Good day, everyone, and welcome to the 1-800-FLOWERS.COM Fiscal 2012 Second Quarter Results Conference Call. This call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to the company's Vice President of Investor Relations, Joseph Pititto. Mr. Pititto, please go ahead, sir.

Thank you, Tyrone. Good morning, everyone, and thanks for joining us today to discuss 1-800-FLOWERS.COM's financial results for our fiscal 2012 second quarter. For those of you who have not yet 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 e-mail or fax. In terms of structure, our call today will begin with brief formal remarks, and then we'll 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 detailed description of these risks and uncertainties, please refer to our press release issued earlier 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 early -- issued early 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 in any of its SEC filings, except as may be otherwise stated by the company. I'll now turn the call over to Jim McCann.

Good morning, everyone. During this fiscal second quarter, we saw a continuation of the positive trends that we have seen in our business since last year. In Consumer Floral, revenues continued to grow at a strong rate and gross margins increased further as customers responded positively to our enhanced merchandising and marketing efforts. BloomNet grew at a double-digit pace, benefiting from increased shop-to-shop order volume and further market penetration for our expanded suite of products and services. And our Gourmet Food and Gift Basket business saw solid growth in e-commerce, which helped offset weakness in the wholesale baskets for the mass market channel, which we have described to you in past calls. As a result of these factors and our continued focus on improving our operating expense ratio, we achieved enhanced bottom line results for the quarter. We also continued to strengthen our balance sheet, finishing the quarter with more than $30 million in cash and net debt of approximately $7 million. Since our peak in fiscal 2008, we have paid down more than $90 million on our term debt despite a challenging economic environment. We believe this provides us with significant flexibility to grow our business using our multichannel retailing strategy and emphasizing e-commerce, while currently seeking -- while concurrently seeking growth in local markets, where we primarily do it through our franchising initiatives; in wholesale, where we see increasing opportunities for our Gourmet Food and Gift Baskets brands; with leading department stores and mass accounts; and in BloomNet, where we continue to expand our offerings and deepen our relationships with our florist. And in the social and mobile media areas, where we have investments that we've made over the past several years, have positioned us as a leader in both mobile and social. Before I turn the call over to Bill for his review of the second quarter metrics, I'd like to touch on 2 specific topics. First, during the second quarter, we announced the 62-store franchise deal for Fannie May with GB Chocolates, a partnership that includes some of the preeminent franchise operators in the United States. The agreement includes development rights of 45 new stores to be opened over the next 3 years in several Midwest states, as well as specific cities in Florida and Ohio. The deal also included the sale of 17 of our existing Fannie May stores located in areas outside of our core Chicago market. While the sale of these stores during Fannie May's biggest season reduced our revenues for the period, it provides us a solid platform for our new franchise partner to accelerate their growth plans while providing us with future revenue streams through franchise and area development fees and product sales. As I've noted in the past, at one time, there were more than 500 Fannie May and Fannie Farmer stores stretching from the Midwest and East Coast. As a multichannel retailer, we believe that growing our local market presence through franchising is the most capital-efficient way for us to expand Fannie May's footprint and brand awareness and, thereby, drive both retail and e-commerce revenue growth. Second, in terms of our gift baskets business, while our 1-800-FLOWERS Baskets.com direct-to-the-consumer brand is performing well, our wholesale basket business continued to underperform. To address this area, we have installed a new management team that has put in place new processes to improve the division sourcing, operating and reporting infrastructure. In addition, we've hired new talent to lead our sales efforts with extensive experience in the mass channel, and we stepped up our efforts to expand the customer base to reduce dependencies and increase customer reach. We are confident that these changes, and others underway, will produce improved results in this category. I will now turn the call over to Bill for review of the financial and operating metrics for this quarter.

