1 800 Flowers Com Inc Q2 FY2021 Earnings Call

Good morning, and welcome to the 1-800-FLOWERS.COM, Inc. 2Q 2021 Conference call. Please note this event is being recorded. I would now like to turn the conference over to Joe Pititto. Please go ahead.

Thank you, Grant. Good morning, and thank you all for joining us today to discuss 1-800-FLOWERS.COM, Inc's. Financial Results for our Fiscal 2021 Second 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 www.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.

Thank you, Joe. So this morning we are very pleased to report the highest quarterly revenue and profit in our company's history. This reflects a continuation of the momentum that we've been building over the past several years, including accelerated revenue growth that began in our fiscal... Pardon me, we seem to have lost connection to your line again, Chris. We can no longer hear you. Thanks, everyone. I apologize for the technical difficulties. It's good to have somewhat of a backup plan in place, and it's a heck of a way to kick off a celebration of a great quarter. So let's jump back in. So, as I started to say, this morning, we are very, very pleased to report our highest quarterly revenue and profit in our company's history. This reflects the continuation of the momentum that we've been building over the past several years. This includes the accelerated revenue growth that we saw begin in fiscal '18, continued through '19, and into fiscal '20 and accelerating further since the start of the COVID pandemic. Our record results for the quarter were driven by strong double-digit e-commerce growth across our Gourmet Foods and Gift Baskets brands in our market-leading 1-800-Flowers brand and in our newest market-leading brand, Personalization Mall. Our strong e-commerce growth, combined with excellent operational execution, enabled us to drive record adjusted EBITDA and EPS results despite the significant headwinds that we faced in the year-end holiday period, including what we're all familiar with the increased labor and product shipping costs as well as operating inefficiencies related to the ongoing pandemic.

Thank you, Chris. As noted, we achieved record top and bottom line results for our fiscal second quarter, despite the significant headwinds that we told you about as we headed into the year-end holiday period, including increased costs for seasonal labor, volume constraints from third-party shippers, higher shipping costs related to the holiday season, COVID-related expenses and operating inefficiencies related to the ongoing pandemic. This was no small achievement and all our associates across the company are to be commended for going above and beyond in a very challenging environment to help millions of our customers stay connected and express themselves to the important people in their lives. Now breaking down some highlights from the quarter. First, in terms of revenue. Total consolidated revenues increased 44.8% or $271.6 million to $877.3 million compared with $605.6 million in the prior year period. The strong growth was driven by e-commerce growth of 59.7%, including revenue contributions from PersonalizationMall.com, which we acquired in August 2020. Excluding PMall, total revenues increased 24.7% and e-commerce revenues increased 34.6% compared with the prior year period. Gross profit margin for the quarter increased 100 basis points to 45.4% compared with 44.4% in the prior year period. The gross margin improvement primarily reflects strong PMall gross margins and our successful efforts to reduce promotions during what is typically a highly promotional environment. These efforts more than offset higher costs associated with seasonal labor and third-party shippers. Operating expenses as a percent of total revenues was 28.6% compared with 28% in the prior year period. The slight deleverage in the quarter reflects several factors, including investments we have made in enterprise marketing, personnel and programs designed to help drive future strong growth. The acquisition of PMall, which has higher gross profit margin, but also higher operating costs compared with the overall company and the impact in the quarter of the higher investment income associated with our company's nonqualified deferred compensation plan with the offset being compensation expense. Combination of these factors resulted in increase of 48.4% or $53.6 million in adjusted EBITDA to $164.3 million compared with adjusted EBITDA of $110.7 million in the prior year period. Net income for the quarter increased 53.3% or $39.5 million to $113.7 million or $1.71 per diluted share compared with net income of $74.2 million or $1.12 per diluted share in the prior year period.

