Good day, everyone, and welcome to the 1-800-Flowers.com Inc.'s Fiscal 2013 Second Quarter Results Conference Call. This call is being recorded. At this time, for opening remarks and introductions, I'd like to turn the call over to the company's Vice President of Investor Relations, Joseph Pititto. Mr. Pititto, please begin. Joseph D. Pititto: Thank you, Janette. Good morning, and thank you all for joining us today to discuss 1-800-FLOWERS.com's financial results for our fiscal 2013 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 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 the generally accepted accounting principles. A reconciliation 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 earlier this morning. The company expressly disclaims any intent or obligation to update any of the forward-looking statements made in today's call, any recordings of today's call, the press release issued earlier today or any of its SEC filings, except as may be otherwise stated by the company. I will now turn the call over to Jim McCann. James F. McCann: Good morning. Our fiscal second quarter results reflected a continuation of the positive trends that we have seen in our business for 2 years now. During the period, we grew revenues 5.5% to $253 million, despite a combination of significant headwinds, including the impact of superstorm Sandy on deliveries, and custom demand and the effects of overall weakening consumer confidence, particularly in December, stemming from the worries coming out of Washington over the impending fiscal cliff. Despite these issues, we achieved growth in all 3 of our business segments, led by our Gourmet Food and Gift Baskets business, which grew 8.9% to nearly $143 million. Growth in this area was driven by a solid rebound in our wholesale Gift Basket business, something we had told you we expected to see in our last call back in October. Importantly, the sales improvement in this area came from both an increase in orders from existing mass-market customers and from several new customers. Equally important, sell-through on these products was strong, which bodes well for our efforts to expand sales for next year's holiday season. Revenues in our Gourmet Food and Gift Baskets business also benefited from strong e-commerce growth in Cheryl's, Fannie May and the Popcorn Factory brands, illustrating our focus on leveraging our e-commerce platforms and online marketing expertise to build national awareness of these iconic food gift brands. Somewhat offsetting this strong e-commerce performance for the quarter were lower results in our Fannie May retail and wholesale channels, which Bill will elaborate on in a few minutes. In floral, our 1-800-FLOWERS.com and BloomNet Wire Service businesses achieved enhanced bottom line contributions on modest revenue growth of 1% and 2.5%, respectively. Revenue in these businesses, particularly in our core 1-800-FLOWERS.com brand, were most impacted by superstorm Sandy, which affected customer demand and gift deliveries, as well as wholesale product orders from florists throughout the northeast, where we have a concentration of business. Despite these issues, we were able to increase gross profit margin percentage and reduce operating expenses as a percent of sales in both business segments, reflecting our continued focus on enhancing the efficiency of our marketing programs, even during a very promotional holiday season, while leveraging our operating platform to reduce costs. As a result of these factors, we grew our EBITDA, EPS and free cash flow for the quarter compared with the same period last year. In addition, we also continued to strengthen our balance sheet, finishing the quarter with $27 million in cash after spending more than $5 million buying back our stock during the start -- since the start of the fiscal year and less than $22 million in debt. As a result, we have a net cash positive position, which we expect to build on during the second half of this fiscal '13. As we've stated in this morning's press release, we view our stock purchase program as one component of our strategy for cash usage, and we expect to continue to be in the market buying back shares during the second half of the fiscal year. We believe the strength of our balance sheet and the increasing cash flow we are generating provide us with significant flexibility to grow our business and build value for our shareholders. I'll now turn the call over to Bill for a review of the financial and operating metrics for the quarter. William E. Shea: Thank you, Jim. While we were pleased with our results for the fiscal second quarter, we believe growth could have been even stronger, both top and bottom line, were it not for the headwinds that Jim mentioned earlier, as well as the impact of some operational issues we experienced in our Fannie May business, which I will discuss in a moment. Overall, the quarter was characterized by uneven revenue growth. Sales, which were up a strong 11% in October, were flat in the month of November, coinciding with the impact of superstorm Sandy, and then picked up -- picked back up again in December to 5.5% for the month. We believe the uptick we saw in December is more reflective of a positive trend in revenue growth than we've been seeing for some time now and something that we can build on going forward. Regarding specific financial results and key metrics of continuing operations for the second quarter, total net revenues from continuing operations increased 5.5% to $253 million, compared with $239.8 million in the prior year period. During the quarter, our e-commerce orders increased 6.4% to $3,009,000, compared with $2,829,000 in the year-ago period. Average order size during the quarter was down slightly to $57.37, compared with $58.36 in the prior year period. This primarily reflected the success of our Cheryl's brand's inexpensive cookie card greeting, which is proving to be a very effective customer-acquisition tool for the brand. AOVs were actually up in most of our other Gourmet Food and Gift Basket brands, as well as our 1-800-FLOWERS.COM business. During the quarter, we