Thank you, Jim. As indicated in our press release issued this morning, our fiscal 2012 second quarter is characterized by the continued strong performance of our Consumer Floral business, as well as the growth in our BloomNet, and Gourmet Food and Gift Basket categories. In our Gourmet Food and Gift Basket category for which our second quarter is our largest in terms of sales and profits, we saw good e-commerce growth, as well as solid growth with some new wholesale accounts for our Harry London Chocolates and Popcorn Factory brands. This, however, was largely offset by underperformance in our wholesale baskets business, which we have discussed with you in previous calls. Also in the segment, as Jim mentioned earlier, we closed an important Fannie May franchising deal during the quarter with one of the leading franchise operations in the United States. This 62-store deal greatly accelerated our Fannie May franchising program, which we believe has significant long-term benefits in terms of franchise and product revenue streams, enhanced manufacturing utilization, and expanded brand awareness on a national level for Fannie May, an iconic chocolate brand. Part of the deal included the sale of 17 Fannie May company-owned stores to a new franchisee. While this resulted in some lost revenues and contributions during the seasonally strong holiday period, in fact, the EPS for the quarter by approximately $0.01 a share. It also provided approximately $500,000 in new franchise fees, as well as the pretax gain of $3.8 million recorded in the quarter. Additionally, as Jim mentioned, the deal creates future revenue streams related to area development fees, initial franchise fees and wholesale product revenues, providing specific financial results and key metrics from continuing operations from the second quarter. Total net earnings from continuing operations increased 4.8% to $239.8 million compared with $228.9 million in the prior year period. During the quarter, our e-commerce orders totaled 2,829,000 compared with 2,928,000 in the year-ago period. Average order size during the quarter increased 10.5% to $58.38 compared with $52.81 in the prior year period. During the quarter, we added 612,000 new customers. This was achieved while concurrently stimulating repeat orders from existing customers, who represented 61% of total revenues, unchanged compared to the prior year period. Gross margin for the quarter was 41.8% percent, down 60 basis points compared with 42.4% in the prior year period. This reflected [ph] a combination of factors including product mix, with strong growth in Consumer Floral segment and an increase in wholesale business in Fannie May and the Popcorn Factory, lower gross margins in BloomNet, reflecting the increase in shop-to-shop order volume growth, and lower margins on our wholesale gift basket business. However, it should be noted that gross profit margin in our e-commerce channels increased 30 basis points, driven by a continued focus on reducing promotional pricing and enhanced manufacturing efficiencies which more than offset commodity price increases. Operating expenses improved 20 basis points as a percent of total revenues to 31.6% compared with 31.8% in the prior year period. This improvement reflected the revenue growth in the quarter, as well as our continued focus on leveraging our business platform. Total operating expenses were $75.7 million compared with $72.8 million in the prior year period. This reflected several factors, including operating costs associated with 3 small businesses we acquired over the past year, including Mrs. Beasley's and FineStationery.com in the second half of fiscal 2011, and Flowerama early in the first quarter of this year, as well as the licensing agreement we signed early this year to operate the Stockyards.com e-commerce business. Excluding these businesses -- these business additions, operating expenses would have been down, demonstrating our business leverage. Operating business also included continued investments in our strategic initiatives we have described to you in the past, including franchising BloomNet and the mobile and social commerce area. As a result of all these factors and including the aforementioned pretax gain of $3.8 million on the sale of 17 Fannie May stores during the quarter, EBITDA for the period increased 13.1% or $3.9 million to $33.3 million. Excluding the impact of stock-based compensation expense, EBITDA increased 13% or $4 million to $34.5 million. Income from continuing operations increased 26.8% to $16.6 million or $0.25 per diluted share compared with $13.1 million or $0.20 per diluted share in the prior year period. As previously discussed, EPS for the quarter included the benefit of about $0.03 per share for the sale of 17 Fannie May stores to a franchisee. In terms of category results. In 1-800-FLOWERS.COM Consumer Floral business, during the second quarter, revenues in the category increased 10.3% to $91 million compared with $82.6 million in the prior year period. This was driven by solid e-commerce growth for the 1-800-FLOWERS.COM brand, as well as the contribution from 2 small businesses added at the end of last year and early this year. Gross margin for the quarter increased 40 basis points to 39% compared with 38.6% in the prior year period. Category contribution margin increased 22.1% or $1.8 million to $10 million compared with $8.2 million in the prior year period. This reflected the strong revenue and margin growth in the quarter, as well as effective management of operating expenses. The company defines category contribution margin as earnings before interest, taxes, depreciation and amortization, and before the allocation of corporate overhead expenses. In BloomNet, revenues increased 12.7% to $18.3 million compared with $16.2 million in the prior year period. This growth reflects a significant increase in shop-to-shop order volume, as well as increased sales of wholesale products and services to florists. Gross margin was 49.2% compared with 56% in the prior year period. As we discussed in our quarterly call, since the third quarter of last year, the decline in gross margin percent primarily reflects BloomNet's significant increase in shop-to-shop order volume, as well as wholesale product mix. While the shop-to-shop orders carry a lower gross margin percent, the significant increase in order volume helps drive revenue and gross margin dollar growth. The added orders also increased leverage of sales of our expanded suite of wholesale products and services, which grew approximately 10% during the quarter. Since the majority of the shop-to-shop order increase began in the third quarter last year, going forward, we will not see the negative gross margin percentage comp. Rather, we anticipate BloomNet's gross margin percent will remain in the current range of 45% to 50% as we further leverage these orders and grow both revenues and category contribution. For the fiscal second quarter, category contribution margin was $5.1 million compared with $5.4 million in the prior year period. I should note that last year's fiscal second quarter included a contribution of approximately $800,000 associated with the tri-annual shipping of our flower selection guide, which we did not have this year. In our Gourmet Food and Gift Baskets segment. Revenue increased 0.7% to $131.1 million compared with $130.1 million in the prior year period. This reflected e-commerce growth of approximately 5% across the category and increased wholesale revenues for Fannie May related to a new department store program for its Harry London brand. This growth, however, was largely offset by the reduced wholesale basket orders from mass market customers, as well as the sale of 17 Fannie May retail stores. Gross margin was 42.4% compared with 43% a year ago. Category contribution margin was $30.2 million, including the aforementioned $3.8 million pretax gain compared with $27.7 million in the prior year period. Without the gain, contribution margin was down $1.3 million, attributable to the weak performance in our wholesale basket business and the contribution associated with the 17 Fannie May stores sold during the quarter. In terms of corporate expense, as I stated earlier, our category contribution margin results exclude costs associated with the company's enterprise shared services platform, which includes, among other services, IT, HR, finance, legal and executive. These functions are operated under a centralized management platform, providing support services to the entire organization. For the fiscal second quarter, corporate expense from continuing operation, including stock-based compensation, was $11.9 million compared with $11.8 million in the prior year period. Turning to our balance sheet. At the end of the second quarter, our cash and investment position was approximately $30.1 million. The increase from our year-end results resulted from our free cash flow, the proceeds from the sale of our wine services business in the fiscal first quarter, the proceeds from the sale of the 17 Fannie May stores this past quarter, net of our acquisition of Flowerama in the fiscal first quarter and the pay-down of our debt. Our borrowings under our credit facility were approximately $37 million in term loan debt and 0 outstanding under our revolving credit line. Inventory of approximately $59.6 million was in line with management's expectations and reflects the increase in wholesale operations, as well as our recent acquisitions and positioning for the upcoming Valentine holiday. Regarding guidance. Based on the 8% revenue growth that we achieved in the first half of fiscal 2012, which was driven by 11% growth in our Consumer Floral business, we are increasing our guidance for full year revenue growth to a mid- to upper- single-digit range from the previous low- to mid-single-digit range. In terms of bottom line results, we continue to focus on enhancing our operating leverage and expect to grow our EBITDA, EPS and free cash flow at rates in excess of our guidance for revenue growth. In summary, as we enter the second half of our fiscal year, we plan to build on the positive trends that we have seen since last year, and we remain focused on seeking cost-efficient ways to stimulate consumer demand across our brands and businesses, continuing to seek other creative growth opportunities, improving gross profit margins and managing our operating costs by leveraging our business platform. I'll now turn the call over to our President, Chris McCann.

