1-800-FLOWERS.COM, Inc.

Good morning and welcome to the 1-800-Flowers.com Inc. fiscal year 2022 third quarter conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw from the question queue, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Joseph Petito, SVP, Investor Relations. Please go ahead.

Good morning. Thank you for joining us today to discuss 1-800-Flowers.com's financial results for our fiscal 2022 third quarter. 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 1-800-Flowers-Inc.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, Tom Hartnett, President, and Bill Shea, CFO. Before we begin, I need to remind everyone that some of the statements that we will be making 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 earlier this morning, as well as our SEC filings, including the company's annual report on Form 10-K and quarterly reports on Form 10-Q. In addition, This morning we will discuss certain supplemental financial measures that were not prepared in accordance with generally accepted accounting principles. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures can be found in the tables accompanying the company's press release issued this morning. The company expressly disclaims any intent or obligation to update any of the forward-looking statements made in today's call, any recordings of today's call, the press release issued earlier today, or in any of its SEC filings, except as may be otherwise stated by the company. I'll now turn the call over to Chris McCann.

Thank you, everyone, for joining our call this morning. Before we jump into the results for the third quarter, I'd like to take a moment to level set our view of the significant changes or stages that our company has seen over the past several years. Essentially, we see our business and the macroeconomy that we operate in in four stages, pre-COVID, during COVID, the current environment, which I will optimistically call late COVID, and the fourth stage, our outlook for the future. Prior to COVID, our company had set a goal to accelerate revenue growth while continuing to grow EBITDA and free cash flow. For the second half of fiscal 2018 through the first three quarters of fiscal 20, we significantly accelerated our growth rate from low single digits to high single digits, with our forward-looking guidance at the time calling for double-digit growth. We did this by leveraging the strength of our all-star family of brands and evolving our business platform into a highly scalable and leverageable e-commerce platform that is built for growth. The world's changed dramatically in the spring of 2020 with the advent of the COVID pandemic, and we all had to adapt to lockdowns, work from home, social distancing, masks, and so much more that we've all had to live through. From a business standpoint, we had to pivot quickly to address dramatically increasing demand from consumers stuck at home, while being sure to protect our associates across the company. Once again, the resourcefulness and dedication of our team helped our customers stay connected with the important people in their lives, and we saw our revenues, our bottom line results, and our customer file accelerate significantly. Today, as we are entering what we hope the late last stages of the pandemic our world in the macro economy has changed dramatically once again disruptions in the global supply chain geopolitical turmoil and an unprecedented rapid rise in price inflation have combined to deliver a broad range of challenges to the macroeconomic environment from rising costs to slowing consumer demand as we look ahead to the future We know that we need to address the challenges we face in the near term while continuing to invest in our business in the long term. That has been our business philosophy from day one, and it has enabled us with the talented team and experienced team that we've assembled and the unique business platform that we've built to weather the challenging periods in the past and emerge as a bigger, stronger, and better company that we are today. With that said, let's turn our attention to the most recent quarter's results. which, as we stated in this morning's press release, were below our expectations. During the quarter, we saw solid growth for the Valentine's Day holiday in our 1-800-Flowers brand, and, based on the industry data that we've seen, we continue to extend our market-leading position in the floral category. However, the holiday period strength was offset during the quarter by the slower consumer demand across all categories for everyday gifting occasions. reflecting growing consumer concerns with rapidly rising inflation and geopolitical unrest. In terms of the bottom line, our results of the quarter reflected a continuation and in some areas, such as fuel prices, an escalation of the inflationary pressures that we discussed back in January. While we expect these challenges to persist in the near term, we are beginning to see early improvements in certain areas, including some softening in ocean freight rates, and port disruption, and improved outbound shipping efficiency, trends that we certainly hope will continue. More importantly, we're taking proactive steps to address these issues, and we are well positioned because of the scale of our business and the strength of our unique business platform to weather the current macroeconomic environment and as we emerge, as we have in the past, a bigger, stronger, and better company. To provide some perspective on our scale, our revenue in the third quarter, while essentially flat with the prior year period, was up more than 68% compared with our fiscal 2020 third quarter. In fact, over the past three years, we have essentially doubled the size of our company, with revenues now exceeding $2 billion. While macro market conditions have slowed consumer demand in the near term, we anticipate driving growth on top of last year's more than 42% increase for our full fiscal 22-year. We'll continue to leverage the unique assets that we've assembled on our platform, including our all-star lineup of market-leading brands in floral, gourmet foods, and personalized gifts, and we continue to expand our product offerings through accretive acquisitions that our customers are embracing, such as Sherry's Berries Personalization Mall, and our most recent acquisition, Vital Choice. Our large customer base, which also has more than doubled in size over the past few years, and includes extensive and increasingly valuable first-party data. Here, we are combining behavioral and demographic data with machine learning technology to create highly personalized campaigns and experience for our customers on our sites and throughout our communications touchpoints. Our Celebrations Passport Loyalty Program, which continues to grow at a strong pace with membership up more than 40% year over year. Importantly, as we always point out, the behavior of our Passport customer continues to be strong in terms of frequency retention and average spending, all well above non-Passport customers. And Passport continues to feed our very best customer cohort, those who purchase from multiple product categories or brands, and those that have our highest frequency, retention, and average spend. We've also been improving the user experience on the new Celebrations Passport app that we launched in January. Some of the new features we've added include the ability to search for any product across our family of brands on the app, including wine, and we've deployed new ways to connect with our customers directly through the app. We provide help finding gifts and advice on how to celebrate. We present custom app-specific promotions and events. And we push tailored notifications based on past experiences. Along with the Passport app, we continue to view the overall Celebrations Passport loyalty program as a key element in our strategic focus on customer engagement and enhancing the total customer experience. Along that line, we also continue to expand our initiatives to create a true community through a broad range of non-transactional engagement experiences and content. Through the third quarter, we reached more than 80 million consumer engagements driven by our content and social campaigns and a growing number of influencer campaigns. We are now fast approaching our target of more than 120 million consumer engagements for the full fiscal 22 year. Now these engagements really help us to build relationships with our customers beyond the transaction and give us the opportunity to really deepen that relationship. We believe the combination of these unique assets and initiatives position us well to manage our business and drive long-term revenue growth. In terms of bottom line results, while we anticipate facing continued cost headwinds in the near term, our strong balance sheet enables us to invest in our operating platform to address these issues and build for the future. These investments include initiatives to automate our warehouse and distribution facilities, which reduces our exposure on the labor front, to utilize our strong balance sheet to build and bring in inventory early to get ahead of the ongoing global supply chain issues, and to optimize programs to enhance our outbound shipping operations and manage rising third-party shipping costs. Over the long term, we anticipate these initiatives will enable us to improve our gross margins and drive enhanced bottom line performance. Now I'd like to turn the call over to Bill for his review of some of the key metrics from the third quarter.