Good day, ladies and gentlemen, and welcome to the 1-800-FLOWERS.COM Incorporated Fiscal 2015 Third Quarter Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time.

[Operator Instructions] As a reminder, this conference is being recorded. I would now like to hand the conference over to Joe Pititto, Senior Vice President of Investor Relations. Please go ahead..

Thanks, Karen. Good morning. Thank you all for joining us today to discuss 1-800-FLOWERS.COM financial results for our fiscal 2015 third 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 website, at 1800flowers.com, or you can call Patty Altadonna at (516) 237-6113 to receive a copy of the release by email or fax.

In terms of structure, our call today will begin with brief formal remarks, and then we will open the call to your questions. Presenting today will be Jim McCann, CEO; Chris McCann, President; and Bill Shea, CFO.

Before we begin, I need to remind everyone that a number of the statements that 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 issued 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 maybe be otherwise stated by the company. I’ll now turn the call over to Jim McCann..

Good morning everyone. The solid performance in our fiscal third quarter and we achieve better than anticipated revenue growth and bottom line results for the period.

This is accomplished even with the headwinds we faced during the period which included the significant seasonality of the Harry & David business, the Saturday placement of Valentine’s Day, and impacts of the Thanksgiving Day Fire at our Fannie May Fine Chocolates business.

We grew revenue approximately 29% or more than $52 million for the quarter reflecting contributions from Harry & David which we acquired at the end of September. In terms of our bottom line the launch for the quarter reflects the highly seasonal needs for the Harry & David business.

Excluding this we grew our bottom line significantly during the quarter with solid contributions from all three business segments. Regarding Harry & David, we are pleased to see positive year-over improvements in both top and bottom line results.

We plan to build on these positive results by capturing significant revenue and operating synergies as we continue our integration of the business.

We’ll do this by leveraging our technology platform, our database, our suite of marketing programs and the relationships we have with the millions of customers we serve across all of our brands and channels.

It’s worth noting that excluding Harry & David our Gourmet Foods and Gift Baskets brands performed very well during the third quarter with solid top and bottom line growth even with the lingering impacts from the impacts from the Fannie May warehouse fire that occurred back in November.

The continued growth in this segment illustrates how our customers are embracing our expanded product offering for a growing range of their gifting and celebratory occasions.

We believe our collection of iconic brands combined with our new multi-brand website and our omni-channel strategy positions us well to accelerate our growth as the leader in Gourmet Foods and Gift space.

Before I turn the call over to Bill for his review of the financial and operating metrics for the quarter I like to highlight the performance of our Consumer Floral business where we achieved top and bottom line results ahead of our expectations during the quarter.

Revenues in this segment decline less than 5% this despite the Saturday placement of Valentine’s or the Valentine holiday which historically had a more significant impact on the bank. Frankly the Valentine holidays are always challenging because it’s varying day placement and even unpredictable winter weather.

With that said we achieved year-over-year growth in our gross profit margin and bottom line contribution. For the quarter we increased gross margins in this business by 30 basis points to more than 39%. We’ve reduced our operating expenses in both dollar terms and as a percentage of total sales.

As a result we grew contribution margin in the segment by more than 12% to $12.5 million. We believe distribution sales to reflect the strength of the 1-800-FLOWERS.COM brand and the expansion of our latest position and the getting space.

Chris will provide more color on that Valentine holiday performance and in particular our strong customer service metrics in his remarks in a few minutes. As you saw in this morning’s press release we’ve raised our guidance for bottom line results for the full fiscal year.

This is based on the several positive factors and they include the benefits of the Harry & David acquisition, the positive top and bottom line trends we've seen across all of our business segments throughout the first nine months of this year and on positive outlook for the current fiscal fourth quarter.

Most of all we are increasingly excited about the opportunities we see ahead of us to drive an increased shareholders value. I will now let Bill run through the metrics for the quarter..

Thank you, Jim. During our fiscal third quarter we achieved top and bottom line results that exceeded our expectations as we were able to launch the offset some of the headwinds that he mentioned in his remarks. This includes the Saturday day placement of the Valentine holiday and the lingering impacts of Fannie May Fine occurred back in November.

I would enter this list a highly promotional nature of the competitive landscape around the Valentine holiday. Regarding the former while the Saturday placement of the Valentine's Day reduce order volumes for the 100.Flowers.com brand the impact was significantly less than we had anticipated.

