from a consumer's point of view, it's still very early. But again, we're pretty confident that based on what we've seen from the combination of 1-800-FLOWERS and 1-800-BASKETS and how we're seeing our customers continue to come back for their floral gifting needs as well as now their gift basket and food gifting needs, thus increasing and deepening the relationship with our customers.

I think, Chris, one of the things we've done multi-brand is the Summer of Smiles campaign because each of our products helps our customers to deliver a smile to them and to the recipients of their gifts. And the fact that both you and the team linked the Summer of Smiles across all of our brands this year and really emanated out, Eric, kind of our show's product line some of the experimentation that we're doing there. It typifies how you could expect this to behave going forward where you have one arching theme and execution across our different campaigns. So Summer of a Million Smiles is an early indication of how we can now start to link all our brands. And one of the things is that we have a very fun introductory product in Cheryl's that our team came up with, which is a single buttercream iced cookie, oftentimes a smiley face. And we invite our customers to just -- we want them to sample our product. And so they came up with a product that's $5 retail price point complete. It's a single cookie in a beautiful little gift box, and people are coming to our site and buying those cookies, sending to people for just $5. Well, Chris just -- and the team had gone on 1-800-FLOWERS site, just put that product on our 1-800-FLOWERS site to give customers in that buying category an opportunity to do something whimsical and fun for one or for a couple of dozen people. So it's how we're starting to, in the early stages, link our promotional efforts and our product efforts, all to help our customers be aware of the wide variety and assortment of products we have and integrate them across our different gifting categories.

And your next question comes from the line of Dan Kurnos from The Benchmark Company.

Just first, could you tell us what the Consumer Floral revenue growth was on a comparable week basis in Q4? And then, what would you say was the revenue impact of the reduction in the promotional marketing programs you talked about in the press release? And do you think there's a possibility that you'll reduce your overall level of promotional activity going forward?

Bill, will handle the part of that in terms of comparable revenue with...

Yes, so as far as I remember, yes, so 12 [ph] for them, both of them, yes. So expect that it was about 5% in the fourth quarter. All right, 7.9% for the year. And then I think if you look those things, one of the things we're really proud about is that the product lines, our marketing messages, are really resonating with our customers, thereby allowing us to not be extremely promotional in the marketplace, as evidenced by the increase in gross margin that we've had throughout the year and especially in the second half of the year. So what you can see it we're confident we'll continue to grow our customer accounts, our transaction accounts based on the green products and good marketing messages and relationships that we're building with our customers.

Great. And then on BloomNet, you had some decent growth there despite a difficult comparison, and you mentioned it quickly in your prepared remarks. But could you give us a little bit more color on how the franchise effort is going, and if you're seeing pickup in add-on services or wholesale products for your BloomNet members?

Sure, Dan. This is Jim. On the -- we view our relationship with our BloomNet florists as being pure middle in its nature as we have several gradations of depth of the relationship based on the flower shop's interest and then their qualification. And we view franchising as a top of that pyramid. And yes, there's good interest on the part of our florists. They want to be our partners and step up their relationship with us into the top of that pyramid on the franchising side. But we're being very deliberate and very strict about who we allow into that program, and we've been very diligent about how we do that. In terms of the depth of relationship and why we did have such a good year in BloomNet, again a couple now in a row, I think it's exactly what you attribute it to. It's the depth of relationship. So we spend a lot of time and effort leveraging our resources to provide them either products and services, like our digital directory, or with software services that we make available to them. But also on the product side, we're leveraging our buying power to help our florists buy product at a better cost so they can deliver a better value to their customer and, at the same time, improving their expense posture as well so they can be more profitable and grow their businesses. Yes, so it's a combination of those 2.

And we're pretty happy that BloomNet has established itself as the growth leader in the wine [ph] service category with unsurpassed innovation in the product suite and services that we offer.

Great. And just one more from me. On the mobile and social front, I'm just curious if you've seen any improvements in conversion or monetization, particularly with regards to social, excluding daily deal sites? And are you getting a better sense now of how much of the traffic and revenue generated from those media is incremental to results as opposed to shifting from the traditional website path? Or is there any further color you could give us as to customer behavior or lifetime value from those media sources?

So I think, again, well, each of those, social and mobile alike, is still in their early days. So yes, we continue to get improvements in both our capability to generate traffic, to increase conversion rates and thus monetize our spend in those categories. So that continues to grow and evolve. I think from a consumer point a view, we had -- and with any kind of emerging access channel, you get migration between -- from a desktop to a mobile site, et cetera. However, with any new emerging channel also, you have the ability to reach a new audience, the early adopter audience, right? So in those channels, we tend to get higher rates of new customer acquisition than in the more mature channels. And thus, we're pretty happy with the result that we're seeing there.