Thanks, Bill. The fiscal second quarter marked our fourth consecutive quarter of growth, driven by the positive trends we've seen in our 1-800-FLOWERS.COM Consumer Floral business. These positive trends are the result of the initiatives that we've put in place to enhance our marketing and merchandising programs, which have enabled us to embrace our floristness and engage directly with our customers to help them deliver smiles. Our marketing messaging, reminding our customers to wow their recipients and don't settle for less, are resonating well as evidenced by the continued growth in our average order value. To deliver our message, we are increasingly integrating social and traditional media channels to reach the broadest possible audience. For instance, our Valentine's Day holiday customer engagement effort invites people to vote for the wowest sports moment of the day on their Facebook page, giving us a tremendous multiplier effect as we reach not only their friends but friends of friends. The contest is also being broadly promoted by our endorsement radio personalities on ESPN, where they will be talking about it live on air during their shows. And in addition to featuring it on the 1-800-FLOWERS.COM website and our Facebook page and on ESPN Radio.com, it's also being promoted on ESPN's first foray into Facebook on the new Mike & Mike Facebook page. We're also excited by our new partnership with TV Land's hit comedy Hot in Cleveland, featuring one of today's hottest media stars, Betty White. Special video content from the show is being promoted through various social media channels to tell all the helpless guys out there what women really want for Valentine's Day: to be wowed with beautiful flowers from 1-800-FLOWERS.COM. On the merchandising front, we continue to focus on truly original product designs, working directly with our BloomNet professional florist to develop gifts and help our customers express themselves perfectly, such as our Lucky in Love a-DOG-able arrangement for Valentine's Day. In terms of our efforts in mobile, I mentioned in our last call the launch of our completely redesigned site in early September which helped us pick up the Best Mobile Site of 2011, following a similar honor in 2010, and I'm pleased to report that our mobile customers are responding enthusiastically. Looking ahead, the second half of our fiscal year is driven largely by our floral business due to the Valentine's and Mother's Day holidays, as well as other spring gifting occasions. We've built some nice momentum in this area, and we plan to build on the positive trends we have discussed today going forward to achieve enhanced results. I'll now turn the call back to Jim.

