Good day, everyone, and welcome to the 1-800-Flowers.com Incorporated Fiscal 2013 First Quarter Results Conference Call. This call is being recorded. At this time, for opening remarks and introduction, 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, Jamie. Good morning and thank you, all, for joining us today to discuss 1-800-FLOWERS.com's financial results for our fiscal 2013 first quarter. For those of you who have not received a copy of our press release issued earlier this morning, the release can be accessed at the Investor Relations section of our 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 and 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 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, and a recording of the today's call, the press release issued earlier today, or any of its SEC filings, except as may be otherwise stated by the company. I will now turn the call over to Jim McCann.

Good morning, everyone. The results we achieved in our first quarter, particularly the strong gross margin improvement and enhanced bottom line metrics, reflect the continued positive trends in our business that we've seen now for the past couple of years. Revenue for the period, typically our smallest due to the lack of gift-giving holidays during the summer months, benefited from continued market penetration in our BloomNet business, where our expanded suite of products and services is enabling us to deepen our relationships with our member florists. In addition, BloomNet's gross margin increased significantly during the quarter, up 350 basis points compared with the prior year period, as we continue to leverage increased order volumes and growing utilization of -- by our florists of our unique digital and print directories. BloomNet has become the growth and innovation leader in the wire service business, by providing florists with exciting incremental sales opportunities, such as our new fruit bouquets line, our same-day gift -- gift basket program and our exclusive essentials line of vases and giftware, among others. In addition, BloomNet provides unique industry-accredited training seminars through our Floriology Institute. These programs are designed to help florists increase their customer traffic and enhance their profitability. As a result, BloomNet continues to grow its market position in the wire service business. During the quarter, we also saw continued positive trends in our Consumer Floral business, in terms of revenue, gross margin and contribution margin. Revenues for the quarter benefited from a year-over-year increases in both order volume and average order value. This was driven by accommodation of our marketing that encourages customer to send only the very best and to wow their recipients, and our enhanced merchandising programs, focusing on truly original better-and-best product offerings, including the signature gifts for everyday occasions, such as our birthday Flower Cake and our extended Happy Hour Collection. In Gourmet Food and Gift Baskets, revenues in our Cheryl's and the Popcorn Factory brands grew nicely, while overall revenues for the category were essentially flat year-over-year, primarily due to the fact that during -- in the prior year period, that included early shipments of wholesale orders for gift baskets and chocolate. This year's shipment of these orders shifted in the beginning of the current fiscal second quarter. Importantly, in our wholesale Gift Basket business, we've seen a year-over-year increase in orders from key existing and new customers. As a result, we anticipate a positive year-over-year contribution from this business, both top and bottom line for the current fiscal second quarter and for the full year for the first time since 2009. Additionally, in our Gourmet Food and Gift Baskets category, we are excited by the growth opportunities we see in the expansion of our truly original product offerings, such as the launch this quarter of our new Fannie May Berries line; specially selected gourmet strawberries dipped in real Fannie May Fine Chocolate, unlike anything in the market today. As we head into our -- the key holiday season, we plan to expand our still-evolving cross-brand marketing and merchandising efforts to our multi-brand portal and website. Here we are leveraging the strength of our 1-800-FLOWERS.COM brand, its significant site traffic and deep customer relationships to introduce all of our great gift-giving brands, thereby increase the number of celebratory occasions, for which we could help our customers deliver smiles. I'll now turn the call over to Bill to review the financial and operating metrics for this quarter. Bill?