Thank you, Bill. So to sum up, again we achieved the highest quarterly revenue and profit in our company's history. We've had a tremendous holiday season with strong customer demand, truly incredible execution, offsetting the headwinds that we told you about back in the fall. And I just can't say enough about how proud I am of how well our associates rose to the occasion during this very challenging environment. Now during the quarter, we saw a continuation of strong growth in new customers, increased frequency from our existing customers, more customers signing up for Celebrations Passport and more customers buying from multiple brands. The strong growth in enhanced behaviors that we're seeing in our customer file give us the confidence in our outlook for continued strong revenue growth going forward. Importantly, the strong momentum that we have been building for the past several years now in our top and bottom line results reflects the investments that we've made and continue to make in our technology stack, digital marketing and innovative merchandising programs, our laser-focused initiatives in customer experience and customer care and in strategic and highly accretive acquisitions. As a result, we have built a highly scalable and leveragable e-commerce platform that is designed and built for growth. We're confident that our business platform positions us well to continue to drive growth, both near and longer term. Now before I turn the call back to Grant to provide instructions for the Q&A portion of the call, I'd like to again thank all of our associates as well as our vendors and suppliers for their hard work and commitment to helping our customers solve for their connective and expressive needs, sentiments that are more important than ever in today's environment. With that, I will turn the call back to you, Grant. Thank you.

First question today will come from Dan Kurnos with The Benchmark Company.

Congratulations on the quarter. I thought the revenue number was a misprint. Chris, the key here might be PMall, which came in approximately 50% higher, exceeding $120 million in the quarter, much more than most people expected. There was a lot of underlying strength in e-commerce demand, and we initially discussed not fully integrating by the holiday period. I know you were pushing hard for it. Can you provide some insights into cross-selling or any metrics or learnings you've had, and how much more work remains for full integration if you're not there yet on PMall? I'm trying to understand the potential growth rates for this aspect.

Yes, Dan, thank you very much. We really couldn't be more pleased with the acquisition of PMall than we are right now. And from an integration point of view, we did focus on some efforts early in the beginning making sure that we got it up in one form or fashion on our Multi-Brand site, integrated the customer database so Passport customers would have access to PMall. So, we did some of those things. A lot of the integration is still yet to come. There were limited capabilities that we could do before we really hit holiday time, when then we would think the risk factor was too high to mingle with it at that time. But the fact of how we've added that to our platform now, you'll see PMall products on the flowers side for Valentine’s Day this year, showing further integration. It's really given us great capabilities that we're starting to integrate across the company, across the brands, moves us into a whole new category for our customers. So, we really couldn't be more pleased with it and the progress that we're making. Then from an early point of view, one of the early areas that we said we were going to focus on from an integration was really on the marketing side of things in the digital marketing. And now, we're really happy with the early first holiday season results helping to increase its growth rate. Bill, why don't you give a little more color on that?

Again, as Chris mentioned, we're very pleased with the results of PMall. If you've been following along, we'd like to leave some of the calculations for you during the earnings call and the earnings release, but the $122 million is a pretty accurate figure. That’s what we achieved, reflecting a 50% increase year-over-year. Many had projected around $80 million in their models, and we generated a contribution margin of $25 million to $26 million, indicating a significantly profitable business, so we're extremely pleased with these results.

And a really good team of people there, Dan, that integrating well with us, meshing with our teams. And really, it's a really strong operational team that we're very, very proud of.

That's very helpful. Looking ahead to calendar Q1 and fiscal Q3, we recognize that Valentine's Day falls on a Sunday, which has typically had negative effects. Additionally, we are still experiencing the ongoing impact of COVID. Everyone is at home trying to assess the situation. The guidance you've provided is more optimistic than what many expected, indicating positive momentum. I'm curious if there’s potential for flexibility around shipping dates, perhaps earlier in the week, even though it may not be as robust as Mother's Day. How are you managing that?

Right, as we look at Valentine's Day, you're right, there's a day placement shift there. Bill will cover that in a minute, but what we're looking at is the ability to change things around and looking at this holiday season instead of just a decrease that we normally would expect, we're such well positioned right now as a company, much better than we were even a year ago, and we're bigger, we're better. We have a stronger customer file. We have consumer demand. We have broader product categories. So, as we’ve headed into this quarter, even with that headwind, gives us the confidence with the guidance. And Bill, why don't you cover that in a little more detail as well?