Thanks, Chris. Our customers continue to turn to us to help them deliver smiles. That's the business we're in, helping them connect and express themselves for all their celebratory occasions from the everyday to the once-in-a-lifetime. The strong results and the strong growth results we have achieved in our second quarter and throughout the first half of our fiscal year and the positive trends we are seeing for frankly more than a year now, attest to the fact that our messaging and positioning as a florist and gift shop is resonating. We are growing our business through our focus on providing truly original floral arrangements, as well as an expanded offering of Gourmet Food and Gift Baskets, featuring highly relevant gift brands that our customers expect from us. We have a multichannel business model that emphasizes e-commerce while including a local retail presence. Our business philosophy is to engage directly with our customers, invite them behind the curtain, if you will, to work directly with us on the design and development of products and services, and even in our marketing and advertising programs. Towards this end, we have embraced early on the new social and mobile tools to become the next-generation retailer. We have become a leader in our space in social and mobile commerce as a result of our strategy to invest in innovations for the future and to embrace new technologies and modes of customer engagement that will help us develop and deepen those relationships. To wrap up, we are pleased with our second quarter and fiscal first half results and the positive trends that we see continuing in all of our businesses. We are heartened by the recent reports of improvement in consumer confidence, but we remain cognizant of the challenges in the global economic environment. As a result, we will continue to focus our efforts on managing those aspects of our business that we can control: our relationships with our customers, our operating expenses, our financial strength and flexibility, and our growth initiatives. We believe this focus will enable us to continue to grow and create additional leverage within our business model and, thereby, drive good value creation. That concludes our formal remarks. We'll now open the call to your questions. Tyrone, would you please restate the instructions for the Q&A portion?

[Operator Instructions] We have a question from Anthony Lebiedzinski of Sidoti & Company.

First question on the Consumer Floral segment, I'm just wondering if you could give us a breakdown between order volume versus the average order value just for that segment?

Sure, Anthony, thank you. I'll ask Chris to cover that.

Yes, I think what we're seeing is good trends in both areas. On average order value, we're seeing our customers really respond to our focused merchandising strategy, on the good, better, best and wow strategy, so we're seeing the average order value continue to increase year-over-year. Of course, that starts to level out, and we're seeing positive trends for the last several quarters now on order counts.

Yes. We're basically, the first half of the year, almost flat on order counts with Consumer Floral. And if you go back to last year, we were significantly negative on year-over-year order counts. AOV was -- started to drive our growth, but now we're looking forward to be on both counts.

So the trend lines are clear, continuing our good trend lines on the AOV, and now good trend lines now for a couple of quarters on the order count as well, Anthony.

Okay, that is helpful. And looking forward to Valentine's Day this year is on a Tuesday versus Monday last year. Just wondering if you could talk about the benefit of the -- this counter placement. And also what is your promotional strategy going to be around this Valentine's Day versus last year?

I'll ask Chris to cover the second part of your question, Anthony, with regard to our approach to the market with promotions and our merchandising strategy. But the first part of it, on Valentine's Day in general, Valentine's Day is a crazy busy period for us in the middle of what is an otherwise quiet quarter. It's always challenging. And I say that because we have a huge variable that really impacts us here more than it does for the Christmas holiday, certainly more than it does for the spring floral holidays, and that is the weather. So that's, first and foremost, the primary concern as we head going in. There are lots of logistics issues related to the holiday. And of course, for other retailers who don't have the benefit of being a year-round retailer like we are, they sometimes become exceptionally promotional. But Chris, would you cover for Anthony our approach to the merchandising strategy and marketing strategy for Valentine's Day?

