1-800-FLOWERS.COM, Inc. (FLWS) Q2 2019 Earnings Report, Transcript and Summary

Good day, and welcome to the 1-800 FLOWERS.COM Fiscal 2019 Second Quarter Results Conference Call. Today's conference is being recorded. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Joseph Pititto, Senior Vice President, Investor Relations and Corporate Communications. Please go ahead, sir.

Thank you, Caroline. Good morning and thank you all for joining us today to discuss 1-800 FLOWERS.COM'S financial results for our fiscal 2019 second quarter. For those of you who have not yet received the copy of our press release issued earlier this morning, the release can be accessed at the Investor Relations section of our Web site at 1800flowersinc.com. Our call today will begin with brief formal remarks and then we will open the call to your questions. Presenting today will be Chris McCann, CEO; and Bill Shea, CFO. Before we begin, I need to remind everyone that some of the statements 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 any of its SEC filings except as maybe otherwise stated by the company. Before I turn the call over to Chris McCann to being our formal remarks, I'd like to ask everyone to mark their calendars for the morning of Friday, March 22nd. On that date, we will be hosting an investor day in New York City. We'll send out invitations with details on location and agenda in the days ahead, and we hope to see you all there. I'll now turn the call back to Chris.

Good morning, everyone. Thank you all for joining us. As we noted in our press release this morning, we are very pleased to report accelerated revenue growth, along with solid year-over-year increases in adjusted EBITDA and EPS for our fiscal second quarter. The results are a continuation of the positive trends we saw in the second-half of fiscal '18 and our fiscal first quarter of this year. For the quarter, total revenues grew nearly 9%, reflecting strong holiday and everyday gifting demand combined with excellent execution across all three of our business segments. In our Gourmet Food & Gift Basket segments, customers who were looking to express, connect, and celebrate for the holiday season as well as for everyday occasions responded well to Harry & David's Share More brand messaging, and its focus on providing truly original products. Harry & David, our largest brand in the Gourmet Foods & Gift Baskets segment, was the primary driver behind 8.4% growth for the overall segment. In addition, during the quarter we saw excellent returns on the increased investments we told you we are making in digital marketing programs for Harry & David, which contributed to companywide new customer growth of nearly 12%. And currently, we also had strong revenue growth from existing customers. The growth in the segment also benefited from enhanced operating performance at Cheryl's Cookies, strong growth in our 1-800-Baskets business, growing demand for the Popcorn Factory's new offerings in wholesale channels, strong growth in Simply Chocolate, which launched several new brands for the holiday season, including our Chuao Chocolatier [ph], Jacques Torres, Kohler, and Ethel M. In our Consumer Floral segment, revenue increased 8% compared with the prior year period, further extending our market leadership position in floral gifting. Here, again, we are seeing excellent returns on the increased marketing investments we told you are making in the 1-800-Flowers brand which helped generate double-digit gains in new customers, while also stimulating increased demand from existing customers. The strong revenue and new customer growth were achieved by leveraging the strength of the 1-800-Flowers brand and our industry-leading experience in digital marketing programs, delivering a customer experience that's second to none, focusing on truly original products such as our top selling Noelle and Christina arrangements from our new Wild Beauty collection, and our new and exclusive Succulent Garden, available in a variety of shapes, including our hit Christmas Tree Succulent. The 1-800-Flowers brand also helped introduce our enterprise-wide Gifts That Give Back collection, the part of our Smile Farms philanthropic initiative that is focused on creating meaningful employment opportunities for individuals with developmental disabilities, a program we are very excited about. Our BloomNet business also achieved strong growth during the quarter, with revenues up 15% compared with the prior year period. This reflects the investments we have made to drive significant increases in order volumes going through the BloomNet system. This growth in order volume is also helping BloomNet increase its penetration for technology system sales, including digital marketing program, point-of-sale store management systems, and digital directory advertising. The rest, BloomNet is capturing market share in a wire service space and is positioned to continue to deliver strong growth going forward. So, to sum up, we had a very good second quarter. Consolidated revenue growth accelerated to nearly 9%. We posted solid gains in adjusted EBITDA and EPS, and we saw strong results on the investments we are making in Harry & David, 1-800-Flowers and BloomNet in terms of accelerated revenue growth, strong new customer growth, and increasing order volumes. As we head into the second-half of our fiscal year, we are well-positioned to continue the positive trends we are seeing across our business. As a result, we are increasing our guidance for top and bottom line growth for the full year. I'll now turn the call over to Bill for a more detailed review of our key metrics and our revised guidance. Bill?