In addition due to a combination of our efficient marking programs and strong customer service metrics we were able to enhance or operating expense ratio about our gross profit margin resulting in solid year-over-year bottom line growth.

As for the lingering effects of the Fannie May Fine warehouse fire inventories lost in the fire included heart-shaped valentine's boxes resulted in some product shortages in both our retail and wholesale channels.

As a result revenues during the quarter were impacted by an estimated $3.4 million, despite this challenge Fannie May performed well as it shows several of our other Gourmet brands all of which benefited from the shift of Easter holiday to the first on the April which pulled some sales into the fiscal third quarter.

Before I jump to our specific financial operating metrics in the quarter I think it is important to note that in today's press release we provided our top and bottom line results both as reported and on an adjusted basis with the accompanying table at the back of release to explain the various adjustments.

We believe these adjusted result provide a more comparable view of our business performance in the third quarter by aided back onetime cost associated with Harry & David integration adjusting for the bottom line impact across revenues associated with the Fannie May fire and looking at the business with and without having.

The volume adjustment related to Harry & David integration. During the third quarter we incurred $1.7 million of integration related cost primarily related to severance and third party services retained to help us achieve the operating cost synergies outlined on our prior call.

Terms of adjustment for the impact of the Fannie May warehouse fire we estimate the impact on our reported revenues during the quarter was 3.4 million. The impact of these lost revenues on our EBITDA for the quarter was an estimated $1 million. Now regarding specific financial results and key metrics from continuing operations for the second quarter.

Total net revenue from continuing operations increased 29.3% to 232.2 million compared with 179.6 million in the prior year period. During the quarter our e-commerce orders increased 23.1% to 2,722,000 compared with 2,211,000 in the year ago period.

Average order sites during the quarter increased 3.3% to $56.37 compared with $63.27 in the prior year period. During the quarter we added 815,000 new customers this was achieved with currently stimulating with peak orders from existing customers who represented 56.4% of 12 customers in the quarter.

Gross margin for the quarter was 41% consistent with prior year. Operating expense as a percentage of total revenues including depreciation and amortization was 48% up 540 basis points compared with 42.6% in the prior year period. This primarily reflects the added operating expenses associated with Harry & David.

As a result of these factors reported EBITDA loss excluding stock based compensation was 6.8 million compared with a gain of 3.3 million in the prior year period.

Adjusted EBITDA for the quarter excluding stock based compensation as well as the one-time cost associated with the integration of the Harry & David and the impact of the aforementioned Fannie May warehouse fire was a loss 4.1 million compare with a gain of 3.3 million in the prior period.

Reported net loss from continuing operations attributable to the company with 10.5 million or $0.16 per share compared with a net loss of 1.4 million or $0.02 per share in the prior year period.

Adjusted net loss from continuing operations to both of the company with 8.6 million or $0.13 per share compare with the net loss of 1.4 million with $0.02 per share in the prior year period. EBITDA adjusted EBITDA net loss and adjusted net loss all effect the seasonality of Harry & David.

Excluding Harry & David adjusted EBITDA excluding stock based compensation increase 95.3% to 6.5 million looking contribution from the Gourmet food and get basket segment and continues strong year-over-year performance in our consumer floral segment.

Additionally, adjusted net income from continuing operation excluding Harry & David was $342,000 or $0.01 per diluted share compare with the fore mentioned net loss of 1.4 million or $0.02 per share in the prior period.

In terms of segment results 100flowers.com consumer floral segment during the fiscal 2015 third quarter revenues in this segment were 116.7 million down 4.5% compared with 122.3 million in the prior year period was [indiscernible] Saturday day placement of the Valentine holiday during the quarter.

Gross margin increased 30 basis points to 39.2% compared with 38.9% in the prior year period. Gross margin benefited from enhanced sourcing and logistics as well strong customer service metrics.

Combined with efficient marketing programs these factors resulted in contribution margin increase of 12.5% to 12.6 million compared with 11.2 million in the prior year period. In our BloomNet segment, revenues for the quarter were 23 million up 1.7% compared with 22.6 million in the prior year period.

Gross margin for the quarter increased 150 basis points to 54.8% compared with 53.3% in the prior year period. This primarily reflected revenue mix, which included growth and sales of higher margin services such as web marketing and directly advertising programs as well as some pricing initiatives.