Yes. As we mentioned in our release and in the call this morning, we're providing overall guidance for revenue growth of 45% to 50%, which includes contributions from PMall and still represents over 35% organic growth. This considers the effects of the Floral brand and the Sunday day placement. Typically, moving from a Friday, which is an excellent day placement for Valentine's Day, to a Sunday results in a revenue impact of about 20%. However, this year is unusual due to the pandemic, as most recipients are not in the office. We expect to achieve double-digit growth within the Flowers brand. This, combined with strong everyday gifting within the Flowers brand, our Food brands, and PMall, supports our overall topline growth. Additionally, we face several headwinds from a cost perspective, yet we are pleased to provide guidance for adjusted EBITDA improvement of approximately $7 million, turning what is usually an adjusted EBITDA loss quarter into a positive one. Consequently, we expect to have all four quarters positive for the year.

Got it. Really helpful. Last one, if I could just ask, Chris, I understand the reluctance to provide guidance given the tough comparisons ahead and the uncertainties. However, if I could ask from a high level, you're now facing four consecutive quarters of challenging comparisons, but it seems like the business is truly accelerating. Should we consider this as the new baseline for the business that we can grow from?

I believe what you're seeing is the momentum we had going into the pandemic and the acceleration we've experienced since then. The decisions we've made to let go of our retail operations at Harry & David and focus on e-commerce, along with the customer database we've established, have been pivotal moments for our company to capitalize on the opportunities that have arisen. So, you're correct in your assessment. We are in a significantly better position than we were a year ago. We have become a larger, stronger, and more capable company with improved assets from additional acquisitions, and we are anticipating solid growth rates moving forward.

Our next question comes from Anthony Lebiedzinski with Sidoti & Company.

In previous calls, you mentioned that the Friday placement of Christmas would be beneficial. Did that turn out as you expected? Additionally, I'm curious about any experiences you've had with third-party carriers, particularly if you've encountered any issues with FedEx or any other carriers.

Yes. I think as we did the Christmas Day placement was beneficial for us. It gave us 2 extra shopping days in the season compared to last year. So that ramped up. So much of our volume really came in earlier than that last week than it normally does. And that also gave us the capability to push the numbers a little bit. The 27% e-commerce growth that we got in the Gourmet Foods brands, as an example, Anthony, was a little bit ahead of our expectations. So we're able to achieve that. On the shipping distribution front, Bill, why don't you cover that?

Yes. I'm going to reiterate with Chris. I think there were so many stories about shipping challenges that the consumer is trained to buy a little earlier, which did kind of create an earlier demand than we normally have. So that wasn't kind of the late push, which we would have otherwise gotten a benefit with the Friday day placement. There certainly will continue to be challenges within the shipping environment. We had to go into the quarter, planning for volume constraints with it, and we manage very well. We have a great partner in FedEx that does a lot of our shipments and work with them daily on any of the challenges that we have. But we did have increased costs, and we had to absorb those within that. I think increased shipping costs are the new normal. Basically, the third-party carriers have instituted what essentially are permanent surcharges. They start off with, first with COVID surcharges, then it became holiday surcharges and now with past holiday, so we have a new set of surcharges. So kind of increased shipping costs is the new normal; we all have to adjust for it. I think we've done a very good job. I think we've historically demonstrated our ability to absorb challenges that we have with regard to whether it be shipping costs or increased labor costs and build it into our plans, automate certain things to help offset these items.

Got it. So is there any way you can quantify these higher labor and transportation costs, higher shipping costs, any sort of ballpark estimate as to how much that impacted the quarter?

They are significant, Anthony, and I believe they are here to stay. These challenges won't disappear suddenly, and we won't see positive comparisons in those areas going forward. We will have a $15 minimum wage rate across the countries. We are already operating under that condition in Oregon as they transition to that $15 rate. In other locations, we don't have that wage yet, but due to labor supply and demand, we are already paying close to those rates. Increased labor costs and increased shipping costs are likely permanent. We need to keep investing in automation in our manufacturing and distribution processes to reduce reliance on seasonal labor. Each year, we encounter both short-term and long-term challenges, and we address them while continuing to grow both our revenue and profits.

