Logo of jester cap with thought bubble with words 'Fool Transcripts' below it

Image source: The Motley Fool.

1-800-Flowers.com Inc (NASDAQ:FLWS)
Q4 2018 Earnings Conference Call
Aug. 23, 2018, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day and welcome to be 1-800 Flowers' Fiscal 2018, Fourth Quarter and Full Year Results Conference Call. All participants will be in listen-only mode. (Operator Instructions). After today's presentation, there will be an opportunity to ask questions. (Operator Instructions). Please note this event is being recorded.

I would now like to turn the conference over to Joseph Pititto, Senior Vice President of Investor Relations and Corporate Communication. Please go ahead.

Joseph Pititto -- Senior Vice President of Investor Relations and Corporate Communications

Thank you, Michel. Good morning and thank you all for joining us today to discuss 1-800-Flowers.com's financial results for our fiscal 2018, fourth 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 website at 1-800-Flowers.com.

Our call today will begin with brief formal remarks and then we'll 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 certain statements that we will make today may be forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involves 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 supplemental financial measures that were not prepared in accordance with Generally Accepted Accounting Principles. Definitions of these non-GAAP financial measures can be found in the definition section of the company's press release issued this morning. Also, where applicable, reconciliations of certain non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in the tables accompanying this morning's press release.

The company expressly disclaims any intent or obligation to update any of the forward-looking statements in today's call, any recordings of today's call, the press release issued earlier today or any of its SEC filings, except as may be otherwise stated by the company.

Before I turn the call over to Chris, I'd like to take this opportunity to make sure that everyone on the call is aware of our upcoming Investor Day. The event will be held on Thursday, September 13th, in Columbus, Ohio. We have an exciting agenda planned that will showcase our Cheryl's cookies bakery and Obetz distribution facility and including update on our initiatives across all three business segments.

We will also be hosting a dinner, the evening before, on September 12th, with Chris, Bill, and other members of our executive team. If you're able to join us next month, please reach out to me via email or phone, and I'll send you details of the event. We look forward to seeing you there.

Now I'd like to turn the call over to Chris.

Chris Mccann -- President and Chief Executive Officer

Thank you, Joe. As we noted in this morning's press release, we had a strong finish to the fiscal year with comparable revenue growth accelerating across all three of our business segments during the second half. In the fourth quarter, we achieved strong results in our 1-800 Flowers and BloomNet businesses, both of which recorded healthy top and bottom line growth for the period.

This reflected a combination of solid everyday gifting demand combined with robust performance during the Mother's Day holiday period, which more than offset the impact of the Easter holiday shift in these segments. The strong growth in our Floral businesses for both the quarter and the second half reflects the investments we have been making in targeted marketing and merchandising programs, designed to take advantage of market conditions and accelerate growth.

In the 1-800 Flowers brand, we continue to leverage our experience and expertise in digital marketing, where we are increasingly using machine learning in areas such as search and display. These efforts are focused on helping us customize our messages and enhance relevance for new customer acquisition and to stimulate increased frequency from existing customers.

In Merchandising, where we've continued to expand our offerings of truly original gifts with broader price points at both entry level and the luxury high end. During the year, we expanded our plant offerings with the successful introduction of our new Succulent line. This is a growing product category that's particularly popular with our millennial customers. We also celebrated the color of the year, with our passion for purple collection of floral arrangements and we expanded our exclusive offerings in flowers and plants created in collaboration with Style Maven's Real Simple, Southern Living and Sandra Magsamen.

These investments we have made and continue to make have enabled us to further extend the 1-800 Flowers brand's market leadership and significantly widen the gap with our competitors.

Similarly in BloomNet, we made investments throughout fiscal 2018 both to expand our suite of products and services for florists and to increase the order volumes running through the BloomNet platform. During the year BloomNet expanded its digital marketing programs, offering SCO and SEM capabilities to florists for their websites, introduce new digital directory features designed to help florists highlight their unique offerings, and drive additional incoming orders from sending flowers, and we successfully expanded efforts to capture a growing volume of orders from local flower shops and third-party online floral companies.

As a result, BloomNet grew its market position in fiscal 2018 and is well positioned to build on this growth and further expand its market share in fiscal 2019.

In our Gourmet Food and Gift Basket segment, comparable fourth quarter revenue growth adjusted for the sale of Fannie May, declined 7% due to the Easter shift. Combining our third and fourth quarters, which eliminates the impact of the Easter shift, this segment achieved revenue growth of nearly 5% for the second half of the year.

This was driven primarily by continued strong growth in everyday gifting in Harry & David, 1-800 Baskets and Cheryl's Cookies.

Harry & David in particular achieved strong double-digit growth in birthday, sympathy, and thank you, by creating specific product collections for these occasions and utilizing digital marketing campaigns to create awareness among customers. Harry & David also continued to see growing consumer demand for its expanded Moose Munch product line, with strong sales across all channels.

Cheryl's, which stumbled during the second quarter due to operational challenges, corrected those issues and aggressively invested in customer engagement programs throughout the second half of our fiscal year to win back customers who may have been affected. As a result, Cheryl's performance improved steadily throughout the second half and the brand is now well positioned to resume its place as one of our top performance in fiscal 2019.

