Thank you, John. Good morning, and thank you all for joining us today to discuss 1-800-FLOWERS.COM's financial results for our fiscal 2019 third quarter.

For those of you who have not received a copy of our press release issued earlier this morning, the release can be accessed at the Investor Relations section of our corporate website at 1800flowersinc.com. Our call today will begin with brief formal remarks and then we will open the call to your questions.

Presenting today will be Chris McCann, CEO; and Bill Shea, CFO. Before we begin, I need to remind everyone that some of the statements 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.

Reconciliations for forward-looking figures with respect to our guidance, however, would require unreasonable efforts at this time because of uncertainty and variability of various necessary GAAP components. The company expressly disclaims any intent or obligation to update any of the forward-looking statements made in today's call, any recordings of today's call, the press release issued earlier today or in any of its SEC filings, except as may be otherwise stated by the company.

I will now turn the call over to Chris McCann.

Good morning, everyone. Thank you all for joining us.

As you saw in our press release this morning, during the fiscal third quarter, we continued to drive strong revenue growth with total net revenues up 4.1% for the period. We also improved our gross profit margin and achieved bottom line results in terms of EBITDA and EPS ahead of our expectations.

These results were achieved despite the shift of the Easter holiday into our fiscal fourth quarter compared with last year when the holiday fell in our fiscal third quarter. The strong revenue growth for the quarter was driven by our floral businesses, where the investments we have been making throughout the year enabled us to further extend our market-leading position for the 1-800-Flowers brand and continually expand our market share position for BloomNet in the floral wire service business.

In Consumer Floral, the 1-800-Flowers brand achieved revenue growth of 7% for the quarter, driven by a strong Valentine's holiday as well as the everyday gifting occasions. The strong growth reflected our ability to leverage, our experience and expertise in digital marketing, our industry-leading mobile platforms, our focus on delivering an unmatched customer experience and our truly original product designs, including our new Magnificent Roses and our hot pink floral collection, both big hits for the Valentine's Day and everyday occasions.

Our BloomNet business also continued its strong growth momentum with revenues up 15.1% for the quarter. This was driven primarily by double-digit growth in order volumes coming from the 1-800-Flowers brand, our member florists and third-party online floral companies.

In addition, BloomNet's revenues for the quarter benefited from growth in its digital directory advertising sales, wholesale products and technology offerings, including point-of-sale systems and digital marketing services. In our Gourmet Foods and Gift Baskets segment, where the shift of Easter has the largest impact, revenue for the quarter was down 3.8% compared with the prior year period.

However, throughout the quarter, we saw strong revenue increases in everyday gifting occasions with Harry & David and 1-800-Baskets continuing to achieve strong growth in such occasions as birthday, sympathy, get well and thank you. We also continued to grow our customer files in both 1-800-Flowers and Harry & David as well as growing membership in our passport loyalty program.

In addition, throughout the quarter, we continued to invest in innovations, designed to enhance the customer experience. We expanded our roll out of lightning-fast PWA technology to our Cheryl's mobile site.

And we implemented a new faster-checkout flow in widescreen format for the Cheryl's site. Following our recent launch on Samsung's Bixby digital assistant, we launched an Android app in the Samsung app store.

We launched an interactive virtual assistant for customers who choose to interact with us by phone or actually from a web link. This application seamlessly integrates artificial intelligence and human understanding to reduce average handle time and increase overall customer satisfaction.

And in the spirit of experimentation, we continue to experiment with new forms of technology to help our customers express themselves. We launched what we call smart message, an augmented reality gift message feature available on the iOS mobile app.

Looking ahead, the strong revenue and customer file growth momentum that we are seeing across our business position us well for solid top and bottom line performance in the current fiscal fourth quarter and the years ahead. I will now turn the call over to Bill for a more detailed review of our results.

Bill?

Thanks, Chris. As Chris noted, we are very pleased with our top and bottom line results for the fiscal third quarter.

Despite the shift of the Easter holiday, we achieved revenue growth of 4.1%. This was ahead of our expectations and reflected strong customer demand for both the Valentine's Day holiday and everyday gifting occasions in our Consumer Floral and Gourmet Food and Gift Baskets segments.