Thank you, Chris. Chris noted, we are very pleased with the strong top and bottom line results for [technical difficulty]. Revenue growth of 8.6% was ahead of our expectations [technical difficulty] strong customer demand for both holiday and everyday gifting occasions including Gift Baskets and Consumer Floral segments while a significant order volume growth in BloomNet. Turning to our bottom line results, worth noting that the solid increases in both adjusted EBITDA and EPS for the quarter were achieved while absorbing year-over-year cost increases associated with the assumption of a full bonus payout for fiscal 2019, compared with significantly reduced payout in the prior year, and the increased investments we have discussed in past calls in marketing for the 1-800 Flowers and Harry & David brands and the launch of Goodsey. This reflects both the strong revenue growth in the quarter as well as effective leveraging of our operating platform. Breaking down some of the key metrics for the quarter, we had strong revenue growth across all three of our business segments including Gift Baskets, Consumer Floral and BloomNet up 8.4%, 8%, and 15% respectively. Gross profit margin was 44.6%. A decrease of 10 basis points compared with 44.7% in the prior year period. The minimal decrease primarily reflects our ability to reduce our transportation cost on a per order basis through logistical initiatives, our shifting of some production and manufacturing facilities to earlier in the season when we could use our core workforce, our automation of certain manufacturing functions, and our implementation of strategic price increases. These initiatives enabled us to largely offset the impact of continuing rising cost of seasonal labor, the growth of our passport program and the lower gross margin percentage in BloomNet. Operating expenses as a percent of total revenues improved 70 basis points to 28% compared with 28.7% in the prior year period. The improved operating expense ratio was achieved despite having to absorb the impact of the year-over-year increase in bonuses and increased investments in marketing. This reflects several factors including increased efficiency of our digital marketing programs, strong revenue growth which provided better leverage of our marketing and other cost, automation initiatives in our service centers which drove lower customer service cost. Combination of strong revenue growth and enhanced operating expense ratio in the quarter resulted in an adjusted EBITDA growth of 9.1% to $103.1 million compared with $94.5 million in the prior year period. Net income for the quarter was $68.6 million and EPS was $1.04 per diluted share compared with net income of $70.7 million and EPS $1.06 diluted share in the prior year period which included a onetime benefit of $0.18 per diluted share associated with the Tax Cut and Jobs Act of 2017. Adjusted for this onetime benefit, net income and EPS for this year's fiscal second quarter increased 17.1% and 18.2% respectively compared with adjusted net income of $58.5 million and adjusted EPS of $0.88 per diluted share in the prior year period. EPS in the quarter also benefited from year-over-year lower effective tax rate associated with the Tax Cut and Jobs Act of 2017, which became effective in our fiscal second quarter last year. Our effective in this year's second quarter was 25.4% compared with 29.7% as adjusted in the prior year period. Turning to category results, in our Gourmet Food and Gift Baskets segment, which represents more than 75% of our total revenue for the quarter, revenues increased 8.4% or $34 million to $440 million compared with the prior year period. As we previously noted, the strong revenue growth in this segment was driven primarily by Harry & David which benefited from strong customer demand for holiday gift baskets and towels including those containing Harry & David's iconic Royal Riviera Pears which were truly exceptional this year. Successful launch of its new sentiments to everyday gifting occasion, growing demand for our Harry & David gourmet line which has become popular among younger customers for entertainment. Segments growth also benefited from improved operational performances at Cheryl's Cookies, has made good progress in bouncing back from last year's holiday season operating issue, strong growth in consumer and wholesale channels for 1-800 Baskets, increased wholesale business for The Popcorn Factory. Profit margin for this segment was 45.6%, up 20 basis compared with the gross profit margin of 45.4% in the prior year period. Segment contribution margin increased 12.9% to $105.5 million compared with segment contribution margin of $93.5 million in the prior year period. This increase reflects a strong revenue growth in the growth combined with improved gross profit margin. Now Consumer Floral segment, revenues increased 8% or $8 million or $108.1 million compared with a $100.1 million in the prior year period. Profit margin was 38.5%, a decrease of 30 basis points compared with 38.8% in the prior year period. Segment contribution margin was $9.8 million compared with $10.8 million in the prior year period. The lower gross margin was the certain aspects of our increased marketing investments as well as increased penetration of our passport program. Lower segment contribution margin reflects the impact of the assumption of a full bonus payout for 2019 compared with significantly reduced payout in the prior year period, marketing investments to drive accelerated growth and the startup cost for our newest brand Goodsey. Now BloomNet wire service segment. Revenues for the quarter increased 15% or $3.1 million to $23.4 million. They were $20.4 million in the prior year period. Profit margin was 52.6%, a decrease of 480 basis points compared with 57.4% in the prior year period. Lower gross profit margin percentage reflects the investments we discussed to drive increased auto volumes for BloomNet. This was more than offset by strong revenue growth in the quarter resulting in a segment contribution margin increase of 7.3% to $8.3 million compared with $7.7 million in the prior year period. In terms of corporate expense, segment contribution margin results exclude cost associated with the company's enterprise shared services platform which includes among other services IT, HR, finance, legal, and executive. These functions are operated under a centralized management platform providing support services to the entire organization. For the fiscal second quarter, corporate expense including stock based compensation was $20.9 million compared with $18.8 million in the prior year period. The increase in corporate expense plus the high bonus in stock based compensation compared with the prior year period. Turning to our balance sheet, at the end of our second quarter, our cash in investment position was $257.7 million. Term debt balance net of deferred financing cost was $98.5 million. And we had zero borrowings outstanding under our working capital line within our revolving credit facility. As a result, total net cash at the end of the quarter was $159.2 million. Inventory of approximately $64 million was in line with management's expectations. Turning to guidance for fiscal year 2019, we are raising our guidance for revenue and earnings growth for the year based on the following factors. Our strong top and bottom line performance for the first half of the fiscal year, our stated plan to continue to invest in marketing programs to accelerate growth in Harry & David and 1-800 Flowers brands and to invest in our newest brand Goodsey and our assumption of a full bonus payout for the year compared with minimal payout in the prior year. As a result, we are raising guidance as follows. An increase in consolidated revenue growth from the previous range of 5% to 7% to a new range of 7% to 8% compared with the prior year, an increase in EPS from a previous range of $0.38 to $0.42 per diluted share to a new range of $0.44 to $0.46 per diluted share, an increase in adjusted EBITDA from a previous range of $77 million to $80 million to a new range $80 million to $82 million. Our guidance for free cash flow remains unchanged at a range of $30 million to $40 million for the year. As a reminder, the Easter Holiday which represents approximately $10 million in revenue falls in our fourth quarter this year compared with fiscal '18 when it fell in our third quarter. Given the resulting impact on our year-over-year quarterly comparisons, we recommend viewing our second half results on a combined basis. Now I'll turn the call back to Chris.

