1-800-Flowers.com (FLWS) Q1 2021 Earnings Call Transcript

1-800-Flowers.com (FLWS 0.33%)
Q1 2021 Earnings Call
Oct 29, 2020, 8:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to the 1-800-FLOWERS.COM, Inc. first-quarter 2021 conference call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Joe Pititto, senior vice president of investor relations and corporate communications.

Please go ahead, sir.

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

Thank you, Chris. Good morning, and thank you all for joining us today to discuss 1-800-FLOWERS.COM's financial results for our fiscal 2021 first 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. Before we begin, I need to remind everyone that some of the statements we will make today may be forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the applicable statements. For a detailed description of these risks and uncertainties, please refer to our press release issued this morning, as well as our SEC filings, including the company's annual report on Form 10-K and quarterly reports on Form 10-Q.

In addition, this morning, we will discuss certain supplemental financial measures that were not prepared in accordance with generally accepted accounting principles. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures can be found in the tables accompanying the company's press release this morning. The company expressly disclaims any intent or obligation to update any of the forward-looking statements made in today's call, any recordings of today's call, the press release issued earlier today or any of its SEC filings, except as may be otherwise stated by the company. I'll now turn the call over to Chris McCann.

Chris McCann -- Chief Executive Officer

Thanks, Joe. And thank you to everyone who joined our call this morning. As you can see, our results for the first quarter really demonstrate the benefits of our business platform, which has positioned us to deepen the relationships we have with our customers and to drive sustainable long-term growth. For the quarter, we achieved 51.5% revenue growth, driven by 85% e-commerce growth.

This reflects the momentum we have in our business as we continue to drive strong profitable growth across our three business segments. In fact, Q1 represented the sixth consecutive quarter in which our three business segments: gourmet food and gift baskets, consumer floral and gifts and BloomNet, each recorded solid year-over-year growth. And we see strong momentum in our business continuing based on some of the key macro trends that we see today. Trends that, quite frankly, have been accelerated dramatically by the current environment, condensing what may have taken five years into less than one year, for sure.

First, the tremendous shift of consumers to e-commerce shopping, where we are positioned as a leader with our all star collection of brands. Second, the increase in nesting as people are spending less time traveling and more time at home, and everything is centered around the home, people are seeking to add more comfort and convenience to their new stay-in-place lifestyle. And third, the prevailing sentiments that have emerged from these challenging times. Specifically, people's need to connect and express themselves to the important people in their lives.

Without a vision to inspire more, you need expression, connection and celebration. We are uniquely well positioned to benefit from and build on these trends by leveraging our business platform, which includes our all star collection of brands, our advanced technology stack, our manufacturing, distribution and logistics capabilities and our marketing capabilities with our integrated and growing customer file. With our leadership positions in floral, gourmet foods and our personalized products, we can sell for more of our customers' need to connect with more of their recipients for more occasions, thus increasing lifetime value. Over the past several years, our platform has enabled us to execute well on our strategy: to expand our product offerings, evolve our marketing to focus on engagement, accelerate our customer file growth and enhance customer loyalty.

And our results illustrate that we are reaping the benefits and the investments that we've made in these areas. For example, we expanded our product offerings organically by adding new product lines such as our expanded collection of house plants and succulents from the 1-800-Flower's plant shop that has been wildly popular for us. Our Harry & David gourmet line, including Harry & David Wines and The Popcorn Factory's Tins with Pop line. Now we further broadened our product offerings with the acquisition of Shari's Berries last year and Personalization Mall this year.

We have enhanced and expanded our digital marketing capabilities. And as always, we remain hyper-focused on delivering exemplary customer service. The combination of strategic investment, strong execution and focus on our customers has brought us to where we are today. The leader in our industry, driving e-commerce growth in our first quarter of more than 85%.

As we enter the holiday season, we will continue to leverage our platform and drive our momentum. We expect that demand for our everyday gifting solutions will remain high, and we are gearing up to satisfy as much of that demand as we possibly can. Now no doubt, we'll face some challenges as will virtually all retailers. As the third-party shipping companies are facing capacity constraints, and qualified labor is not always at our preferred levels.

We are working to proactively manage these issues and execute against our plan for strong growth. And as Bill will discuss in a few minutes, our outlook for Q2, which, as you know, is our seasonally largest quarter, is for record revenue and profits. Before I turn the call to Bill, allow me to take a moment to provide you with some color on the integration of our latest acquisition, Personalization Mall. Put it succinctly, we could not be more pleased with the acquisition of PMall and with the great progress that we are making in our integration process.

PMall offers a tremendous assortment of products that can be personalized from glasswares to picture frames, to throw blankets. And we have a wonderful holiday assortment, which I encourage you to visit and browse. In addition, PMall is among the industry's broadest range of personalization technologies, including laser engraving, photo sublimation, as well as a dozen more capabilities. And with our highly automated processing capabilities, PMall offers one of the industry's fastest turnaround times with orders often completed and shipped the same day as ordered.