During the fourth quarter and the second half, we also experienced strong everyday gifting demand in our newest Gourmet brand, Simply Chocolate, which has continued to capture customer interest. Throughout the fiscal year, we also continue to invest in innovations designed to enhance our customers' experience. We launched our digital self-service portal, allowing customers to track their orders, to make modifications to delivery dates, their addresses, and even their gift message, further enhancing our already historically high customer sat metrics.

We rolled out a new responsive widescreen website design across our family of brands with enhanced navigation functionality.

We launched Smart Gift, a digital gift application that enables customers to send a gift even when they don't have the recipient's address. We can simply notify them of a gift coming via email or SMS and you give the recipient the opportunity to choose their gift from our family of brands, choose their preferred delivery address, even pick their delivery date, equally involving the recipient in the full gifting experience.

We continue to build on our early adopter position in the world of conversational commerce with new applications launched on Google Assistant, Apple Business Chat, Samsung Chatbot and Google Rich Business Messaging and we deployed new PWA, Progressive Web App technology on our category-leading mobile platform, significantly ramping up speed and functionality for our growing volume of mobile customers.

In addition, just this past week, we launched Goodsey, an exciting new brand that features a selection of unique items for gifting across a broad spectrum of product categories, from children's gifts to pets, to jewelry, and much more.

Joining Simply Chocolate and Personalization Universe, Goodsey is the third brand that we've added to our growing portfolio within this past year. This illustrates the strength of the celebrations ecosystem and the platform that we have built that allows us to expand rapidly into new product categories, using a marketplace concept to provide our customers with the widest selection of solutions to help them express, connect, and celebrate for all occasions, and recipients including themselves.

Our focus on innovation and our investments in product design, in addition to the introduction of new brands on our platform has enabled us to become our customer's go-to destination for all occasions. As we enter our new fiscal year, we plan to build on the positive trends we're seeing in our business.

In our 1-800-Flowers brand, we plan to step up our investments in targeted marketing and merchandising programs to take advantages of current market conditions, accelerate revenue growth and expand our market leading position.

In BloomNet, we will continue to focus on expanding the suite of products and services we provide to help our flowers [ph] grow and on increasing the volume of orders throughout the BloomNet system. As a result, we expect BloomNet to deliver accelerated top and bottom line growth in fiscal 2019 and further expand its market position.

In Gourmet Foods and Gift Baskets, we'll continue investing to expand our digital marketing footprint and to broaden our product offerings, particularly for everyday gifting occasions. We expect to build on the momentum we are seeing particularly at Harry & David to drive strong top and bottom line performance in this segment.

I'd now like to turn the call over to Bill to cover metrics in more detail for the fourth quarter and the year. Bill?

William Shea -- Senior Vice President, Finance and Administration, Treasurer and Chief Financial Officer

Thank you, Chris. As Chris referenced in his remarks, we are pleased with the strong finish to fiscal 2018, while reported revenue growth in the fourth quarter was 1.7% excluding Fannie Mae. This was impacted by the shift of Easter into our fiscal third quarter, compared with last year when Easter fell in on fiscal fourth quarter.

Adjusting for the Easter shift, revenue growth in the quarter was 6.6% and for the second half of the year it was 5.8%. This was driven primarily by strong growth in our flagship 1-800-Flowers and Harry & David brands, as well as significantly accelerated growth in BloomNet.

Our Consumer Floral segment grew 4% in the quarter and 6.3% for the second half of the year. Last quarter, we noted strong performance for Valentine's Day. Similarly in the fourth quarter, we saw strong performance for Mother's Day, combined with the strength in everyday gifting, 1-800-Flowers continues to extend its market leading position.

Everyday gifting also grew nicely in our Gourmet Food and Gift Baskets segment, with 4.5% growth in the second half of the year, adjusted for the sale of Fannie Mae, driven primarily by Harry & David's e-commerce growth of 9%. In the BloomNet, while we were challenged for growth in the first half of the year, that began to turn in the third quarter, culminating with breakout revenue growth in Q4 of 12.6%.

Now breaking down the fourth quarter and full year results. As I already noted, total consolidated revenues adjusted for the sale of Fannie Mae grew 1.7% in the quarter and 5.8% for the second half. Total consolidated revenues for the year, adjusted for Fannie Mae grew 3.7% to $1.15 billion. This was driven by accelerated revenue growth we saw in the second half of our fiscal year illustrating the strong growth momentum we have as we move into fiscal 2019. Gross margin for the quarter was down 50 basis points to 40.5%, compared with 41% in the prior year period. This primarily reflected the Easter shift. Gross margin for the year was 42.5%, down a 110 basis points compared with 43.6% in the prior year. This primarily reflected a combination of the impact of the Cheryl's operational issues, higher than normal transportation costs, and the investments we made during the year to extend 1-800 Flowers' market leading position.

We anticipate consolidated gross profit margin will be up slightly in fiscal 2019 based on initiatives we are implementing in manufacturing and supply chain, as well as reducing expenses associated with promotional programs and shipping. Operating expenses for the fourth quarter improved 20 basis points to 45.4% of total revenues compared with 45.6% in the prior year period.