As all of these factors segment contribution margin increased to 7.3 million compared with 7.1 million in the prior year period. In our Gourmet Foods and Gift Baskets segment, revenue for the fiscal third quarter were 93 million compared with 35.3 million in the prior year period.

The significant increase primarily reflects the contributions from Harry & David. Excluding Harry & David revenues grew 18% reflecting the benefits of Easter holiday day placement which will in fact offset by the lost revenues associated with the Fannie May fire.

Gross margin for the quarter increased 90 basis points to 39.6% compared with 38.7% in the prior year period and segment contribution margin was a loss of 5.4 million compared with the loss of 3.2 million in the prior year period reflecting the seasonality of Harry & David.

Excluding Harry & David and adjusting for the impact in the Fannie May warehouse fire on Thanksgiving Day segment contribution grew to $400,000 compared with formation loss of 3.2 million in the prior year period.

In terms of corporate expense our segment contribution margin result exclude cost associated with the company’s enterprise 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 for the entire organization.

For the fiscal second quarter corporate expense from continuing operations including stock based compensation was 22.8 million compared with 13 million in the prior year period reflecting the addition of the Harry & David overhead expenses in the quarter as well one-time integration cost.

Turning to our balance sheet at the end of the third quarter we have 52.7 million in cash and equivalents on our balance sheet. Long-term debt was a 135.6 million reflecting our quarterly payments on the original 142.5 million term loan associated with Harry & David acquisition. Additionally there are no borrowings under our revolving credit line.

Inventory of 82.4 million reflected the incremental inventories associated with the Harry & David business and within management expectations is worth noting that excluding the inventories associated with Harry & David our inventory was down more than $10 million year-over-year.

Regarding guidance we continue to anticipate generating revenues from continuing operations in excess of 1.1 billion. In terms of bottom line results we’re raising our guidance for adjusted EBITDA excluding stock based compensation and adjusted EPS reflecting our results for the first nine months of the fiscal year.

The fiscal 2015 we now expect adjusted EBITDA will exceed $90 million and adjusted EPS will exceed the high end of our previous guidance range of $0.45 to $0.50 per diluted share.

As an important reminder our fiscal 2015 guidance for top and bottom line results do not include Harry & David’s results for the fiscal first quarter of the year reflecting the September 30, 2014 close of the acquisition.

The fiscal first quarter which includes the slowest summer months with Harry & David lowest in terms of revenues and includes a substantial bottom-line loss. Lastly, as we announced back in January we’ve launched the comprehensive integration program involving Harry & David across our entire business platform.

This effort is design to identify and pursue synergistic opportunities both revenue growth and operating efficiencies. In terms of later we believe our initiatives can generate operating cost efficiencies in excess of $15 million with the full benefit to be realized over 3 year period beginning in fiscal 2016.

I now turn the call over to our President Chris..

Thanks Bill. As mentioned we’re pleased with our third quarter results. Most notably we achieved top and bottom line results exceeding our expectations in our 1-800-FLOWERS.COM business. Our solid result it was the holiday in the quarter reflecting number of factors.

Our merchandising programs featuring our Rose Authority collection in offering 80 brand new truly original flower arrangements from those plants in our exclusive mosaic container to four foot tall red roses, to roses bundled with exclusive Swarovski jewelry.

Our focus on efficient marketing programs across all of our channels, they told our customers to wow her and don’t settle for less with an emphasis on data and best product offerings that designed and fulfilled by our BloomNet local florist.

The effectiveness of these programs is reflecting in both the better than anticipated order volumes and year-over-year reduction in our operating expenses. Similarly our improved gross margin reflects our focus on providing exceptional customer service something that we are particularly proud of.

We have a customer service team that's literally obsessed with service, that obsession has resulted in numerous awards and certifications including a recent Top Performer rating from J.D. Powers.

In fact the 1-800-FLOWERS.COM brand is consistently among the leaders in customers service surveys across the retail landscape, we deliver millions of gifts beautiful, intricately designed, highly perishable gifts many of them same day anywhere in the country.

We do this by working with the very best professional local floweriest who are extremely proud of their artistry in their dedication to helping deliver smiles even in the middle of yet another Boston snow storm were no sane person would be out on the roads.