As you all may have already noticed, we've integrated PMall onto our multi-brand website and into our Passport loyalty program. In terms of cross-brand merchandising, we've integrated PMall into our co-branded holiday gift guide, including our holiday gift and seasons of sharing notebooks. We're leveraging our customer file to introduce PMall to millions of new and existing customers in our everyday and holiday season communications. And we've already begun to leverage our digital marketing teams for PMall with content and creative development across a broad range of digital channels.

As a result, we anticipate PMall will be a strong top and bottom line contributor in the upcoming holiday season for sure and for our full fiscal year. One last point. I'd like to touch on another important area where we are seeing accelerated growth. In addition to our revenue growth, we continue to see accelerated growth in our customer files, as well as strong double-digit growth in membership in our Passport program and multi-brand customers.

As we have emphasized in the past, these are our best-performing customer cohorts in terms of purchase frequency, retention and lifetime value. The continued strong growth in our customer files, along with the growth of our Passport program and multi-brand customers bodes well as we enter the key holiday shopping period. Now, looking ahead, we have strong momentum across our three business segments. We continue to grow our customer files at a rapid pace, and our customer behavior metrics continue to improve.

And our latest acquisition, PMall, is already proving to be an excellent fit on our platform and a great addition to our all-star collection of brands. And now, I'd like to turn the call over to Bill.

Bill Shea -- Chief Financial Officer

Thank you, Chris. As Chris noted, we have started fiscal 2021 off with strong momentum carried over from last year. And we are pleased with the strong top and bottom line growth that we achieved in our first quarter. Our first quarter was also successful on the standpoint of our closing of the PMall acquisition, and the completion of an amended credit facility provides added financial flexibility and strengthens our already strong balance sheet.

As a result, we are well positioned as we enter the key holiday season, and we anticipate the momentum we see across our three business segments will enable us to deliver strong results for the period. Now, breaking down some highlights from our first quarter. First, in terms of revenues. Total consolidated revenues increased 51.5% to $283.8 million compared with $187.3 million in the prior-year period.

Excluding PMall, which we acquired in August this year, total consolidated growth increased 40.6%. This growth was driven by strong e-commerce demand, which increased 85.1% during the quarter. Gross profit margin for the period was unchanged compared with the prior-year period at 40.7%. This reflected increases in the gross profit margin of 90 basis points in both our gourmet food and gift baskets and consumer floral and gift segments, offset by a reduction of 560 basis points in BloomNet, primarily related to product mix.

Operating expenses, as adjusted, improved 820 basis points to 43.5% of total sales, reflecting the strong revenue growth in the period and our ability to leverage our operating platform. Operating expenses, as adjusted, exclude the impact of the company's nonqualified deferred 401(k) compensation plan and onetime costs primarily associated with the acquisition of PMall. As a result of these factors, we improved our adjusted EBITDA by 128.7% or $14.5 million to $3.2 million compared with a loss of $11.3 million in the prior-year period. Our adjusted net loss for the period also improved nicely to $6.5 million or a loss of $0.10 per share compared with an adjusted net loss of $15.3 million or $0.24 per share in the prior period.

Turning to our segment results. In our recently renamed consumer floral and gift basket -- and gift segment, which now includes PMall, we grew revenue 78% for the quarter. The 1-800-Flowers brand grew approximately 55% on the largest revenue base in the industry, thus further expanding its market leadership position. Gross margin in this segment increased 90 basis points to 40.6% compared with 39.7% in the prior-year period, primarily reflecting contributions from PMall.

Segment contribution margin increased 125.7% or $10.7 million to $19.2 million compared with $8.5 million in the prior-year period, primarily driven by the 1-800-Flowers brand, which accounted for more than $8 million of the increase. In our BloomNet business, revenues increased 28.7% to $32.7 million compared with $25.4 million in the prior-year period, reflecting significant growth in wholesale products, including fresh floral and hot goods. And growth in order volumes, both from the 1-800-Flowers brand, as well as from florist-to-florist orders. Clearly, the decision we made to help florists back in the early days of the pandemic, including waiving membership fees and providing various products and services at reduced prices is paying off as more florists are buying more products and services from BloomNet in addition to fulfilling increased order volumes.

Gross profit margin for the quarter was 45.3%, representing a decrease of 560 basis points compared with 50.9% in the prior-year period, primarily reflecting product mix. Segment contribution margin increased 24.7% to $10.4 million compared with $8.4 million in the prior-year period. In our gourmet food and gift baskets segment, we grew revenues 26.3%. This was driven by e-commerce growth of nearly 100%, offset in part by a decline in wholesale orders for the holiday season of approximately $15 million and a loss of approximately $5 million in revenues associated with the closing of the Harry & David retail stores in fiscal 2020.