And all of that, Anthony, is part of the reason why we're really pleased to provide the guidance for Q3, the nice improvement on the bottom line that we're showing, taking it from a loss, you know, positive in this quarter, even with those new increased costs.

Got it. And then last question from me is just to give us a sense as to the order volume versus AOV for the quarter?

Yes, go ahead and cover the AOV.

Yes, AOV increased a couple of points during the quarter, primarily driven by the growth in e-commerce, which was mainly due to volume.

Our next question will come from Michael Kupinski with NOBLE Capital Markets.

Congratulations on your impressive revenue growth over the past year. It's a significant achievement for you and your team. My question relates to seasonal labor and associated costs. You mentioned that some markets have already implemented a $15 minimum wage. I wonder how competitive it has been in those areas. Have you been able to hire workers at that wage, or have you had to offer higher wages? For the markets where the minimum wage hasn't increased, given the competitive nature of seasonal labor, how has the minimum wage affected your hiring and costs in those regions?

I'll provide two examples. Oregon is a minimum wage state that is gradually increasing to $15. Each year, we see an increase in the minimum wage, and we pay above that. In Ohio, which has many employees, it's not a minimum wage state, but as mentioned, Southern Ohio is significant for distribution. This leads to a supply and demand situation, pushing wages higher in that market. It's challenging to find employees. Previously, when unemployment was 3.5% and then rose to double digits at the start of the pandemic, we expected labor challenges to ease. However, as unemployment decreased, the impact of the COVID environment made labor still difficult to secure. Supply and demand continues to drive higher wages. Our response is to attract labor by offering competitive market rates while also investing in automation. We have substantial projects, some of which were delayed during the pandemic, but we are moving forward with big automation initiatives, which will help decrease our dependence on seasonal labor.

Yes. I think, Michael, to your comment and your compliment on the beginning of your question about the scalability of our business, in addition to focusing on the scalability that I referenced in my opening remarks regarding the scalability of our IT platforms, we're looking at the full platform, including our manufacturing and distribution platforms and making the appropriate investments there to scale into the future to handle the demand that we see.

Can you provide some insight into your current plans for the large facility you have at PMall? I understand you haven't utilized it extensively yet, but have you considered how you might integrate and utilize that space moving forward?

We've begun some discussions on that, Michael. No rock solid plans there yet on how we utilize that facility further than what it is currently being used or how we integrate some of the personalization capabilities into some of our other facilities as well. Again, looking to move that product line closer to the customer around the country. So as we talk about investing into this distribution and manufacturing and assembly capabilities of our business. Those are the things that are in consideration now, but no hard plans in place at this point.

My final question is about gross margins. You said that it benefited from reduced marketing spend. And of course, this could be because of your scale and your broad platform, but it also might just be due to the fact that you're just seeing e-commerce sales being very strong. So can you provide some color on your decrease in marketing spend in the quarter? What do you believe will be the sustainable gross margins going forward? And just kind of give us an idea about whether or not you're currently just benefiting from the platform of adding more onto your platform and not really seeing the type of incremental increases in market spend?

Thanks, Michael. I think as we look at the marketing spend here, and as we look at last year, last year, we had extremely low marketing costs as we went into the pandemic. So we're seeing those marketing costs return to normal. But because we're seeing effectiveness, we continue to lean into the growth rate. We continue to lean into new customer acquisition with the marketing spend. As long as we're getting the proper return on ad spend, we'll continue to push that. How that might impact gross margin, Bill?

