FTD.com Profitability Blooms Anew

Floral e-tailer FTD.com (Nasdaq: EFTD) will report net income of US$2.3 million, or five cents per diluted share, for its fiscal 2001 second quarter — the company’s second consecutive quarter of profitability, FTD.com said Tuesday.

The announcement comes at a time when sluggish sales and declining advertising revenues are forcing many e-tailers to cut back their operations and staff. However, officials at Downers Grove, Illinois-based FTD.com said a decision to shift its marketing focus away from television and national print ads, and toward the name recognition generated by parent company FTD, Inc., helped drive up profitability.

FTD.com said it now lures new customers through online and corporate advertising efforts, as well as using a combination of e-mail and catalogs to keep customers coming back to its home page.

“Since our IPO [initial public offering] just over 12 months ago, we have continuously pursued a path to profitability,” FTD.com president and chief executive officer Michael J. Soenen said. “More encouraging, profitability was achieved during a period in which there were no major gift giving holidays.”

The company said it also expects to generate profit in its third and fourth quarters, which include such big-ticket flower-sending holidays as Valentine’s Day and Mother’s Day.

Revenues Rise

Officials said that FTD.com’s second-quarter results include a one-time, non-cash gain of $500,000 from the settlement of a third-party vendor cancellation.

A year ago, FTD.com reported a net loss of $11.2 million, or 24 cents a diluted share, in its second quarter.

FTD’s second-quarter revenues for fiscal 2001 grew by 38 percent to $32.5 million, compared to the $23.6 million the company reported during the same time period last year.

“Six months ago, we made the strategic decision to operate the company to achieve both growth and profitability,” Soenen said. “With our historically largest revenue quarters remaining in the fiscal year, I believe that FTD.com is well-positioned for continued revenue growth and profitability.”

Online Ordering Grows

Company officials said the increase in revenue was primarily due to a continued growth in order volume and average order value.

The company reported 514,000 orders, with an average value of about $57 an order, during the second quarter, compared to 384,000 orders, at a value of $54.60, during the same time period a year earlier.

Internet orders accounted for about 83 percent of the order mix for the quarter, compared to 74 percent the previous year, officials said.

Specialty gift orders increased 150 percent in the second quarter compared to the prior year quarter, and comprised 10.7 percent of total orders, compared to 5.7 percent for the second quarter of the prior fiscal year and 6.8 percent in the first quarter of fiscal 2001.

Profitability Forecast

The company reported a gross profit of $9.6 million for Q2 2001, giving the e-tailer a gross profit margin of 29.5 percent, compared to $6.6 million or a profit margin of 28.1 percent, in 2000.

Soenen said he expects third and fourth quarter revenue growth of 25 percent to 35 percent over a year earlier and a gross profit margin of 27 percent to 30 percent. The flower e-tailer also expects to achieve its profit more from revenue than from cuts in expenses.

“Based on these expectations, and the company’s proven ability to control costs and improve marketing efficiency, I believe FTD.com will continue to report profitability for the remaining quarters of the current fiscal year,” Soenen said.

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