Additionally, we continued to see significant order volume growth in BloomNet. Regarding our bottom line results for the quarter, which were also ahead of expectations, the slightly higher loss in adjusted EBITDA and the flat EPS for the quarter were achieved while absorbing the Easter shift as well as year-over-year operating expense increases associated with the assumption of a full bonus payout for fiscal 2019 compared with the significantly reduced payout in the prior year and the increased investments we've discussed in past calls in marketing for the 1-800-Flowers and Harry & David brands to drive accelerated growth and the investment to launch our newest brand, Goodsey.

These top and bottom line results illustrate the effective execution of our strategy to accelerate revenue growth as well as the enhanced leverage we have in our operating platform. Now breaking down the third quarter results.

In terms of revenues, total consolidated revenues of $248.4 million, grew 4.1% compared with $238.5 million in the prior year period. Gross margin for the quarter improved 10 basis points to 39.3% compared with 39.2% in the prior year period.

This reflected increased gross margin in our Gourmet Food and Gift Baskets segment, which more than offset lower gross margins in our Consumer Floral and BloomNet segments. It is worth noting that Gourmet Food and Gift Baskets margins in the second half of the year are not impacted by seasonal labor, which as we have noted in previous calls is the largest headwind impacting gross margins across the company.

Operating expenses as a percent of total revenues increased 70 basis points to 45.1% compared with 44.4% in the prior year period. This reflected year-over-year cost increases that I mentioned earlier as well as the impact of the Easter shift.

The combination of our strong revenue growth, stable gross margin and higher operating costs resulted in adjusted EBITDA loss of $4.4 million compared with an adjusted EBITDA loss of $3.6 million in the prior year period. Net loss for the quarter was $8.2 million or $0.13 per share, essentially unchanged compared with the net loss of $8.5 million or $0.13 per share in the prior year period.

In terms of category results. In our Gourmet Food and Gift Baskets segment, revenues for the quarter was $75.4 million, down 3.8% compared with $78.5 million in the prior year period, reflecting the shift of the Easter holiday into our fourth quarter this year.

The impact of the Easter shift, the majority of which occurs in this segment, was somewhat offset by continued strong growth in everyday gifting in Harry & David and 1-800-Baskets. Gross margin for the quarter increased 180 basis points to 35.6% compared with 33.8% in the prior year period.

The improved gross margin reflected continuing benefits associated with our logistic initiatives to reduce shipping and transportation costs as well as strategic pricing programs. As a result of these factors, segment contribution loss improved 18.3% to $7.2 million compared with $8.8 million in the prior year period.

In Consumer Floral, revenues increased 6.7% to $144.8 million compared with $135.8 million in the prior year period. This reflected strong growth for the Valentine's holiday as well as for everyday gifting occasions throughout the quarter.

Gross margin for the quarter was 38.9%, down 70 basis points compared with 39.6% in the prior year period. This reflected the increased promotional nature of the Valentine's Day holiday combined with strong growth in our passport program.

Segment contribution margin was $15.4 million, down 5.3% compared with $16.2 million in the prior year period. This primarily reflected the impact of the Easter shift, combined with our continued marketing investments to drive revenue growth and the launch of Goodsey and higher bonus expense.

In BloomNet, revenues for the quarter increased 15.1% to $28.2 million compared with $24.5 million in the prior year period, primarily reflecting strong order volume growth. Gross margin for the quarter was 49.9%, down 290 basis points compared with gross margin of 52.8% in the prior year, primarily reflecting product mix and our continued investments to drive order volume growth.

Segment contribution margin increased 12.3% to $9.5 million compared with $8.4 million in the prior year period. In terms of corporate expense, our segment contribution results exclude costs associated with the company's enterprise shared services platform, which includes among other services, IT, HR, finance, legal and executive.

These functions are operated under a centralized management platform providing support services to the entire organization. For the fiscal third quarter, corporate expense, including stock-based compensation, was $25.2 million compared with $20.4 million in the prior year period.

The increase in corporate expense was largely attributable to year-over-year increases in performance-based compensation of cash bonuses and stock-based compensation. Turning to our balance sheet.

At the end of the third quarter, our cash and investment position was $206.4 million. Our term debt balance net of deferred financing cost was $95.8 million, and we had zero borrowings outstanding under the working capital line within our revolving credit facility.