I'm glad that even though we've had to tell you over the last couple years, Dan, that we've been investing in our CapEx and investing in our marketing spend and emerging channels like mobile and social, it has been a drag on us for the last couple years. But we just knew that those phenomenons were going to become real and deliberate channels and impacts on channels, as social is and mobile as a channel. We just knew that it was going to have a big impact on the consumer and, therefore, on us. So we knew we had to do it over the last several years. And even though it was a tougher economic environment, as we look back, it was still clearly the right thing to do. And now as those -- as mobile in particular starts to mature as a channel, we'll start to see the benefit of those investments over the last few years.

And our next question comes from the line of Anthony Lebiedzinski from Sidoti & Company.

Now, well, my first question here is on BloomNet. So as far as gross margins, is this kind of the trend that we should expect going forward? I know there had been some noise with the shop-to-shop order volumes. So is this kind of where we should expect that to go going forward?

Anthony, this is Bill. As we described in the past as we entered kind of calendar '11, we kind of changed the model a little bit with BloomNet that would kind of produce incremental gross margin dollars, but it would have an impact on the gross margin percentage. We've now normalized that. We've anniversary-ed that back in the third quarter of this year, and we're starting to see, and we saw in the fourth quarter, the growth in gross margin dollars. And we think we really have kind of now normalized the margins and we'll start seeing margins where we can start improving margins going forward.

Also, I was wondering if you would comment on the impact of commodity costs. How much was that -- the pressure during the quarter? And then where do you see that heading for fiscal '13?

Yes. Look, I think commodity cost involves a number of different areas for us. Probably the largest commodity cost that we have is cocoa, and we seem to control that very well. We have bought forward in cocoa both for this year to protect those sales and into next year to protect ourselves. The second probably, that is one, is fuel. And we continue to see the fluctuations that we have in fuel prices.

But the fluctuation is still at a very high level.

At a very high level. We saw fiscal '12 clearly was over fiscal '11, so it impacts our margins. We have to manage in that environment. We've seen a little dip in the spring and then it bounced right back up in the summer. So we can manage for positive impacts on fuel. Even though it's at a very high level, we manage to where they are. I think the biggest impact on fuel is the mindset of the consumer. With high fuel, it impacts consumer confidence. And that impacts, ultimately, demand for the business. So we're probably more concerned with that. We manage around the core implications of it.

Okay. And then for fiscal '13, are there any calendar shifts that we should be aware of?

Bill, there is just one, we don't have the extra week this year, and we won't have to talk about that for another 4 years. But talk, if you would, about Easter.

Yes, we've talked already this year at the end of Q3, and we talked about it in this release regarding the shift in Easter this past year, in fiscal '12, because Easter being at the end of April a year ago and being in early April this year, and it pulled probably about $4 million of revenues into our Q3 this year, mainly impacting our Gourmet Food and Gift Basket business. As we move into fiscal '13, we have a further shift. Easter is the one holiday that really bounces around and impacts multiple quarters. Next year, Easter falls on March 31, the last day of our fiscal third quarter. So all the revenues of Easter will now be in Q3 next year. That could probably pull forward even more revenues than it pulled forward this year into next year. So this is the way you need to look at our business as really combining the second half of our fiscal year and look at Q3 and Q4 combined because Easter does shift around.

Okay. And then CapEx, where do you expect that to be for this coming fiscal year?

So I think we've been managing CapEx. You saw this at about $17.3 million. Jim alluded to some of the areas where we spend our CapEx. And while we are multichannel and we do need to support the vertical integration of our Gourmet Food and Gift Baskets, we are an e-commerce player, and so most of our CapEx goes towards technology. As e-commerce plays into the world of social and gets more and more mobile, the technology areas, where we lead, well, that's where we spend the lion's share of our CapEx. We believe our CapEx will continue to be below the $20 million level.

And Anthony, just to expand on that point that Bill made there, when you strip it all away, what are we as a company, we happen to have a core competence around e-commerce. And we like multichannel, as Bill mentioned, but we've made the decision over the last couple of years that although we love retail and we know it's important from a multichannel mix point of view, we have chosen a franchising model to approach retail so it gives us a better capital posture and good partnerships with our local operators. So we're a multichannel but heavily focused e-commerce player that happens to be in the floral and gift business. Increasingly, especially as you see our CapEx, you see that we're morphing more into a social commerce company. As, frankly, we think, most e-commerce companies will or will have to migrate and embrace these social technologies and the mobile technologies, that's clearly what we're becoming and what our CapEx expenses have helped us to become.