Thank you, Jim. As we look at our fiscal first quarter results and the continued positive trends in top and bottom line performance, we are particularly pleased with the expansion in gross margin achieved during the quarter. This is a continuation of the trend that we saw throughout the second half of last year, and as we have discussed with you in the past, it's a key focus of ours. As such, we believe we'll be able to continue to drive the year-over-year improvement in gross margins throughout the current fiscal year, regarding specific financial results in key metrics and continuing operations for the fiscal first quarter. Total net revenues from continuing operations increased 3.1% to $120.9 million, compared with $117.2 million in the prior year period. During the quarter, our e-commerce orders totaled 1,234,000 compared with 1,204,000 in the year-ago period. Average order size during the quarter increased approximately 1%, $66.01, compared with $65.42 in the prior year period. During the quarter, we added 355,000 new customers. This was achieved while currently stimulating repeat orders from existing customers who represented 64.2% of total revenues, compared with 65.7% in the prior year period. Gross margin for the quarter was 41.1%, up 140 basis points, compared with 39.7% in the prior year period. This was driven by 80 and 350 basis-point increases, respectively, in our Consumer Floral and BloomNet categories. Operating expense ratio, including depreciation and amortization, was essentially unchanged at 46.4% of total revenues. For the quarter, depreciation and amortization was $4.5 million, compared with $4.9 million in the prior year period. As a result of these factors, EBITDA loss from continuing operations for the quarter, excluding stock-based compensation, improved $700,000 to a loss of $1 million, compared with a loss of $1.7 million in the prior year period. Including the impact of stock-based compensation, EBITDA loss for the quarter was $2 million, compared with a loss of $2.8 million in the prior year period. Net loss from continuing operations was $4.6 million or $0.07 per share, compared with $5.1 million or $0.08 per share in the prior year period. In terms of category results, in our 1-800-FLOWERS.COM Consumer Floral business, during the first quarter, revenues in this category increased 3.8% to $72.8 million compared with $70.1 million in the prior year period. Gross margin for the quarter increased 80 basis points to 38.9% compared with 38.1% in the prior year period. In category contribution margin increased 15%, or approximately $900,000 to $6.9 million compared with $6 million in the prior year period. This reflected a combination of revenue growth, the strong gross margin increase and 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 6.8% to $19.8 million compared with $18.5 million in the prior year period. Gross margin increased 350 basis points to 49.6% compared with 46.1% in the prior year period, a strong increase, primarily reflecting enhanced monetization of increased order volumes, as well as increased utilization by florists of our digital and print directories. For the quarter, category contribution margin increased 26.1% to $5.8 million compared with $4.6 million in the prior year period. In our Gourmet Food and Gift Basket segment, revenues were essentially unchanged at $28.4 million compared with $28.6 million in the prior year period. This reflects increased revenues on our Cheryl and Popcorn Factory brands, offset by a shift of wholesale order shipments in our Gift Baskets and Fannie May businesses from the first quarter last year to early in our second quarter this year. As Jim noted, we expect an increase in total wholesale Gift Basket orders for both the current fiscal second quarter and the full year, as order volumes in this business have increased this year, from both existing and new customer accounts. Gross margin for the fiscal 2013 first quarter was up slightly to 39.4%, compared with 39.2% in the prior year period. And category contribution margin was a loss of $2.5 million, compared with a loss of $1.9 million, reflecting the timing -- the shift in timing of wholesale order shipments, which moved into the second fiscal quarter this year. In terms of corporate expense, as I stated earlier, our category contribution margin results, excluding 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 first quarter, corporate expense from continuing operations, including stock-based compensation, was $12.2 million compared with $11.5 million in the prior year period. Turning to our balance sheet. At the end of the first quarter, our cash and investment position was approximately $5.8 million. Our borrowings under our credit facility were approximately $25 million in term loan debt and $37 million outstanding under our revolving credit line. The borrowings under the revolving credit line reflect the seasonality of our business, specifically the increased investments and inventory for the upcoming holiday period. Inventory from continuing operations was approximately $85.2 million, was slightly above our expectations, due to the aforementioned shift in timing of some wholesale order shipments into the second quarter, and reflects our usual seasonal build-up for the yearend holiday period. We anticipate that we will finish the current fiscal second quarter with significantly reduced inventories, 0 borrowings under our revolving credit line and a strong cash position. Regarding guidance, we are reiterating our top and bottom line guidance for fiscal 2013, which calls for an anticipated revenue growth across all 3 of our business segments, with consolidated revenue growth for the year expected to be in the mid-single-digit range. Also, based on the expectation of continued improvements in gross profit margin and operating leverage, we anticipate achieving double-digit year-over-year increases in EBITDA and EPS. I will now turn the call over to our President, Chris McCann.