The strong e-commerce growth we're seeing in each of our brands for everyday occasions, such as birthday, anniversary, sympathy and get well, among others. Customers also continue to embrace the Harry & David Gourmet line and Harry & David Wines, both of which grew significantly during the quarter and continue to attract a younger shopper to the brand. Gross profit margin increased 90 basis points to 38.9% compared with 38% in the prior-year period. Segment contribution margin, as adjusted, improved 54.8% or $3.6 million to a loss of $3 million compared with a loss of $6.6 million in the prior-year period.

Now, turning to our balance sheet. Our cash and investment position was $11 million at the end of the first quarter. Inventory was $192.6 million compared with inventory of $172.5 million at the end of last year's first quarter, primarily related to PMall. In terms of debt, we had $217.5 million in debt, including $25 million borrowed under our revolving credit facility.

In August, we closed on an amendment to our existing credit facility. The amendment adds an incremental $100 million in term loan and expands our revolving credit line of credit from $200 million to $250 million. All components of the credit facility mature in May 2024. The amendment provides added financial flexibility and further strengthens our balance sheet.

Now, turning to guidance. Due to the continued uncertainty in the overall economy related to the ongoing COVID-19 pandemic, we are not providing guidance for our full fiscal 2021 year at this time. Regarding the fiscal second quarter, the strong e-commerce demand that we carried into this year continued through our first quarter and through October, the first month of the current fiscal second quarter. Based on this growth momentum, we anticipate achieving total consolidated revenue growth for our second quarter in the range of 22 to 26% compared with the prior-year period.

This anticipated strong revenue growth in the quarter reflects expected e-commerce growth of more than 40%, including contributions from PMall, somewhat offset by the lower wholesale orders and reduced retail revenues, reflecting the closing of the Harry & David retail stores. Regarding bottom line results for the second quarter, we anticipate that the strong e-commerce revenue growth, combined with contributions from PMall, will help offset certain headwinds, including increased costs from third-party shipping vendors, higher labor costs, higher operating costs due to the COVID-19 pandemic and the loss contribution in the wholesale and retail channels during the quarter. As a result, we anticipate driving adjusted EBITDA and EPS growth in the range of 18 to 23% for the quarter compared with the prior year. I will now turn the call back to Chris.

Chris McCann -- Chief Executive Officer

Thanks, Bill. So as you can see, we had an excellent start to fiscal '21. Top and bottom line results for the first quarter represent a continuation of the growth mentum that we built for the past several years. In our gourmet floral and gift business, 1-800-Flowers brand continues to extend its market leadership position with strong e-commerce growth on the largest bit revenue base in the industry.

This is now complemented by the acquisition of PMall, which is already proving to be an excellent fit on our platform and in our all star collection of brands, making us a leader in the fast-growing category of personalized products with gifting and home decor. In BloomNet, we are further expanding our market share position with increasing order volumes and growing wholesale business. In our gourmet food and gift baskets segment, we have continuing strong e-commerce demand for Harry & David's expanded product offerings, as well as a growing assortment of innovative, on trend, top products from The Popcorn Factory, Cheryl's Cookies and our other great gourmet brands. In addition, we're continuing to grow our customer file across the enterprise with accelerated new customer growth, increased demand from existing customers and growing membership in our Passport program.

And perhaps most important, we've begun to engage with our customers differently through an open two-way dialogue, such as our weekly celebrations post letters that Jim and I send out to customers designed around empathy and emotion rather than a transaction. These efforts are helping to deepen the relationships we have with our customers and build customer loyalty as our customer file evolves into an interactive customer community. So as we head into the key holiday season, we are very well positioned to deliver again an excellent customer experience and drive continued strong top and bottom line results. With that, I'll turn it to Chris to open the call for questions.

Chris, would you please repeat the directions again for the Q&A?

Questions & Answers:

Operator

[Operator instructions] Our first question comes from Dan Kurnos of The Benchmark Company. Please go ahead.

Dan Kurnos -- The Benchmark Company -- Analyst

Yeah. Good morning. Chris, just on the KPIs you gave around Passports and multi-brand, I just wanted to be clear, were those year-over-year growth rates? And if so, is there any color you can give us on sequential improvements. And maybe some color around, again, like you did last quarter, the profile of new customers coming to the site.

Are they taking -- what's the percentage chance they take Passport and become multi-brand? And then on PMall, it sounds like you're probably further along the integration path. And I think you were talking about on the last quarter, that's a good thing, I think, especially if there's reduced mobility, it feels like personalization should do well this holiday period. Is there anything -- I know it's super early, and you just closed it and integrated it, is there anything you can kind of tell us on what you're seeing from that particular customer channel? How they behave relative to sort of your traditional customer set? And whether or not they are more or less inclined to browse other brands?