As a result, total net cash at the end of the quarter was $110.6 million. Inventory at the end of the quarter was $74.4 million and was in line with management's expectations.

Regarding guidance. We are updating our guidance for fiscal 2019 based on the strong results of the first nine months of the fiscal year and our expectations for solid performance in the current fiscal fourth quarter, which includes Easter and the Mother's Day holiday.

Updated guidance for fiscal 2019 is as follows: Consolidated revenue growth is now expected to be at the high end of our previously stated range of 7% to 8%. We are increasing our guidance for EPS to a range of $0.49 to $0.50 per diluted share from a previous range of $0.44 to $0.46 per diluted share.

Adjusted EBITDA is now expected to be at the high end of our previously stated range of $80 million to $82 million, and free cash flow is now expected to be at the high end of our previously stated range of $30 million to $40 million. I will now turn the call back to Chris.

Thanks, Bill. So to sum up, we are pleased with our top and bottom line results for the fiscal third quarter.

In terms of revenues, we achieved strong growth with Valentine holiday, further expanding our market-leading position for the 1-800-Flowers brand and growing our market share for BloomNet. In addition, we continued to see strong growth throughout the quarter in everyday gifting occasions for 1-800-Flowers, Harry & David and 1-800-Baskets.

The combination of growth in these areas more than offset the impact of the Easter shift. Importantly, in addition to the solid revenue growth in the quarter, we also continued to grow our customer file across the enterprise.

This revenue and customer file growth reflects our focus on providing truly original products, which our customers are clearly resonating with, as well as innovative enhancements to the customer experience from our industry-leading mobile platforms to our digital self-service portal. In terms of our bottom line results, both for the quarter and the first nine months of the fiscal year, we are seeing good returns on our increased marketing investments, with growth continuing to exceed our expectations.

This combined with the enhanced leverage we have in our business model is helping us achieve enhanced cash flows as well as increasing earnings. As we head into our fiscal fourth quarter, which includes Easter and Mother's Day along with a long list of spring holidays and everyday gifting occasions, we have strong growth momentum across all three of our business segments.

As a result, we are well positioned to deliver enhanced shareholder value for the quarter and for the full fiscal year. I'd like to thank a moment - take a moment to thank our team, including all of our associates across the company for their passion and their focus on continuing to expand our celebratory ecosystem, to help us deliver on our vision, to inspire more human expression, connection and celebration and help deliver smiles for our customers.

With that, let me turn the call over to John, so that we can take your questions. John?

Congratulations on a really nice start to the calendar year here. I'd love to get a sense of, you talked about the difference business segments.

Obviously, your guidance for the full year, both on revenue and profitability has come up pretty nicely. Can you give us a sense of where that's coming from?

Is it coming more from the floral side, more from the Gourmet Food and Gift Baskets side? And then just kind of related questions.

As we think about kind of the March quarter and the June quarter together, kind of trying to eliminate the impact of the Easter shift, can you give us a sense of how fast those two larger units, and then I guess, if you layer in BloomNet as well, how fast all of your business segments have been growing so far in 2019?

Sure. I'll take a stab at that to begin, Alex, and thank you, and then I'll ask Bill to really cover on the two quarters combined.

The good news for us is where the growth is coming from. It's across the platform.

And I'll start with BloomNet. As you're seeing, we're getting nice growth in BloomNet.

We expect that to continue for some time to come yet. And on the consumer side, it really is, as you saw, the first half of our fiscal year was really driven by the Gourmet Food side of the business.

The second half now you're seeing being driven by the floral side of the business. So it gives us a nice balance there.

And again, the things that we did is, as we said, we were seeing really good customer behavior metrics in our file with probable focus - focused programs on creating multi-brand customers, getting customers to sign out for passport and other cross-brand merchandising opportunities that we were giving our customers. So that gave us the impetus to really invest in the top of the funnel and bring more new customers into the ecosystem, really driven in the first half by Gourmet Food category, now really it's being driven in the second half by the floral category.

So you're seeing that kind of flywheel effects really start to work. And it's a combination of those things that's what's propelling the growth.

Bill, you want to comment on the two quarters combined?

Yes. So Alex, when you look at how we performed in the first half of the year, we were little above 8% growth, we're giving overall guidance now for the year at the high end of that 7% to 8% growth.