added 642,000 new customers. This was achieved while concurrently stimulating repeat orders from existing customers, who represented 61% of total revenues, unchanged from the prior year period. Gross margin for the quarter was 41.3%, down 50 basis points compared with the 41.8% in the prior period. This primarily reflected cost mix associated with the strong sales growth in lower margin wholesale gift baskets, somewhat offset by strong gross profit margins in our BloomNet Wire Service business. Operating expenses as a percent of total revenues improved 60 basis points to 31% compared with 31.6% 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. As a result of these factors, EBITDA, excluding stock-based compensation and the $3.8 million gain on the sale of 17 Fannie May stores in the prior year period, increased 3.6% to $31.8 million compared with $30.7 million in the prior year period. Net income and EPS from continuing operations increased 12% and 9%, respectively, to $16 million and $0.24 per diluted share compared with adjusted net income of $14.3 million or $0.22 per diluted share in the prior year period. In terms of category results. In our 1-800-FLOWERS.COM consumer floral business, during the second quarter, revenues in this category increased 1% to $91.8 million compared with $91 million in the prior year period. In this business, we saw the biggest impact of superstorm Sandy, which affected floral gift deliveries as well as customer ordering capabilities throughout the Northeast, with the 1-800-FLOWERS.COM brand as a significant concentration of business. Gross margin for the fiscal second quarter increased 20 basis points to 39.2% compared with 39% in last year's second quarter. And category contribution margin increased 3% to $10.3 million compared with $10 million in the prior year period. In BloomNet, revenues increased 2.5% to $18.7 million compared with $18.3 million in the prior year period, also reflecting the impact of superstorm Sandy on wholesale product orders for flowers whose retail locations were either closed or suffered damaged from the storm. Gross margin for the quarter increased 310 basis points to 52.3% compared with 49.2% in the prior year period, primarily reflecting product and service mix, including strong growth in such high margin offerings as our directory and new web marketing services for flowers. Category contribution margin increased 19.2% to $6 million compared with $5.1 million in the prior year period. Looking at revenue growth, there's strong gross margin and continued focus on managing operating expenses. Now the Gourmet Food and Gift Basket segment. Revenues increased 8.9% to $142.7 million compared with $131 million in the prior year period. This was driven primarily by a rebound in our wholesale gift basket business after several years of decline in this area. As Jim mentioned in his earlier remarks, we had discussed our expectations for improvement in wholesale baskets in previous conference calls. This was based on an increase in orders we had received from our existing big-box customers, as well as several new customers that we opened -- the whole new customer accounts that we opened over the past year. Sell-throughs are strong throughout the holiday season, providing good momentum as we commenced the key selling period for next year's holiday season. In addition to the improvement in the wholesale baskets, e-commerce revenues also showed strong growth during the quarter, particularly in our Cheryl's, Fannie May and Popcorn Factory brands, each of which saw double-digit increases online. The strong e-commerce growth, however, was somewhat offset by lower sales in our Fannie May retail stores and wholesale channels, booking lower customer foot traffic during the quarter. Gross margin was 41% compared with 42.4%, down 140 basis points, reflecting primarily product mix related to the increase in the wholesale gift baskets, as well as some operational issues associated with the relocation of a warehouse and distribution facility prior to the holiday season, which led to higher-than-expected labor costs. Subsequent to the holiday, we have implemented initiatives to reengineer the facility and expect significant improvement in operating efficiency going forward. Category contribution margin increased 1.9% to $26.9 million compared with $26.4 million in the prior year period. This reflects the solid revenue growth during the quarter, somewhat offset by the aforementioned lower gross margin and higher operating gross associated with operational issues. In terms of corporate expenses. For the fiscal second quarter, corporate expenses from continuing operations, including stock-based compensation, was $12.7 million compared with $11.9 million in the prior year period. Now turning to our balance sheet. At the end of the second quarter, our cash and investment position was $27 million. This reflects the free cash flow we generated during the period, offset by the more than $5 million we spent buying back our stock since the beginning of the fiscal year, as well as paid down the debt. Borrowings under our credit facility were $21.8 million, and we had 0 outstanding under our revolving credit line. As a result, we finished the quarter net cash positive, and we anticipate generating additional cash and building on this position during the second half of fiscal '13. Inventory of $58.4 million was in line with the management's expectations and below the corresponding prior year period levels, this despite our 5.5% revenue growth for the quarter. Providing guidance. Based on the continued positive trends we are seeing in our business, we are reiterating our top and bottom line guidance for fiscal 2013. We expect to achieve revenue growth in all 3 of our business segments, with consolidated revenue growth for the full year in the mid-single digit range. In terms of bottom line results, we expect to grow our EBITDA and EPS at double-digit rates while generating free cash flow in excess of $20 million. As we enter the second half of our fiscal year, it is important to note the seasonality of our business. Our