Good morning and welcome to 1-800-FLOWERS Inc Fiscal Year 2020 Fourth Quarter and Full Year Results Conference Call. All participants will be in the listen-only mode. [Operator Instruction] After today’s presentation, there will be an opportunity to ask questions. [Operator Instruction] Please note, this event is being recorded. I would now like to turn the conference over to Joe Pititto, Senior Vice President of Investor Relations and Corporate Communication. Please go ahead.

Thank you Ann. Good morning, and thank you all for joining us today to discuss 1-800-FLOWERS.COM, Inc’s. financial results for our fiscal 2020 4th 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 corporate website 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 supplementary 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 will now turn the call over to Chris McCann.

Good morning, everyone. Thank you all for joining us this morning. I would like to begin by acknowledging all of our associates across the company for their dedication and hard work in healthcare - to stay connected and express themselves despite the unprecedented challenges brought on by the COVID-19 pandemic. I’m grateful and proud. Our record revenue and profit growth for the fourth quarter and the full-year is a testament to their efforts and demonstrate the effective execution of our strategy to engage with our customers and drive sustainable long-term growth. As we noted in our call at the end of April, through the first three quarters of the year before the impact of the pandemic, we achieved solid top and bottom line growth, as well as strong growth in our customer files. This reflects our ability to leverage our business platform, including our all-star family of brands, our focus on innovation in technology and product development, our digital marketing experience and expertise and our dedication to providing a truly exemplary customer service. We entered Q4 with this momentum, which was further accelerated by the impact of the pandemic as customers increasingly turn to our trusted brands, and innovative products to help them remain connected, and express themselves during a very difficult period. As a result, already strong customer demand levels rose dramatically across our Floral and Gourmet Gift Brands. In our Gourmet Food and Gift Basket segment, revenue for the quarter increased more than 112% as products and product collections that had already been showing strong growth became the go-to purchases for our customers. Products like the Harry & David Gourmet line of prepared foods from [indiscernible] to complete family meals. The Popcorn Factory’s Tins With Pop featuring relevant memes like a Socially Distant Hug, Cheryl’s Cookies Sentiments Collection…

Thank you, Chris. We are very pleased with our strong results for the fourth quarter and full-year and with the considerable momentum that we have carried into fiscal 2021. Fiscal 2020 was an exciting, challenging, and ultimately very successful year for our company. The past 12-months were book in by the acquisitions of Shari's Berries in August a year ago, and our acquisition of PMall earlier this month. These acquisitions illustrate the strength of the unique business platform that we have built, one Shari's Berries, a smaller tuck-in, where we required no hard assets, infrastructure, or personnel, and where we are able to leverage our existing operating infrastructure to repositioned the brand and grow with top and bottom lines ahead of even our own expectations. And the second PMall, a great new extension of a product offering that adds a whole new set of capabilities to our platform and instantly makes us one of the leaders in the personalized products that our customers tell us they are looking for to help them connect and express themselves. In both cases, we see significant opportunity to accelerate the growth of these businesses by leveraging off close friend marketing and merchandizing, our digital marketing experience and expertise, our technology platform and our fulfillment network. Now breaking down some of the key metrics for the fourth quarter of the year. Our revenue growth for the first nine-months of the fiscal year was a solid 8.3%. And we were building momentum as we approached our fourth quarter with double-digit growth in Q3. when the pandemic hit, our eCommerce revenues rose dramatically. Total consolidated revenues grew 61.1% to 418 million in the fourth quarter and grew 19.3% to 1.4 9 billion a year. This reflected solid growth across our three business segments for the quarter and…

Thank you, Bill. So to sum up the momentum that we saw across the first three quarters of the year accelerated in the fourth quarter, the record results of the quarter and the fiscal year are evidence of our continued strong execution across our business segments despite the challenges brought on by the pandemic. I would like to, again, thank all of our associates for their agility, tenacity and commitment to finding solutions, to enable our customers, to express and connect with the important people in their lives. As we move ahead into fiscal 2021, the strong momentum built throughout the past year has continued through the first two months of our Q1 and it bodes well for the key holiday season in Q2. We continue to leverage the power of our unique operating platform. The strength of our brands, expanded product offering, the innovative application of technology and the marketing and product strategies that are designed to engage with our customers to drive customer lifetime value, such as our connection communities and experiential design and entertaining events. Our strong execution and continuing momentum combined with our strong balance sheet and significant cash flows give us continued confidence in our ability to manage our business in this unprecedented and rapidly changing environment. Thank you. And we look forward to sharing our Q1 results with you in October. Now I would like to open the call and take your questions.