So showing pretty consistent top line growth in the second half of the year. As Chris mentioned, it does swing just from an overall concentration of where the revenue is on to the floral side of the business in the second half of the year.

But if you eliminate Easter with Q3 and Q4 combined, Consumer Floral was in that 7% range. BloomNet is in that mid-teen range and GFGB is - it's probably it's an - their nonseason.

So it's probably around more like the 6% range. And those are pretty consistent numbers of what you saw in Q3 adjusted for the Easter holiday.

You would have seen Consumer Floral probably a little higher than that, and you would have seen GFGB in that range, adjusted for Easter.

Okay. That's really helpful.

And then just thinking about the passport program that you've been doing for the last couple of years here, see the full price is still about $30 per year. Is that something that you continue to be testing different price points and pulsing lower prices during key periods?

Just curious as you think about opportunities to take market share at a more permanent basis over the next couple of years. How you view being promotional with the price of passport versus other forms of marketing?

Yes. Passport, we continue to experiment with what the optimal price points.

At different points in time, Alex, we will run passport at a $19.99 promotion to bring in more customers into the fold, then we do it $29.99. We are looking at seeing how can we maybe test higher price points as well, what else can we add in value.

So it's an ongoing management of that program and development of that program. But what we're really thrilled to see is the continued growth there.

The customer behavior metrics continue to hold up, and then you really combine the Holy Grail, right, is kind of when we get a customer that's buying for more than one brand and joining passport. We're seeing those retention rates up in the 80% to 90% range.

And that's just fantastic. So the more we can drive that kind of behavior, the more we'll accelerate our growth rate.

Congratulations on a strong quarter. So can I just ask, in the corporate expense line, I think, you did note it was a little - it was up year-over-year because of increased compensation, et cetera.

But I saw that a lot of the compensation increases were allocated to the business segments. So was there anything else in the corporate expense line that made it a little bit unusually high?

Or is it just mainly the comps?

Linda, it is mainly the comp. While there is some of the bonus dollars that actually gets allocated back to the individual segments, a big piece of it's just in corporate.

And all of our stock-based compensation sits in corporate expense and again with - our performance a year ago - we weren't really granting any performance shares a year ago, so our stock-based compensation has increased this year as well, and that all sits in corporate expense.

Okay. And then can I just ask you on GFGB.

I mean, growth was pretty good. I think it was about 4% excluding the shift.

Is that about right? And that's good, but it's a little bit less growth than we saw last quarter.

Is there anything in particular that's slowed down? And can you give us a little rank order just which branches grew the fastest and which were a little less fast?

So it'll start and see if Bill add some details. GFGB, again, I think adjusted from Easter was in that mid-single-digit range, if you adjust for Easter...

5% to 6%.

About 5% to 6%. And yes, while that's down a little bit from the last quarter, it is the slowest - one of the slowest quarters of the year for GFGB, just coming off the holiday season.

We were thrilled to see the great momentum we had during the holiday season, again, that growth exceeding our expectations. So it was clearly in line, if not a little bit better than we expected for this quarter Q3 as well.

Yes. And the drivers of that continue to be Harry & David is a big driver of the overall GFGB and 1-800-Baskets continues to perform extremely well.

So those are the two kinds of the leaders in the overall growth.

And especially, the Harry & David e-commerce growth.

Okay. And then - there seems to be some information out about a company called Terra Flowers taking a minority position in FTD.

Do you know - can you tell us like what you know about this Terra Flowers? And do you have any suspicion as to why they may be taking in ownership in FTD?

And does this effect, like you're thinking on the competitive landscape, at all in terms of this development?

Sure. So Terra Flowers is a grower.

Sole Farms, they're the only Sole Farms that are growing in the industry, but that's all we really know at this point, and we worked with them over the years. So I don't know anything else new there.

And really as we look at the competitive landscape, we're always going to see the competitive landscape change over time. If you look at us for the past several years now, we've been taking market share and that landscape has been changing and shifting, and we continue to do that.

We continue to do that, Linda, by focusing on really what we do best. Our truly original products, bringing great customer experience to the table.