Yes. So with that said, we continue our focus, again, on our good, better, best, and especially the wow messaging that is resonating with our customers. It enables us to focus really on our -- as I've mentioned in the call, our floristness and working with our creative florists to move [ph] truly original flowers, and that's what we see our customers migrating to, right? As opposed to -- looking to just the cheapest product they could find in the marketplace. So we're very happy. We're continuing that effort, picking up on the things we learned from last year and, again, taking a nice broad approach. We're into the Valentine's swing, so taking a broad approach at our marketing efforts, continuing our radio promotions as we've done throughout the year, leveraging them, as I just mentioned, with our partnership with Espn.com into customer engagement programs that get us into the social media channels, which is getting us a multiplier effect on impressions that we can make. So we think we have a good plan in place, and we look forward to -- we're set for Valentine's Day.

Anthony, I read with interest last night about J.C. Penney's announcement. It's about their new go-to-market strategy. And although I only read the headlines of it, it seems very much like the program that we've developed for the last 2 years now, and for us, it's producing the growth we expected. I certainly don't know how it would impact them but, certainly, it's producing the growth we hoped for.

Okay. And my last question on the Gourmet Food, Gift Baskets segment, you mentioned that you're looking to expand the business to more department stores. Just wondering how many you have right now. And what's your expectations for later this year?

Well, I think what you've seen us do is we are a -- we're a retailer. We're an e-commerce retailer that likes to be multichannel. We embrace the multichannel aspect of that, the retail part of that through our franchising model. That works for us. On the e-commerce side, we're focused on growing our e-commerce relationship, embracing the social aspect of that so, clearly, on the path to becoming a truly social retailer, a social commerce player, and we think that mobile accelerates all of that. But when it comes to how we'll expand our other relationships in the wholesale channel, wholesale for us is simply a way for us to leverage the assets we have. So we'll do it from a margin perspective, we'll do it from a utilization perspective, and we'll do it from a brand extension perspective. So it's not a big part of our business, but we'll do it when we can because it gives us contribution margin, it gives us leverage on facilities, and it gives us brand extension opportunities.

[Operator Instructions] Our next question is from David Kanen of WFG Advisors.

First question, regarding BloomNet, what was the -- sequentially, what happened with gross margin? I know it was 49.2%, but how does that compare with the September quarter, if you have that number, Bill?

Yes, it was up -- we talked about gross margin for BloomNet being between 45% and 50%. It was 49% this quarter. I think it was in -- it was 46%, 47% in the first quarter of this year.

But maybe you should step back, Bill, and give David a little color in terms of what we expect of gross margin situation and the gross margin dollar situation for BloomNet will be.

So BloomNet always -- has always had strong gross margins, and we continue to have very strong gross margins. It's in that 45% to 50% range. Now as we've always said, our goal with BloomNet is to really kind of drive both the top and bottom line. [indiscernible] say, a program about a year ago to really step up our shop-to-shop orders and to -- which would ultimately allow it to sell other products and services and many of those on a wholesale basis that will drive incremental gross margin dollars. But we're driving our gross margin percent from where it used to be, which was above 50%. I think we're now anniversarying that period of time and, therefore, we'll now have more comfortable margins, gross margins going forward. But obviously, the idea behind BloomNet is to grow top line and grow our contribution margin within that segment.

Okay. So is it safe to say that gross margin troughed last quarter in the BloomNet segment?

I think what we could say, David, is we don't see it as it a trough. We told you it would be in that 45% to 50% range. Gross margin dollars were up this quarter. Gross margin dollars were up last quarter. What we think we'll see is we're having good success at introducing new products and services. So the good news is gross margin is down because we've had a real success at deepening the relationship we have with our BloomNet shops from its traditional high points. But that 45% to 55% range is enviable in anybody's low [ph], and we're very proud of it, and we expect that, that will be the range going forward as well.

Okay. Next question is you've been co-branding floral shops, partnering and co-branding. I know locally I've seen signage change and so forth. What are those shop owners experiencing in terms of organic growth, if any? And are you tracking in those local zip codes what's happening on the e-commerce side if there's any benefit there?

David, our efforts that you're referencing here are all part of our BloomNet strategy. Our BloomNet strategy is to have a stratified layer of options for our BloomNet florists in terms of how much they want to participate with us and what kind of a depth of relationship they'd want to have. So as we pointed out, we -- as a result of several different things here, including the huge impact that the show Undercover Boss had on our relationship with [indiscernible], exposing so many of our BloomNet members to the opportunity, that they saw some of their cohort's experiencing by becoming a co-branded partner of ours. We decided to experiment with that and to introduce others to the possibility. There's an enormous demand from our florists who would like to participate in that, but we don't have an enormous capacity, so we're very limited, and we're testing our way in to that program. I will tell you anecdotally, the florists, too, have -- who we provided the program, which are few in number, have experienced a very -- a good situation, but we don't have hard data to share with you on that today. So it's an effort that we've introduced several months ago. The branding experience that they're -- that our florists are experiencing is quite good. The fact that we know that it's good for us, and it's part of our overall strategy to be a multichannel retailer, as we said, whether it's in new chocolate brands or it's in our bakery brands or in our floral brands, we'll do our local piece in our franchising model, but it's too early to say on this very deliberate effort that we have on the floral side about our early results from our franchising efforts. We're happy with them. We're pleased with them. We'll continue to go, but it's very early in its development.