Thanks, Bill. The positive trends that we've seen in our business for the past 2 years reflect the combination of the successes of our initiatives to enhance our marketing and merchandising programs across all of our brands, and the benefits we are seeing from our focus on investing and innovating for the future, particularly in the areas of social and mobile. On the social front, we were very pleased to be mentioned as a launch partner in Facebook's recent announcement regarding its gifts platform. We've made our integration in the program, illustrates the strength of the 1-800-FLOWERS brand and our family of great gourmet gift brands, as well as our relevance to Facebook users as the leading gift destination. While this is an early-stated developing program, we are excited about the long-term potential to build brand awareness and deepen our relationships with Facebook users and their many millions of friends. On the mobile front, we continue to build on the leadership position of 1-800-FLOWERS.COM brand, as a mobile commerce, adding new functionality and features, designed to enhance our customer's experience as mobile traffic continues to grow significantly. We're using our learnings in this area to expand our mobile footprint across our enterprise, rolling out enhanced mobile sites for our Gourmet Food and Gift Basket brands over the next several quarters. Also, in terms of enhancing our customer's experience, we are working with a number of payment system providers to provide our customers with the lowest friction checkout experience, as illustrated by the recent announcement of our integration of V.me by Visa. As always, we remain focused on investing and innovating for the future, particularly in the new technologies in relative communication that can enhance engagement and enable us to deepen our relationship with our customers. Now I'll turn the call back to Jim for the wrap-up.

As you can see from our solid first quarter results, the positive trends that we have experienced for 2 years are continuing. And as a result, we are on track to deliver our guidance for fiscal 2013. To wrap up, we are pleased with our first quarter results and the positive trends we are seeing in all of our businesses. While we are marked by the improvements we have seen reported lately in the Consumer Confidence Index, we remained cognizant of the challenges in the current economic environment, not to mention the distraction of the upcoming presidential election. And as such, we will continue to focus on managing those aspects of our business that we can control, like our operating costs, our relationship with our customers and our financial flexibility while we continue to invest in the future, our development programs with truly original gift products, our new fruit bouquets and Fannie May Berries initiatives, our leverage in social and mobile, our BloomNet initiatives to expand the product and services we provide to help our florists grow, and our growing local retail presence through Fannie May and 1-800-FLOWERS franchising programs. We believe these and our other efforts, will enable us to create additional leverage within our business and provide long-term top and bottom line growth opportunities. Now that concludes our formal remarks, and I'll ask Jamie if she'd -- our moderator to give us the instructions for the Q&A.

[Operator Instructions] Our first question comes from Jeff Stein from Northcoast Research.

A couple of questions, first for Bill and then I have a question for Jim. With regard to the profit and log statement, Bill, I was wondering if you could go through 3 line items specifically, and maybe talk us through why we saw growth in technology and development expenditures, also G&A and conversely, why depreciation, amortization dropped year-over-year? And as we look ahead, are these trends in each of these 3 line items most likely going to be sustainable over the balance of the year?

Jeff, first with technology and development, and I think we have an overall kind of technology and development spend that's up slightly year-over-year in our plan. What happened in Q1, sometimes part of our technology and development is working on capitalized projects. That was less this quarter but will pick up as projects pick up, so there will be a shift from what's one into the operating expenses. So actually, what gets capitalized is part of our fixed assets or PP&E additions on that. So that will even out. That was high in Q1, it will not be year-over-year nearly as high in Q2, 3 -- Q2, 3 and 4. But with regard to G&A, again, we have certain increases in G&A and other expenses to support the growth of the overall business but we will be demonstrating operating leverage throughout the year, with regard to the operating leverage that we have. And depreciation and amortization really is a result of the last couple of years where we've seen a reduction in our overall CapEx, we brought it down to that $17 million, $18 million range from over $20 million in years past. So we've seen a reduction, a slow reduction in depreciation and amortization.

Got it. Got it. And when you were discussing segment results, Bill, and you were talking about the Gourmet Food and Gift category, you did call out the fact that Cheryl and Popcorn Factory saw revenue growth year-over-year. You did not mention Fannie May. And I'm wondering is that because you have seen a shift in revenues from a company-owned to franchise locations? Or were there other factors involved that caused Fannie May revenues not to be up?