[Operator Instructions] The first question today comes from Daniel Kurnos with The Benchmark Company. Please go ahead.

Hey good morning, thanks. Chris. Your commentary around the holiday season sounds incrementally more optimistic. I know you guys always start off conservative, but just to be clear, it sounds like even with the retail closures and the wholesale headwind, you are expecting, I just want to make sure we got this right organic growth through PMall in the holiday period. And if that is the case, can you just talk about what you are seeing that gives you confidence in kind of making that statement?

Sure, thank you, Dan. Yes I think in your interpretation of my comments are accurate. What we are seeing is the continued momentum in that business, and really the continuing momentum that we are seeing on the eCommerce side of the business and really supported and sustained by the strength that we continue to build and see from our customer files you know what we are seeing in new customer growth. What we are seeing in the behavior of the new customers even since the pandemic, some new customers we acquired really since the march time period, their behavior metrics are looking better than average. And so all of those things coupled with the product categories, we have the operating capabilities, and the team has done to adapt our facilities into this COVID operating environment that we are in really gives us confidence that we will be able to handle the demand moving forward into product.

Can you go a little bit more into some of those KPIs around the new customers if you wouldn't mind? I mean, at least what you are willing to share, how many of those new customers are coming to multi brand or at least, is it greater than sort of what you have seen historically? Are you seeing significant repeat usage in the September quarter or anticipation of such relative to prior, just anything around color that would be super helpful?

So, while we don’t breakout up specific metrics around those, what I can say is that we are continuing to see A, first and foremost as I highlighted in remarks, good performance from existing customers as well as accelerated new customer growth. Then what we are seeing happening with that is we are seeing several different things. We are seeing an increase in multi brand customers. As a percentage of our total customer base, we are seeing a higher conversion of new customers into our Passport Program. We are seeing the existing Passport Program become a higher percentage of our daily and monthly customer activity and revenue streams. So, we have seen an increase overall throughout the year, but even as I pointed out from a short-term perspective either if I just look back to the March time period an increase in - and again it is going to be slight because of the short time record, but trending increase in frequency and retention rates. So, all of the behavior metrics we track are showing positive right now, which gives us the confidence that besides the demand that we are seeing out there on new customer growth, the sustainability of our customer base bodes well for not only the upcoming holiday seasons, but beyond that as we go forward.

Got it, that is really helpful. And then just last one for me, and I will let others jump in here. Obviously, with elevated levels of demand, I'm sure you weren't anticipating as 60% growth quarter in the June quarter. But if this kind of continues, we know that you have had some expanded distribution plans on tap and obviously COVID probably put those on hold. Are you able to get anything done prior to holiday period to improve some - to get efficiencies or is it going to be kind of you know just you have sufficient network capacity now to handle the demand and then once you get through the holiday period, look to go after whether it is national coverage or improved - reaching from hubs?

Yes. So, I think as we looked at our distribution network and you know the plans we have to continue to expand that and enhance the operating leverage of those facilities does continue. And there are things that we have made progress since last year, that will help us for this year, there are some things that we actually had to put on hold. And then keep in mind that we are also dealing with the increased operating costs of - operating in a socially distant manner. But with that said, I think pretty good position as we go into this holiday.

Yes, Dan, certainly, our trend lines in eCommerce is very strong in the fourth quarter, we have seen them roll over into the first quarter of this year. These are obviously during times when we are comping against overall domain, that is much lower. We are able to even with the challenges of social distancing and some of the inefficiencies we have, and as a result of that we are still able to product the product, get the product out the door. Lots of stories out there about challenges for capacity with the third-party carriers, with the UPS, FedEx is and USPS of the world. So we have all these as potential headwinds, but we think our eCommerce demand is going to be strong. We are working very hard on producing products early to make sure that we have a product to fulfill that demand, but there are challenges and headwinds as we get into Q2.

Reflective of those challenges and headwinds as Bill pointed out is because of one of the benefits with - getting in the benefits with change as well as others, the tectonic shift from offline to online. So that huge growth in eCommerce is benefiting us. Putting some challenges on the distribution channel. But those are the things we have to manage through.