And I know that you just start -- launched fruit bouquets not too long ago. Approximately, how many floral shops do you have in total in your network? And approximately, how many shops are enabled right now? And what's your strategy over the next 2 years?

Well, as we had told you a quarter ago, we think that this category of the fruit bouquets is a strong category. We've looked at it for a number of years now, and we've decided that the best way for us to enter into this business is in partnership primarily with our retail floral partners. In terms of the size of BloomNet, we told you that it's -- well over 7,000 members of BloomNet, has been for a long time. We're not allowing that number to grow, although there's a great interest on the side of retail florists to become a part of that network. We think we have the right-sized network today. Within that network, we have 2 things happening. As you mentioned in your first question, some -- many of our florists have applied to become co-branded partners of ours, and we're very deliberately pursuing that and letting a few of them in. Secondly, on the fruit side, it's a big shift in terms of -- we've done all the things we needed to do in terms of creating the product line, creating the technology behind that, creating the training programs, the merchandising materials and our marketing support for that program, and that's what we've done since we initiated this program at the beginning of the second quarter of this fiscal year, August, September time frame, when we introduced this idea to our community and to you. And so far, what we've seen is a very good response, but it's a long lead time in terms of building the physical plant that they need for it, the permitting that they need, the training programs that we put them through, the marketing and merchandising training that we put them through. So we'll, in the future calls, give you color on numbers of those when its significant, it's meaningful, and we have some data to back it up. I will tell you that those who have converted to the program are having a very positive experience. This is a deliberate long-term effort, and like baskets and like our chocolate business, our fruit bouquet business will become a very big and very important part of our mix. And it's a wonderful, wonderful and natural addition to our BloomNet florists to have this program as part of their mix. It's something that some of us as florists have done for decades but now to have it in a formal program with a great marketing support. With all the trimming that we've done around this is going to help a bunch of very successful florists become even more successful by adding this product mix to their menu.

With the limited number of shops that are, let's call them, fruit bouquet-enabled, if you will, are they seeing a double-digit same-store sales growth or high single-digit same-store sales growth? I mean, I know it's not a large number, but can you give me a sense numerically as to the effect it's having on the local store?

Yes, I could, but I won't. It's too early for us to say it, David. I don't want to mislead you with the good news that we've seen so far. I don't think there's enough florists out there in terms of the -- those who have already installed it. I might give you a misread, and I don't want to lead anyone on there. We are very pleased with it. We're putting a big effort behind it, but it's too early for us to give you that, but it seems like good news until we really -- it seems like exceptional news until we've really dug in and put some qualifiers and quantifiers behind it.

Okay. And a final question. I know you raised guidance to mid- to high- single-digit growth overall. In the balance of this year, assuming you hit that target, will we see an expansion in the operating margin? Will you get some operating leverage off of that growth on the top line?

I think the answer to that is true. I'll ask Bill if he'd like to give any color to it, but when you have accelerating growth on the top line that we've had, when you've seen us control our operating expenses on a same like-to-like model, where we've -- or like-for-like without some of the additions of the new businesses we have created or attached in the last quarter or 2. If you looked at our operating expenses, they are actually down year-over-year without those additions. So you see, we have pretty good discipline in controlling our expenses, and we have improving gross margins, and Bill mentioned earlier that he expects our gross margins to continue to improve in the second half of the fiscal year, then that results in our earnings improvement. Bill, any...

Yes. I mean, I think Jim covered it. He's basically saying, we're confident that our gross margins can improve in the second half of the year, we're -- we continue to demonstrate leverage on the bottom line, and we have -- and we raised our guidance on the top line, so all those lead to that. We gave kind of broad brush guidance, that our EPS, EBITDA and cash flow will grow at a faster pace than our revenue. So...

Plus we do have this -- we do have Valentine's Day ahead of us. And what I mean when I say ahead of us, we are already into the Valentine rush, and it's frankly the holiday that gave me my hairline.