Chris McCann -- Chief Executive Officer

Sure. Dan, thank you very much for the question. As we look at the numbers that I gave you on the past quarter, we're seeing double-digit growth rate. That is year over year, not sequential.

We don't really report our quarterly sequential numbers. With our seasonality business, year-over-year comparisons, we do feel much better. What we're seeing is good double-digit growth in both people becoming multi-brand customers, as well as people joining the Passport program. As we do that, and with the accelerated growth that we're seeing in new customers, we're also seeing, and I think I mentioned this last quarter as well, we're also seeing an increased conversion rate or take rate from both existing and new customers, very importantly, into the Passport program.

And a nice lift on that increased conversion rate year over year. We don't publicize the number, but it's been a nice lift that we're seeing. So all of that's very encouraging for us. And what we're seeing in the everyday customer file is a larger percentage of our customers every day being Passport members and/or multi-brand customers.

And with that, drive the increased frequency and the increased spend that comes along following that first purchase. So working very, very well for us that we're seeing now in the Passport and the multi-brand efforts. And still, I would say, we're still early stages on some of our cross-brand merchandising capabilities and cross-brand marketing capabilities. So that leads me then to your answer on -- your question on Personalization Mall.

We're very pleased with the progress that we're making on the integration. We're thrilled to have it up on our website. We just got it up this week. So I really don't have any strong indication of cross brand migration.

We got the tail up there. What we did see was some good response to the communication we sent out to our Passport members, as well as through the general customer database as we had to inform them of their new login and the fact that their login capability would now work with -- PMall login credentials would work on the 1-800-Flowers platform as well. And we saw some good feedback in response to that. So the PMall business on its own is performing ahead of our expectations.

And the very early indications that we have all that door-to-door product line will be very well received by the 1-800-Flowers existing customer base.

Dan Kurnos -- The Benchmark Company -- Analyst

Got it. That's helpful. And then, maybe just 1 quick follow-up and then one for Bill. Just in terms of sort of the forward growth trajectory, Chris, because this is becoming sort of more of a talking point.

I know that you guys still -- it feels like your customer base, you're just starting to scratch the surface. How do we think of the balance between growing your customer file and expanding wallet share? Do you have a sense of kind of what wallet share you have currently as a percentage of your existing customers' gifting budget?

Chris McCann -- Chief Executive Officer

No. We don't really look at the wallet share so much. What we're focused on really is our internal metrics to customer behavior metrics. We're seeing a frequency, retention and thus, lifetime value.

So that we're seeing move nicely in the right direction. And that's what really gives us really good, strong confidence on sustainability of our growth rate going forward.

Dan Kurnos -- The Benchmark Company -- Analyst

OK. Fair enough. And then, just for Bill. Obviously, you mentioned kind of the plethora of headwinds that you're facing.

Is there any way to quantify kind of what you think the margin impact is from COVID? And sort of what are you putting in place? Are you giving up maybe some margin to try to get either -- I know you usually do this ahead of like Valentine's Day, but are you giving up some margin to try to get sort of pull forward in demand so you can make sure you get everything out, or are you doing other things to try to increase the flexibility of shipping dates like you had around Mother's Day, which is a lot tougher around the holiday season, obviously?

Bill Shea -- Chief Financial Officer

Yeah. Dan, as we've mentioned, we're not like -- we're very similar to many companies out there that face the headwinds that we have mentioned. Those headwinds being higher shipping costs, higher labor cost and COVID-related expenses. So that has an impact on us.

We've demonstrated significant leverage in the model in Q4 and Q1 of this year. Our guidance does not show that same level of leverage. But still showing kind of record numbers in our second quarter for both top line, as well as bottom line. The ability to move, yes, we -- as much as you'd like to incentivize customers to buy early, with the perishable products, it's hard for them to accept shipping only.

And that's where the challenge is with the shipping with our third-party shippers, is having that delivery during that -- during the month of December and as we get into the month of December. So we continue to look at incentives to do that, but it doesn't move the needle that impact significantly.

Dan Kurnos -- The Benchmark Company -- Analyst

Thanks for all the color guys and another nice print.

Bill Shea -- Chief Financial Officer

Thank you, Dan.

Operator

Thank you. The next question is from Alex Fuhrman of Craig-Hallum. Please go ahead.

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

Great. Thanks very much for taking my question. I wanted to talk also about just the shipping issue and, of course, seeing a lot about the strain that there's going to be on the supply chain this year. Just wondering how much visibility you have into delivery times? And what sort of estimates in terms of times you're quoting customers versus what you normally would? Is there any concern that that could result in a shorter shopping season this holiday season?