Do you have any alternatives for last mile that are cost efficient? If you needed to use them?

Yes, we have a very flexible model in place. So yes.

Okay. Perfect. Thanks very much for all the color guys, I appreciate it.

Thank you.

The next question comes from Michael Kupinski with NOBLE Capital Markets. Please go ahead.

First of all congratulations on your extraordinary quarter. Just a couple of quick questions here, just following up on Dan's question with the substantial growth were there any issues that arose from that type of revenue growth? Any issues you feel needs to be addressed to support the prospect of elevated revenues or future growth? Or maybe that have limited the extraordinary performance that you had in the quarter?

The extraordinary growth suppose some challenges. And that is one of the things that I'm extremely proud of is how the team responded to that. You know how the team responded from a number of different fronts, the preparedness and response team that we put in place led by our General Counsel where made up of operations people from across the company, managing first and foremost the health and safety of all of our associates, our vendors, and our customers. But then saying, okay, now how do we operate this environment? So there were challenge, but the response that they had to get us up to speed, to get us to the point where we were performing right now. I just think has been tremendous. So challenge have been thrown at us, we responded both of those challenges and we think we are well positioned going forward.

So in other words, you don't feel like you left any revenues on the table like you rose to the occasion, so to speak.

Correct.

And then in terms of just the integration process for PersonalizationMall, can you kind of give us your thoughts about, I know that you have identified opportunities and given the size of the facilities there, but I was wondering in terms of cost synergies with some of the other brands, when you start implementing some of those opportunities?

Well first and foremost we are thrilled to have completed this acquisition. And it really is as Bill pointed out earlier, If you look at the two acquisitions we have done in the past 12-months, very different, Shari's Berries was kind of a tuck-in, just take it and put it completely on top of our platform. PersonalizationMall is really a category extension for us putting us into another leadership position. Now we are leaders in floral, we are leaders in Gourmet Foods, and now we are a leader in personalization kind of products, which is a nicely growing markets. And the team that comes with PersonalizationMall is just a fantastic team. I mentioned, we looked at this business back a couple of times, but certainly back in 2016 and always came away, very impressed with the management team there, I don't think they're doing a fantastic job. So clearly this is more about focus for us on gross synergies and merely product category extensions. And, really that is where our focus is right now, getting the business on to our platform, making sure that this holiday season we are able to expose our existing customer base, the PMall product line and PMall customer base to the rest of our brands. Making sure that we are implementing the Passport Program across all of our brands, cross promotion and cross marketing capabilities, that is where the focus is right now for the short-term, of course, from a long-term perspective, we'll always be looking at how do we continue to get off that synergies out of our combined essence.

And thanks for that color. And it was just, I'm wondering in terms of PersonalizationMall, I know that you kind of gave us some thoughts about how it is performing in the quarter, just backing out the pro forma guidance, I guess if you want to look at that way. Can you just tell us about the revenue growth you indicated year over year in the fiscal first quarter, if you can just tell us what that might be, and then you indicated that it would be profitable. Can you give us the margins in the quarter? And then I think when you purchased it, you kind of gave us some thoughts about what PersonalizationMall had done in terms of revenues and cash flow contribution. Do you anticipate that the businesses in such a position that it will grow from those metrics that you provided earlier?

And Michael, this is Bill, as Chris mentioned, we are very pleased with closing these transaction, we saw PMall since it is reopened up, there is year-over-year revenue growth has been nice and we are pleased with it since we have closed on August 3rd, we have seen some nice year-over-year gains from the top-line. Got to remember seasonality of this business is pretty consistent with seasonality of our enterprise business with a little less than 50% of the revenues being in the second quarter. And then the second biggest quarter is the June quarter. They are contribution margin positive and in all four quarters of the year. So that is a great add. We think in some seasonalizing our business to some degree. As we outlined early on this, this business did historically in excess of 150 million and about $25 million in contribution, certainly from what we have seen so far, we expect to achieve and hopefully exceed those numbers.

And Bill can you just give us the thoughts on what the balance sheet looks like currently, you know, following the acquisition?

What balance sheet looks like? Following the acquisition.