You know what, I'm sorry, I should have asked this earlier. I would like to get a little color on -- I saw this announcement of the franchise deal for the Fannie May stores. Can you -- I think it was 45 new store openings. What's the approximate timeline on that? And will you be getting royalties? Will it be a traditional franchise model, where you get 6%, 7% royalty on their total sales?

Thank you for that question, David. Well, we'll give you the broad numbers here. It's a 62-store deal. That means that we've sold them 17 stores that we had. They were outside of our core Chicago marketplace, where we own the stores. So we sold 17 of our 95 stores at that point to this new group that are very seasoned. They happen to be really good, knowledgeable people and very seasoned franchise operators. So they bought 17 stores. In addition, their contract requires them to open up to 45 stores. They may want to do more but, certainly, at minimum, 45 stores in a 3-year period. They've already opened a few of those stores, so they're well on or ahead of schedule. As a result of that, what we get is a few things. One is we get the traditional franchise fees, opening fees, license fees, et cetera, and the ongoing royalties and marketing contributions that go along with that. In addition, we're the manufacturer, so we have a slight margin on the product we manufacture, and we get the benefit of utilization, which is one of the reasons why we're on the wholesale business. So it expands our business in that respect. So from every way, they get a good deal, they get a great brand, the economics on those stores that are already open and the stores that they will open are terrific. They are great operators and great partners. It's already attracted a lot of attention from other operators like them, who would like to become part of our program, so we continued -- continue to see it as a wonderful way for us to prime the pump on a very important effort. Oh, and by the way, the other thing we get that you referenced in your question about florists is we get the rainbow effect of that living billboard, the store being in the marketplace, giving benefits to all of our channels: the retail channel, the wholesale channels and, of course, most importantly, the e-commerce channel as well.

Okay. Just before I get off, I have just a comment. With your stock under $3 and now, essentially, the balance sheet being almost net debt free, only $7 million in net debt, I would -- as a shareholder, I would like to see the company be very aggressive in buying back stock because it would really move the needle in terms of the bottom line results. So that -- just a comment and you could -- I'm going to get off-line now, and you could maybe comment on that later.

David, I'll comment on it now, and thank you for your point of view and for being an interested and passionate shareholder. I think the good news is we've stuck to our guns over the last few years and did what we said was our highest priority. Our highest priority were 3 things. One, get closer to our customer, improve our operating leverage, and -- by -- and having its beneficial impact on our balance sheet, yet at the same time continuing to invest in the future. The good news is the economy is stabilized and allowed us to do those 3 things and achieve what we have. You can see the evidence of our getting closer to our customer by Chris's report on all of our brands showing growth once again. Second, the balance sheet over that 3-year period, we paid down $90 million in debt, and we're on a pace now to be net debt free, now, but certainly by the end of this fiscal year in June, on the current trends that we have going on there. And then third, we've continued to invest for the future with the introduction of the fruit bouquet program in Celebrations.com and half a dozen other initiatives that we continued to invest in. And here we find ourselves now with growth, good bottom line performance and good trend lines and a balance sheet that's fairly pristine. It's nice to have options. And so I think it's a responsibility for us as shareholders and as stewards of these assets to look at all of our options going forward in terms of how can we best continue to create value and continue to create opportunities for us as shareholders and for outside shareholders. So we're having interesting and good thoughtful discussions with people like you, David, who have the same interest we have and helping us to explore all of our options. But I'll just affirm, it's nice to have these good options.

Our next question is from Anil Gupta of Imperial Capital.

Just one kind of quick question I had on the mobile segment. I think you have both an app and then a specific mobile website, and I was wondering if you can provide metrics or just some color on how those platforms are performing for you. So some examples would be either number of orders placed on either the app or the mobile site, average order value relative to the Internet orders, number of downloads, et cetera. Just trying to get a sense as to how valuable that platform is for you right now.

Well, what we're seeing in the mobile channel is, you're right, we have a mobile website, as well as apps across the 3 major platforms. What we're seeing is a good early adoption. We're not seeing really any difference to speak about in AOV across the e-commerce or m-commerce channels. The majority of business does take place on the mobile website as opposed to on the apps. Some people like the apps better. We're getting good learning from those apps, and we'll refine when we go forward into the tablet world, in different ways that we can stay engaged with our customers on that. But again, so we can't really provide any color beyond that between -- and we don't track it that way, Anil, on which different app is producing, but the mobile web is the leader on producing the transactions.