And our next question comes from the line of David Kanen from WSG advisors.

First question, on BloomNet, because I'm traveling today. If you could tell me, what were gross margins sequentially? I know there were up, but from Q3 to Q4?

Yes, they're -- Q4 was a little over 48%, as we reported this a year ago. Gross margins were in the 44-plus percent range. Back in Q3, I have to go back and check it on in front of me, but it was in the -- I think -- I believe it was in the 46%, 47% range.

So what we said was depending on our product introductions versus service introductions, it's -- we're going to keep it north of 40%. It's going to fluctuate within a normalized rate, but we could introduce a new product or service in the quarter that'll influence it either up or down but always a guide toward an improvement in net dollar contributions. And if you expect that percentage, it will average out about where it is but, certainly, in excess of 40%, even with fluctuations.

Okay. And then, I know you made reference to the wholesale kind of your order book for the wholesale gift basket business for the first time in a few years. It's looking like it's going to be up year-over-year. Is that -- do you expect that double-digit increase? Or is that modest and in the single digits?

Well, David, we're thrilled to be able to tell you that we're -- we can see that we've turned a corner in this business. It's been a drag on us for the last few years. It's matched the good performance in the rest of our gift food -- great Food and Gift Baskets businesses. What we see is that we definitely have an improvement in the top line there and that, that will definitely allow us to have an improvement in the contribution margin. But I don't want to get more specific in that because we have a lot to go before -- in terms of incremental orders that will come in and the execution ratio we deliver on those orders. But I'm just thrilled to be able to tell you that for the first time in a few years, we've turned the corner, we'll see growth there and will no longer hide a good -- the good business that's being done in the other food businesses. In fact, it'll contribute this year.

Great. And did you guys -- how many shares did you guys buy back during the quarter?

1.1 million. 1.1 million for the year. We only started buying back stock, I think, early in the third fiscal quarter.

Okay. It looks like now, you are in an -- you no longer have net debt. And if things go according to plan, will you generate the free cash flow that you expect? Do you see you guys -- do you see yourself deploying additional capital into stock buybacks at this level?

I think what you've seen from us, David, especially as we hit the rough period of '08, '09 and '10, that we've made sure that we were good stewards of the assets we're fortunate enough to have here in particular our balance sheet. So since 2008 we've paid down more than $100 million in debt, and that gives us good comfortable breathing space. We really, as you mentioned, have a net debt free balance sheet with plenty of borrowing capacity have we needed. And we've continued to invest in new businesses. We continue to invest in our technology. And we've continued to make strategic investments in bolt-on acquisitions and ideas that can accelerate some of our core capabilities today. And of course, we've made a few investments internationally now, which are proving to be quite good as well. So you see how we use our cash: pay down debt, invest in the future, invest in your good and your growing businesses. But we've had the flexibility, on top of that with the performance that we've demonstrated in the last couple of years, to generate excess free cash flow over our needs. And then as we -- well, now that we're getting to the point where we have little debt we'll pay down -- we're scheduled to pay down another $16 million in debt this year, at least that's the minimum we'll pay down, it gives us some flexibility to make other decisions there. I think you could expect that we'll be -- continue to be active on a go-forward basis now that we've passed our blackout period, or will over the next few days, to be active in buying our stock again.

Great. And then the last question is on the fruit bouquet business. Can you give me an update there in terms of the number of floral shops that are prepared to give that offering?

Okay. And so we're pretty happy with the way the fruit bouquet business has gone really in its first year of introduction. And shops that are retrofitting their capabilities to really provide that business, the ones that have not only are doing a good job fulfilling the orders we generate from e-commerce but doing a really good job of generating local retail sales as well. So we're very happy for those franchisees that have embraced it early on. We're continuing to add the shops, and we will continue to do that throughout the year. Some places, it takes longer than other depending on permits and things like that, but I think you'll just see a steady growth of zip codes that we cover. And if you look at our website, you'll get an idea of how many zip codes we cover through the food bouquet program. So we're very happy with the growth rates we're seeing there.