fiscal third and fourth quarters are more floral in nature due to the Valentine, Easter and Mother's Day holidays, as well as the other spring gifting occasions. As a result, the year-over-year growth in revenues, gross margins and contribution margin that we expect to achieve during the second half will be driven primarily by our core 1-800-FLOWERS.COM consumer floral and BloomNet Wire Service businesses. In addition, we expect the majority of this to occur during our current fiscal third quarter, reflecting the shift of these holidays to late March this year, within our third quarter, versus last year, when Easter fell in April, during our fiscal fourth quarter. I'll now turn the call over to our President, Chris McCann. Christopher G. McCann: Thanks, Bill. The fiscal second quarter marked our eighth consecutive quarter of top and bottom line growth driven by the positive trends we have seen in all 3 of our business segments. We were particularly pleased by the strong e-commerce revenue growth that we saw in our Gourmet Food and Gift Basket businesses during the period, the largest and most important of the year. The increases that we saw in traffic and conversion for our Cheryl's, the Popcorn Factory and Fannie May brands illustrate the early success we're having with our new e-commerce platform and our multi-brand strategy. This is enabling us to introduce the millions of customers who come to the 1-800-FLOWERS.COM site each year to our Gourmet Food gift offerings and, over time, increase national awareness of these iconic brands. In this area, we've also continued to expand our offerings. Last year, we added prime steaks and other super-premium meats to our stockyards.com brand, and we made it even better this past holiday season by providing the unique ability to pair steaks with the perfect wine selection, then ship them together with a complete gourmet gift. Early in the second quarter, we also added to our fresh fruit gift offering through the introduction of Fannie May Berries. This new line of fresh, giant strawberries stands out from the competition by being dipped in real chocolate and even features some of Fannie May's iconic flavor profiles, such as Pixies, Trinidads and Mint Meltaway strawberries. We'll be giving Fannie May Strawberries increased exposure for the upcoming Valentine holiday by featuring them on the 1-800-Flowers.com site and in our special Valentine gift centers across all of our brands' websites. As Bill mentioned earlier, the second half of our fiscal year is predominantly floral, and it kicks off this quarter with the important Valentine holiday, during which we plan to build on the success we have had over the past 2 years in terms of deepening our relationships with our customers. We do this through our enhanced merchandising programs focusing on truly original products and our marketing messaging that emphasizes the better, best and WOW offerings, which continue to resonate with our customers. In addition, we continue to expand our use of social channels to deliver our message and, most importantly, to engage directly with our customers. As an example, we are once again asking our customers to share their WOW Moments of the Day and to vote on the best WOW Moments posted on our Facebook page. On the mobile front, we continue to distance ourselves from the competition in this fast-growing channel, which we view as the key element driving our evolution from e-commerce to social commerce. In this area, we are leveraging the experience and learnings that we have gleaned from our award-winning 1-800-Flowers.com mobile site by rolling out mobile commerce sites for our Gourmet Food and Gift Basket brands this quarter. Looking ahead to the second half of our fiscal year, I believe we are well positioned to build on the positive trends we've been seeing in our business and deliver on our goals of top and bottom line growth across the enterprise. I'll now turn the call back to Jim. James F. McCann: Thanks, Chris. We are pleased with our results for the first half of the fiscal year, particularly in light of the various headwinds we've discussed. Most important, we're excited about the multiple opportunities we see to grow our business by deepening our relationships with our customers through our growing suite of products and services designed to help them deliver smiles. That's the business we're in, helping them connect and express themselves for all their celebratory occasions. The positive trends that we are seeing -- that we've seen now for the last 2 years attest to the fact that our customers are responding to our focus on our ever-expanding offering of truly original products with a broadening range of price points that make it easy to celebrate and connect for any occasion, big or small. Our multiple-channel go-to-market strategy with an emphasis on e-commerce that is fast becoming social commerce, while also including retail and wholesale, were appropriate. Our effective use of social and mobile channels to energize directly -- to engage directly with them, inviting them behind the curtain to work with us on the design of the products and services that we need to help them connect and express themselves. And our investments in our database and new tools to help us personalize and thereby enhance our customer's experience, whether it be online, on the phone or in one of our stores. To wrap up, we are conscious of the continuing uncertainty in the economy. With that said, we will continue to focus on managing those aspects of our business that we can control, including our relationship with our customers, our operating expenses and our financial strength and flexibility. Combined with the initiatives that we have described to you today and more that are underway, we believe this focus will enable us to build on the positive trends in our business and continue to grow our top and bottom line results. Now that concludes the formal remarks for today, and we'll now open the call for your questions. Sammy, can you please give the instructions for how people can signal if they'd like to answer a question -- ask a question?