I think we agree with you, Anil, in that the whole world is mobile. I just did a conference 1 day or 2 ago, and the interactions I've had with people internationally, especially, is that the whole world is mobile. And the reason why we've been investing there, the reason we have the CapEx that we do, the reason why -- the good news is that we can afford to have that CapEx we do because it's essentially all technology spend and a big chunk of that, of course, had been to give us a platform that allow us to do all of these new things in the years ahead. But the biggest part of that has been affording us the opportunity to be active and aggressive in a mobile world. It's very much like the early days of the Internet in that it doesn't amount to a whole lot on a percentage basis in the early days and then all of a sudden, a tipping point comes and it really matters. We've made the investments. We have all the apps. We have the direct mobile web platform, and so they are all working for us. The average order seemed to be about the same or similar to what we have experienced in all our other channels, and now it gives us the opportunity as the channel improves and develops. We are already there. We're noted for our leadership there. We should reap an outsize reward for those efforts.

What I'll tell you with the mobile channel, too is, we have -- our customer base is very tech savvy, so it allows us to give them another vehicle to reach us, to access us, as well as it also, like Jim mentioned in the early e-commerce days, it then allows us to extend our brands even further into a very tech-savvy audience and acquire new customers.

Okay. A couple of other quick ones. One would just be any trends you're seeing in the online ad pricing world? And then I don't know if you disclosed this before, but the percentage of your traffic, what's the organic versus paid?

Yes, so -- I mean, in trends, I think we continue to see trends in the ad tech world really just that -- not so much a trend in cost. I think things are fairly stable there, but just the emerging technologies and how we can reach customers, how we can speak to different customers differently continues to emerge, providing great value to retailers that really understand it's all about building relationship first and doing business second.

I think while we've seen costs remained fairly flat, Anil, a world that you know so much as -- that the ad tech world here is changing very quickly, and it's a place I know Chris focuses his team's time and attention on because I think the yield for us as an e-commerce player is improving all the time because of the benefits of the new technologies in marketing and advertising online. So for the same dollar, we're able to reach more effectively customers. And I think one of the reasons contributing to the renewed growth you've seen in 1-800-FLOWERS and all of our consumer brands.

And just specifically, one of the things we do benefit from is the value of great, well-known brands. So while we certainly don't break out the traffic between paid and natural, we do benefit from the fact that we have well-known brands and, therefore, get a decent amount of direct traffic.

Okay. And then 2 other quick questions. One would just be any impact that you're seeing in terms of foreign currencies, specifically in the U.K.? I'm not sure how big the business is over there, but any comments there? And then just in terms of the general market, do you feel like you are taking share from competitors, FTD, ProFlowers, et cetera, and just kind of what you're seeing in the marketplace?

I'll go in reverse order on that, Anil. In terms of trends, the indications we get, there's not really good hard data on the floral and gift categories that we play in, but our sense is that there's not been a lot of growth there, maybe some now but not a lot, so that would be a factor. They were taking some share from somebody because of our growth. On the second piece of that, on the international, we are still very heavily a U.S. player. We have a few investments that we'll talk about in future quarter calls on our international arena, but they're very small, so there's no really consequential impact of any kind on ourselves.

We have a follow-up from David Kanen of WFG Advisors.

Bill, what was CapEx for the quarter? And where do you expect it to fall for the full year?

Yes, we still expect that for the full year to be about $17 million. For the first half of the year, it was just about half of that. It was a little over $8 million for the first half of the year.

Okay. And then I don't know if you can answer this question, but I know it's a small part of the business, but what was the growth rate for mobile year-over-year?

You're right. We didn't state that, so you didn't miss that, David. And it's too early for us to be reporting on the growth rates in mobile. The size of it, it would sound silly.

There are no more further questions at this time. I'd like to turn the call over to management for any closing remarks.

So thank you all for your time and attention today. We're very pleased with our results for the quarter. We're very hopeful and expecting a good solid second half of the year. It's nice to have growth. It's nice to have options. It's nice to have performance in what is otherwise still not a terrific retail environment. I think our strategy in terms of being a multichannel retailer, focused on e-commerce, focused on new commerce, and I think our investments that we've made through a very difficult couple of years on the future are starting to bear some fruit now [indiscernible] upon them but, clearly, bearing fruit. And finally, as a reminder, that Valentine holiday that we talked to you about, that is so important to us, frankly, it's pretty important to you, and I encourage you to come to 1-800-FLOWERS or any of our retail sites to find a way to wow the loved ones in your life and find our -- only-the-best floral arrangements, as well as some wonderful gourmet gifts that will help deliver smiles to the important people in your lives. So thank you for your time and attention, and I look forward to servicing all of your needs for this Valentine's Day.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may now disconnect, and have a wonderful day.