David, this is Jim. This is a product -- I've been at this now for more than 3 decades, and this is a product that, frankly, I remember making for customers back 3 decades ago. So it's a -- I almost feel a little bit embarrassed that we didn't realize earlier on how much of an incremental product this could be for us and our franchisees. But clearly, it is. Clearly, our customers like it. And clearly, our customers have been asking us for this product for a few years now. So we are on the stage now. We have a good brand name. And I think we brought our florists' creative capabilities to the product line. So I encourage you to take a look at it at the website. Really good product. It's great for our florists because you have some CapEx to get into the business. But once they do, as Chris mentioned, the local business is terrific in the food bouquet area, and the business we'll be generating through e-commerce that we can send to them is even as good, if not better, than the local business they get. So everybody wins on this: the customer gets a good product; our franchisees get a good-margin product, leveraging their facilities, their delivery capability and their creative skills; and our customers get a product they truly like and enjoy. So as Chris said, our efforts will be to continue in a very steady stream of adding new zip codes with new capabilities as we train our florists, as they come through our Floriology Institute, we introduce, training them on the product, on the sourcing of product. We have field staff helping them in the product. So this will be a big, multiyear effort that will result in us having another product category that's very substantial and is all incremental to the flower business.

[Operator Instructions] Our next question comes from the line of Jeff Walkenhorst from Copeland Capital.

I wanted to follow up briefly on the capital allocation question. I know, Jim, you touched on it in some detail there. But I was curious, as we've now kind of reached the inflection point on the balance sheet with -- where cash should hopefully continue to build, at what point would you consider the possibility of initiating a dividend as part of your capital allocation?

It's something that we have to consider. David, as you -- Jeff, rather as you say, we've hit an inflection point, and we feel very confident about this fiscal year in spite of the uncertainties that we can't control and know enough about. I would say over the next couple months as we get a good feel for how the consumer will behave as we enter the holiday period, that will give us another data point as we consider the options we have in front of us. I think there are good and interesting ways that we can grow our business with strategic development activities. And I think that I'm happy to be a purchaser of our stock. I think it's good for our existing shareholders, and I think it's very good for our flexibility and for our balance sheet as well. And the dividend question is one that we'll revisit, as we do periodically. It's one of the options we have available to us.

Okay, that's helpful. And on the acquisitions front, so you have made some smaller tuck-in acquisitions in recent years: Mrs. Beasley's, you mentioned the iflorist. Could you just spend maybe a few minutes on how some of these acquisitions have worked out to plan or maybe where have there been travails? Are you pleased with how they've gone?

Well, I can tell it to you easy. The only one that has not worked out to plan was our wholesale basket efforts. And as -- as I expressed some delight being able to tell you that I think we've changed direction on the wholesale basket business. I can tell you all the others have worked pretty much to plan, some far ahead. So internationally, the 2 investments we've told you about where we have deployed some capital, in the U.K., our partners there have done a terrific job with growing that business over the last few years. It's not consolidated in our numbers because we're in a minority position there. But we've them giving them financing, they've leveraged our expertise in terms of promotion and marketing, mobile efforts. And these guys are just doing a terrific job as they become closer and closer to our business. That, the one I point to, is just absolutely over-the-top in terms of delivering against the plan we had. They're far in excess to the plan. And our newest investment is in a company that we've come to know well over the last couple of years, a company that mimicked what we were doing here in U.S. over a dozen years ago: a family business, good values, good capabilities, wonderful people, people that we're proud to be partnered with. And I expect that although in it's early months of that relationship, because we know them for a couple of years quite well, I'm very confident that they'll perform just like iflorist has and exceed their plans quite successfully. You mentioned Mrs. Beasley, and that's a very small acquisition, but that's on or ahead of plan as well. They were able to buy some assets, put them on top of a platform we already had, not inherit any of their expense posture except for the store that we kept open out in California, which was their base store and their lead store. So we had very little increases in the overhead, our expenses. And the few million dollars in top line business that we moved over -- came over on a kind of very profitable basis for us.

Okay. And have you been able -- I mean, that's -- it's higher price points, some of these products. Have you been able to scale those successfully to your current customer base?

I think we have. And I think that, that customer base, being a higher price point, very thoughtful, very personal, I think, gifter, will be a very good customer for our fruit bouquets, for our other Cheryl's product line, which is at different price points, and, frankly, for our gift baskets because they've been purchasing a gift basket of muffins and cookies from Mrs. Beasley. So while small, we think that they'll be a top candidate as a customer to be a multiproduct purchasers of ours.

Okay. And is it -- would it be a safe assumption on the acquisition front to think that going forward, you are more inclined to make these smaller tuck-in type acquisitions versus the wholesale basket size deal that was a few years back?