For the year, operating expenses improved 80 basis points to 38.9%, compared with 39.7% in the prior year. Adjusted EBITDA loss for the fourth quarter was $1.8 million, compared to a loss of $1.2 million in the prior-year period, primarily reflecting the Easter shift.

Adjusted EBITDA for the full year was $78.9 million compared with $85.9 million in the prior year. This primarily reflected Cheryl's operational issues and higher transportation and healthcare costs incurred throughout the year.

Net loss for the quarter was $8.2 million or $0.13 per share, compared with a net income of $8 million or $0.12 per share in the prior-year period, which included the gain on the sale of Fannie May, which closed at the end of May of last year. On a comparable basis, net loss for the quarter was $7.6 million or $0.12 per share, compared with a net loss of $7 million or $0.11 per share in the prior-year period, again reflecting the shift in Easter.

Net income for the full fiscal year was $40.8 million or $0.61 per share, compared with $44 million or $0.65 per share in the prior year. Contributing to these amounts are the one-time benefit related to the Tax Cuts and Jobs Act enacted in fiscal 2018 and the one-time benefit related to the gain on the sale of Fannie May in fiscal 2017.

On a comparable basis, adjusted primarily for these items, net income for the year was $29.3 million or $0.44 per share, essentially unchanged compared with $29.9 million or $0.44 per share in the prior year.

In terms of category results. In Gourmet Food and Gift Baskets, fourth quarter revenues adjusted for the sale of Fannie May declined 7.1% to $60.1 million, reflecting the Easter shift. For the second half of the year, revenues in this segment adjusted for Fannie May, increased 4.5% compared with the prior year period. For the full year, revenues in this segment adjusted for Fannie May increased 3.2% to $605.5 million. This reflected strong e-commerce growth in our Harry & David and 1-800 Basket brands.

Gross profit margin for the quarter was 36% compared with 37.8% in the prior year period adjusted for Fannie May. The lower gross margin in the quarter primarily reflects the Easter shift. Gross profit margin for the year was 42.6% compared to 44.2% in the prior year period adjusted for Fannie May. The lower gross margin for the year primarily reflects the impact of the aforementioned operational issues at Cheryl's, as well as higher transportation and seasonal labor costs.

Contribution margin loss for the quarter was $8.8 million, compared with the contribution margin loss of $6.8 million in the prior year period adjusted for Fannie May. The higher contribution margin loss reflects the shift of the Easter holiday. Contribution margin for the year was $70.9 million compared with $75.5 million, adjusted to Fannie May. The lower year-over-year comparable contribution margin primarily related to the impact of the operational issues at Cheryl's and higher transportation and healthcare costs.

In Consumer Floral, fourth quarter revenues grew 4% to $145 million reflecting strong Mother's Day and everyday gifting performance, which more than offset the impact of the Easter shift. Second half of the year growth in this segment, which eliminates the shift -- the Easter shift was 6.3%. Gross profit margin for the quarter was 40.2%, unchanged compared to the prior year period, and contribution margin increased 14.5% to $16.8 million.

This reflected a combination of strong revenue growth in the period, as well as efficient marketing programs, which more than offset the impact of the Easter shift. For the year, revenues increased 4.7% to $457.5 million, reflecting investments we've been making in targeted marketing and merchandising programs. Gross profit margin for the year was 39.7% compared with 40.6% in the prior year, and contribution margin was $50.8 million compared with $51.9 million in the prior year.

The lower gross profit margin and contribution margin for the year reflected the investments we made to drive accelerated growth and the impact of a higher promotional competitive landscape that was prevalent through the first three quarters of the year. In our BloomNet business, fourth quarter revenues increased 12.6% to $24.9 million, primarily reflecting increased order volumes.

For the year, revenue increased 2.1% to $89.6 million. Gross profit margin in the quarter was 51.8% compared with 56.6% in the prior-year period, reflecting product mix and the investments to accelerate revenue growth. Gross margin for the full year was 54.3% compared with 56.5% in the prior year. Contribution margin for the quarter increased 2.1% to $8.9 million compared with $8.7 million in the prior year period. Contribution margin for the year was $31.7 million compared with $32.4 million in the prior year.

As I mentioned earlier, BloomNet has nice momentum coming into fiscal 2019, as we expect both top and bottom line growth throughout the year. In terms of corporate expense, our category contribution margin results exclude cost associated with the company's enterprise shared services platform, which includes among other services, IT, HR, finance, legal and executive. These functions are operated under a centralized management platform, providing support services to the entire organization.

For the fiscal fourth quarter, corporate expense including stock-based compensation as adjusted was $19.6 million compared with $19 million in the prior year period adjusted for Fannie Mae. For the full year, corporate expense including stock-based compensation as adjusted was $79 million compared with $80.5 million in the prior year adjusted for Fannie Mae.

Now turning to our balance sheet. At the end of the year, our cash and investment position was $147.2 million. Our term debt balance net of deferred financing cost was $102.3 million and we had zero borrowings outstanding under our working capital line within our revolving credit facility. As a result, our net cash position at the end of the year was $44.9 million.

Inventory of $88.8 million reflects our decision to pre-build some holiday season inventory during our off peak season using our core manufacturing associates and expanded cold storage capacity to mitigate the impact of a tight labor pool and rising labor rates.