Yes. To clarify, when we discuss marketing expenses, it's important to note that promotions and discounts impact gross margins, while actual advertising costs are categorized under operating expenses. In the second quarter, we observed a decrease in promotions in a typically promotional environment. This reduction in promotions helped mitigate several challenges we faced related to seasonal labor, transportation costs, and operating inefficiencies due to the pandemic, resulting in improved gross margins compared to last year. We reported a 100 basis point increase in gross margins for the quarter, with PMall being a significant contributor given their high gross margins. Without PMall's influence, our gross margins remained stable, though we experienced better margins in the 1-800-Flowers brand and within our Food brands. However, as the Floral brand, which has traditionally lower gross margins, grew more, it affected the overall margin mix, leading to an overall gross margin of 44%. Moving forward, we intend to maintain a less promotional approach, which we started prior to the pandemic. We aim to enhance our messaging about our products and brands while reducing promotions, which should help improve gross margins and counteract ongoing cost challenges. On the marketing front, as Chris mentioned, we have increased our investment a bit, and we are seeing a good return. We plan to allocate additional funds to support revenue growth and customer acquisition, as we believe this will benefit our future prospects.

Our next question will come from Linda Bolton-Weiser with D.A. Davidson.

So not to rain on your parade here because it's a great quarter, congratulations, but your organic sales growth is decelerating from when the pandemic started. Although you are guiding to a reacceleration next quarter. But can you kind of give us some color or some feel on why the growth would be decelerating? Is it just as the world reopens, there is just simply less need for kind of remote gifting, or kind of what is the phenomenon that's going on? I mean, why would your business really slow at all here, even though it was a very high-growth rate, which can't be expected to continue, but the growth rate has slowed a bit. Can you give a little bit of color?

So Linda, after our significant outperformance of the consensus revenue numbers, it's important to note that the bottom line in the second quarter was different from the rest of the year. We previously indicated that we faced volume restrictions imposed by third-party carriers on all e-commerce businesses, and we had to operate within those limits. The substantial growth in the overall e-commerce industry has placed considerable pressure on these carriers, leading to constraints and challenges regarding their on-time delivery capabilities, which have been widely reported since last summer. Additionally, we've faced labor challenges that many companies are experiencing in this environment, affecting our ability to produce and ship inventory despite the volume limitations from third-party carriers. These factors impacted our second quarter results. However, we still achieved a remarkable second quarter.

When considering our performance, it’s important to note that we shouldn't evaluate it on a quarter-to-quarter basis due to the seasonality of our business. The Gourmet Foods category has faced many of the restrictions mentioned, yet we achieved a 27% growth in e-commerce there, which is a strong outcome for our largest quarter. In our last call, we discussed potential areas for growth in the calendar fiscal Q2 and calendar Q4. While we anticipated limited upside in Gourmet Foods, we actually saw growth in Consumer Floral, which has continued to flourish without any signs of slowing down, reaching approximately 58%.

58% in the quarter.

58% in the quarter. So BloomNet hitting 33% growth. So I'm not sure really what you're seeing in deceleration.

Great. Can you remind us about the comparison to the 54% organic growth in the June quarter? Did the demand start late in the June quarter last year, or was it strong right from April when the pandemic began? How did that growth trend develop throughout the quarter last year?

No, it was strong right from day one. Initially, we saw a slight slowdown in the Floral side of the business, but the Food segment took off immediately. With Easter falling on April 10 or 11, the Floral category quickly rebounded, and we experienced significant growth in April, which continued throughout the quarter.

And I think it's important to note that as we look forward and as we come up to some of those next quarter, the comps going to be difficult? Sure, they're going to be difficult. Everybody recognizes that and understands that. I think the fact that you have to look at our business, as I mentioned earlier, this has been a pivotal moment for our business going through this pandemic, the way we responded to it, the way we reacted to it, the momentum we had going into it. So when we look forward, we see ourselves as a much bigger, much stronger, better positioned company, and we look at the trends that we're seeing. There's been a seismic shift of offline to online sales that we are just so well positioned for. The shift of consumer sentiment out there that we've all learned the need to express and connect, and our business, obviously, is well positioned for that. And then the third big trend that we see is the trend of nesting. And that's not going away either. And I think we were well positioned for that trend to begin with. But now with the addition of PMall, it's even better. And again, our focus as an e-commerce company, keep in mind, in Q2, we also lost a lot of revenue from the decision we made on the retail stores that we didn't have this year in Q2. So we got to factor that into our growth rates. But that just keeps us laser-focused on what we're doing, how we're building our customer file. So will we grow in the future? Yes.