Bill Shea -- Chief Financial Officer

Yeah. The significant shift in consumers to e-commerce has put quite a bit of strain on the capabilities of the third-party shippers. You've heard and I have been reading many stories about FedEx, UPS, USPS, well documented in the media. So all retailers, including ourselves, are facing these constraints, higher cost constraints on volume.

We've built that all into our guidance. We're navigating through these challenges. We work very closely with our primary shipping partner, which is FedEx. And even with the constraints on shipping capacity, as well as the higher cost, we anticipate record top and bottom line results in the second quarter.

Chris McCann -- Chief Executive Officer

Yeah. And I think based on the fact that we worked so well and so closely with our primary shipper, FedEx, specifically. I think, Alex, we do have very good visibility into shipping times that we're able to then, should we see a challenge, adjust our communication and our customers' expectations around that. That's what we're always trying to manage.

So I think the answer is yes, we have good visibility into it. We have a team that manages that extremely well. We're fairly confident that we can navigate through the challenges in this holiday season, produce the numbers that Bill gave and that we gave in guidance for this holiday, which is four times over what our growth rate was last year, and still provide a great customer experience.

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

That's terrific. Thank you very much.

Chris McCann -- Chief Executive Officer

Thank you.

Operator

Thank you. The next question is from Linda Bolton-Weiser of D.A. Davidson. Please go ahead.

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

Hey, great. Thanks. So I think there's been some investor questions around how well you think you can maintain or retain the customers that you're gaining here during the pandemic. So maybe you can comment on that in terms of kind of retention.

And also, I think your average purchase rate is about 1.7 times per year, maybe at least for floral. Is there any indication that that's actually increasing because people are participating more in e-commerce gift giving?

Chris McCann -- Chief Executive Officer

Thank you, Linda. Thank you for that question. Now as we look at our business and the momentum that we've built over the past few years, it's very encouraging to see that just continue to grow. So it's been several years out and we've been building that growth momentum, increasing our customer file, new customers, as you pointed out.

Then we look at what's been the impact of the pandemic on business in general. And it's really been a binary impact. There are certain businesses like restaurants, bars, retail, brick-and-mortar retail stores have just been devastated by it. Then there's businesses like us, e-commerce businesses that will reap the benefits of it.

And as we said early on, we've been leaning into that opportunity to grow our customer file even more aggressively with fantastic new customer acquisition growth rates that we're seeing. And why is because it's behind the three trends that we see coming out of this pandemic. The trend of a dramatic shift to consumers to e-commerce shopping from offline to online, that went from 14% up to 40% of sales. It's probably moderated somewhere between 30 and 40% right now, but that's not going away.

That's not changing. Then we look at the second real trend of nesting, and how our products like plants and floral and gourmet food gifts fit so well into that trend. And now we've really enhanced that even further with the Personalization Mall product line in front of the trend of nesting. And then the third real trend that we're seeing that we believe we are so well suited for with our vision to inspire expression, connection and celebration is that we've all learned that there is a strong human need to stay connected to the people or alliance.

And people turning digitally, looking to companies like ours to help them do that. So you take those components, the momentum we had, the trends that we see that we're so well positioned for, the benefits of the platform that we've built over the years. The customer file size and the increasing behavior metrics that you asked about. Yes, we are seeing increased behavior metrics of frequency and retention and customer lifetime value.

Then you add in that, the acquisition we just did with Personalization Mall, and we think we couldn't be better, well positioned for long-term sustainable growth when you combine all of those factors together.

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

Great. And then, also, can you -- I think in the past periods, at least, you had given some concessions to BloomNet florists. Maybe some waving or something of fees or something of that nature. Can you update us on if that's still going on, or if that's something in the past? And can you quantify that? And does that affect the revenue line or the gross margin line of BloomNet, or can you just give a little more color on that?

Chris McCann -- Chief Executive Officer

Well, Linda, thank you very much, again. Yes, as Bill mentioned in his remarks, in fact, in Q4, when the pandemic really first started to hit, we gave some concessions and reduced pricing to our florists, waiver up some fees, and in other ways, marketing programs that we could help the florist. That's what we do. That's our business is to help out florists compete and to grow.

And in that mode, our focus was to make sure we helped our florists survive, which they've done very nicely. That's turning around and benefiting us now, as we pointed out, with the growth of people choosing to send their orders through BloomNet as opposed to some of the other competitors in the market. And purchasing more from BloomNet in the wholesale products, again, as opposed to other competitors in the market. So we're seeing that customer loyalty.

Bill, I'm not sure if they quantify from the last quarter, right?

Bill Shea -- Chief Financial Officer

Yeah. I mean -- back in Q4, that's the reason why the revenue growth was slightly below double digits. And the bottom line contribution margin was negative in the fourth quarter. But as you saw in Q1, as we just reported in Q1, with growth almost 29% in the quarter with contribution margins up $2 million in the quarter.