Regarding guidance, as indicated in our press release, our guidance for fiscal 2019 includes our plan to increase investments to take advantage of market conditions and build on the revenue momentum we are seeing across our business segments. In fiscal 2019, we plan to accelerate investments in marketing and merchandising programs, specifically in our flagship brands, 1-800-Flowers and Harry & David and invest in our newest brand Goodsey, which Chris mentioned earlier.

Additionally, our guidance for fiscal 2019 bottom line metrics assumes the restoration of our 100% bonus payout compared to a minimal payout in fiscal 2018. As a result, the company's guidance for fiscal 2019 is as follows. Consolidated revenue growth accelerating to a range of 5% to 7% compared with the prior year. EPS in a range of $0.38 to $0.42 including an anticipated effective tax rate of 26%. Adjusted EBITDA in the range of $77 million to $80 million and free cash flow in the range of $30 million to $40 million.

We anticipate working capital to be relatively consistent in fiscal 2019 after the strategic investment we made in pre-building inventory in fiscal 2018. To further clarify, in fiscal 2019, we are investing to accelerate revenue growth. Growth that we believe is sustainable at the mid-single digit or better level beyond fiscal 2019.

As I mentioned earlier, fiscal 2019's bottom line results will reflect the restoration of full bonuses assuming they are earned. Absent this one year catch-up in bonuses, we expect to significantly improve our bottom line metrics and then in fiscal years 2020 and 2021, we anticipate reported EBITDA and EPS will grow at double-digit pace, as we approach $100 million in EBITDA.

Additionally, as you may be aware, that FASB recently issued new accounting guidance on revenue recognition. While the new guidance, which we are required to adopt in Q1 of fiscal 2019 will have little to no impact on revenue, there is a change in the timing of when we recognize catalog and direct mail expense. The new accounting rules require the immediate expensing of catalog and direct mail expenditures when they incur, versus the previous method of amortizing the expense over the life of the catalog.

As an example, catalog and direct mail pieces that are mailed in September, will now be expensed in full in Q1. While historically, they would have been amortized over their respective lives, which would have extended into Q2. This change is therefore primarily a timing issue for the company with higher expenses related to catalog marketing in Q1 that will ultimately be offset by lower expenses in this area in Q2.

One last data point. Due to the timing of the Tax Cuts and Jobs Act, which was enacted during our fiscal second quarter last year, the tax benefit that we received in our first quarter last year was based on an effective tax rate of 35%. In our fiscal first quarter this year, the tax benefit will be lower compared with last year, as it will be based on an effective tax rate of 26%.

With that, I will turn the call back to Chris.

Chris Mccann -- President and Chief Executive Officer

So to sum up, in fiscal 2018, while we faced some operational challenges in the first half of the year, we built nice momentum in our second half. As we entered fiscal 2019, we see revenue growth accelerating across all three of our business segments. In our Floral businesses, 1-800 Flowers and BloomNet are ramping up growth and taking market share.

In our Gourmet Food and Gift Baskets, Harry & David's e-commerce business is growing at a solid sustainable pace reflecting strong everyday and holiday gifting demand. We've addressed the operational issues that held Cheryl's back last year and we are seeing strong performance at 1-800 Baskets and Simply Chocolate.

We are growing our customer file across the enterprise and we continue to get more sophisticated in terms of our capabilities to mine and utilize the tremendous amount of data we have in our customer files. Importantly, our customer behavior metrics, including frequency, retention, and average spend are strong and getting stronger. This is being driven by our multi-brand customer initiatives including our Celebrations Passport program.

As we've told you in past calls, Passport and multi-brand customers, purchase frequency, retention rate, and average spend are all significantly higher compared with single-brand or non-passport customers, helping to grow lifetime value across our customer file. These metrics are the impetus behind our decision to invest to bring more customers into our ecosystem.

Looking ahead, we are excited about the opportunities we see to leverage the celebrations platform that we have built to expand the products and services that we offer our customers and to help them express, connect, and celebrate.

Now before I turn the call over to Michelle to begin the Q&A portion of our call, just like to take this opportunity to thank all of the associates across our company, for their hard work, for the way they embrace change, and really help us constantly innovate, and most importantly for their dedication to helping our customers deliver smiles.

Michelle, would you please repeat the polling questions for the Q&A session?

Questions and Answers:

Operator

We will now begin the question-and-answer session. (Operator Instructions) (inaudible) The first question comes from Dan Kurnos of Benchmark Company. Please go ahead.

Dan Kurnos -- Benchmark Company -- Analyst

Great, thanks, good morning. The first two questions I have are going to be related. And I'm sure this is going to be a familiar line of questioning throughout the call. So, Chris, just on the whole situation, you guys are very polite not to mention FTD, but -- so I don't have to be as polite and I'll just say it. They're obviously a mess right now, you've clearly indicated you're going to market, we'll use your terms, the competitive dynamics, your competitive landscape, however, you want to put it. The real question here is, on the last call, you clearly took a bunch of market share, you said you weren't going to spend indefinitely, your forward, forward, I don't know what to call it, soft guide of double-digit EBITDA growth and we'll get into expenses in a second, implies that as you said in the remarks the share gains are sustainable.