[Indiscernible] FedEx and UPS the premiere names in package delivery and we benchmark ourselves against their high customer service standards. I'm proud to say that our customer service metrics are second to none.

You can see this in our gross margin which continues to expand as we drive customer issues down towards every diminishing factor of total orders.

Even though we successfully deliver millions of perishable gifts with the customer issue rate that we believe is by far the lowest in the industry [it's so few smiles] that do not get delivered probably that keep us working every day to get even better of what we do. I'll now turn the call over to Joe..

As we get ready for mother's day, father's day and all the spring holidays on our fiscal fourth quarter we believe we are uniquely positioned to build on the positive trends we see in our business, in our 1800flowers.com brands we continue to expand our leadership position in the floral gifting space.

In gourmet food and gift baskets, we see solid growth and enhanced contributions from our growing collection of brands, we are now positioned to accelerate our growth in this gifting space with the recent completion of our expanded shareholders facility, our [indiscernible] operations and our add position of David [Indiscernible] growing initiatives is place overall and social commerce and our new multi brand website and you can see while we are so excited about the opportunities ahead.

Carrie if I ask you now to please instruct our listeners in terms of how they participate in the Q&A portion of the call..

Thank you. Ladies and gentlemen [Operator Instructions] Our first question comes from the line of Jeff Stein from Northcoast Research..

Good morning guys, a great quarter.

Couple of questions here, first of all to Bill, you talked a little bit about the fact that in the first quarter you're going to be up against a large deficit at Harry & David, so maybe you could talk, number one, about how much they lost in the first quarter last year, so we have a better idea in terms of what we're up against.

And number two, if you can talk a little bit about the synergy cost savings that you see for next year. And what are kind of biggest buckets of cost saves? Thank you..

Jeff. Thank you for the comments.

With respect to the first quarter, Harry & David's EBITDA loss was close to $15 million, $14.8 million, so that's what we're up against, comping against that number, as we've discussed in the past trying to achieve integration savings as well as growth in the overall business trying to offset as much of that first quarter loss as possible.

Some of the areas of the operating synergies, that we have assuming sourcing and procurement, IT, and other shared services that we have, leveraging both West Coast and Mid-West distribution facility and manufacturing facilities, and combining our buying power in a number of different in a number of different areas.

We'll start to see some of those benefits in fiscal 2016, and we believe we'll be able to achieve the $15 million we've identified across the enterprise and savings by fiscal 2018..

With the number, hi this is Jim, Jeff. The number that Bill and the team laid out early on was accumulating $5 million per year savings. So, $5 million, $10 million, $15 million total in that three year period.

But I'll tell you that the more over the closer we get to the operations at Harry & David the more excited we get, not only about the talent in the management team there, but the leverage able resources and Bill mentioned several times to you including our west coast, our logistics and freight opportunities, and leveraging our IT and other shared services..

Great maybe Jim and Chris perhaps maybe you can just talk a little bit about some of the learning's you had in terms of the motile brand portal and the benefits and are you beginning to drive any and also I'm sure you've been running some marketing test with respect to Harry & David in terms of trying to mind the database of their business and to see it relevant it is to the core 1800flowers business and conversely try to go in the other way as well, are you seeing any early signs of synergies that were well produced that accelerated top line..

You are right, Jeff.

I think in addition to the operating synergies that Jim and Bill just referenced, we really get continue to get more and more excited about the growth opportunities that lie ahead of us here, looking at areas such as our B2B business gifting opportunity, growth opportunity, wholesale growth opportunities and most importantly as you were just mentioning the customer database leverage that we have I think what we've seen so far is really good customer reception to our cross brand, things like our cross brand emails that we tested our cross brand merchandizing test where we are featuring Harry & David products on the 1800flowers site, as example there in the sympathy collection we've added some Harry & David products that have quickly moved up into top rankings of the non-floral sales from the sympathy collection on 100flowers.

So once more we have positive result, we really haven’t tested yet the reverse of that than in flowers products and Harry & David business too much so that’s yet to come.

As far as the multi-brand part, it's an important aspect of our strategy and as evidence by the early results we continue to see in that area and as we look at the integration the works streams working on that, marketing merchandise team and certainly the IT teams we continue to lay out the plans and allow the strategy achieving that ultimate goal integrating Harry & David into that.