Thanks Bill. We are very pleased with our results through the first half of our fiscal year. Importantly, the accelerated revenue growth we are seeing across all three of our business segments illustrates strong returns we are getting on the investments we told you we are making this year. These include our digital marketing programs for the 1-800-Flowers brand, where we are taking advantage of market conditions to drive accelerated revenue growth, our initiatives to accelerate Harry & David's migration to a digital market platform which is helping to drive both strong revenue and significant new customer growth, and our programs to increase total order volumes going through our BloomNet platform. In addition to strong growth in new customers, we're also seeing solid improvements in the behavior metrics of our customer file in terms of increased frequency, average spend and retention among our best customers, all helping to drive increased lifetime value. Helping to drive this are our initiatives to expand our Passport loyalty program, which provides free shipping and service charges for members, and our focus on cross-brand merchandizing and marketing programs to grow multi-brand customers. So, during the second quarter, we saw continued double-digit growth in Passport members as well as strong growth in the creation of new multi-branded customers. As we move into the second-half of our fiscal year, we plan to build on the strong returns we are getting from our investments. We have the benefit of the Valentine holiday moving to a Thursday this year, compared with it falling on a Wednesday last year, providing an additional day for marketing and fulfillment. And also, as part of our ongoing mission to deliver smiles, we are continually innovating to enhance the customer's experience. Among the innovations we are introducing for Valentine's Day are several in the area of conversational commerce where the 1-800-Flowers brand has already established a leadership position. These include smart ordering capabilities from Samsung's voice-powered digital assistant, Bixby. This enables customers to use Samsung devices to place orders via voice commands and to complete the order with Samsung Pay. Voice and chat optimized capabilities on Google Assistant, including real-time order tracking, new search and shop features in the 1-800-Flowers store on Google Express, enhanced text ordering and tracking capabilities via Apple Business Chat, and upgraded search and shopping capabilities on the 1-800-Flowers bot [ph] Facebook Messenger featuring new Track My Order functionality. Building on our success in mobile, we have also launched TWA technology for tablets, because tablet speeds in the gifting space can significantly enhance conversion rates. We've also continued to expand our integration with SmartGift, [technical difficulty] experience. [Technical difficulty] truly original product innovations for the Valentine holiday we have our new Magnificent Roses. These are roses that [technical difficulty] and from Harry & David, our new Ruby Cacao Truffles, creamy confections made using the unique ruby cocoa bean [technical difficulty] and deliver on our guidance for fiscal '19. Before I turn the call over to Caroline to begin the Q&A portion of our call, I'd like to commend all of our associates across the enterprise for their hard work, their innovative thinking, and their dedication to helping our customers express, connect, and celebrate. [Technical difficulty] I'll turn the call back to Caroline to open the call for any questions that you might have.