Our next question will come from Doug Lane with Lane Research.

Just on that note of the retail stores here, Chris and Bill, I had in my model, that was about $20 million of revenue to you guys that is not there this year that was there last year. Is that about right?

That's about right.

And the wholesale.

And wholesale is down as well as we guided people to going into the quarter.

Okay. Fair enough. And getting back on the Floral, I mean, PMall obviously blew away my numbers, but also the organic growth at Floral was pretty astounding. To your point, Chris, and I wondered if you could give a step back and give us some color on the retail landscape at Floral. I know a lot of flower shops around here are closed. I don't see them coming back. Is there just a permanent dislocation going on at Floral? Or how do you view the whole retail market a year from now or so when we come out of the COVID thing?

I think what we're seeing in the health that was seeing in BloomNet and Bill really referenced, Doug, what we saw in the benefits that we're seeing in BloomNet from the aid that we gave in the early pandemic. So I think as we look at the retail florist industry, there's always a different number of closings. And certainly, many shops have been hit harder by the pandemic than others. And again, we're fortunate that as an industry we've been well positioned during this pandemic. And even while orders have shifted from offline to online, it still is benefiting the BloomNet partners for us from a fulfillment perspective. So what we expected last summer was a little bit more of a challenge of shops closing up. It hasn't been what we expected. There are those situations, those unfortunate situations in every town. But I would say we have not really seen that acceleration there on the retail store side. And as we look at our distribution capabilities, we continue to see the benefits of our franchise shops, our BloomNet shops as well as our direct ship capabilities and having that flexibility in the network works very well for us, especially as we manage the high-volume holidays like Valentine's Day coming up.

Okay. That's helpful. And just one more thing. You talked about your balance sheet. It's getting a lot better. You're getting all this cash in from the December quarter. Obviously, the acquisition strategy is on point, Shari’s Berries, Personalization Mall, and not what you guys do, but acquisitions, as you know, are difficult to time. So what else can you do with the financial strength here as far as stock buyback as far as reinvestment in the business, CapEx, digital marketing? Just what's sort of the backup plan pending the next acquisition?

Yes. Thank you, Doug. First and foremost, I think we've always been proven to be very good stewards of our balance sheet. And we utilize our balance sheet to drive investments in our existing business. As we talked about some of the investments Bill highlighted a moment ago, certainly around the scaling up the operational capabilities of the company, implementing automation, et cetera, investments in technology that we like to make. And as you've pointed out, I think we've proven very capable and adept at acquiring companies and integrating them. You're right, you can't predict timing on that, unfortunately. And also, I think we've been very diligent in our approach, and we'll continue to be very diligent in our approach on the M&A aspect. So I think that's how we're looking to utilize our cash in general. But Bill, why don't you speak to buybacks, et cetera?

Yes, our stated strategy is to buy back shares in a way that offsets any increase in share count. In the first half of the year, we spent about $12.5 million to repurchase approximately 550,000 shares at a price of $22. We have shown that we are good at picking stocks. When you review the figures related to our earnings per share calculation, you will notice that our share count is slightly lower compared to last year. Therefore, we are effectively carrying out that strategy.

And Doug, our goal at the end of the day is to put our underleveraged balance sheet to work for our shareholders primarily through acquisitions that help us accelerate our growth.

Our next question will come from Tim Vierengel with Northcoast Research.

I have a question for you. From my notes, I believe you mentioned a 40% to 50% growth in that customer profile or portfolio during the pandemic shutdown quarter back in June last year. Additionally, if you examine the e-commerce growth rate, it exceeds that figure. It appears you are gaining traction with Multi-Brand customers. Can you provide more specific insights on what you are observing in terms of both Passport and the percentage of customers in your portfolio purchasing from multiple brands?

Tim, thank you very much. As we look at the customer file overall, you referenced some earlier numbers from the earlier days of the pandemic. But even I think we see that growth in our customer file continue. As we mentioned, we'll continue to invest in new customer acquisition when and where we see the opportunities. This past quarter, I think we grew new customers north of 50% over last year. So...

Not including PMall.