So can you just give us some color on the stickiness like sort of -- obviously you don't give away all the secrets, but the stickiness of customers that you expect to be able to go after, and I'm not sure that people are also thinking about this, but potentially on the wire side, your ability to take share from guys that are concerned, order volume from guys that are concerned that FTD may not be around in a few years.

Chris Mccann -- President and Chief Executive Officer

So I'll kind of start at the top, Dan, if we can. I think as we look at guidance, we're going forward, and we really step back and look at the macro environment that we're working in, clearly, we're in a middle of a strong economy here, hopefully in the middle of a strong economy, we're in a strong consumer environment right now and we're in a changing competitive landscape.

So that gives us opportunity we believe to continue to accelerate the growth of the company. These multi-brand customer initiatives that we've been doing, the Passport programs, all of the customer metrics, I just mentioned to you, give us really the confidence and the ability to drive more customers into that ecosystem, because of the stickiness that we're seeing that you referred to. And we're really looking to invest not just on the floral side of the business, yes, we see opportunity there, yes, the competitive landscape gives us more opportunity, but also on our other flagship brand, Harry & David.

We took a brand there that had not grown in a long, long time before us acquiring that business going through the integration process, started to get good nice growth there last year and we are seeing that accelerate. And when you look at the two flagship brands that we can invest in customer acquisition, both of which have good customer acquisition cost, bringing them into our ecosystem and then leverage them into our multi-brand capabilities, our Passport program, it gives us the customer behavior metrics or stickiness as you put, that really helps us to see this as a sustainable move for us.

Once we take up and take the investments, and taking the customer acquisitions to next level this year, that bodes well for the next 2 or 3 years for us at minimum.

Dan Kurnos -- Benchmark Company -- Analyst

And your thoughts on being able to take on the wire side, Chris?

Chris Mccann -- President and Chief Executive Officer

Yeah, I was just going to come back to that, Dan. I think you're seeing that already on the wire side, and that's why, as you know, my comments and certainly Bill's comments alluded to, we saw some opportunity or we saw some turn begin, some momentum begin in Q3, that was able to accelerate that in Q4 as we had double-digit growth in Q4 in BloomNet. And it really is a matter of kind of sticking to our core, making sure that we are delivering, and offering, and sending florists that are out there, a good customer platform, good coverage, good customer service, quality delivery, competitive rates. And what we see we are doing is, we are moving market share from other competitors into BloomNet and we see that as being sustainable for some period of time right now.

William Shea -- Senior Vice President, Finance and Administration, Treasurer and Chief Financial Officer

Dan, the investments that Chris was referencing of, consumer brands and our flagship brands 1-800-Flowers and Harry & David, as well as the launch of Goodsey, these investments are going to have kind of a mid-single digit million-dollar impact on our EBITDA in 2019 and they're going to skew more toward the Consumer Floral segment because Goodsey as well as the 1-800-Flowers brand roll up into the Consumer Floral segment. But these investments are helping to drive the accelerated revenue -- growth that we believe is sustainable and we expect returns on these investments in fiscal 2020 and 2021 and beyond that will help us drive sustainable double digit bottom line metrics in EBITDA as we approach $100 million.

But to be clear, even with these investments, our bottom line metrics in fiscal 2019 would've been up double digits, if not for the one-time catch up in bonuses.

Dan Kurnos -- Benchmark Company -- Analyst

Got it. Okay, that's helpful. All right then, let me just ask one more question. I'll get back in queue. Just on the thought process of your use of cash here, look, you guys have the opportunity to go after the landscape a bit more, I'm sure, you'd like to scale up, you haven't made an acquisition yet since selling Fannie, you haven't really been aggressive on buyback, the multiple has gone up and probably rightfully.

So does it change your view on willingness to make it growth with your acquisition at this point given that it would be less value dilutive or is the landscape still not really healthy enough for you to go out there and find something at an attractive price?

Chris Mccann -- President and Chief Executive Officer

So you are right, Dan. I think we're in a very good position with our balance sheet and we're very pleased with the cash position that we have on it. It gives us good flexibility to really achieve our ultimate goal, which is to put our cash and under leveraged balance sheet to work for our shareholders through acquisitions that can help us accelerate our bottom line growth.

As we look at where we stand today, clearly, and we're portraying a really strong confidence in the plan we have going forward, the investments we're making in our core business behind those customer metrics that I spoke about, behind the products and service we're introducing, taking the company over the past couple of years from the 1% growth to 2% to a 3.7% to next year guiding north of 5% growth.

So we are really very pleased with that. With that said, we clearly have the responsibility to be looking for acquisitions that can add to our platform, leverage our platform and like you saw us doing with Goodsey, we will also develop businesses, and invest in developing businesses, utilizing the leverage of our platform.

So, and I think as we continue to look at our business and where we're going, we're the leaders in the Floral category, we are leaders in the Gourmet Food category, with steps like Personalization Universe and now Goodsey, we're starting to move into other categories that gives us a higher addressable market to go after, so I think acquisitions will certainly play a role in that.

Dan Kurnos -- Benchmark Company -- Analyst

Got it. Thanks, Chris. Thanks, Bill.

William Shea -- Senior Vice President, Finance and Administration, Treasurer and Chief Financial Officer

Thanks, Dan.

