1-800-FLOWERS.COM, Inc.

Good day, and welcome to the 1-800-Flowers.com third quarter 2023 results conference call. All participants will be in listen-only mode. If 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 a touch-tone phone. To withdraw your question, please press star then two. Please note today's event is being recorded. I would now like to turn the conference over to Andy LeVoy, Senior Vice President of Investor Relations. Please go ahead.

Good morning, and welcome to our fiscal 2023 third quarter earnings call. Joining us today are Chris McCann, CEO, Tom Hartnett, President, and Bill Shea, CFO. Before we begin the call, I'd like to remind you that some of the statements we make on today's call are covered by the safe harbor disclaimer contained in our press release and public documents. During this call, we will make forward-looking statements with predictions, projections, and other statements about future events. These statements are based on current expectations and assumptions that are subject to risks and uncertainties, including those contained in our press release and public filings with the Securities and Exchange Commission. The company disclaims any obligation to update any of the forward-looking statements that may be made or discussed during this call. Additionally, we will discuss certain supplemental financial measures that were not prepared in accordance with GAAP. Reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures can be found in the tables of our earnings release. And now, I'd like to turn the call over to Chris McCann.

Thank you, everyone, and good morning. Our third quarter performance reflects a continuation of the three trends that we've experienced throughout this fiscal year. One, we continue to see a cautious consumer that's facing a number of macroeconomic pressures, including ongoing inflationary pressures, rising interest rates, and, of course, fears of a recession. In response, consumers continue to moderate their spending on discretionary items and, in our case, everyday gifting occasions. It's important to note that consumer behavior remains complex in the current environment. Consumers remain pressured by higher prices on non-discretionary items. They continue to increase their spending on post-pandemic travel and experiences while reducing their spending in other discretionary areas. Our approach is to ensure that we have many options at key price points across our brands to maximize conversion and customer value no matter the occasion or budget. Second, our gross margin continues to gradually improve, with our third quarter margin benefiting from our strategic pricing initiatives and lower ocean freight costs. And three, we are managing the business well in this environment. As a company, we have and we will continue to focus our efforts on being strong stewards of our shareholders' capital. We continue to invest in developing stronger customer relationships and in the long-term growth of our business while simultaneously identifying opportunities to operate more efficiently. As a result of our expense optimization efforts, we were able to improve our adjusted EBITDA performance despite the softer top line. Now let's take a closer look at our third quarter. Anticipating this year's demand compression into a couple of days for the Valentine's Day holiday, our team was well prepared to manage the last-minute surge in demand with a variety of product offerings. In addition to our traditional floral offerings, Valentine's Day customers gravitated towards our one-of-a-kind gifts that only we can offer through our family of brands. Popular bundles included flowers and sherrys berries, which sold out early, our confection bundles that paired cheesecake bites with cake pops, floral paired with confections, and our newest pairing, Shari's Berries with Harry and David Wine. We will be leaning further into these pairings for Mother's Day, as we think they are truly special gifts to celebrate moms and recognize all the hard work they do every day. Bundles help increase our price points and provide customers with great value. We continue to see our customers trade up in price points to unlock that additional value, with our AOV increasing 3.8% over last year. Diving deeper into our food businesses, Shari's Berries were a popular choice and had a strong performance for Valentine's Day. Their offerings resonated with our customers and provided a great gifting option for our value-oriented customers. Going from February into March, we focused on continuing that momentum by creating additional holiday-related celebratory moments. A great example of this was the success we had at Cheryl's for St. Patrick's Day in with its shamrock frosted cookies. And once again, we used the power of our portfolio to offer customers a great St. Patrick's Day assortment that consisted of items from several of our brands, leading to a double-digit increase in bundled sales. As we look ahead to the balance of our fiscal year, we expect consumer discretionary spending to remain challenged. We have begun to benefit from lower ocean freight costs and expect to see continual gross margin improvement during the fourth quarter and into our next fiscal year. Over time, we expect our food group margins to recover as we benefit from our automation initiatives and as commodity costs decline. And as Bill will discuss in further detail, we are being prudent with our promotional and advertising expenses as well as our labor costs. As we look beyond the current horizon, we remain very optimistic about our long-term prospects. We expect to emerge from the post-pandemic downturn as a stronger company, and we continue to see tremendous opportunities to grow our business, both organically and through strategic acquisitions. Recent examples of our initiatives to support organic growth include expanding the Cheryl's Cookies brand into Cupcakes, which builds on the brand's equity and expands our product lines. The introduction of our gifts and more online marketplace, which features curated items from local sellers across more than 15 new categories, including home decor, spa gifts, and party baskets. And we relaunched our Smile Farms collection with an expanded assortment of everyday gifting products. We have also been big believers in testing and adopting emerging technologies that enhance our platform and the customer experience. With the emergence of generative AI capabilities, we moved quickly to create a fun and playful way to intertwine the emerging AI technology with our gift-giving experience. Just in time for Mother's Day, we launched the 1-800 Flowers MomVerse. Now, MomVerse is an AI composer powered by ChatGPT that enables customers to create original, one-of-a-kind verses, including personalized poems and songs for their moms. We've seen our customers engage, have fun, and create some great poems and lyrics for their special moms. We plan to further leverage this technology to empower our customers to use AI to help them create thoughtful notes for their recipients across our gift-giving platform. In addition to our organic efforts, as many of you know, we also believe in further fueling our growth through acquisitions. In January, we announced the acquisition of the Things Remembered brand. We have spent the last few months developing a new Things Remembered website on our e-commerce platform and recently launched that site in mid-April. I encourage you all to visit it. This was a perfect example of a tuck-in acquisition whose brand will benefit from our e-commerce platform and will enable us to further expand our leadership position and product offerings in the personalization category and the B2B gifting space. To further bolster our B2B gifting capabilities, we more recently completed the acquisition of SmartGift, a leading technology platform that facilitates easy and thoughtful gifting and recognition experiences. Corporate gifting represents less than 10% of our total sales today, and we believe there is a significant opportunity for us to grow our B2B sales. We plan to leverage SmartGift's technology platform to accomplish this. Their platform provides innovative, thoughtful, and convenient gift-giving experiences, allowing users to send, track, and to manage gifts and recognition campaigns from employees and clients quickly and efficiently. This is a great example of how we are investing in our technology platform to expand and innovate our gifting capabilities. We are offering more ways to build and maintain meaningful relationships celebrate important milestones, and create even more impact all through the power of gifting. Before I turn it over to Bill for the financial review, I wanted to highlight something that is near and dear to us. March was Developmental Disabilities Awareness Month, and it provides an opportunity to show allyship for people in the disabled community. And for us, it's an opportunity to share how proud we are to support Smile Farms, our signature philanthropic partner. The mission of Smile Farms is to create meaningful work opportunities for people with disabilities in agriculture and hospitality. Their work generates purpose and pride, enhances life skills, and forces socialization. This year we relaunched an expanded Smile Farms collection that features an assortment of everyday gifting products. Smile Farms is working every day to shape a better future where people with special needs are valued for their real contributions they make in their workplaces and communities, and we are extremely proud to work closely with them. Now let me turn the call over to Bill for his financial review. Thank you, Chris.