[Operator Instructions] Our first question comes from Christopher Ferris of Noble Financial. Christopher L. Ferris: I was wondering if you could address BloomNet for a moment. But perhaps I don't understand the business that well, but the growth in revenue has really slowed over the past couple of quarters. You were doing double-digit top line growth for the last 2 years, and now you're sort of on a pace for mid-single digits at best this year. Can you help us understand the dynamics there and how we should be looking at the driver of that business going forward? James F. McCann: Christopher, this is Jim. I'm not certain I completely understand your question there, but I'll -- we'll both give it a shot and give you just a broad overview of BloomNet. BloomNet, as you know, is the wire service, as we call it, organization that has, as its members, are retail florists around the country who fulfill our orders for us and buy products and services for us that help them to enhance and grow their businesses in their local communities. So the growth of that business is driven by primarily an increasing depth of relationship with the flower shops that are -- have been approved and are members of that organization. We have competitors in that space who have been suffering a bit from the overall contraction in the number of retail flower shops that exist, still good and profitable businesses, while we've been growing our business because I think the florists are voting that we have a unique proposition and a unique value proposition that we bring to the market. So we will continue to grow our business in BloomNet by expansion of products and services that we offer and a deepening of the relationship we have with the florists who are members of our BloomNet network. In terms of growth rates, growth rates, we've anticipated, will continue. In fact, we think that BloomNet is one of the key growth areas for our company that we have within our organic capability to continue to develop. So we expect margins to stay in that mid- to high-40% range. We expect growth to continue and we expect margin enhancement. Now the margin will vary from quarter-to-quarter depending on the types of products and services we're introducing, in terms of if it's a product, a wholesale product kind of introduction, that will have a lower margin. If it's more of a digital product, it will have a higher margin. Bill, is there anything you'd like to add there, color wise? William E. Shea: No. I mean, recently, we saw our margins this quarter, 52%, very strong margins. Because of the mix of revenues that we had, we saw lower wholesale revenues during the quarter. That was somewhat impacted by Sandy, and the florists really were not buying out on the wholesale products, so buying for both Christmas and -- they bought less for Christmas and for Valentine's Day, so that's what they do in the second quarter. So that impacted the revenue number within BloomNet. We'll get some of that back in -- on our third quarter. But we had very strong high-margin revenue offerings. Our directory is going very strong. And some other products that we're having are very strong, which is why we're seeing the higher margins there and the expanding operating margins that we're seeing there. Christopher L. Ferris: Right. I mean, all of that makes sense and the margins are good. I'm just trying to understand the deceleration in the revenue in this business over the past 3 quarters. And maybe I'm missing something, but it's just that I always thought that this would have been a -- the growth that you've always talked about in this business, I thought it would be accelerating rather than decelerating. James F. McCann: I think there would be -- as I've said, the revenue growth within BloomNet is going to be a function of the depth of relationship and the expansion of product and services that help our florists to compete in the local market. Yes, we have growth in membership, but it's smaller compared to the overall revenue, obviously. So I think you'd expect a modest revenue growth in BloomNet going forward with increasing dollar and percentage margin contributions. Christopher L. Ferris: Okay, that makes sense. I was wondering if you could talk about how the trial with Facebook Gifts is doing, and if you could give us a little bit more of a drill down on your social media efforts and how you feel they're driving growth? William E. Shea: Sure. So I think, I mean, we continue to be very pleased with the relationship that we have with Facebook, where we're very often a beta or an alpha-beta test partner with them, as we have been with Facebook Gifts. We think Facebook Gifts actually is a good example when we talk about social commerce, all right? So -- and how we and the consumer's evolving into social commerce. So it continues to develop for us. It's still in the rollout phase. It's still adding to it. We're still working with them on integrating different things for the Valentine's holiday, as an example. But