Operator

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

Linda Bolton Weiser -- D. A. Davidson -- Analyst

Hi. So just a follow on the questions about the increase in the comp expense, the bonus expense. Your corporate expense declined by $2.5 million in FY 2018, so is that -- is that $2.5 million, is that the decline in comp expense, like is there a dollar figure that we can somehow attach to the delta in comp expense FY 2019 versus FY 2018?

Chris Mccann -- President and Chief Executive Officer

Yeah, Linda. The comp expense sits within a number of categories. So the bonus expense associated with -- people who are bonus eligible within the brands, sits within the segments, but the bonus for people who are on the -- in the corporate sector would sit in that line. But certainly that $2.5 million reduction in corporate expense is always representative of the decline in bonus in that -- in that segment.

William Shea -- Senior Vice President, Finance and Administration, Treasurer and Chief Financial Officer

It's a part of it, yes.

Chris Mccann -- President and Chief Executive Officer

It's part of it. But as we kind of put in our formal remarks, you know, our bottom line results in fiscal 2019 would be up double digits, if not for the one-year catch up in the bonus. So that would put the incremental bonus in 2019 in the kind of the high-single digit, million dollar range.

Linda Bolton Weiser -- D. A. Davidson -- Analyst

Thank you, that's helpful. And then, so thinking longer-term here, I mean FTD has been having problems for a couple of years now. It just hasn't been all of a sudden, it's been a gradual deterioration of their business. And if you look back at your FY 2016 EBITDA, I think you did about $86 million of FY 2016 EBITDA, and here we are next year expecting 7% to 10% lower than that. A couple of years later, three years later, your EBITDA is about 7% to 10% lower than a few years ago.

So granted, your top line growth is accelerating pretty steadily. So that's good, but it strikes me that you're spending more to get that top line growth. So you're getting the growth, but your profitability is deteriorating. So can you comment on like customer acquisition costs? Is that increasing over time because a lot of other net -- internet type companies, e-commerce companies say that it is increasing.

And it's just -- it's getting costlier and costlier to capture those customers. So can you just comment on the connection between top line growth and profitability? Thanks.

Chris Mccann -- President and Chief Executive Officer

Yes. Well just -- let me start. And again just to be clear, our bottom line results in fiscal 2019 would've been up double digits, if not for the one-time catch up in bonuses. In addition, our guidance includes investments we're making in our flagship brands 1-800 Flowers and Harry & David to accelerate revenue growth and to increase customer acquisition, as well as the launch of a new brand, Goodsey. We expect strong returns on these investments going forward and anticipate our bottom line metrics in 2020 and 2021 will grow at double-digit rates as we approach $100 million in EBITDA.

So yes, you know -- our guidance is showing lower EBITDA. We incurred lower EBITDA this year for a number of the reasons that we talked about, the operational issues we had at Cheryl's, healthcare costs, transportation costs, we've addressed a number of those items.

William Shea -- Senior Vice President, Finance and Administration, Treasurer and Chief Financial Officer

And some mid-year decisions to invest in growth in the Floral side, right?

Chris Mccann -- President and Chief Executive Officer

But as we move forward, we are seeing that bottom line growth. We do have -- we have a one-year catch up in bonuses, but aside from that we are seeing double-digit growth and we're projecting double-digit growth on a sustainable level in EBITDA and EPS going forward.

William Shea -- Senior Vice President, Finance and Administration, Treasurer and Chief Financial Officer

Yes. And I also think it's an opportune time for us to increase our investment spend to take a bit more advantage of the current marketplace, whether it be the competitive landscape or the strong consumer economy to invest more in customer acquisition. Why, because the model that we've been building is working. We're seeing the excellent customer behavior metrics across our customer file, the multi-brand customers, the Passport customers, with their increases in frequency, retention and average spend.

Those values, Linda, will help us to offset increases in marketing spend that we see in different places, whether it be from Google or just in the display world, those rates are always going up. So there is always pressures. How we make our marketing more effective is by making sure we are creating a sticky relationship with our customers. And that's what we're doing and not [ph] really because we're seeing that start to really take hold after a couple of years of building this program is what gives us the confidence and the impetus to make these investments.

Linda Bolton Weiser -- D. A. Davidson -- Analyst

Thank you.

Operator

The next question comes from Alex Fuhrman of Craig-Hallum Capital Group. Please go ahead.

Alex Fuhrman -- Craig-Hallum Capital Group. -- Analyst

Great, thank you very much for taking my question. Wanted to ask about a couple of your different business lines. One is certainly intrigued by the new site, Goodsey, curious where you see that fitting into the assortment and how you envision customers migrating there from the other brands. And then, Chris, you mentioned everyday gifting as being something that's really taken off lately, curious where that's coming from, if that's been driven by new customers or existing customers, and is it fair to assume, as you've been bringing customers into the Passport program, presumably around some of the big peak holidays like Valentine's Day and Mother's Day, I mean, are these the customers that are then becoming stickier and participating more in the everyday gifting occasions or is there been something else that's been driving that for you guys?