We spend $245 million of cash on the acquisition of PMall, but as we announced earlier this week, we just closed on a new credit facility. So we added 150 million of borrowing capacity, a 100 million of that is term. So net of those two, we are down - we use in theory, 150 million of all cash towards the equity acquisition, but we are following capabilities as we go through this quarter where we use a second quarter where we actually use working capital. We anticipate that our max followings on working capital in the second quarter for inventory build would be about a $100 million that leaves us an extra $150 million of excess borrowing capacity at that point in time. By the end of the second quarter our cash is going to be very strong and will be have no borrowings under the revolver.

I think you know Bill and team has done a great job really leading the effort to put that credit facility in place. When you look at what we have done there, the balance sheet that we have today, put us in extraordinarily strong position to make sure that we are looking to say, how do we invest in our business growth for the future, whether it is further capital investment that we might need and somebody's operating efficiencies. And you will see us do that, from time-to-time, invest in some of our capabilities to enhance the operating leverage going forward. Or from an M&A point of view, as you have seen, we continue to be very judicious and very diligent in our approach. And looking to very strategic and looking for businesses that we believe can either leverage the operating platform we build or add to the operating platform we build or take a combination of both. And I think, again, we are in a very strong position, we have dry powder on our balance sheet, and we'll continue on the direction that we have been.

Yes. And Michael not be lost in this is we did generate 104 million of free cash flow during this past year, so significantly accelerated the amount of free cash flow that we generated so the balance sheet will just continuing to get stronger and stronger.

Great. Thanks and congratulations.

Thanks.

The next question comes from Linda Bolton-Weiser with D.A. Davidson. Please go ahead.

So, in the first fiscal quarter and thanks for providing the guidance. But on your sales line, you are going to beat consensus by more than $40 million. And yet the upside to EBITDA is just about $10 million. So, can you give a little more color around that, is that still the higher operating costs and shipping costs and that whole thing or what exactly what accounts for the fact that you are outside and EBITDA is not even greater?

Well Linda I think we are actually very happy with the guidance that we gave. We expected everyone to be pretty pleased with the both the top and bottom line guidance that we provided. But we are operating in a pandemic. And we do have increased courses as a result of that. But I think we are driving a very nice bottom line improvement off the growth that we are -.

And I think you really need to look to last quarter in the last year's improvement in our fetch ratio, which was phenomenal. And that is what you expect to continue to see from us driving that OpEx ratio, driving that increased margin capabilities. And that is what we are demonstrating in this while we expect going forward.

Great, and then you had mentioned higher corporate expense, one of those things was pandemic related higher corporate expense, what specifically would be pandemic related in that line items?

Yes, first and foremost, as we approach our jobs every day we got to keep in mind the health and safety of all of our employees. So, of course, the enterprise, we have nurses at all our facilities to take temperatures. We have all testing that has been that is been done at our facilities, cleansing of our facilities at a very rapid pace equipment for all our facilities to keep our employees safe. These are all types of expenses that we are talking about.

Running shifts that we had to before this also exist in labor and manufacturing facilities, et cetera. First, as Bill said, first and foremost, health and safety.

And then, finally, you mentioned the election, maybe taking attention away from consumers, temporarily, with all the eyeballs that are on TV during elections. Have you considered perhaps looking at TV advertising in addition to your other digital and radio efforts.

So, Linda, I think, you know, first and foremost, the general election, especially national elections always is a little bit of a drag on retail sales in general. Now as we look at this year, while that is a potential headwind, because it is so much in our face every day, it might not be that much different than a regular year, we just don't know that yet. As we look at, advertising clearly running up to election advertising rates will move up as well. So we will always look to take our advertising and making sure that we are optimizing where we are getting the best performance. We have been experimenting on the FLOWERS brand as you know in the past year or two, utilizing television a little bit more. We have been experimenting on television with Harry and David and with videos, but we will put the dollars where we are seeing the better returns.

Okay. Thanks that is it for me. Congratulations.

Thank you very much.

The next question comes from Anthony Lebiedzinski with Sidoti and Company. Please go ahead.

Good morning. And thank you for taking the question and providing all the details. So I wanted to circle back as far as the COVID-19 really at a cost Bill. I mean, if you could, is it possible for you to kind of isolate that? What was that for the quarter and kind of what is embedded in the guidance in terms of those costs for the first fiscal quarter?

Yes. You know Anthony we don’t break out specific cost, but, they were not insignificant in the fourth quarter and we were anticipating that, you know throughout fiscal 2021 that they are going to continue at that level.

