Please ensure Javascript is enabled for purposes of website accessibility

Valentine's Day Struggles Help Push FTD Companies Inc. Sales Down 10%

By Demitri Kalogeropoulos - May 6, 2016 at 9:23AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The gifting specialist still sees a return to profitable growth ahead.

FTD Companies (FTD) posted quarterly earnings results this week that showed a double-digit sales decline and flat profits as a weak Valentine's Day holiday pinched the business. Still, the florist and gifting specialist affirmed a full-year outlook that projects a return to steady growth in the next few quarters.

Here's how the headline results stacked up against the prior-year period:

 Metric

Q1 2016 Actuals

Q1 2015 Actuals

Growth (YOY)

Revenue

$331 million

$368 million

-10%

Net income

$2.1 million

$2 million

5%

Earnings per share

$0.07

$0.07

N/A

Data source: FTD's financial filing.

What happened this quarter?
Falling demand in both its online consumer segment and its provide commerce unit powered the revenue shortfall, which was just slightly offset by growth internationally. A comparable decline in expenses meant that net income ticked higher, protecting overall profitability.

Here are the key highlights of the quarter:

  • The provide commerce segment, worth about 50% of sales, logged a double-digit sales decline as a 13% drop in order volume swamped a slight increase average order value. The main driver behind this slump was a shrinking ProFlowers business.
  • Profitability fell in the provide commerce unit; too, with operating income dropping to 4.5% of sales from 4.9% a year ago.
  • The consumer division also saw order volume decline by double digits as average order spending ticked higher. Its operating margin shrank as well, falling to 8.2% of sales from 8.5%.
  • FTD's florist segment grew sales and member revenue, however a bad debt expense pushed profits down in that division.
  • The international business ticked higher as price increases more than offset a small decline in order volume.

What management had to say
The quarter went roughly according to plan, management said. Q1 was "broadly in line with our expectations," CEO Robert Apatoff said in a press release. FTD in March forecast a 10% revenue decline this quarter, which is exactly what investors saw, due mainly to a quirk of the calendar that put the key Valentine's Day holiday in a weaker sales position. Valentine's Day was on a  Sunday this year and also had to compete for attention with a later-than-usual Super Bowl. FTD management said in March that Google search traffic for Valentine's Day holiday-related searches was down dramatically this year compared to the previous year and this impacted it.

The chief executive tried to put the current soft trends into long-term perspective for shareholders. "2016 marks the second year of our multi-year integration plan and our team continues to remain focused on growing profitability and cash flow generation," Apatoff explained. "We are moving forward on a number of new initiatives to continue to strengthen our solid foundation, to position the business for future growth and to return value to our shareholders."

Looking forward
Those initiatives include working to lessen the intense seasonality of a business that's highly exposed to just a few popular gifting days including Valentine's Day and Mother's Day. In that regard, it's good news that some of its smaller brands like Personal Creations and Shari's Berries are seeing strong growth. FTD also recently partnered with greeting card specialist Hallmark and introduced another site to its portfolio, Roses.com.

If all goes to plan, Q1 will mark the weakest quarter of the year. FTD affirmed its 2016 outlook that projects a 2% sales decline and net income of roughly $10 million following last year's $80 million loss.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

FTD Companies, Inc. Stock Quote
FTD Companies, Inc.
FTD

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
311%
 
S&P 500 Returns
110%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/01/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.