I think we have a responsibility to look broadly at the marketplace because of the -- because of our, first and foremost, desire to make sure we had the balance sheet flexibility that we wanted, so that I can look you, as an investor, in the eye and look all of our other constituents or each of our staff, et cetera, in the eye and say that we're on solid, financial footing. We clearly are now. So I think it gives us the opportunity to look more broadly. I think we always do. But now it gives us more wherewithal should we -- to look bigger than we have. Plus, when you look, it helps you think about your strategic direction and helps you analyze the businesses you already have. It gives you benchmarks for your thinking in terms of your performance to date and other opportunities. And I would point out that the largest acquisition we ever did, which was Fannie Mae, has just worked out gloriously. Now we're quick to be self-critical and expose our warts with the wholesale business, but that also begot us the opportunity here into the very successful consumer side of the basket business. So while we stumbled on the wholesale side, mea culpa and full confession, we think we have the -- are headed in the right direction now. And the largest acquisition we ever did, Fannie May, is just becoming a very strong pillar of our product line and our opportunity set for how we grow our business.

Right. But it's actually a great segue. I just had a couple of questions on the Fannie Mae business. Did you break out or mention the online growth for the business in the quarter and in the year?

No, we haven't yet.

Is it -- I mean, is it sort of mid-single digit? Or can you give us a ballpark idea of how it performed?

It's growing in line with the rest the businesses. Remember, it's a business we introduced probably 5 years ago now. So it's growing on pace. I think you can -- I think we can look to accelerate that growth this year. It was outshone by its wholesale growth, and that really shouldn't be the case. Just the wholesale guys did a great job, but I think we can do a better job on the consumer e-commerce side. And I think you could expect to see that this year.

And are you still in a position with manufacturing capacity where you don't really need to deploy incremental CapEx to ramp up volume if you have the demand?

We could.

Yes, that's right. We have capability. We have -- as you expand, there's always some incremental capital you put in, but alternating with things like that. But we don't need it to -- for expansion purposes.

So I don't think -- when you see -- when Bill mentioned the CapEx, that about 75% of what's spent is on technology, it's the other 25% will go to other stuff like improving your functionality or existing facilities. But we don't anticipate any large need for additional facilities to handle the growth we project over the next few years.

Okay. And one final question. Were -- have you been able to take any pricing or bump prices upward in the chocolate business? Or have discounting kind of kept prices flattish, especially as input prices rise?

Pricing has been -- we touched a little bit on the commodity cost of cocoa and have seen that jump around quite a bit. But we've been -- I think we're very smart in our purchasing of cocoa until we've been able to maintain our margins for that without increasing pricing. It is a product of different times of year where there are some promotions with that, kind of just like we do throughout the rest of our business.

What we need some promotional pricing is to bring new customers into our stores, to get them to our website. And I think that the team on the food side of our business, the management group there that's been in place now for a good number of years did a really good job of hedging our exposure there so that we could prepare a budget for this year that we've given you guidance on that fully anticipates our commodity costs. And in many cases, it hedged us throughout the year. They've done a very good job of being very prudent about how they managed that expense side of our operation.

And I'll add, though, similar to what we've done on the flower side and other brands, we've made sure we offer a good-better-best merchandising strategy. So we have lower price point items for our customers, the core price points, and then higher-end items. And thus, we've been increase our AOV.

And I mentioned earlier, Jeff, that the -- the great job that the team at Cheryl's had done at introducing a $5 price point. I think we've -- we're learning some really interesting lessons there. And while you can't make money at that price point clearly, what we're seeing is a really good uptick, and people who've received and sent those cookies are then becoming regular customers of our regular product line at our regular price points. So they end up -- is that a marketing expense? Is it a product expense? Yes to both. But clearly, it's turning a lot of new customers on to our product line, and it's being done quite efficiently.

Right, right. If you could go -- maybe from a 10,000-foot level, if I look at over the next several years, 3 to 5 years, would you expect the chocolate business to have better -- an ability to bring -- push prices higher with inflation, is it that type of business? Or when do you think about a See's Candy, which has been able to raise prices over time, how would you classify Fannie Mae?

I think that they -- what you've seen historically is what you'll see going forward. We've introduced different price points, both higher and lower, which has allowed us, when we introduced our Artisan line of chocolates, which is a much higher price point, so that's given us some margin expansion there. On the same token, in our stores, they've introduced the Wrap product line. That's a lower price point on a per pound basis, and that's increased our traffic. So you'll see that management team there continue to push us in both directions so that we serve more and more consumers and we have more and more flexibility to attract them into our stores, into our franchise without us compromising on margins.

And I show no further questions in the queue at this time.

Thank you, Jan, and thank you all for your time and attention today. And of course, we're available for any other comments or questions you have. Feel free to just reach out to us, and I think you all know how to do that. And as a reminder, I encourage you to take a visit of our website where you can see the Summer of Million Smiles program all the way it brightens the days of many people around the country. It's something that our team here has really gotten engaged in, our franchise and BloomNet communities have all gotten engaged in. It just helps you to realize the business we're in and how lucky we all are. So thanks for your time. We thank you today look forward to chatting with you again soon.