Well, Jeff, that is -- that does impact this quarter because we didn't sell that -- 1-800-Flowers.com Inc., we did that deal with Bridgeman Givens to sell off 17 Fannie May stores in November of last year. So for the first 5 months of this year, we do have that negative comp because we don't have those stores this year. But the big reason of what I'm mentioning is and why GFGB was flat overall, was really we referenced the shifts in the wholesale orders. We had very strong Q1 in GFGB growth a year ago because a certain of those wholesale orders were actually were shipped in the month of September, with the latter part of the month in September, and those shifted to early October of this year, and actually have already been shipped out. So that's just shifting from Q1 to Q2.

So that was -- so the wholesale reference was in relation to Fannie May and not to the Gift Basket business?

It was both.

It was both.

Both? Got it. Got it. Okay, and Jim, just a question for you. I mean, relative to where you finished the fiscal year back in June or so, are you more or less optimistic about the outlook for holiday today than you were, let's say, 3 months ago?

Well, I'd have to come down on the side of more, Jeff, a bit more optimistic, because a bunch of things have happened in this first quarter in terms of our operating leverage, seeing our plans start to take effect for the quarter. From a macro point of view, nothing horrible has happened. The elections will soon be -- will be behind us, so those distractions will be gone. And we've tracked the consumer confidence and that's when you'll see a slight improvement to that, month-over-month, each in the last several months. So I think as you read good news about the U.K. coming out of recession, there's more little good news [indiscernible] than there are bad, and the bad macro things don't seem to have affected us that much. But then, when I turn internally, I look at the initiatives. I look at our franchising initiatives and how they're deliberate and sure to add to our future growth, and the leverage we have in our brands there with the 1-800-FLOWERS franchisees and now the Fannie May franchisees, and they're doing very, very well. We had a very successful franchise conference convention last month, which was just a love-fest, in terms of our franchisees from all accounts being really upbeat about how strong their businesses are locally, about how the programs we've introduced are really benefiting their business, how connected they feel to the brand, and how the stores that have converted and put the 1-800-FLOWERS brand on their store, with the new and improved deco package and a new merchandising plan, they're seeing a very robust and significant local store, cash and characters [ph] in this local market business, improving very dramatically, anywhere from 10% to 40% reports from all of the franchisees that have converted in that program. We knew that their business would be up, we had no idea that it would be so impactful on their local businesses as well. The standing joke among us at the convention was, "Geez, maybe get national brands do matter." And then, when you look at the wholesale basket business, Jeff, we struggled with that business for 3 years, and now, we had the first year turnaround, with both top and bottom line improvements there. So that's been an anchor on us that has now been cut and we're on our way to growth across the GFGB brands. And then the launch of fruitbouquets.com, which is I think is going to be a big contributor in the years ahead. The customers love the product, as we get our market up and certify, and train. Without any marketing behind this, our franchisees are reporting really robust interest on the customers' part, sales, and delight with the product. So I think that's going to become a very important part of our product mix, going forward. And the last I want to mention is what Chris talked about in terms of the launch of the Fannie May Berries project. It's a cross-platform initiative that we just introduced and we think helps to deepen the Fannie May brand. It helps to give some hint of what that terrific brand can become, even broader, bigger and more national in the months and years ahead. So when you take a look at the exterior things and the internal initiatives that we've launched, the cost controls that we've been able to demonstrate, I would say with another quarter under our belts, we feel more confident, more optimistic.

And Jim, your multi-brand technology platform evolution, can you kind of tell us where you are with that? And is that potentially a needle mover this holiday season? Or is that still more of a longer-term initiative?

I'll pass that question to Chris, he worked for this day-to-day job [indiscernible]...

So Jeff, I think we continue to be very pleased with our progress there. And most importantly, as we look at our customer-facing businesses, with this initiative, our customers are really turning to us and seeing us as a gift destination. So it's a long-term play. I wouldn't say it's a needle-moving game changer in any short-term perspective, but it is on a long-term perspective.