But again based on all the above result we are very encouraged by the growth opportunities in front of us..

Our next question comes from the line of Dan Kurnos from The Benchmark Company..

Obviously good quarter good execution from you guys just got a few housekeeping questions really since you touched on a little bit anywhere the revenue synergies so have to hear more on that. Bill can you just give us a sense of what Valentine day was from an organic perspective just we have a comparison tool.

And then if you could just since I missed the couple of them could you just run over again what the numbers were for Gourmet Food ex Harry & David from top through bottom line..

So first on the consumer perspective, consumer floral Valentine's Day we had guided that were we down as much of 15% ahead of that came in less than 10% down year-over-year.

We knew the Saturday placement was going to be an impact on demand we obviously reduced a lot of expenses in marketing as a result of that as a part of our plan we achieved the year-over-year bottom results where consumer floral was stronger up 30 basis points, bottom line was up $1.4.

With the fact that we get back without Harry & David, we mentioned the growth was about 18% during the quarter we had some benefits from the pull forward of Easter but that was offset by the loss revenues of the Fannie May fire without Harry & David we saw the Gourmet Food and Gift baskets up.

It was positive about $400,000 and contribution margin versus the year ago they were down 3.2 million. So about $3.5 million to $3.6 million improvement in that segment without Harry & David. So altogether then consumer product, gift baskets and floral would have been $5 million between the two on contribution margin basis in Harry & David..

And top line?.

And top line would have been positive so the Gourmet food growth of about $6 million or $7 million would have offset the 4.5% that we were down in consumable flow for the quarter..

Perfect that’s obviously lot better than your competitors.

So thanks for clarifying that and then just in terms of the warehouse fire we are finally through all of this now and so it's going to be any impact on the Easter holiday are we done with that?.

I think for the most part there should be no longer any impact on the top line with the fire.

We incurred losses between lost inventory equipment and incremental cost associated with the fire over $30 million, we collected advances from the insurance carrier $30 million, 15 million back in the second quarter, another 15 million back now in the third quarter.

We now are fully stocked back in our inventory so we should see no further impact on revenues going forward..

I would say that the impacts that you'll see on the Fannie May concessions brands and their businesses going forward are likely to swing to be very positive now that’s because of that team confronted a tragedy like they did, they rallied as a team in an amazing way we have roll in here a very product and I think that commitment when that thanksgiving prior anniversary.

So that will be a bigger stronger better company and they have shown every indication that they are well under way to achieving that early..

I guess maybe one last one from me I guess may for you Jim.

Thoughts on BloomNet obviously the growth hasn’t been stellar but it's still continuing to sort of improve a little bit here just your thoughts on accelerating that effects part of if that’s going to come as part of the Harry & David integration efforts or just how you really get the wire service accelerated from a growth perspective..

I think from an overall ask question give you a little bit more color but I'm just beside the table. I think that BloomNet is been a good solid study contributor management's is done a good job there may [indiscernible] contract.

I think it's clear that competition the BloomNet faces have been bigger businesses but there businesses are in decline for a long time and BloomNet continues to grow both on a top line and a bottom line. I think there are opportunities in front of them that they can accelerate that growth I'll ask Chris to give you a little color on that..

I think overall we expect Bloomnet to continue grow both top and bottom line in this fiscal year.

And while top line growth is slower than we had hopped BloomNet continues to do an excellent job of managing its operating expenses, deepening its relationship with the florists and providing a unique suite of products and services that we believe will help the florist grow and help our business grow.

As we said BloomNet will continue to grow steadily gaining market share in a very competitive market..

Thank you. Our next question comes from the line Linda Bolton Weiser from B. Riley & Company..

Hi. Just kind of looking forward into FY16 I know you probably don’t want to get into too many details but you posted really nice EBITDA margin expansion in your base business even excluding Harry & David in really all of your segments for the last few quarters.

Is there anything that you see coming up in FY16 that would be like special investments you would have to do running marketing strategies that would require higher spending or can we expect to see this nice improvement continue on EBITDA margins in those businesses. Thanks..

I will leave it to Chris or Bill to chime in with their thoughts, but from an overall point of view, we think the trend lines were very good for us last three quarters. Top and bottom line expansion in all three of our business segments we expect our goal would be to continue that trend.