Thank you. We will now begin the question-and-answer session. [Technical difficulty] --

-- is up slightly, flat-to-up slightly depending upon the brand, so the growth in new customers hasn't influenced that.

Got it, really helpful. So then just kind of a good segue into my last question, and then I'll get off. Look, you seem like you're finally getting scale. It's something that I think we've all been waiting for a while, and particularly impressive this holiday period with all of the data we've seen out there on pressure on trucking, shipping, freight costs, et cetera. I want to ask you in kind of an odd way, does this alter how you guys would view an acquisition or give you more leeway to bolt something on that might not have standalone scale?

No, I think that as we look at the position that we're in from an acquisition point of view, first off, we're in a very strong position, a good balance sheet. We have good cash position. We'll always be very thorough and disciplined in what we're looking at. But I think you're right, Dan, we are looking for opportunities to bring even more scale into the platform that we've built. While at the same time, we will also add companies -- either add companies by acquisition or build, like we did with Goodsey, that compliments the offerings that we have out there. So what we're seeing from a brand like Goodsey is, they -- while very early stage on Goodsey, they got most of their traffic from the sister brands, and it's just a complimentary offering. So, we'll look at that opportunity, but yes, I think it does skew us to really look for opportunities of scale.

All right. Thanks for all the color -- sorry, go ahead there, Bill.

I was going to say since you brought up transportation I figured I'd take the opportunity to tout some of our accomplishments there. While transportation costs in the industry continue to increase, so we were largely able to mitigate the increases through certain logistical initiatives that we put in place, and we're actually able to reduce our transportation cost on a per-order basis in Q2. We have several initiatives in play here. We do work very closely with FedEx, which is our key transportation vendor, but also an excellent partner for us to enhance our distribution platform. We were able to reduce the number of FedEx hubs that we're brining product to, which helped us save on some our trucking costs, we're able to consolidate some of our trucking needs to several larger firms and lock in some pricing. And most importantly, we're able to really forward deploy more inventory to not only our fixed, but also our seasonal distribution centers and get the product closer to the customer, which enabled us to lower our small package costs. So we're very pleased with our logistics and transportation team. This past holiday season, it really did help us save some money.