I think the Fannie May initiative, Chris, is -- the Fannie May Berries program, is a good indicator on how that might work, going forward.

Yes, I think it's a great indicator, right, because all brands will be supporting it. Plus, just as we introduced it, we changed with the Fannie May tab on our gift destination site to be Fannie May Berries, just to highlight that product launch. Our launch of our cookie bouquets line is really resonating well with our customers. Fruit bouquets, as Jim mentioned already, is really putting a good spotlight on our customer-facing business. In addition to the great merchandising of truly original products that we continue to launch within brands, within the flowers brand, the a-DOG-able line, Happy Hour Collection, our personalization efforts with Vase Expressions, just launching a multi -- a Major League Baseball licensing program this week. You're on that. I may have crossed these. This week also, a kind of a relaunch our platinum collection on the 1-800-FLOWERS brand. So as you go through the site and you look at all the great gift opportunities for all of your gifting occasions, I think it really positions us well on a long-term basis to be the gifting destination for our customers.

The next question comes from Christopher Ferris from Noble Capital.

First question. Average order value increased only 1% in the quarter, and I believe this is the one of the smallest increases in a while. Could you talk about some of the factors there and how you expect that to trend in Q2 and the rest of the year?

Well, I'll take that, Chris. Yes, I think, first of all, again, it's a slower quarter, it's no real interesting [ph] quarter, so I think that will drive to be relatively flat during the quarter. And I think overall, it's just a reflection of our merchandising programs, right? So what we've seen is that we do always offer good, better, best strategy. And in the everyday occasions, a lot of times we're looking to sell lower-priced items on the everyday occasion to increase our frequency. So that's been successful with our customers. But then when you really hit the core occasions, that's when you see us focus on our better-and-best and our wow-product offerings that has historically moved the needle and I think will continue to do so on AOV as we go forward.

Yes, I think it's important to note the improvement in transactions that we had during the quarter. We've been -- over the last 2 years, as we've been moving the revenues up, a lot of it has been driven by the AOV and not by the transaction counts and showing that a 2.5% to 3% improvement in transaction counts, I think, is an important metric.

And how do you look for that to trend over the next quarter or so?

I don't think we are projecting any great growth in the average ticket value -- the average order value here, Christopher.

I think we're seeing -- continuing to see positive trends in the transactions in our customer accounts and we believe that with our merchandising efforts, we should see that continue.

Which is why we state in our guidance that we believe we are at mid single-digit growth for the year.

Don't say, restated, reaffirm. It has also a difference in meaning as reaffirm.

And another question, just on the numbers, looking [ph] consumer forward growth of 4% in the quarter, your seventh straight quarter of growth. How do you compare that with the number you had in Q4 where you had a number of special impacts there, the Easter holiday shifts, the -- 1 less week. This quarter you had a really tough comp, with a 12% comp, but taking that all into account, do you think revenue accelerated this quarter on a normalized basis? Or was it comparable? Or I'm just trying to get a sense of how the floral business is trending. I realize it's a small quarter for you, but still.

I think -- this is Jim. Chris, I think what you can discern from what we've said is that we feel like we're on track to deliver the year as we expected. The year-over-year comparison is getting a little tough. We really look at our business as 2 halves and the reason for that is because of the wholesale businesses and our Chocolate on Gift Basket businesses, that's what's going to impact that ship [ph] date. Is it last week of the quarter? Is it the first week of next quarter? So when you combine those -- when you look at the 2 quarters combined, the first and second fiscal quarters, you get a better picture. Just like, as you mentioned, in the third and fourth fiscal quarters, Easter is a big variable, depending on where it's placed at the end of third quarter, beginning of the fourth quarter, how deep into the quarter it goes, it has an impact on revenue shifts, particularly in our floral and -- in our consumer brands, in our floral and in our food brands, depending on its placement. So we look at the business in 2 halves. And as we do, as we stated earlier, we're confident that we're on track, we see the -- our indices [ph] in terms of growth in the floral and the all of our consumer-facing businesses getting better.