A caring team of people that are obsessed with customer service. So as we focus on those things and focus on growing our customers into our ecosystem, we're well positioned, really as the competitive landscape starts to shift and perhaps we're driving some of that change.

And then finally, can I just ask you on the BloomNet business, which continues to be very strong. Are you seeing a change in the trend of the increase or decrease in your number of florist members?

Is there any kind of change in that trend occurring yet?

No. I wouldn't say we've see any real change in trend of the membership.

I think what we spoke about in the past is we're seeing that membership start to get more orders as we're attracting more orders coming into the system. And then as time goes on, we'll start to sell more products and services into the BloomNet shop and some of - into those BloomNet shops, some of which I know I spoke to earlier in my formal remarks where we're seeing some growth in our wholesale product sales and our digital directory sales.

We're seeing increases start to happen there. In our digital marketing services, we're seeing increases happening there.

So we're starting to see those, and that's really what we need to do now as we go forward is monetize that increased order flow as we help our BloomNet members with products and services to compete more effectively in their local markets.

Congratulations on a great quarter. Just following up on that last question real quick, the move by Terra Flowers with FTD.

I know I asked it in the last quarter about the prospect of you guys maybe taking a look at some of the growers, and you, I believe, thought that it was a fragmented market. Does the move by Terra Flowers change that dynamic at all?

No, it doesn't. Strategically, as we look at our business and way to go forward, we have great relationships with the grower community.

Tom Hartnett and I were just visiting with our primary growers a couple of weeks ago, and just making sure things were ready for the Mother's Day season, of course, but really looking at long-term strategic relationships that we have as well. So again, I'm not familiar with the move exactly being referenced.

I'm not sure what that is, but it wouldn't change any of our strategic plans at all.

Got you. And in terms of how shares did the company repurchase in the latest quarter?

I don't know if you may have said that. I may have missed it.

Michael, we actually were not in the market in this current quarter. We had purchased about 1.1 million shares and spent about $13 million in the first half of the year.

We thought the stock was undervalued at that point in time and thought it was a good investment on our part to buy back the shares. So we bought back more shares than we needed to offset our stock-based compensation, which is always our goal, and we just did it in the first half of the year.

Got you. And you still have $12 million under your share repurchase authorization.

Is that right?

That is correct.

Okay. And then what is your thought on the company's capital allocation at this point then?

I know that you've been building a pretty sizable cash flow there. What are your thoughts?

And maybe if you can add some color on your M&A pipeline.

Sure. So I think as we look at our capital allocation right now, really we're using it - we're using our cash to really help accelerate organic growth with the investments that we've made into our marketing initiatives, new brands that we've launched, et cetera.

So we're doing that. But at the same time, I think over the years, we've been very good stewards of our balance sheet, and we'll continue to do so.

We'll be judicious and thorough as we look at M&A opportunities. We see opportunities out there, and we constantly are looking at them.

And again, we're looking for opportunities that can leverage our ecosystem or can add to our ecosystem. Really helping with the focus on serving our customer base and expanding our customer base as well as we're doing with the new customer acquisition we're doing as well as expanding the number of times our customers will turn to our ecosystem for their all of their gifting needs.

So that seems to be working well and that's where we'll continue to focus our M&A investments. But keep in mind, we are focused on utilizing our underbalanced - our underleveraged balance sheet to make sure that we really return value to the shareholders.

And Michael, just to - I was just going to say, just that we did not buy in the third quarter does not mean we're not going to be in the market going forward. We will continue - our promise is we'll buy back shares to offset any sort of share creep.

So as we enter fiscal '20, we will be in the market again.

Got you. And I know that you guys have been spending a little bit more in marketing and your Consumer Floral.

But what's interesting is that your marketing and sales expenses as a percent of total company revenues has been consistent to actually slightly lower as a percent of revenues for the past couple of years. And I know that technology and development expenses have trended up as a percent of revenues.

And I was just wondering if you could talk about that dynamic and the trends that you expect going forward, may be as you go into the subsequent quarters.

Yes, I think that's due to the fact that what we stated is we're seeing good returns on our investments, and we're a little ahead of expectations on the first year of increasing the marketing investments and behind new customer acquisitions. So we have seen those good returns.