Okay. And in terms of a PMall just wanted to get a sense as to kind of how you were thinking about that as far as the plants to eventually integrate that into the multi-branded website and the you could be talked about driving growth and revenue synergies from that. But can you give us a sense as to like the timing of when you expect to be able to fully integrate that?

Sure. So, first and foremost Anthony to answer your questions. As we look at this internally call this project ascent as we bring these businesses together. And as you know we have a rule in our integration playbook that we are managing and that we are following that we have really been building ever since the acquisition with Harry and David and fine tuning our playbook. Number one rule in our playbook is don't mess up the existing business, especially as with what now on the precipice of the holiday season. So that is the number one thing that we challenge ourselves and challenge the team with is let's help them run their existing business before anything else. With that said, you will see us promote the PersonalizationMall brand and product line on our multi brand platform prior to holiday season. You will see us expose all of our customers into our Passport Program. You will see us utilizing their products across merchandising and cross marketing capabilities to our existing customer base. So there are certain things that we will get done certainly for the holiday season, because it is all important and we have some time to do so, but we will do so in a very judicious manner.

Got it. Okay. Thanks for that. And then obviously, you know you have had a tremendous growth in customer file and a lot of people signing up for the Passport Program. So you know, given the accelerated shift to eCommerce. I'm just wondering if you guys are thinking of perhaps changing your pricing for the Passport Program, is there an opportunity to increase that price perhaps? Or is it just something that you would not consider at that point?

Yes. We are not considering it at this point. It is something that we look at from time-to-time. And if there are things that we start to edge into the program that are other value add items that we might consider it, but in the short term, we are very happy with where we are and the growth that is producing in the customer behavior metrics that is producing. And all of that I think really fits into making sure that we continue to position the strength of our customer file. Position the company that we are, which is a company that inspires human connection and expression and celebration. And as we look at that as a company with the Passport Program, with the customer file, with the company position, we are so well positioned right now in what we see as the key trends coming out of this pandemic. The shift from offline to online and as an eCommerce, mobile commerce company, we are well positioned for that. The consumer sentiment that we have all learned as we had to go into isolation of the need to be socially connected to each other, to maintain relationships, to express ourselves. And even in this all this gloom, it is a very day celebration. Certainly I became a grandfather during this pandemic. So that was a moment of bright, light and celebration for us. And many of us have those moments. So we are well positioned for that. And the third key trend that we see coming out of this is the nesting. People celebrating and expressing themselves more and more around their home and our product categories, we are good for that nesting trend already of the food product lines, decorating with flower in your home, but now with the additional PersonalizationMall, because it is a whole another product categories, people celebrating and nesting at home. So those are the three key trends and I think we are very well positioned to those.

Got it and congratulations, Chris on becoming a grandfather. So last question for me is, so as far as your appetite for additional acquisitions, or just wondering if you guys have a target leverage ratio, perhaps so that you want to be at so it sounds like - obviously now you have added additional financial flexibility with the new credit agreement. Just wondering how we should think about your appetite for additional acquisitions and then leverage ratio that you want to get to with that.

Yes. So Anthony, as a result of the closing of the credit facility, we now have a little under $200 million worth of term debt, the $92 million we had on our balance sheet as of the year end plus a new $100 million. But still, our leverage ratio right now is the way on the two. So we have obviously flexibility to go off north of that. I think we have said in the past that we would be comfortable three times leverage. Obviously depending upon the opportunity of that could always change, but we have plenty of room from where we are to - additional M&A.

Got it. Alright, thank you and best of luck.

Thank you Anthony.

The next question comes from Doug Lane with Lane Research. Please go ahead.

Yes. Good morning, everybody. I just want to go back to the PMall acquisition if you don't mind. Because I know that during the initial stages of the pandemic, it was pretty much step down. So is it fully back up and running now or where does that stand as far as getting back to full operation.

The businesses fully back and up in running now for month of June since June timeframe. Probably it was completely caught up by 4th of July weekend I would say right. so fully operational and ready for the holiday season and as we mentioned earlier, what we have seen so far there is nice year-over-year increases that we are very excited about.

Great. Thank you. And then the last six months the labor environment softened dramatically here. Does that impact your outlook for the cost situation going into the December quarter?