And in terms of Harry & David and his contribution clearly is a seasonal business we knew that going in, it's one of the reasons why it took us 12 years to pull the trigger on the acquisition.

But now that we've gotten comfortable with it we think there are opportunities on the seasonal side of the business to grow their business, to grow their contribution and that’s very important for holiday quarter for calendar second fiscal quarter.

So from the big point of view yes, we think CapEx will be a continuing ingredient on mix but nothing beyond the extraordinary Bill, Chris, I think trend lines continue -- the bump in the road for comparison purposes the overall Linda is what Jeff was mentioning earlier that is Harry & David had include confident bottom line results in this fiscal third quarter.

But last year they had a $14.8 million loss in the summer quarter and it's because [indiscernible] September 30, is not part of our number, so that's a bump in the road that we have to get our arms around and be at year end call to give you some guidance, color of what we expect that to be reduced to and offset by other savings.

But other than that, Chris?.

I would say we’re very comfortable with each of our different business segments as we reported continuing to see positive trend we will see anything that we can see that was railed in that progress, I will specifically call out the improvement on the contribution margin of the 1-800-FLOWERS consumer floral business growing double digit for the last three quarters we’re very proud of that, they want a very competitive market we are able to do that.

So that should goes well into the future. So take that coupled with the growth opportunities that Jim's referencing with the Harry & David business and we feel comfortable..

And just to summarize we expect the core EBITDA margins to continue to improve and we expect to grow Harry & David and improve their results..

Great. And then can I just ask in your floral business for next year I guess just we’re looking at the calendar Valentine’s Day I think falls on a Sunday, then next year.

So my understanding is that’s a little better than Saturday, is it or do you expect -- so the growth rate then I would think would be normalized because you already took the hit kind of this year, am I thinking of that the right way for next year?.

No, Sunday is actually the worst day replacement than Saturday but I think what we’ve done this year has shown you A, we’ve been able to mitigate the impact on the top line, B, we'll have a broader product offering that will help us to mitigate that further and see even in the phase of the top line challenge our bottom line results continues to improve.

So we’re much more focused on to looking at better experience to our customer and improving our margins..

Got it, thanks.

And then just finally on your cash flow performance I know I have these numbers right but it looks like maybe your operating cash flow was somewhat negative in the quarter like maybe negative 40 million versus positive last year, was there anything strange in the quarter in operating cash flow?.

No, if you look at, obviously the cash flow for the year it’s a significant numbers, it’s over $100 million for the nine months so that’s obviously impacted by the timing of the Harry & David transaction.

So when you have it the second quarter showed a tremendous cash flow because we bought Harry & David on September 30th when their working capital is fine and we work that down -- so we had a tremendous impact on positive cash flow in the quarter and now just starting to normalize throughout the rest of the fiscal year..

So for the year, what we gave is -- guidance on cash flow was….

Yes, it's an unusual year, because of the acquisition so we’re going to have -- and the declining of the acquisition so we’re going to have a cash flow for this year it was like close to $100 million because of the timing, but normalized it’s really more in the north of 40 million..

Thank you. And our next question comes from the line of Anthony Lebiedzinski from Sidoti & Company..

Good morning. Just wanted to follow up on the BloomNet, in your prepared remarks, you mentioned that the revenue from that segment benefited from some pricing initiatives.

Can you just expand on that a little bit please?.

Well, I think what Bill talked about was the mix impact, and in some quarters when it looks like the margins are going down, that might be an emphasis on our product that we might introducing through the network, a container program or new launch program this quarter was mostly an impact of the software as a service kind of programs we sell that appear to have a higher margins you are frontend loading the expenses of introducing the product..

Got it.

Okay and just thanks for that and also just wondering as far as Harry & David the segment has I believe 48 stores what is your overall long term outlook for the stores, do you expect to keep that all of those stores or close some or possibly expand I mean this is just if you could just give us some sense as to how you are thinking about the brick and order business for Harry & David..

Sure I think first off, we're an omni-channel channel retailer we believe there is growth opportunities across all of the channels so you will continue to reevaluate the Harry & David store model as part as our on overall operating plan looking at what works what doesn't and you can [Indiscernible] adjust accordingly to improve that channel..

Okay so it's still early to say..