It's producing the appropriate percentage that you're referencing. And again, we're constantly utilizing our technology platform to increase the customer experience, to increase how we work with our customers, how we attract our customers, focusing on the mobile platform, where the customer clearly is moving.

So I think that trend will continue for a while, where the investments in technology help really enhance the customer experience, which then makes our investments in new customer acquisition much more fruitful.

And then just - I was just wondering if you could talk a little bit about you mentioned about the borrowings being up and that contributing to BloomNet and that's also as a function of 1-800-Flowers. I was wondering is the number of florist shops in your network have - can you talk a little bit about the trends there?

I know that at one point, I think you had 1,200 in your network, and then you thought that there might be an opportunity to grow that. Where do you stand on that?

Have you started to grow the number in your network? Or what - where do we stand on that?

So the number in our network has been stable for a while. And that's usually generally in the 5,000 to 6,000 membership range, and that's kind of where we manage it too, because we really want to focus on the quality of the membership and the quality of the product that ultimately gets delivered to the end user, to the recipients who're our customers.

And that's why when I mentioned earlier where we start to turn our focus is, okay, with that membership, we want to keep it stable where it is, making sure everybody is getting a good amount of orders to be happy with the membership they have. And then what all the products and services can we bring to the table to help them compete more effectively in their local markets, whether it's leveraging our scale for the wholesale product purchases, whether it's marketing services to help them with search engine marketing, SEO optimization or it could be technology, like websites or point-of-sale systems.

So really that's what we're doing is looking to - memberships, we'll keep stable in that range and then increase the participation rate we have with our other products and services.

Chris, it's kind of a perfect segue into something I wanted to ask on sort of the tech stack. I know, you gave a pretty good answer to Mike on his question of M&A, but I want to get a little bit deeper here on sort of the path forward.

Look, you guys have a great track record here. You've taken a bunch of shares, stocks were phenomenally well.

And now, the question is what we're seeing in the lot of other e-com plays right now, particularly in the hospitality space to name. One, sort of point in your example right now, are guys getting more vertically integrated?

And two, kind of the merchant touch points. So I am curious sort of how you are weighing spending your money and/or flexing that balance sheet and expanding your customer profiles so you get more touch points with the customer versus, say, getting more involved on merchant processing?

And just sort of remind us, you have kind of the five key tenants. We know you touched point-of-sale and analytics.

Is that as deeply integrated as you are on sort of the merchant side? And would you be willing to make a larger deal to get more involved on that side of the equation?

No. As we look at our M&A strategy, I think, as we mentioned, we are always going to be very judicious in how we look at it.

And we look at it in a series of adjacencies. So really kind of first is what fits in the cause.

So are there floral opportunities for us - opportunities in the floral space? And if there are and that makes sense, we'll look to make those acquisitions.

In the Gourmet Food category, clearly, there are more opportunities for us to add more brands and products in the Gourmet Food category as well. We've seen it start to move into other product adjacencies with Personalization Universe, Goodsey, Simply Chocolate moving into other product adjacencies, and we're always looking at what are those next level of adjacencies.

As we start to get to adjacency level 2 or 3 is where, I think, you'll start to see us look at other types of service offerings that our customers will find attractive. Again, if you stick to the vision of looking for us to inspire more human expression connection and celebration, what are the tools, will it be technology tools or capabilities that we can bring besides of floral and gift products that we have to help our customers express themselves so that we can deepen the relationship we have with them even further.

And what we see is that starts to pay off for us. And we've begun to do that through Goodsey, which is a marketplace platform.

So don't look at Goodsey so much as a brand that you would expect to see grow more and more, but look at it as a platform that allows us to bring more product categories onto our ecosystem to put in front of our customers. And as we're doing that, it's either through the marketplace concept and/or through an M&A strategy.

Has the fact that almost anything that you would buy now would be value accretive? Has that changed the parameters of which you're willing to look at from an M&A perspective?

And I know that you want to be diligent sort of to your existing shareholder base. But if the right deal came along, obviously, you have plenty of room on the balance sheet.

I mean, are you willing to use equity as a currency to go after something much larger, if you could find something Harry & David plus out there, not saying that it exists, but just hypothetically?

I think, as a responsibility to our shareholders, we would be open to that. We feel if it's a big opportunity for us that could really create value, certainly in the immediate term, but if not in the short term, we would love to utilize a combination of both stock and cash, if that was what was necessary to get the deal done and provide the best value-creation opportunity, certainly, we would look at that.