Not including PMall, right, just kind of from an organic perspective. So I think that continues. And in addition to that, as you point out from our remarks, we're seeing good increases in retention and frequency, especially from our top cohorts, whether it be our top decile customers, our Passport members, customers buying for more than one brand. And what's very encouraging is during this time period, we're seeing new customers convert into Passport at a higher rate than average at a higher rate than previously. New customers become Multi-Brand customers at a higher rate and then average and a higher rate we have been previously experiencing. So we continue to grow that file. We have said previously that Multi-Brand customers were accounting for about 10% of our 12-month active file. We're not forecasting that, but that is growing, and that is increasing as time goes on very nicely. So that's when we look at our customer file, we look at those behavior metrics, we look at what's happening to the new customers that have come on during the past year and see their behavior slightly than the average, we see that very, very encouraging.

No. I appreciate that color. And I was wondering, looking deeper into the customer profile, if you guys could give us an indication whether those new customers are skewing younger or older? Maybe as older people get more accustomed to buying e-commerce wise? I know there's been some talk about younger consumers shying away from using a service like you guys? Just some color there would be great as well.

Yes, we're observing strong customer engagement across various demographics. Each of our brands has slight variations, but the Flowers brand aligns closely with the demographic makeup of the population. Our digital marketing efforts are helping us attract younger customers, particularly with new product lines like the Jason Wu Wild Beauty Line. The plants category is also drawing in a younger audience. On the Gourmet Foods side, our fastest-growing category at Harry & David is the Gourmet Foods line, significantly supported by our digital marketing strategies, which also appeal to a younger audience. Additionally, reports indicate that the most substantial shift from offline to online shopping is among baby boomers, who have long been our core customer base. This shift also bodes well for our future.

Our next question will come from Alex Fuhrman with Craig-Hallum.

Congratulations on a terrific quarter and a terrific calendar year. I wanted to ask about, I guess, sort of the pace of revenue growth as well. I mean, I would imagine, it sounds like a lot of the reason that your growth rate in percentage terms probably came back a little bit in the holiday quarter. It's just a law of large numbers, given how big your base of business is. And as we're kind of looking into the March quarter, where obviously, you're guiding to revenue growth reaccelerating it to a very strong rate. It crosses my mind that it looks like, I think last year, in the March quarter was, I believe, a record quarter for you guys in terms of Consumer Floral. And obviously, Valentine’s Day, I imagine, drove a lot of that. So can you kind of give us sense how much room is there to continue to grow on the Floral platform given that, that becomes really your workhorse brand for the Valentine's Day and Mother's Day season? Can you give us a sense of how much growth potential there is in the years to come during those peak holidays if the demand is there?

What we've incorporated into our guidance for the third quarter is the potential impact of Valentine's Day for the 1-800-Flowers brand. Typically, when Valentine's Day shifts from a Friday to a Sunday, we would see a revenue decrease of over 20 percent. However, given the current situation, we believe we can achieve double-digit growth. This is part of our plan. Last year, during the third quarter, we experienced significant success, achieving 10 percent growth on Valentine's Day. Currently, we are tracking around 10 percent growth for most of this quarter. At the onset of the pandemic, consumer activity dipped slightly at the end of March but rebounded strongly in April. We are also focused on expanding our infrastructure to support growth consistently, not only on regular days where we have almost unlimited capacity but especially during peak times, such as the December holidays and key floral occasions like Valentine's Day and Mother's Day. We expect to meet the increased demand we foresee during these periods.

There being no further questions. This will conclude our question-and-answer session. I'd like to turn the conference back over to Chris McCann for any closing remarks.

Thank you all for joining us today. We are excited to celebrate a record quarter in terms of revenue and profit, which we take great pride in. We are also proud of our team's efforts in navigating through these challenging times. If you have any additional questions, please feel free to reach out to us, and we will be happy to assist you. Also, as we've mentioned during the call, don't forget that Valentine’s Day is coming up soon. We have fantastic opportunities available, including multi-gifting options to express your love over several days, not just one. Make sure to place your orders early, and remember that this year, there are no limits on love. Thank you.

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