1-800 Flowers Comments on Bloomnet

Aug.14.06 | About: 1-800 FLOWERS.COM, (FLWS)

On 1-800 Flower's (NASDAQ:FLWS) Fiscal 4Q conference call, executives discuss the increase in Bloomnet membership:

James F. McCann - Chairman and CEO

Bloomnet membership has increased three-fold since we launched this initiative and now includes more than 9,000 florist members. As we stated in the past in growing Bloomnet we are permitted to maintaining our industry highest quality standards while providing our florists with products and services that they need to grow their businesses and enhance their profitability. As we continue to grow both the network and the products and services we offer. We expect to see a growing contribution from this high margin business...

William E. Shea

Our Bloomnet business has emerged from its investment rollout phase, and we’re now beginning to generate increasing profitability. Bloomnet revenues in fiscal 2006 were nearly $30 million and we expect compound revenue growth over the next three years will be in access of 50%....

Robert Labick - CJS Securities

Can you give us an update on the roll out schedule of Bloomnet products?
We talked about this before you know currently that the primary revenues screens on Bloomnet are membership fees, fees associated with our Bloomnet technology, transaction for the product sales, purchase net, Bill mentioned and of course as Jim mentioned before which is doing very well for us. All these things will grow as grow with membership and the total volume of orders that go to our system. In addition, as state of the past we will offer many of the same products and services that currently offered to the florist industry such as web hosting, 24/7 telephone answering, appointment sale system, things like that well of which are under development. They will be rolled out over the next 12 to 24 months we are not going to put a specific timetable on anyone of those items. But we are excited about the acceptance of the products we built up thus far.

James F. McCann

I think you can see that with the accordance so many new products this part of the Bloomnet network so rapidly that the primary offices will get the coverage to begin, to the pick critical mass we have the coverage we need, you’ll see an increased emphasis now on introducing new products and services. Frankly we are amazed at the receptivity in the market place, all those price and services so we are certainly to enough to bring it in the market in a quick and orderly fashion.

Eric Beder - Brean Murray & Co

... could you talk a little about you know your 9,000 florists and Bloomnet. What is kind of the ideal number that you are looking for in terms of -- where would you like -- you know your competitors has about 18,000 and 19,000 and sinking in terms of florists where would you want to be?

James F. McCann

While, yeah -- be careful not to compare apples and oranges here in terms of florist -- we are delighted that we have achieved what we have so quickly. I am not certain Eric, what the optimum number is? Clearly there is still lot of demand in the pipeline of florists who have approached us, expressed their interest they will qualify and let into the system. We don’t need any more from our coverage point of view, our quality point of view, so we will examine two things as going in remote place. How the demand is coming to us, which says this florist is struggling really needs business, looking for ways to grow their business, looking for the right people to partner with. So that’s all positive. The negatives for the category are that they still are relishing in the category in terms of the number of shops. If you look at the competitive set of -- there are two big competitors out there in the B2B space providing generically wire service business. Their numbers all down, both of them are down considerably over the last several years.

We see the number of flower shops continuing to grow in both domestically and internationally. Just visiting with some of our international partners in relationships in the last 30-60 days, each of the year countries that we have had conversation with around the globe our experience in the same phenomena on then and I don’t think that’s peculiar to the floral industry but that’s a one frankly that we are most concerned about. So our number will continue to growth. Those with--I think our focus is more on building relationships, so many of those members have recently come into the network, so you are not seeing the revenue from them, they do see now in calendar, in fiscal ‘07. So, yes, we will continue to grow. But not likely the tripled insight (inaudible) florists in the country. But clearly are there opportunities beyond the country so they were able to continue to growth the emphasis is on building relationship with those shops, with the right products and services, building the revenue and profitability of each of those memberships. And when I said you got to careful not to compare apples and oranges because the other competitors have supermarkets and other mass kind of relationships in their number. We do not at this point have that but clearly its another revenue, clearly it’s a place we have been involved of but we have into anything to that we care on this call about better all involvement in those other categories.

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