Feels like we've been talking about that for a long time, Bill, so nice to see that come to fruition, anyway thanks for the color, and congrats guys.

Thank you.

And our next question will come from Michael Kupinski with Noble Capital Markets.

Congratulations on a great quarter. I have a couple of quick questions, Dan asked quite a few. Can you talk a little bit about the number of affiliated floral shops at this point, did you increase those in the quarter or are you still pretty constant from the previous quarter?

Yes, it was pretty steady quarter-to-quarter. There hasn't been any dramatic change, Michael.

Okay. And I know that you were thinking about, I believe, in the last quarter, you had talked about the prospect of potentially increasing those, any thoughts on that at this point?

No, we're still looking at it. We think there is opportunity in the marketplace to do so. There is -- that's a rather slow process. Florists take time to make that decision. And then also I think it's a matter of time of the year when florists will choose to another wire -- and switch a wire service. You generally won't see that happen like now, right before a Valentine holiday or a major holiday. You'll see that more when there's more time in between the holidays.

Got you. And I was talking with a relatively small Columbian floral producer at a recent conference, and he indicated that there has been some significant amount of consolidation within the floral producers. And first of all, I was just wondering if you were seeing that, and if you are, if you have any thoughts about the implementation of that prospect? And would it make sense for the company to vertically integrate into the floral production business, much like you have with Harry & David with the pears to owning a floral producer be a competitive advantage, any thoughts on that?

Yes, so we really haven't seen the consolidation that you referenced. We've heard that there might be some consolidation coming down the road, but we haven't really seen any evidence of it yet. And as far as, we have very good supply relationships. And one of the things we like is having good supply relationships with several different suppliers so we're not locked in. So, I think buying one might not give you the advantages you might think on vertical integration.

Got you. That's all I have. Congratulations again.

Thank you.

And next, we'll go to Anthony Lebiedzinski with Sidoti & Company.

Yes, good morning, and thank you for taking the questions. So, just following up on the 12%, the new customer growth, I was wondering if -- did you see a good chunk of those customers become Passport program members?

Well, again, we're very happy with that 12% growth of the overall customer file, and as we look at the customer file overall, we continue to see it grow, we're investing in that growth, again, because of the impetus that you're pointing out there, Anthony, because we're seeing programs like Passport work et cetera. And you know, specific to Passport, we are seeing double-digit growth in customers joining Passport and steady increases in the percentage of total sales coming from Passport, so we're seeing that grow nicely. And we're seeing the same thing on multi-brand customers as well where we see higher frequency retention compared to non-Passport customers. So the customer file, we're very pleased with both what we're bringing into the top of the funnel, how we're migrating them into high retention rates, getting them to join programs like Passport, so we're very pleased with what we're seeing in the customer file, because that portends the future.

Got it, that sounds good. So I was also wondering if you could help us better understand your growth trends in terms of everyday gifting demand versus holiday gifting demand, if you could kind of parse that out, perhaps, that would be very helpful.

Well, it's hard to really parse that out, you know, it kind of gets mixed in, but what we look at and what we're very happy to see is even during the holiday season [technical difficulty] saw a good double-digit increases, especially, in the food brands, especially at Harry & David in thank you occasions, sympathy, get well, just because occasions. And that really bodes well for us then when we go into times of year. Let's take Harry & David as an example. January, where you don't have the holiday season, but where you still see strong returns from those everyday customers, and we're just getting better and better at it. You've heard Bill mention in the past, and it took us a while to get the everyday business going in some of these food brands, because they weren't focused on it. So product development cycles needed some lead time, marketing programs needed some lead time, and then leveraging, and learning from the 1-800 Flowers brand, and that's where the multi-brand [technical difficulty] on the desktop comes into play. When customers are coming to 1-800 Flowers which is an everyday engine, for birthday, anniversary, get well, et cetera, we're able to get good cross merchandising and cross brand marketing programs in front of those eyes, and get them to try our newer brands on the food side [technical difficulty] to create that multi-brand customer effect. So you start to get that network effect as you do it.