Clearly, the decisions we made back then were the right ones.

Chris McCann -- Chief Executive Officer

Yeah. It's a good team. That BloomNet team is really doing a good job taking care of the florists.

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

Thank you. That's all for me.

Bill Shea -- Chief Financial Officer

Thank you, Linda.

Operator

Thank you. The next question is from Anthony Lebiedzinski of Sidoti & Co. Please go ahead.

Anthony Lebiedzinski -- Sidoti and Company LLC -- Analyst

Yeah. Good morning again. Thank you for taking the question. So I may have missed this, but as far as the customer file growth is concerned, so are you seeing this growth across all of your brands, or is there any one brand that stands out? And then as far as your customer file, just wondering when you look at the customer file for PMall, can you give us any indication as far as the incremental growth that customer filed because of PMall acquisition?

Chris McCann -- Chief Executive Officer

Thank you, Anthony. As we look at the customer file growth, first of all, it is across all brands, and that's important. With that said, keep in mind, the wo lead brands in customer acquisition efforts are our two largest brands -- to date, our two largest brands of 1-800-Flowers and Harry & David. But the growth is across all brands.

And really, also the same thing that we're seeing with the growth, obviously, with multi-brand customers, but a test for our customers, the growth is also across all brands, where they're really recognizing the value and the total solution that we're bringing to the market for them. So we're very, very pleased with the visibility we have there. As we look at the PMall numbers, I forget that 12-month active number is about 1.5, 1.8 million, in that range, 1.5 to 1.8 million, 12-month active customers from PMall that we'll be adding into our file. And again, what we see there and one of the things we're very excited about is, a, the expanded product line that helps to solve the more of our gifting needs.

The broader range of price points from the PMall product line is more lower price point items in there that all -- that, the expanded product line, the lower price points, we believe will help drive the frequency of usage across our customer base even further as we give our customers more products to meet more of their recipients at more price points to really just help drive lifetime value for us.

Anthony Lebiedzinski -- Sidoti and Company LLC -- Analyst

Got it. OK. So as far as those 1.5 to 1.8 million active customers for PMall, do you have a sense as to what the overlap is with your current customers? Just want to get a sense as to like if you're picking up new -- brand-new customers or not?

Chris McCann -- Chief Executive Officer

There's enough turnover there to -- just like the Harry & David, there was enough crossover in the file to give us strong confidence in our ability to grow multi-brand purchasing. So there's enough crossover there, not a significant amount. So the majority of those customers really are new to file.

Anthony Lebiedzinski -- Sidoti and Company LLC -- Analyst

Got it. OK. And then, as far as the wholesale and retail headwind that you saw in Q1. Can you give us -- may be, Bill, maybe just a breakdown between the headwind that you saw, if you could just separate wholesale versus retail drag that you had in the quarter?

Bill Shea -- Chief Financial Officer

Yeah, Anthony. So in Q1, it was about $20 million combined, about $15 million for wholesale down year over year and about $5 million by not having Harry & David stores open this quarter.

Anthony Lebiedzinski -- Sidoti and Company LLC -- Analyst

Got it. OK. Well, thank you. Best of luck.

Bill Shea -- Chief Financial Officer

Thank you.

Operator

Thank you. The next question is from Michael Kupinski of Noble Capital Markets. Please go ahead.

Michael Kupinski -- Noble Capital Markets -- Analyst

Thank you and congratulations on your quarter. I know that in the past during the midst of COVID, that you indicated that you weren't seeing any product disruptions from China. And I know that this is a big inventory quarter. So I was just wondering if you can just give us a sense of the -- whether or not you have shifted products of your suppliers away from China? And what the type of increases in your inventory that you have seen?

Chris McCann -- Chief Executive Officer

Yeah, Michael. Thank you. And look, I think as we look at the inventory, we've been very fortunate that, first off, the imports from China for us are not a significant part of our supply chain. And even early on, we saw some disruption, not a lot, more just late shipping, getting in, and that caused a little bit of problem back in the March, April time period.

Things got better since then. And really, the big concern was as we moved into this holiday season, what would happen as far as inventory coming in, components that we bring in from China. While they run one week to two weeks late sometimes, and that has not caused a major disruption. We've been able to utilize that and service our customers appropriately without any major interruptions.

So that's worked out well for us. We've looked at shifting some capabilities, some sourcing out of China. And we've done a little bit of it. But even really as we studied it more and more, other geographies are just really aren't set up like China.

So even with some of the challenges, even with some of the tariffs coming out of China, we're still better off sourcing there than many other places around the world, although we continue to look at mitigating any risk that might exist.