One final question, if I may. Can you drill down a little bit on Facebook Gifts and how you're participating? And then I'm sure there's some sort of revenue-sharing component. Can you talk about how this might affect margins?

So I think it was any new initiative, Facebook Gifts are so again, as I mentioned, very early stages, but we're happy with this based on our past experience with them, they turn to us to be a launch partner with them. So when the experimentation and learning phase. Out of that will come the appropriate revenue share. But as with any marketing program, any channel and this is somewhat of a new channel, there's a marketing expense. The fact that the marketing expense is, in this channel, is on a performance basis, is very attractive to us and I don't think it will have any significant impact on margin.

The next question comes from Danielle McCoy with Brean Capital.

As far as market share, do you guys feel like you're taking market share in the floral segment? And if so, is there any way to quantify it and what items are driving it?

Well, clearly, what you see, Danielle, is that in all of our consumer-facing businesses, because it's difficult to separate them out because the products are sold back and forth on all the websites, we're seeing very solid growth improvements now for a -- most coming up in a few years. We think that trend continues. Whether the category is growing, it's very difficult in our categories to find good macro inputs. But it would seem to me that there's not been a lot of growth in the floral category. We are growing both in the consumer-facing side and on the BloomNet side. So if that -- if those indications tell you, we're gaining market share, then we are. And it seems -- that would seem to be the case. And when do think of ways where we're improving our margins over time, gross margins, our bottom line margins, outstripping our growth on the top line, so we're doing it with good products, good merchandising efforts, controlled marketing efforts, and I suspect that as we continue to grow competitively, we have different motivations, we'll become more promotional. But then, again, that always happens.

All right. Great. And then, I guess, acquisitions, are you guys actively looking? If so, what type of companies, brands?

Well, I'll give you a list of the companies we're about to buy. I think we're in an awfully good spot, Danielle, that is we've come through a difficult period. At the same time, with the fiscal periods, we've improved all our operating metrics. We've paid down over $100 million in debt. We have a pristine balance sheet now, with essentially no debt, a good cash position, good assets to capital, and frankly, improving assets to capital. So I think we're in a good place there. So then a challenge comes up, how can we best create value for our shareholders? And the best way to do that, plain and simply, is to grow. And we're going to grow organically. From time to time, you've seen us do some select bolt-on kinds of acquisitions, very small risk-light. And frankly, you've also seen us do some pruning. In the last couple of years, we've sold off our [indiscernible] division, we sold off our lawn services division, we sold those off because they had different performance characteristics than the rest of our business. So I think we have optionality in front of us in terms of using that financial flexibility for acquisitions that will help us grow. You see us using our capital to accelerate our organic growth rate and launch some really exciting initiatives like cookie bouquets that Chris mentioned, our Fannie May Berries line, our fruitbouquets.com line, our franchising efforts, and we've sold off some retail stores, [indiscernible] terrific performance as part of our franchising efforts to stimulate the pipeline of good partnership that will help us grow those businesses. So we're happy with the flexibility we have, we're likely to be interested in growing our business, both organically and through business development efforts, and M&A kinds of efforts. But we'll, as you've seen in the past, be very judicious about how we use that great financial position we're in to leverage us to achieve growth, both organically and through acquisitions.

The next question comes from David Kanen from Williams Financial.

First question is on BloomNet. There was, I guess, about a 350 basis-point increase in gross margin. Is that trend sustainable for the balance of the year? Do you think we could potentially go north of 50%? Or I should model out a similar balance for the year? And then also comment on total gross margin dollars year-over-year. What your expectation is for that segment.

David, BloomNet is an area that -- we have the 2 pieces of our business, we have the consumer-facing brand, we have BloomNet, which is focused on our retail floral members and that business is continuing to do well. It's a tough environment, but we continue to grow. We continue to deepen our relationships with our florists and we continue to see enhanced bottom line results as part of that. I think the overall picture for BloomNet is quite bright. We're very excited about it, it's a business now that we continue to find new opportunities. And the good news is the opportunities we find involves benefit on member florists, in terms of the products and services that help them in their local businesses, to grow their profitability, to grow their top line, which many of them have not seen in some time. And in particular, our franchisees, which are part of our BloomNet network are seeing very robust growth. And that's just exciting and turns all on. In terms of the specific question you had about margin, I'd asked Bill to touch on that then, and -- but we're very pleased with that 350 basis-point improvement this quarter. Bill, about the sustainability?