Chris Mccann -- President and Chief Executive Officer

So let me start off on Goodsey. We're really excited about Goodsey. You saw us with one of our launches this past year bringing Personalization Universe onto our platform as one of the first steps into a new expanded product category and we'll continue to grow in that direction. But what we've been looking to do also is to say how do we rapidly expand into other product categories that we believe our customers will want for their total gifting solutions and really taking a marketplace strategy to do that is something that's a little bit new for us and one that we think holds a good opportunity for us overall as a company in the future, as we could significantly ramp up the skew counts in this marketplace area (inaudible) SEO juice out of it and really get the word out there more and more of these family of brands as a total gifting solution.

So we're really happy with Goodsey, the platform that we are building it on and it shows how we are able to leverage our platform to expand rapidly. So it will be positioned right up along with all of our other brands that launched on the multi-brand tab of our website two days ago. It's already getting some decent, again, all it's just as usual [ph], it's just people finding it, some decent cross brand pollination, customers coming in and exploring and trying the products.

But we see this as an opportunity first and foremost to really make sure that if you're coming to any one of our branding and not quite finding what you're looking for, take a look at Goodsey, maybe there is an opportunity for us to capture what might have been a lost sale. So that's kind of the starting point of how we'll position it over the next month or two.

As we start moving into the holiday season, we'll start to put some more marketing dollars directly behind Goodsey and really in the tag line of Goodsey is, it's a unique collection of these great gifts, the tag line is, find it, love it, gift it. And that's all about the experience about the hunt for these unique gifts and how -- the challenge of finding them and the joy of finding them, which also sometimes leads into a self purchase.

So we're pretty excited about Goodsey, as we move forward. Goodsey plays into everyday gifting as well. The everyday gifting that we talked about so far, however, has really been the growth of everyday gifting in the Gourmet food business. The flowers business has always been an everyday gifting engine. Yes, we talk a lot about the peaks of Valentine's Day and the peaks of Mother's Day, but it's the everyday occasions of birthday, anniversary, sympathy, get well, that really drive the Flowers' engine.

We've been able to take that knowledge and capabilities now and start to extend it into the food brands, which have historically been holiday season-driven marketing brands. And while we're getting 30%, 40% growth on some of these occasions, the numbers are relatively low, but we're gaining good momentum and we're starting to see when we get to those customers who are new customers generally utilizing the food brands for those everyday occasions, those customers are then coming back at holiday time. So we really like what we're seeing there.

And then similar to your point on Passport, as we bring more and more people into the Passport program, we're really finding that stickiness and multi-brand exploration from those customers. So that's significantly helping us to increase retention rates.

Alex Fuhrman -- Craig-Hallum Capital Group. -- Analyst

Great, that's really helpful. Chris. And then, just thinking about the competitive dynamics that are out there, I think another analyst mentioned that FTD has been struggling for a couple of years and while I suppose that is -- that is true, they've also been increasing their marketing spending, pretty substantially over the last couple of years, and I imagine that is, that is likely set to tail off for them now, which would be what's different here.

So curious, as you think about the opportunity to grab market share, I mean clearly FTD and ProFlowers are big competitors on the Floral side, they're not particularly important on the floral gifting side. Is that where we should think about the biggest opportunities are to gain market share and then have customers migrate over to Gourmet Foods after they come into the Floral segment or it sounds like there's also a lot of opportunity specific to Harry & David there within the -- within the Gourmet Food segment.

Is there anything going on there that's -- that's competitive in nature or is it just a matter of blocking and tackling following years of under-investment before you acquired that brand.

Chris Mccann -- President and Chief Executive Officer

So I was going to bring you more toward the latter there, but let me jump and address the Floral side first. You're right, I think, as Bill mentioned, through the -- the first three quarters of last year we continued to see heavy spend, especially as we moved into the Valentine quarter, fiscal Q3, the Valentine holiday period, we saw a significant spend and significant pricing promotion and discounting.

As we moved into the Q4 Mother's Day holiday period, we probably saw the spend pull back a little bit, but still aggressive on discounting and promotion activities, which again in the long term hurts the brand I believe. But it got more rational, we expect that rationale behavior to continue to play forward into the next year based on what we can see from the competitive landscape in the floral category.

However, while that is giving us opportunity, again along with the strong consumer out there, that does give us opportunity to grow Floral and that's why we are investing behind 1-800 Flowers flagship brand, equally we see growth opportunity on the Harry & David brand. I would take your lead there, I'll just hit on the question or just follow that and then say, it is not so much from competitive dynamics, but really from blocking and tackling, and getting the business to where we wanted.

When we did that integration four years ago now, the first two years or more were focused on the cost integrations, which we did a good job of, and then we started to turn our attention to the revenue side of the business. And that always takes a little bit longer, but we saw that start to take traction a year or more ago, and where we started to see that, we saw it last holiday season, then we saw it now continuing in the everyday business. So we're really comfortable that we have the right products in place, we have the right marketing messages in place, constantly enhancing them, but seeing really strong results on Harry & David's e-commerce business.

Alex Fuhrman -- Craig-Hallum Capital Group. -- Analyst

Great, that's really helpful. Thank you very much.

William Shea -- Senior Vice President, Finance and Administration, Treasurer and Chief Financial Officer

Alex, I was just going to say, Harry & David e-commerce growth for the year was over 6%, and we've seen that trend line accelerate in the second half of the year, where it was over 9% for the second half of the year.

Alex Fuhrman -- Craig-Hallum Capital Group. -- Analyst

That's terrific. Thank you.