Michael Kupinski -- Noble Capital Markets -- Analyst

Got you. And in terms of PMall, I was just wondering in terms of the revenue trajectory there, given the impact that that business has probably seen in terms of COVID. And then, also, if you could just talk a little bit about -- I know that the governor of Illinois has placed additional restrictions in certain areas of the state. Whether or not any of those restrictions have affected PMall, given that it's based outside of Chicago?

Bill Shea -- Chief Financial Officer

In Q1, we kind of gave it -- the results kind of pre -- both with and without PMall. So kind of go through the math and understand that was about 10 points of our growth related to PMall. So it was about $20 million or so in the quarter. Q2 is, by far, its biggest quarter.

Almost 50% of its revenues are in Q2. One of the attractiveness of PMall is that it is EBITDA positive and contribution positive in all 4 of its quarters. But certainly, this upcoming quarter is very important to it as nearly happens to every user during this quarter. We have not seen any disruption in PMall since our ownership.

It's growing very nicely year over year.

Chris McCann -- Chief Executive Officer

I would say, Bill, really since we've owned PMall and started to -- started the integration process and really looking, as I mentioned, getting the digital marketing team involved looking at the creative, the content, etc., we're seeing nice growth rates ahead of our expectations in PMall. As far as the announcements from Governor Pritzker, they have not affected our facilities in the Chicago land area at this point. And we think we're very well positioned that we won't have any interruptions. Of course, in this pandemic, you never know, but the visibility we have right now is we're confident that we will not be interrupted.

Michael Kupinski -- Noble Capital Markets -- Analyst

I know longer-term that you had anticipated that there would be some consolidation among your facilities, and that PMall's state-of-the-art facilities offer some opportunities to move some of your inventory and products to that location. Does the COVID situation in the issues with Governor Pritzker, given the fact that Illinois has been probably more restrictive in many ways than other markets. Does that kind of derail that plan in terms of any of the potential consolidation into that facility?

Chris McCann -- Chief Executive Officer

Michael, not so much as far as especially if anything to do with Illinois or any of the restrictions in Illinois. We had mentioned previously some of the efforts that we had planned for this calendar year were delayed early on by the pandemic, some automation facilities and automation projects in some of our facilities as we just weren't been able to bring the people into the facility back in the March, April, May time frame to do the work that was needed. So that will pick up more post-holiday now as we move into January where we'll be able to do that. But that really had -- was not Illinois specific, quite frankly.

Most of that work was focused on our facilities in Ohio and our newest facility in Atlanta. So while there was a delay, we see those picking back up again now post-holiday.

Michael Kupinski -- Noble Capital Markets -- Analyst

And that was unrelated to PMall?

Chris McCann -- Chief Executive Officer

Right. True. True.

Michael Kupinski -- Noble Capital Markets -- Analyst

Gotcha. Well congratulations again. Thank you.

Chris McCann -- Chief Executive Officer

Thank you, Michael.

Operator

Thank you. The next question is from Doug Lane of Lane Research. Please go ahead.

Doug Lane -- Lane Research -- Analyst

Yes, hi. Thank you. Good morning everybody.So you mentioned that the PMall acquisition contributed about 20 million. Do you have a number for what the sales were lost from closing the Harry & David stores?

Bill Shea -- Chief Financial Officer

Yeah. It was about 5 million in the quarter.

Chris McCann -- Chief Executive Officer

In sales.

Bill Shea -- Chief Financial Officer

5 million in sales in the quarter. We're about 20 million down in the -- kind of the retail wholesale component -- channels of our business, 15 million being wholesale and 5 million being retail sales.

Doug Lane -- Lane Research -- Analyst

OK. And then, you haven't talked about any numbers around PMall since it was announced way back pre-COVID. Do you have any updated kind of numbers we can look for from sales and EBITDA from that acquisition this year?

Bill Shea -- Chief Financial Officer

Yeah. We don't provide guidance on a brand-by-brand basis. We have filed an 8-K. So there are filings out there with respect to the historical profitability and size of PMall.

For the year ended February 29, 2020, PMall did about 170 million in revenues. And just under 25 million in contributor -- or EBITDA.

Chris McCann -- Chief Executive Officer

And as I stated earlier, we're very pleased with the growth that we're seeing since we've been operating the business.

Doug Lane -- Lane Research -- Analyst

No. It sounds like the business has come back at or better than where it was before it was shut down in the spring, that's for sure. Can we focus on the December quarter here? Obviously, you're going from your seasonally smallest quarter to your seasonally largest quarter. And Chris, how do you look at the biggest constraint in the growth in the December quarter? Is it generating the demand, which seems to be there, or are you more concerned about capacity? Because this is a big quarter, and these are big growth numbers from a sales standpoint.

And we know about the bottlenecks at third-party shippers. But then even internally at Harry & David and just your whole infrastructure, how should we think about just bottlenecks from a capacity standpoint?