I think a couple of points to your question. One, gross margin overall is an area we're particularly proud of. We saw 140 basis-point improvement overall in margins this quarter. As a trend line, that really started 2 quarters ago, back in Q3. We had 100 basis-point improvement in Q3 and a 100 basis-point improvement in Q4. And we grew margins across all 3 of our business segments. So we think margin is very strong of course, of what's the enterprise. BloomNet is the wow-number with the plus-350. I think we've given guidance in the past that BloomNet will be between 45% and 50% margins. It could shift quarter-to-quarter, depending upon the mix of products. This quarter, we had some growth in some high-margin areas, both on digital and on paper directories and some web marketing services, monetizing orders that we have. So the 350 basis points are going to be a hard one to maintain, but we're comfortable it can continue to drive BloomNet's margins north on a year-over-year basis. The other segment that grew very nicely was Consumer Floral. It's another wow-number, 80 basis points on a much larger base of revenues. We saw increased margins across both our [indiscernible] and our express products, so we're very proud of overall margins.

Okay, and the question about the Facebook with the unveiling of their gift-giving feature, is that fully deployed for Facebook? And have you seen any kind of uptick? Or can you give me some sense of the results that you're seeing, if there's an acceleration or it's pretty much the same?

We're very proud of the relationship we have with the different social entities in the marketplace. We think it's -- what we are is a e-commerce company that has a multi-channel approach to a market, the bottom of that pyramid, the foundation of that pyramid is our retail channel and that we choose to do through a franchising model. But, increasingly, we try to improve this e-commerce capability that we have, [indiscernible] floral and gift business to a social commerce company. And Chris and his team, particularly, have stayed close to the evolution of the different social aspects of the business, as we have a terrific respect and relationship with Facebook, in particular, and we're doing some exciting things with them and the learning is a very steep curve for us because it's a whole new world for us all. And Tim and his team have stayed very close to that, and will. As far as David's specific question about what percentage of rollout, obviously, we're not going to give numbers on the performance, but what color could you give David on that?

Yes, so I think it's still very early in the experimental stage as us, other retailers and Facebook, work to figure out what's the best record, what is the getting the best response from their users? When it's positioned, what they all think of the wording, et cetera. So the results are good so far. It's not rolled out, it is available to a small percentage of their user base. They don't tell us what percentage it's rolled out to now, other that it's still in the experimental stage. And they'll ramp it up as you've seen Facebook do with all of their product introductions. They started out small, and they just ramped it up with learnings.

Okay, and then along that in that same vein, the Visa e-wallet deal, is that meaningful? Or is that just sort of a small start-up, if you will?

We certainly hope it will be meaningful, right? It's still in the introduction stages. In the end, it's just again, consistent with our focus on how do we make it easy for consumers to transact with us. And the way if we can make it take away the steps in the checkout process, that certainly is good on desktop, and it should be meaningful in the mobile commerce sector.

I think, David, you see so many new things going on in the whole payment space. Clearly, it behooves us to stay on top of them and to make the decisions, to which ones we put energy behind, which ones we put partnership behind and our marketing efforts. The good news is a lot other people who do payment, will approach us because we have a reputation for being interested in pioneering, interested in experimentation, good partners to work with, and of course, we have this terrific platform with 30-plus million customers to help them test into their new rollouts. So I think the partnership with Visa, is one that Chris just mentioned we're proud of, but it's in its very early stages. But we heard of probably a half a dozen other different payment discussions and experiments in the queue.

Okay, and if we you answer this one as well. Can you give me a sense, exiting this year, the increase in fruit bouquet-enabled shops versus a year ago. And then what should we expect for this current year?