Yes, but I think what's fair to say is that holiday gifts is the big driver of the second quarter, especially, on the food side of our business. We did see double-digit growth throughout GFGB and within Harry & David on everyday gifting.

Got it, that's good to hear. As far as Celebrations Passport program, so you've had that program for a while, what are the renewal rates that you're saying overall?

Well, we don't break that out, but what I would say is we're very happy as we're seeing increased renewal rates as we move on in time.

Got it, okay. And lastly, as far as the increase bonus dollar amount, did you call that out, or if you haven't, can you share that with us?

Oh, it's significant. Well, I think, as we gave guidance to this fiscal year, it was -- that it was high single-digit to close to $10 million on an annual basis. So, half of that would be represented in the first half of the year. So it's a number around $5 million.

Got it, all right. Well, thank you very much, and best of luck.

Thanks, Anthony.

And next we'll go to Alex Fuhrman with Craig-Hallum Capital Group.

Great, thank you very much for taking my question and congratulations on a really nice holiday quarter. I wanted to ask about the marketing spending at Harry & David. It sounds like it's going really well now that you've started to transition more towards a digital platform. You know, we've seen nice increases in marketing spending for the first two quarters of the year, but still not quite as much as your sales growth. I guess, you know, what I'm wondering is as you think about next year's holiday season, could we be looking at a couple years of really increased marketing investment at Harry & David. I guess, I'm trying to understand, are you just really scratching the surface of what you can do digitally, and then for that matter just for the rest of the calendar year you think there are more opportunities to increase the marketing spending at Harry & David now that you're more digital as you go after the everyday gifting business with that brand?

No, I think that's a good point that you have put there, Alex. First off, I look at say the result that we're seeing at Harry & David, first and foremost, are reflective of how the team is really performing there, and coming together, how marketing is working so well with merchandising and finance and the operations team, all at play there. So it's great to see, because it's taking a real holistic view at our marketing efforts and what's working. We are seeing, and we saw better than expected returns on our digital marketing efforts this quarter, so that's good to see for us. We got really good -- you know, new customer growth, which was the main target. And I think as you look going forward especially to your last point, as you look at -- as we position Harry & David more and more into that everyday gifting business, and we continue to see the returns there that we are seeing, I would expect you will see us increase our marketing spend a little bit more into the non-holiday time going after that. And we can -- as we do that, we're also continuing to trim catalog circulation, and to shift those dollars into the digital platform.

Great, thanks, Chris, that's really helpful. And then just following up on Harry & David, I'd be curious, you know, as you started to take the marketing spend up on that brand a little bit, has that brand been a big contributor to new members who were signing up for the Passport program or is it more the other way around, where Passport members are finding their way over to Harry & David?

It's a combination of both, really. I think each -- and that's the way we work it. Each brand is out there signing up members, getting members to join Passport, and Harry & David's been a big driver of that. Again, we've mentioned that in the past, once we got Harry & David two years or so now, onto that multi-brand platform and began to introduce them to all the multi-brand capabilities including Passport, that's when we saw Passport take a nice lift up. So instead of being dependent upon one big brand like Flowers to drive membership, we now have that second big brand driving membership as well.

Great, that's really helpful, thank you very much.

[Operator Instructions] And we'll go next to Linda Bolton-Weiser with D.A. Davidson.

Hi, congratulations. So can I just ask you about the GFGB gross margin, because it was up slightly year-over-year, but not a lot, so I guess, I'm a little bit surprised given the Cheryl's Cookies impact in the prior year, why the gross margin in GFGB was not up more year-over-year, or was a lot of the Cheryl's Cookies impact in the -- below the gross margin line, can you just explain that a little, thank you?