then we look and say, kind of how do we take learnings from those capabilities and apply them [indiscernible], into our own e-commerce capabilities. So you see us do things like that, where clearly some of the plug-in integrations that we've done with Facebook, some of the things that we're doing with Twitter, et cetera. So we're just constantly looking to how we are working with our customers, how we're researching with our customers, how their behavior is being changed by social media capabilities, and applying that to our business model. James F. McCann: Christopher, I think -- this is Jim -- the point I'd add there is by working with Facebook in a very early stage like this, being able to look over their shoulder, collaborate with them, it's helping us as we -- you heard us mention a couple of times now, they were looking to broaden the range of product we have from a price point of view and from an occasion point of view because we want to be more and more relevant with a variety of brands and products that we have to our customers for all of the celebratory events in their lives, big and small. And so Facebook gives us a good opportunity for learning -- to focus our learning in that direction. Christopher L. Ferris: One last question. Facebook mentioned on their earnings results the other day that they're now seeing more users on mobile than on the desktop. I was wondering if you could quantify or give us some sense of what percentage of your buys are coming from mobile versus the desktop, as it relates to an e-commerce order? William E. Shea: Chris, I don't break that out. I mean, it's clearly there's not more than in desktop, but it is -- the traffic for mobile is a growing percentage of our traffic on an everyday basis. And we're continuing to see that growth accelerate. That's why we talk about kind of the leading efforts. We've been involved in mobile early. W continue to evolve. We're extending that now to our food brands. So we're very pleased with the position we have in mobile. And again, it's like social. We're following where the consumer is going and hopefully staying on the forefront of that. James F. McCann: As an example, too, Christopher, where we've -- even though we've emerged now for 2 years from what -- a couple of years before that were tough times, we said that we were going to do things like maintain our fiscal flexibility and balance sheet strength, that we get closer to our customer and that we control our expenses, all at the same time while investing for the future. And we've been investing quite a bit of money in our social and mobile efforts for the last several years only because we see the trend lines and we know where it's going. So yes, but we're not going to break out exactly what the percentages are. Clearly, we think it's an important ingredient in the future and it's why we've been investing for the last several years.

Our next question comes from Danielle McCoy of Brean Capital.

All right, just a few questions, I guess. First, is there -- can you guys quantify the effects of Sandy on the consumer business? Christopher G. McCann: It would be difficult. I can see the computer in Bill's mind is racing ahead of me here, but it had a couple of different impacts. Obviously, on the flower side of the business, in particular, we -- because we originated in the New York area, we're going to have a heavier concentration in the New England and mid-Atlantic area, which was most impacted by the storm. The fact that our offices were out of power for 8 days, the fact that our primary web hosting facility, third-party, was out of commission for more than a week, it caused disruption. Even when we were -- had our power back from our generators on, it was just extremely disruptive, with people were trying work in the semi-dark and climb many levels of staircase to get to their offices, unable to get gas to get to work. So we had all of that disruption and, of course, you had hundreds of flower shops who were damaged, destroyed, they're certainly closed with no power. And we had hundreds of thousands of consumers then, and many still, had their lifestyles completely rocked. So there weren't customers, nor were they delivering, et cetera. So you had the wholesale impact on BloomNet, you had the retail impact on all of our consumer brands, but most especially on 1-800-Flowers. It certainly is in the several millions of dollars, but I don't think that we're comfortable quantifying beyond that. William E. Shea: Yes, and one other metric, Danielle, of why we broke out the revenue by quarter that we saw during this period, that we had 11% growth in the month of October. Our fiscal, we were on a 4-4-5 fiscal calendar. And so Sandy hit the first day of our fiscal November for the month of November. As an enterprise, we did not grow at all, and then we've rebounded in December to 5.5% growth. So it obviously had a big impact on our November results. Christopher G. McCann: In December, it was a building recovery.