Well, we just -- in terms of calendar years, we just began the program at the beginning of this calendar year. So it's a slow rollout, it takes a while for the people to get physically enabled to be in a product and then trained, which is the easiest part for us, frankly, because we have 3 training centers around the country now where we're training our franchisees in this product. The -- those that we rolled out to have had 100% delight in terms of the impact it’s had on their business and the impact -- the feedback from the customers about the product line. But I think you could expect that it will take 2 to 3 years to have full coverage of the country. And as we get further into this fiscal year, and certainly the beginning of next fiscal year, we can start to -- you can start to expect that we'd start to be able to put marketing campaigns behind it. Right now, it's just organic. If we have it available in a zip code that a customer is interested in sending a gift, we'll offer the product up to them and that's the extent of our marketing efforts to date, while some of our franchisees, who've introduced the program, do some local marketing around it and that's having very, very strong results.

Excellent. And then, Bill, in regards to the wholesale gift basket business, you said that you were going to see year-over-year increases. Is it consistent with the guidance you gave for the year? Or will it be more like low double-digit growth year-over-year?

It's consistent with the guidance, we don't want to change the guidance that we gave for the year as we gave guidance back in August, we had a good sense of that point in time what the impact would be for the full year. The one change is that we were expecting some of those sales to happen in the end -- at the end of the first quarter and those shifted into the second quarter.

But overall guidance remains the same. That business really only happens once a year, the wholesale gift basket business, it really is only a fourth quarter sales business, and the revenues, as you can see, crosses that first and second fiscal quarters end.

Okay, so will it be a double-digit increase year-over-year for the entire year?

For just the basket business, Bill (sic) [David] ?

Yes, just the wholesale basket business.

Yes, we haven't given specific guidance on what the increase would be. They said we would basically reverse the trend over since 2009, we've had this kind of a headwind, and that has turned around, and we all saw growth this year in that category.

Okay, I know this quarter you've kept coming into your strong selling seasons, so you have a lot more inventory, but for the year, for most of the year, you'll be probably in a net cash position. Would you say you're more inclined or will be skewed towards buying back stock for capital allocation or acquisitions?

I think -- this is Jim, David. I think it's a difficult -- either/or kind of question. I think what you're going to expect from us is that we think a great value right now is our stock. So that you'll see us as soon as the window opens. We have the opportunity to be back in the marketplace to buy our stock. We said a quarter ago, we would be. And I'll affirm to you today that we will be. So we'd like to do that. We have plenty of opportunity to do both, and that would be our intention if we find the right opportunities in the development space. Without them, you have our forecast to grow with no M&A activity. And you have our forecast for our stock buyback program as we stated in the last quarterly call. But we have plenty of opportunity to accelerate our buyback program, and to accelerate our development efforts, we can do both at the same time.

[Operator Instructions] The next question comes from Jamie Echo [ph] from MOA Partners [ph].

[Audio Gap] and I'm wondering how many shares are repurchased in the quarter and at what average price?

During the first quarter, if that's what you're referring to, your question got off, but in the first quarter, I think still, several hundred thousand. We had a very short window because our earnings were released at the end of August and our blackout period starts in the middle of September, so it's only about a 2, 2.5 week period in the first quarter where we are able to be the marketplace. So there are several hundred thousand shares. And they were bought at the prevailing market rates at the time in [indiscernible]

So this is the toughest period for us to be active in this stock buyback program. Obviously, we think we have a longer window now, and also addressing with appropriate counsel, different ways that we can mitigate the -- our inability to be in the marketplace during blackout periods. They're very long, and so we have a number options that we're considering we'll talk to you about during the weeks and quarter ahead.

At this time, I am showing no further questions. And we'd now like to turn the call back over to Jim McCann.

Well, thank you for your time and attention today. We are very happy with the first quarter. The big quarter is in front of us now, this holiday quarter. We remain confident about our ability to delivery great smiles for our customers. And I'd like to remind you and encourage you to visit us online or in your smartphone or tablet or in one of our stores, to see the great gift ideas we have for our Halloween Headquarters, as well as our expanded offering of truly original gifts for this yearend holiday period. Thanks for your time today. We look forward to chatting with you.

Ladies and gentlemen, that does conclude the conference for today. Again, thank you for your participation. You may all disconnect. Have a great day.