Chris McCann -- Chief Executive Officer

Thank you, Doug. I think as I mentioned earlier, as we look at the things that have developed in this pandemic, and some of the trends that we've seen, we've seen things -- we've seen this accelerate change more than anything else in so many different fields. And we've seen this accelerated growth in e-commerce, not just for our business but for many businesses. We've seen it accelerate changes in healthcare and everything else.

So I think what we've seen is an accelerated growth rate for our business. And that brings certain challenges with it, for sure. We have the third-party shipping challenges that Bill spoke about that have been mentioned. We have all the labor challenges out there.

But we are also, at the same time, accelerating our internal capabilities. So while it was planned for five years ago, now it has to be planned for one year from now. We're doing that. The team is built for that.

The team is responding well to that. And we're driving, as I mentioned, to capture all of the demand we possibly can at this holiday period.

Bill Shea -- Chief Financial Officer

Yeah, Doug. As our guidance indicates, we expect record top and bottom line numbers in the second quarter. The growth rates are not the same as Q4 and Q1. But looking at our business on a sequential basis and not really relevant, as you indicate, with the kind of the size of the second quarter and the shift of the holiday gifting, by far, the second quarter is our largest quarter.

But we continue to see very strong e-commerce demand. We anticipate that carrying forward through the holiday season. But as we've stated, we have to offset the revenue declines in our wholesale and retail channels. The challenges that you mentioned with the third-party shippers with some internal labor, they're not unlike every retailer or an e-commerce company out there.

But with that said, the guidance we're providing is for our fiscal second quarter to be strong growth in the second quarter. The midpoint of our range is $150 million worth of growth in the quarter. And as a reminder, we were forecasting 22 to 26% growth. That's four times the growth rate that we achieved in Q2 last year, the holiday quarter last year.

So we're anticipating a very strong second quarter.

Doug Lane -- Lane Research -- Analyst

OK. Thank you. That's very helpful. Thank you.

Bill Shea -- Chief Financial Officer

Thank you.

Operator

Thank you. Our next question is from Tim Vierengel of Northcoast Research. Please go ahead.

Tim Vierengel -- Northcoast Research -- Analyst

Thank you. Just one quick question for Bill on the wholesale portion of the gourmet food and gift baskets segment. Typically, there is a lot of noise between when your partners take delivery of the gift baskets. And I was wondering if you could help clarify if there were any shifts between the first and second quarter, do you expect a similar $15 million loss number in the second quarter? Any more clarity there would be great.

Bill Shea -- Chief Financial Officer

Yeah. So as we indicated, wholesale was down 15 million in the first quarter. I think as we kind of alluded to in many of our conversations prior to this that we have some insights into where wholesale demand was going to be for this holiday season. The big box guys make their decisions in the spring, so really in the kind of the height of the pandemic and all were being very conservative in their buying for holiday gift baskets.

And so, that channel for us was going to be down, and that e-commerce was going to make up for that. So in Q2, both retail and wholesale will be down more than they were in Q1. The start of the kind of the wholesale season in September, and it runs through September through November. We saw the impact of wholesale being down about 15 million in September.

It's going to be down slightly more than that in Q2, and retail will be down significantly more than the 5 million that was down in Q1 because of the whole -- just because of the holiday nature of this quarter.

Chris McCann -- Chief Executive Officer

Right. And with that then being offset by the strong e-commerce growth that we've been talking about, that will certainly help us to offset those declines.

Bill Shea -- Chief Financial Officer

Yeah. Again, all this is built into our guidance. So the 22 to 26% growth that we have, the over 40% e-commerce growth offsets the declines in wholesale and retail. And still achieves, again, record top line numbers.

Tim Vierengel -- Northcoast Research -- Analyst

Thank you.

Operator

Thank you very much. We have no further questions in the queue. And I'd like to hand the call to the management for some closing remarks.

Chris McCann -- Chief Executive Officer

Great. Thank you, Chris, and thank you, everyone, for joining us on the call. Let us know if you have any additional questions. Please don't hesitate to contact us.

Certainly, we'd like to wish everybody a very happy and different Halloween this season. Also, I encourage you to visit our lineup of all-star brands to see what we have for the fall season and the holiday season. Especially, I mentioned the great lineup of products that we have in PMall for this holiday season that we're just so very excited about. So thank you, and we look forward to any follow-up questions you may have.

Operator

[Operator signoff]

Duration: 51 minutes

Call participants:

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

Chris McCann -- Chief Executive Officer

Bill Shea -- Chief Financial Officer

Dan Kurnos -- The Benchmark Company -- Analyst

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

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

Anthony Lebiedzinski -- Sidoti and Company LLC -- Analyst

Michael Kupinski -- Noble Capital Markets -- Analyst

Doug Lane -- Lane Research -- Analyst

Tim Vierengel -- Northcoast Research -- Analyst

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