Operator

The next question comes from Anthony Lebiedzinski of Sidoti & Company. Please go ahead.

Anthony Lebiedzinski -- Sidoti & Company -- Analyst

Thank you and good morning everyone. Thank you for taking the questions. So I just wanted to follow up on the last comment, Bill, that you made as far as Harry & David. So you gave us the e-commerce figures, I may have missed this, but what was Harry & David overall for the quarter, or for the year, whatever you have?

William Shea -- Senior Vice President, Finance and Administration, Treasurer and Chief Financial Officer

Yeah, for the year, Harry & David was in the mid-fours in growth. So their -- the retail store numbers are -- the number of retail stores is relatively the same, year-over-year down slightly, so we lose a little bit on that. And we're still working on and we think we have a lot of momentum going into on the wholesale side, but the wholesale side during fiscal 2018 did not grow. We think we have a lot of momentum as we head into fiscal 2019.

Anthony Lebiedzinski -- Sidoti & Company -- Analyst

Okay, thank you for that. And just getting back to the bonus issue. So as we look at our models, so I assume that most of that will hit the G&A expenses. Is that correct? On the income statement?

William Shea -- Senior Vice President, Finance and Administration, Treasurer and Chief Financial Officer

Yes, the most of it will, yes.

Anthony Lebiedzinski -- Sidoti & Company -- Analyst

Right.

William Shea -- Senior Vice President, Finance and Administration, Treasurer and Chief Financial Officer

But it follows where the employees are aligned to. So someone in marketing would sit -- their salary sits in sales and marketing and therefore their bonus sits in sales and marketing.

Anthony Lebiedzinski -- Sidoti & Company -- Analyst

Okay, thank you. So, let's say if -- you know, let's say hypothetically you're able to hit your targets in fiscal 2019, you payout the bonuses as planned. Looking forward to fiscal 2020, what would be kind of the expected growth in bonuses then? Assuming, let's say, you do the 5% to 7% revenue growth, again?

William Shea -- Senior Vice President, Finance and Administration, Treasurer and Chief Financial Officer

Yes, so then bonus would be relatively consistent -- relatively consistent year-over-year. We're getting the 5% to 7% to the extent that we're hiring more people, then there could be a few more people. But we really would be leveraging the assets of the -- of our employee base, so that most of the employees that are driving that, their bonuses will be the same. They hit 100% of their bonus in fiscal 2019, they have the same number in fiscal -- in fiscal 2020, their bonuses will be relatively consistent year-over-year.

Anthony Lebiedzinski -- Sidoti & Company -- Analyst

Okay, thanks for that clarification. And I think earlier you had mentioned that for BloomNet you're looking to expand your suite of products and services. Can you perhaps give us some examples of what you're looking to do there?

Chris Mccann -- President and Chief Executive Officer

I think one area that we've begun in getting some traction is the marketing services that we've talked about. Today, we have been focused on working with our BloomNet members to help them with their SEO and their SCM capabilities. Now I could see is adding on to that suite of services as an example.

Anthony Lebiedzinski -- Sidoti & Company -- Analyst

Got it, OK. And lastly Bill, you had mentioned, as far as the new revenue recognition rule, there are some shift in timing of your catalog costs. So can you give us a sense as to how much you expect that to be in the September quarter?

William Shea -- Senior Vice President, Finance and Administration, Treasurer and Chief Financial Officer

Yeah, in the first quarter, it could be around $3 million of it [ph], moving from Q2 to Q3 from -- I'm sorry Q2 to Q1 and then we get it right back in Q2.

Anthony Lebiedzinski -- Sidoti & Company -- Analyst

Got it. Okay. All right, thank you. Best of luck.

Chris Mccann -- President and Chief Executive Officer

Thank you, Anthony.

Operator

(Operator Instructions) This concludes our question-and-answer session. I would like to now turn the conference back over to Chris McCann for any closing remarks.

Chris Mccann -- President and Chief Executive Officer

Okay. Well, I thank everyone, and thank everyone for their questions and thank everyone for their attention and support. As a reminder, we look forward to hosting you at our Investor Day. Joe mentioned in the beginning of the call, an Investor Day next month at our Cheryl's bakery and our Obetz distribution facility. It will be a great opportunity to meet more members of our team, to learn more about our company, see what we've done in the Cheryl's business there to get ready for the holiday. We'll be showcasing some exciting new automation initiatives in both our Westerville and our Obetz facility. So we'd be excited to show those often [ph]. And of course there may be, just may be some delicious cookies on the menu as well to entice you to join us. Thank you very much.

Operator

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

Duration: 51 minutes

Call participants:

Joseph Pititto -- Senior Vice President of Investor Relations and Corporate Communications

Chris Mccann -- President and Chief Executive Officer

William Shea -- Senior Vice President, Finance and Administration, Treasurer and Chief Financial Officer

Dan Kurnos -- Benchmark Company -- Analyst

Linda Bolton Weiser -- D. A. Davidson -- Analyst

Alex Fuhrman -- Craig-Hallum Capital Group. -- Analyst

Anthony Lebiedzinski -- Sidoti & Company -- Analyst

More FLWS analysis

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

Motley Fool Transcribers has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.