Okay. Great, that helps a lot. And how do you guys view the competitive market in consumer floral at this point? Christopher G. McCann: Well, I think in the fourth quarter, Danielle, it's a very, very promotional quarter. Not only within the flower space and not only within the gift business, but we're competing with every possible retailer online and off for a shared wallet. So I think what you see is that -- and from time to time within the flower and gift space, there'll be different eruptions of high promotional activity from one player or another who has different motivations in terms of trying to do what they can to drive top line for whatever individualized motivations they have. But overall, it's a very promotional quarter. I'd suspect it will always be an extremely promotional quarter. And from a -- one of the things I'm pleased with, though, is that not only did we experience all of that, but we grew through that. And our margin -- we actually saw our margin enhance in our direct-to-consumer businesses. So that worked out nicely for us. So it's promotional, yes. It always will be. And at the other -- the third point I'd make is that the flower business is linked in the quarter, and it's always going to be very promotional. And I think that contributes to the good fortune we had of making the decision several years ago that we were going to expand our product offering in our flower and gift shops by expanding into our Gourmet Food and Gift Basket businesses. That gives us a product that is relevant earlier in the quarter, throughout the Thanksgiving period and early December, with our gift baskets and our chocolate gift products. So I think you really have to look at our business as -- our consumer-facing business as you would with our competitors, who have all the same products now that we have. They're obviously going to mimic everything that we do. So we all have all the same products. Just from a segment point of view, we break out our Gourmet Food and Gift Basket business as separate from our floral business, but actually, we acquired and created those businesses so that we have the right suite of products to compete during that Christmas holiday quarter.

Okay. And just two more quick ones. Historically -- Valentine's falling on a Thursday this year. How has that been an impact? I know Mondays usually aren't the best day for Valentine's Day. How is Thursday? Christopher G. McCann: Yes, we're looking forward to this year. Thursday is a great day placement for us, especially from the floral -- from our floral brand, but as well as from our chocolate brand in addition. So we think Thursday's a good placement and we're looking forward to it.

Oh, great. And this is just a housekeeping question. How much remains on the stock repurchase program? James F. McCann: Bill, what do we have for our fund there? William E. Shea: Sort of about $4 million before we'd have to go back to our board to get an authorization on that. James F. McCann: And an authorization is a simple board meeting and, obviously, they're frequent.

Our next question comes from Anthony Lebiedzinski of Sidoti & Company. Anthony C. Lebiedzinski: I just wanted to touch base on the Distribution Center issues that you guys talked about at the -- in your press release. So is it safe to say that now, that all these issues are over and done with? William E. Shea: Short answer, yes. A little bit more on that is that it's all become a good thing. Our Cheryl brand continues to grow. As a result of that, at least a share for -- on the e-commerce side, a distribution center between our Cheryl brand and our Fannie May brand. To free up more space for our Cheryl brand, we moved our Fannie May e-commerce over to a new facility this past year, and we did experience some growing pains with that during the holiday, but we've been efforting [ph] the recovery of that. And we're very confident that will show significant operating improvements in that facility going forward. Anthony C. Lebiedzinski: Okay, that's helpful. And I think, Jim, you mentioned that -- in the BloomNet that you'll be rolling out some new additional products for the wholesale side, so that could result in some variation in the gross margins on BloomNet there. Can you give us some sense or some color as to what type of products are you looking forward to introduce to your -- to BloomNet? James F. McCann: Sure, Anthony. In BloomNet, we're always looking and working with our florists, our franchisees, our premier florists, our BloomNet florists, to say what can we lever of things that we already do to improve the experience and the product for our customers and to improve your ability to go to market and grow and -- your business both top and bottom line as our retail floral partners? So that -- Bill mentioned a couple of things that we're doing on the digital side in terms of helping them with their web hosting and our directory business and their advertising services. So those will tend to be better margin businesses because they're digital in nature. In addition, we're increasingly leveraging our sourcing, manufacturing and buying