Yes. But Dan, just the combination of the cash we have on our balance sheet plus the underleveraged balance sheet that we have, we do have significant borrowing capacity based upon the performance of the company.

So there is the ability to leverage our balance sheet and to transact a very large transaction just with cash if needed.

Right. But sometimes stock might help the value-creation model behind it, so we would look at that.

Yes. I got it.

Clearly, the most of the stuff you're looking at, you could do with cash. I was just trying to get a sense of where your head's at.

And then just last question from me on the investment front, one short term, one long term. Just looking at kind of the remainder of the guide for the year and taking into account your historical conservatism here.

It does seem like you're stepping on the gas a little bit on marketing around Mother's Day to get to sort of the high-end of the guide with the implied revenue that you've got. So I guess, I wanted to ask, Chris, just obviously you're seeing better-than-expected returns on the top line.

When does that - kind of when does that volume translate through into more incremental leverage? Or do you have to keep sort of spending - ramping spend to keep revenue growth at the same level?

And then longer term, we've talked about distribution. I mean, is there a push?

Is that an area of short-term investment and long-term return where you could dump a whole bunch of money into distribution and get over a 2 to 3 year period of significant uplift in that line item, if you sort of enhance the efficiency in that process?

Yes. So I think as we look at the marketing investments that we're seeing, and I think you'll see that start to mature a little bit really as we move into our next fiscal year from a comp point of view.

As I tried to reference earlier, we expect to keep our investment levels at the same and again, we're seeing better than we expected returns, which should produce and that's why I am specific on the floral side, really should produce then an increasing gross margin. We right now for the last quarter or two we decreased it a little, the gross margin percentage.

And we're fine doing that with what we're seeing from the customer behavior metrics. So on the short term, I think, you can continue to see us do what we're doing now.

Longer term, that starts to, again, perform better from the bottom line as we comp that investment going forward, but I don't think it will change the top line trajectory at all. Bill?

Yes. Dan, just a couple of points.

One, obviously, we updated - we upgraded our guidance, again, and it's great to be updating our guidance for the second time this fiscal year. We've done that based upon the strong performance we had in the first nine months of the year, plus our expectations for solid performance in the fourth quarter with Easter and Mother's Day in this quarter.

We've baked into our guidance for this year and our updated guidance the investment plans that we've outlined in the past, investing behind 1-800-Flowers and investing behind Harry & David, launching Goodsey, and we've talked about the year-over-year comps that we have with some of the incentive comps that we have. That's all baked into our guidance and our updated guidance.

I think what we also discussed back on our Investor Day, and we even stated at the beginning of the year that this year was going to be more of kind of the initial investment year, while we want to continue to drive top line growth between Harry & David and 1-800-Flowers and take advantage of what's out there in the marketplace, we will start seeing better bottom line returns in fiscal '20 and '21 as we march towards that $100 million target in two years. So you will start seeing more of it come down to the bottom line.

And a big contributor there is, well we've been saying that, investments have been going behind building the customer file and then getting the performance added at customer file that we're seeing today, so that gives us the sustainability.

All right. I get it.

I mean, it makes sense, guys. I'm just - you are in a position to dominate the marketplace and make sure that you have that stickiness.

So I'm just trying to get a sense of whether or not it's worth it to invest a little bit more upfront now for sort of that longer-term return. And I appreciate all the color.

And just - so before I jump off, Bill, did you actually mention what Harry & David e-com growth was in the quarter?

We did not. It continues to be very strong.

Obviously, because of the shift of Easter, it's below where that trend line has been. But if you account for kind of the Easter shift or you back out Easter from last year, it's kind of - it still have - it's still growing at a very nice pace, high single-digit almost double-digit e-commerce growth rate.

So obviously, you've done a great job in all three of your segments, particularly in BloomNet growing, sales double digits, a lot of that growth the last few quarters has come from increased florist to florist orders. And I think you'll be anniversarying that actually pretty soon here.

So as we move beyond that, how should that segment grow in your view kind of on a go-forward basis after you get past the big surge in florist to florist orders?