Yes I think, six months ago at the start of this when we started to see unemployment climb, we were thinking that the headwinds that we faced for seasonal labor in the past would be less this year, there would be more ample workforce to pull from versus historically - last year 3.5% unemployment. I think what we are seeing is there are still challenges with hiring seasonal employees with the unemployment benefits that are out there, there is a part of that kind of seasonal workforce that quite frankly is incentive to stay home. So, there is still a challenge and with the tremendous demand in ecommerce for growth in demand of eCommerce, not only for ourselves, but for others eCommerce companies the skill set of manufacturing and distribution personnel. There is a lot of competition for that.

Okay, fair enough. And then, with the whole stay-at-home kind of mindset, can you give us some color or do you have any statistics on how much of your business has shifted from gifting per se to self consumption?

Sure Doug. You know what we have seen a lift in self consumption of self gifting business. It has been a nice lift commensurate with the lift that we have seen overall, but it is still a relatively smaller percentage of our business, really the core of our business is people expressing and connecting with others, or sending to other locations and that is really the core and where we have seen the majority of our growth.

Okay. Thanks everybody.

Thank you Doug.

[Operator instructions] The next question comes from Alex Fuhrman with Craig-Hallum. Please go ahead.

Great. Thanks very much for taking my question. I wanted to ask about the flow through of revenue to EBITDA, it looks like it was really strong here in the fourth quarter and just looking at the guidance for the September quarter looks like once again, you are looking for a really nice, nice flow through of incremental revenue to EBITDA. Can you to talk a little bit about and obviously, it is hard to predict exactly what demand is going to look like for the holiday season. But can you just kind of frame up for what we can kind of think about in terms of incremental costs and margins as you go into the holiday season? I think, Bill, you mentioned that some of the COVID costs which were pretty meaningful in the fourth quarter again, continuing at about that level. Is that an opportunity for perhaps some leverage off of those costs in the December quarter, or as you start to be manufacturing more and running into your own internal constraints could those costs become more significant as it relates to the flow through down to the bottom line?

Yes a lot there. The challenge we have there are headwinds, right we were seeing rising third party shipping costs, we are certainly seeing rising labor costs we have to absorb that and as we plan we will take that. What you didn't see in the fourth quarter and what you are seeing in the first quarter is a significant leverage that we have on our operating model right so over 900 basis points improvement in our OpEx ratio in the fourth quarter is driven by that top line growth and the absorption of a lot of the fixed costs that we have. We did see some marketing efficiencies in the fourth quarter and we do think that is going to probably change as we - Chris mentioned before and, topic came-up with the national elections and as we head towards Q2 costs are going to go up - TV advertising, but you know, we assume on the digital marketing side, the costs will increase as well. So there will be in theory that flow through as a result of that, but strong top-line growth will generate nice leverage within our model. And we would continue to look for ways to continue to drive more leverage in the model.

Okay. That is really helpful, thanks and hope you are all well.

Great. Thank you Alex.

The next question comes from Tim Vierengel with Northcoast Research. Please go ahead.

Good morning, thank you. Just one quick question. If I remember correctly, the U.S. Postal Service is a pretty important partner for you guys. You spend a lot of media about some changes there and slowdown and delivery. Can you talk about how if you guys have seen any impact on your business from maybe changes with the USPS? And how those changes if they are permanent might affect you guys going forward? Thank you.

So we really haven't seen much changes in our delivery capacity, our delivery capabilities as of now. And USPS is not as big of a component as you might think. Bill why don’t you give a little color.

We have no direct relationship with USPS, but FedEx does, FedEx and UPS usually, you know USP S uh, in some cases in some of their product offerings, delivery offerings for the last mile. So certainly, some of the surcharges that that USPS is going through will be passed through to FedEx will be passed through to us. There will be higher shipping costs as a result of that. We are working very closely with our carrier partners to make sure we have sufficient capacity for the strong demand that we continue to see.

Thank you.

Alright. Thanks Tim.

This concludes our question-and-Answer session. I will now like to turn the conference back over to Chris McCann for any closing remarks.

So thank you everyone. As you can see, we are very fortunate as a company that we are positioned so well in front of the trends that are coming out as is pandemic as a company really that is all about focusing on inspiring human and connection, expression and celebration. As I have mentioned, sentiments that we have all learned are more important now than ever. I encourage you to make sure you are staying connected with the important people and the loved ones in your life. Whether it benefits you, I can guarantee it benefits them. Thank you. And we look forward to talking to in October, next earnings call.

This conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.