capacities for products that they use in their business both everyday and on holiday occasions with the products that we produce. So if we would introduce, like we did a year or 2 ago, a new line of glass products to drive down their costs so that they could have a better value for their customer, at the same time improving their own margins, we did that at a very small margin. So the first couple of quarters, with the introduction of the glass line, you saw the margins come back from near 50% to high-40s for a quarter or 2 as that burst into the marketplace with big top line sales. So that will continue to happen when we make an introduction, but you'll see the gross dollars go up and the margins contract a little bit. And that will go from quarter-to-quarter, year-to-year for the next several years. But as Bill told you, we continue to target a mid- to high-40s gross margin on a yearly basis. You might see from quarter-to-quarter variations. William E. Shea: But we should see -- for the second half of this year, we should see strong year-over-year margins within BloomNet. Anthony C. Lebiedzinski: Very good. And then can you give us an update on fruit bouquets? How is that tracking along, and also if you could give us an update on the Fannie May franchising program? Christopher G. McCann: Sure, Anthony. Yes, we continue to be very pleased with the introduction of new product categories like that, and I think that really demonstrates how we view our business, as Jim was referencing earlier. We constantly are working with our customers to find out what products and capabilities make sense for us to add to help them deliver smiles. So fruit bouquet, we continue to grow that. It's continuing to move along throughout the company. And then a good example of that, then, is extending that into the Fannie May Berries line, and we have high expectations for that as well. And then when you look at the fruit bouquets' website, for example, you see a whole suite of offerings there of all different kinds of pit fruits, there's jalapeno, peppers and things like that. So you continue to see us extend our product capabilities where our consumers give us permission to go. Christopher G. McCann: Yes, and I think it's just representative of what we -- we stated many times in the past, that we're going to continue to invest for our future, whether it be on the technology side, in the mobile front or the social front, or whether it be on product innovations and new product offerings. Anthony C. Lebiedzinski: Okay. And the Fannie May program? The franchising? Christopher G. McCann: Our Fannie May franchising, it's continuing to grow for us. We're pleased with the results. We've opened that up. I mean, it's just continuing to grow. It's a good example of how we continue to look to be part of a multi-channel approach to the marketplace, and these stores are going well. They continue to open up, and they're helping us to increase Fannie May's national presence.

[Operator Instructions] Our next question comes from David Kanen of Aegis Capital.

Most of my questions, really, have been answered. The only lingering question was in regards to the relocation of the warehouse and the negative impact. If you could quantify it, was it a million-dollar impact or just a few hundred thousand? William E. Shea: David, I mean, it was more significant that we mentioned it, so it was relatively significant. We're not in a position to quantify it for you. Christopher G. McCann: I would say it was just over a $1 million issue. It was mostly related to labor and the timing that came with that. So I would say it's in that range.

Okay, okay. And then, let's see. On the wholesale component of the Gourmet Food and Gift Basket business, could you give me a little more detail on what the increase was? I know it had a degradory effect on the gross margin due to growth year-over-year. Was it 20% growth year-over-year? Give me a little more color. William E. Shea: Yes, David, it was in that -- it was certainly in that range. James F. McCann: Let me give you a little background on that. We've been experiencing, unfortunately, and we've had to beat ourselves here to death for the last few years reporting declines in that business. So this year, we were able to signal you because we had indications last quarter and the quarter before that we'd see a turnaround in this business, so we have. So we saw a nice turnaround in the business and what we -- what Bill said, furthermore, is that not only did the turnaround come from sales to existing mass-margin [ph] customers, which we did, but also, they had very strong sell-throughs. So that bodes well for next year, and we also increased our customer base in the past year. So we're in a position to accelerate that turnaround and accelerate that growth rate. So we're happy that the downside of that is behind us, and the good news -- and the fact that there was a slight deterioration of margin, as you mentioned, the good news is it came from increased sales on our wholesale business, which obviously carries a smaller margin than our direct-to-consumer business does.