Well there is a lot of things were looking at their yes I think you are right on the store count 48 stores as leashed come also make decisions on individuals store basis and on overall program it's not been an area that frankly the Harry & David team has spent a lot of the time and attention on so we brought in some employees Steve who is the new [Indiscernible] has a lot of multi-channel experience and has lo of in particular retail experience so he is filling the other team that's really driving these into the retail performance and it's a variety of stores in that mix so from a macro point of view were looking at the whole thing and looking for were on the communities we are all there and then on a store like store basis you apply a normal analysis do it as come out to make an individual determination but that will be done in the context of our overall plans, on the seasonal side of wings where we had some seasonal stores last year there is an interesting results that off course is the same this going to be an interesting opportunity for us to expand that..

So do you mean like kiosks is that what you meant by the seasonal stores..

Kiosk would be one component of the seasonal store counts that yes..

Thank you. [Operator Instructions] Our next question comes from the line of from Noble Financial..

Hi Good morning and thank you for taking my questions.

Great quarter I know there has been in a few new start up that have enter the floor on market like a [Indiscernible] what are your thoughts on these area of growing competition and have you seeing any of them as compelling may be one that you component with or even acquire and then on that same line I know your current focus is I mean integrating Harry & David but are you seeing any other compelling acquisitions out there..

Yes that one I'll start with that now let's invite Chris to jump in on the new entrance into the marketplace off course this is our business we live and breathe it so we are going to try and stay current with anyone whose is entering either on market or directly or Jason markets and we find some interesting things going on there some might be interesting features that we use should include some are interesting features that we've been doing for years for example our program that introduced probably three years ago now is called [local artisan] program and there the local artisans are retail flowers have the opportunity to merchandise our website for our customers that are looking for and those flowers home markets so it's a show specific products they get the shelf right the really kind of designed scales that they are local orders that can features local parts that's only available in that market when we see point of view so it’s a program that we introduced a few years ago that other saying that this is revolutionary and is interesting but it's a feature that we've had grown while and continue to grow as last excitedly embrace it so we keep an eye on all the outside potential competitors and when there is appropriate for us to acquire we would have been opposed to that if it's a feature that we already have it's not likely but every category were excited frankly that people were excited that our category installing to reinvest dollars in it and the Jason categories we see frankly some openings with they keep our attention to looking at in terms of acquisitions we have very steady program of doing the best and can to approve our operating performance over the years which frankly where pleased that we have hedged success that which gives a terrific balance sheet which gives [Indiscernible] for us how do we return that created value and the cash flow for our customers like to our shareholders efficiently and ask them primarily through stock buyback of our without 25 million over the last few years and we'll continue to have that as an option and will continue to execute against our stock buyback program and when our acquisitions that help us flesh out our portfolio keeping our relationships with our existing customers and give our ability to leverage the platform of customers and IT etcetera that we have we'd be a in a good position to actually give against those but we have nothing to announce today..

Then maybe if you can provide us with an update on how the Fruit Bouquets business is growing what does the coverage look like and what are some of things you're doing to continue that expansion..

I think as we can see over Fruit Bouquets we are very pleased with the progress that we're making there we have continued steady progress quite frankly the double digit growth in that business right now.

On the coverage we reported a while ago that we crossed that 50% line and as we get to other significant numbers we'll let you know that but just count on continued steady growth. We like to size of this market we believe we can capture meaningful piece of market share overtime and what is still go in category.

So we look at Fruit Bouquets as we have for a while good steady double digit growth..

When would you consider advertising on a national level as far as coverage? How much you need to cover before you can advertise on a national level..

I think it's a combination of coverage; it’s a combination of what we're looking at from an investment across our family of brands and where we're putting that investment of growth. So really total co-relating answer with coverage and national advertising..

Thank you. And that concludes our question and answer session. I would like to turn the conference back over to management for any closing comments..

Thank you all for your interest and time today. We look forward to answering any further questions or engaging a dollar that you feel appropriate. Bill and Joe rest of us available and you have talked with us.

And I remind you that this is a very important season for us we have Mother's Day a week from Sunday, Father's Day soon after, all the spring holidays. So it's a busy time for us and we are here to help you connect with all the special people in your lives. Thanks for your time today..

Thank you. Ladies and gentlemen thank you for your participation in today's conference. This does conclude the program and you may now disconnect. Everyone have a good day..