Yes, well, I think, we're very pleased with the 20 basis points improvement in gross margin within GFGB, again, that's where we see the largest component of the seasonal workforce needs that we have as you know, is a tight labor market out there with rising labor costs, so we have to absorb that, and that's a significant headwind that we have. So we're very pleased with that. With respect to Cheryl's, as Chris mentioned, operationally, we did a great job of pleasing our customers, getting all the packages out on time. We still have work to do to drive down some of the labor costs in that distribution center. So there's more efforts going on there, but overall, we're very pleased with the overall 20 basis points improvement in GFGB.

Okay. And then can I also ask you -- on Valentine's Day, you made a comment -- because I couldn't quite remember it Thursday was better than Wednesday, but it sounded like it is, so you benefit from that, but thinking ahead to FY20, and just thinking about how we're modeling that, I guess, it'll be Friday next year so that this remind me that's one of the worst days. So what would you recommend we haircut the Valentine's Day revenue projection, is it -- would it be a 10% haircut because of the Friday placement, or -- can you just comment on that for next year looking forward?

Yes, no, Friday is actually a very strong day for the -- for the Valentine's holiday, because we have a full week of selling up in front of it.

Yes, I think, Wednesday, Thursday, Friday, are all very good, you know, very strong days for us. So probably Thursday is slightly better than Wednesday and Friday is I think, around the same as Thursday. It really went -- it's going to be the following year, we actually have a leap year in there, so we skipped a Sunday, and when it falls on the weekend, that's when we have some impacts on -- in fiscal '21, we'll have to deal with a weekend.

But it's nice that we have a leap year and eliminate one weekend day.

It is.

Okay. Thanks, that's good. And then just looking at your marketing ratio just for the whole company, you know, the ratio is actually down year-over-year, so you talk about spending more on marketing. Is some of the marketing spend falling in the gross to net line, or can you just talk about the different types of marketing spending, and where they're falling in the income statement?

All the marketing spend would fall within the marketing and selling line. There's other buckets of costs that fall within the marketing and selling line on the income statement, but again, we're very pleased with our OpEx ratio and with our marketing spend as a percent of revenue. Overall, our revenue growth came in higher than we had expected, which helps drive that ratio down, and clearly we're getting better and more efficient marketing spends based upon the results that we're seeing.

Yes. And with that what we said is we're doing is really going out there and fueling more customers into the top of that ecosystem, because we're seeing the benefit of that pay off. So we said we were going to go out there and invest extra to raise the level of new customer acquisitions and we've done that to the point of double-digit growth, so we're very happy with it.

Okay, thanks very much.

Thank you.

And we'll return to Dan Kurnos with the Benchmark Company.

Thanks, just one real quick follow-up, guys, since I was a little surprised it didn't come up. Just on Valentine's Day, Chris, you talked about it -- I haven't really seen STD get aggressive, they're kind of in a tricky situation. Is there any thoughts around sort of what the landscape is going to look like for Valentine's Day from a marketing perspective and how that could impact your margins?

I think, as we look at Valentine's Day, our expectations are it will be an aggressive and promotional holiday with all of our competitors. It always is. And I think, you know what, you've seen us continue to do is stick to what we do well, focus on our brand, focus on the truly original products, and deliver a great customer experience. I think also you'll see -- you know, let's utilize the capabilities we have in digital marketing to get a good return. I mean, we were very pleased on the floral side with the 8% growth this quarter, and we have very good momentum and good learning from that going into the Valentine holiday. So we're feeling very confident.

Great, thank you.

Thank you.

And this does conclude our question-and-answer session. I would now like to turn the conference back over to our speakers for any closing remarks.

Well, thank you all for joining us on the call today and for your questions. And of course, if you have any additional questions, please don't hesitate to contact us. And of course, don't forget, Valentine's Day is just around the corner, so visit any of our all-star brands now to wow the one who wows you, on Valentine's Day. And one last note, as Joe mentioned in the opening call, we'll be hosting an Investor Day in New York City on the morning of Friday, March 22nd. We'd love to see you there. We'll have our senior management team there for presentations and for Q and A and we look forward to seeing you then.

The conference has now concluded. Thank you for attending today's presentation.