Got it. Okay. And since pretty much all of my other questions have been answered, I guess I have kind of a comment, and I'd like to get your take on it. And this is more theoretical, but in light of the new changes to the tax law, I'm kind of putting myself in your shoes, Jim, but also would benefit as a shareholder. In theory, let's say you were to reduce your salary by $1.5 million. That would put you -- that would prevent you from going into that 40% federal bracket, which you are on Long Island, it's over 50%, by staying under the $450,000 threshold. If I were in your shoes, I would start paying a dividend, which could be taxed at 23.8% inclusive of the VAT ObamaCare surcharge. I think the other benefit would be, now we, all of a sudden, open ourselves up to a whole new slew of investors that are yield-hungry and looking for income, given low interest rates for the foreseeable future. So I would just like to -- from a tax perspective, it seems more efficient, and I'd like to kind of get your commentary and thoughts on that. James F. McCann: I appreciate your insights there and just your global perspective on the situation. The good news, David, is we have options. We have options because we have been through our expenses, we have managed our balance sheet, we have paid down our debt, we have accumulated cash, and so we find ourselves in a good position of having these kinds of options, like the one you mentioned, before us. So we take it very seriously. And frankly, the credit markets, being what they are, the good credit rating we have, the great relationship we have with our banks, so we have a plethora of options in front of us, and dividends are one of those that we are regularly considering. And I think you've seen us vote that the most cost-efficient and expedient thing that we could do [indiscernible] is to repurchase the stock that we began. We signaled in our comments today that we certainly continue [ph] that. But the good news, as you point out, is we have lots of other options, and trust that we will be good stewards of our assets here and explore all of them.

Our next question comes from Dan Kurnos of The Benchmark Company. Daniel L. Kurnos: Sorry, I had to hop on a little bit late here, so if -- I apologize if these questions have been asked. But just 2 very quick ones for me. I just want to know where you guys are at in terms of the back end development of your tech initiatives. And then secondarily, if you could just give us a quick update on how cross-sell from your sites has been adding to growth and sort of what kind of future growth you're expecting from all of the tech initiatives that you have been developing? James F. McCann: Chris, would you cover the tech question? Christopher G. McCann: Yes. So I think that the way we look at it, we're very pleased with our progress that we're making on both the front end and back end of our tech initiatives. It's an ongoing process, right? So as you finish up one part of the plan, you move on to the next phase of it. So we're pleased with the progress. I think we're seeing the results, as we mentioned earlier, especially on the front end on the e-commerce platform as we move the food brands onto that. We're now moving the food bands onto the mobile commerce platform as well, and we continue to enhance the back end. So we're pleased with that. From our multi-brand approach to the marketplace that Jim references earlier, it's a decision we made a long time ago, and we continue to see our customers respond to that. Very difficult for us at this early stage, Bill, to kind of put any forecast to that, but it's just evidence of our focus on deepening the relationships with our customers, bringing the product to the table that we know, and they tell us more and more from social interactions, what product they like to help deliver smiles to the important people in their lives. So we're very pleased with this strategy. We're very pleased with the progress we're making. Very difficult to really put any forecast to that at this point, other than what you see in our continued results. James F. McCann: I give you 2 points of color on that, Dan. One is, we want each of our brands to have a discrete brand look and feel and have their own website that reflects that. So that will continue. And you'll see us refer to other websites because that would be more in line with your question around the cross-brand, multi-portal kind of -- multi-channel kind of marketing. So we want each of our brands to have its own website with its own discrete brand characteristics. But on the other hand, when you look at the 1-800-Flowers site, where we have the most of our traffic, you see that we're birthing new brands. So we birthed 1-800-BASKETS, we've birthed -- we're now birthing our fruit bouquet. So you see us -- and now the most recent investment that we've made is in the Fannie May Berries program, and that's getting significant exposure on the 1-800-Flowers site. So I think you can expect three things: each of our brands will have their own discrete websites for brand and for a surge benefit; second is that we'll cross-market brands that are appropriate on the lead site, the 1-800-Flowers site, to birth new brands; and then third, we'll cross-market product like we're doing with Fannie May Berries on several different sites where we think it's appropriate. Daniel L. Kurnos: Just any thoughts on the timing of the developments of the new discrete look and feel to each of your brands? James F. McCann: Well, Chris, you just moved a few of our food brands onto the new platform. Christopher G. McCann: Right, yes. So I mean, there is no timing of new discrete look and feel. They have a discrete look and feel today. I mean, we always continue to evolve that and reiterate it. But we know that the key is that we're moving it onto one platform, which allows for more integration and cross-brand pollination that we're doing. And that will continue -- we'll finish that, obviously, in fiscal '14.

And at this time, I'm not showing any further questions on the phone line. So I'd like to turn the call back to management for any further remarks. James F. McCann: Thank you, Sammy, and thank you all for your questions and your interest today. If you have any additional questions, please don't hesitate to contact us. As a reminder, though, the Valentine week is fast approaching. In fact, it's only about a week away. So don't wait to call to come in. You'll see the multitude of ways that we can help you deliver smiles and really wow your loved ones. Have a great day.

Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may all disconnect. Everyone, have a great day.