Well, I think if you look at this over time, Anthony, BloomNet is benefiting from the increased order volumes from - again, several different sources, the strong growth of 1-800-Flowers brand, the third-party online floral companies we've attracted as well as our local florists, BloomNet members and their shop-to-shop sending. We anticipate BloomNet will achieve strong growth going forward based on these rising order volumes.

And the subsequent opportunities to further monetize these through programs like, we've mentioned, our enhance digital marketing programs, offering SEO and SEM capabilities. Digital directory features that we add that our florists are finding very useful to attract new incoming orders.

Expanded hard good offerings that we can provide florists, again, utilizing BloomNet's scale to do that. So these factors have allowed BloomNet to capture market share in the wired service space, and we believe this momentum will carry forward and we'll be able to continue to take market share if we stay diligent on what we're doing and focus on growing the 1-800-Flowers brand, which helps focus - or helps grow the BloomNet brand as well.

So I think you will see that continue.

Got it. And also I was wondering if you could provide some more details about the customer file growth that you mentioned at a few times that has grown, but I don't think you gave any specific numbers.

And also any color on your AOV metrics.

Yes. So I'm not sure on the AOV, I'll just turn it to Bill, I don't know if we have that.

But - yes, we didn't have any specific metrics. I think last quarter, we gave a couple of metrics about the new customer file growth that we're seeing up around 12% at the end of last quarter.

We didn't update it for this quarter, again, because the Easter shift would skew that any way. But the trend continues for us.

We're seeing good customer file growth overall for the enterprise, really being fed by a combination of our efforts to increase new customer acquisition. But also the good strong efforts we're seeing, behavior we're seeing from existing customers as well as re-activated customers.

And then you feed that into what we're seeing with the passport customer growth, the multi-brand customer growth, like I said, at the very high end, we get a customer who's buying from more than one brand and they join the passport, up in that 80% to 90% range, which is just phenomenal. Now that's clearly at the very top of the pyramid.

But the more we drive metrics like that, through the file and what we're seeing is the behavior to do so and the ability to do so, it takes time. But we're seeing it contribute to our growth rate now.

So we're very happy with what we're seeing. And what that pertains for the future years to come.

When we look at AOV, I mean, AOV is up, slightly within each of the brand. So if you look at 1-800-Flowers or Harry & David, in particular, it's up in that probably up like 1% or so.

There is as a result of some mix, with growth of some brands, while there's others when you compute an enterprise wide, it's up actually a little bit more. So it's up a couple of points.

It's where we wanted it to be.

Got it. That's very helpful.

And also, I think, Bill, you mentioned that seasonal labor is your biggest issue. Anything else that you want to call out as far as cost pressures that we should think about?

Well, while seasonal labor is our biggest headwind, overall, labor rates even for our core steps is a headwind because we're facing rising minimum wages as well. So labor continues to be a headwind throughout the year, seasonal labor is the biggest one and that, obviously, effects Q1 and Q2.

Tariffs have been kind of abated right now. So we've implemented some strategies.

We took on inventory early on in the second quarter to address it in case tariffs kicked in for the second half of the year. So we have the second half of the year covered and Q4 covered, but obviously - if ultimately, those come back into play, the round three kind of tariffs, that got kind of pushed off, if those come back into play in 2020, we'll have to deal with the issues of tariffs.

And we've looked at various strategies on how to mitigate that, but that is the headwind that we continue to monitor.

Got it. So you also talked about GFGB taking some strategic pricing actions or initiatives.

Should we expect more of these on a go-forward basis?

Well, as we continue to face cost pressures ourselves, such as what we just described, we will always look at strategic price increases, whether it be within GFGB or within the Consumer Floral to see where we could take those increases and how does that impact demand. So we test some strategic price increases at various times during the year to see if it - how it impacts demand and we look to continue to do that.

Yes. Let's keep in mind too that as that can be part of the answer, that will never be all of the answer for us in mitigating cost.

It has to be operating efficiencies that we bring to the table.

Thank you all for joining us on the call today and for your questions. If you have any additional questions, please don't hesitate to contact us.

As a reminder, Mother's Day is here, just around the corner, and we have everything you need to make it special. So visit us online, on your mobile device or through your favorite social channel, and trust us to make all the moms in your life feel loved.

Thank you.