Q2 2024 1-800-Flowers.Com Inc Earnings Call

Participants

Andy Milevoj; Senior Vice President - Investor Relations; 1-800-Flowers.Com Inc

James Mccann; Independent Director; 1-800-Flowers.Com Inc

Thomas Hartnett; President; 1-800-FLOWERS.COM

William Shea; SVP, Treasurer, and CFO; 1-800-FLOWERS.COM

Anthony Lebiedzinski; Analyst; Sidoti & Company

Michael Kupinski; Analyst; Noble Financial Capital Markets

Linda Bolton Weiser; Analyst; D.A. Davidson

Presentation

Operator

Good morning, everyone, and welcome to the 1-800-FLOWERS.COM fiscal 2024 second-quarter and year-end earning call. (Operator Instructions) Please also note today's event is being recorded.
I would now like to turn the conference over to Andy Milevoj, Senior Vice President, Investor Relations. Please go ahead.

Andy Milevoj

Good morning, and welcome to our fiscal 2024 second quarter earnings call. Joining us today are Jim McCann, Chairman and CEO, Tom Hartnett, President, and Bill Shane, our CFO.
Before we begin, I'd like to remind you that some of the statements we make on today's call are covered by the Safe Harbor disclaimer contained in our press release and public documents. During this call, we will make forward-looking statements with predictions, projections and other statements about future events. These statements are based on current expectations and assumptions that are subject to risks and uncertainties, including those contained in our press release and public filings with the Securities and Exchange Commission Company disclaims any obligation to update any of the forward-looking statements that may be made or discussed during this call. Additionally, we will discuss certain supplemental financial measures that were not prepared in accordance with GAAP. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures can be found in the tables of our earnings release.
And now I'll turn the call over to Jim.

James Mccann

Thanks, Andy, and good morning, everyone. Thank you for joining us this morning. I'll begin with a brief overview of our second quarter performance and then turn it over to Tom who will provide a business update. We will conclude with financial review from Bill and then we'll open the call for your questions.
Heading into the second quarter, we expected our sales trends to improve our gross profit margin recovery to continue and our operating expenses to decline our performance was essentially in line with our expectations as our gross profit margin recovery and expense optimization efforts helped to offset what turned out to be a softer than anticipated consumer environment. Most notably, our gross profit margins expanded nicely. And as Bill highlighted further, our pace of margin recovery is happening at a good rate. This was our fifth consecutive quarter of year-over-year margin expansion. And we are well on our path to returning to our historical mean annual gross margin rate in the low 40s percentage range.
Our gross profit margin is benefiting from a combination of a reversion to the mean of certain commodity costs and our work smarter initiatives that are centered on operating more efficiently.
As Tom will highlight further, we are regularly evaluating opportunities to improve our top line through our relationship innovation initiatives. And this performance will only further be buoyed by the improvements we are seeing in our gross and operating margins.
Before I ask Tom to provide the business update, I did want to take this opportunity to highlight a new organization that we are very proud to partner with this holiday season. As many of you know, smile farms is our signature philanthropic partner whose mission is to create meaningful work opportunities for people with disabilities. Their work generates purpose and pride enhances life skills and forces socialization this holiday season. We are proud to partner with another organization whose mission is closely aligns with that of Swire bonds. During this past holiday season, we partnered with a nonprofit called the first step stepping to employ approximately 350 individuals in our Atlanta distribution facility. First Step stepping is an organization that provides employment opportunities and resources to homeless individuals who want to reenter the workforce and improve their lives. They not only provide employment opportunities, but they also provide additional support services such as providing sent transportation to and from work to position these individuals for success. They are a terrific organization that does great work and we are glad to be able to partner with that.
Now I'll turn the call over to Tom for the business update.

Thomas Hartnett

Thanks, Jim, and good morning, everyone. Today I'll provide an update on our business performance as well as an update on our relationship innovation developments, which encompasses new or enhanced product offerings, our merchandising efforts as well as user interface enhancements. During the second quarter, we generated $130.1 million in adjusted EBITDA as our work smarter efficiency initiatives, combined with improving macroeconomic factors contributed to a 230-basis-point improvement in our gross profit margin.
Our quarter-over-quarter revenue trends continued to improve. We encountered a softer consumer environment, especially amongst our lower income tier customers as lower income customers continued to be most impacted by the macro economic pressures, we continued to see this customer cohort reduced purchases the most. Conversely, AOV increased approximately 3% as our upper income customers continued to represent a greater portion of our overall population, and they continue to gravitate towards our higher priced bundle products that provide a great gift and value.
While in the first half of our fiscal year, we have been prudent with our marketing spend in a challenging consumer environment in which we didn't see an adequate return on investments. As Jim mentioned, under our relationship innovation efforts, we are regularly evaluating our offerings, pricing and bundling opportunities to ensure we have appropriate price points for each of our customer segments. And we are actively managing the pricing elasticity of our product portfolio.
Our focus on the customer journey, providing thoughtful gifting options and having the appropriate pricing at all ends of the spectrum from value to luxury has never been greater during the second quarter we introduced lower price points and emphasize gifts that are in our lower price ranges to attract customers who may be more price-sensitive. This includes providing new value offerings such as our flowers feels collection at 100 flowers that features custom crafted bouquets that match an array of sentiments and provide great value beginning at 39 99. A
nd we continue to lean into new products and bundling offerings for customers who are looking to wow, their recipients bundles allow us to feature products from our different brands and conveniently ship them to the recipient in the same package. This is also a great way to introduce introduce our customers to our family of brands and give us a competitive advantage by marketing these bundles across multiple brand websites.
These gift bundles provide great value to our customers, and we continue to see customers trade up in price points for these wonderful gifts. As an example, we leverage Personalization Mall to launch a set of food gifts with a personalized item such as our Harry & David charcuterie, get bundled with a personalized Maple cutting board. This program was launched as a test and it has exceeded our expectations. But we believe there's a lot of opportunity here and once again, demonstrates how our brands can complement one another and give our customers an elevated experience compared to others in the market.
As we look ahead to Valentine's Day this year, we have a slightly better day placement than we had a year ago. As it's midweek and a few days past the Super Bowl, which should be favorable to us. We are excited about our new triple bundle that features our one 800 FLOWERS roses, Harry & David wine and Shari's Berries to create a magnificent gift history or bundle combines guests from three of our brands and ship them in a single box that can be delivered overnight if you were to provide an extraordinary experience for the recipient and has a great last minute gift ideas throughout the US and more marketplace, which features curated items from local sellers. We can offer customers a broader assortment of gifts across a number of categories, including jewelry, spot gardening and home decor to name a few finding customers with a variety of gifting options is a core strength of ours. We have an amazing family of brands and products that we can leverage to help our customers express every sentiment.
Now I'll turn it over to Bill provide the financial review.

William Shea

Thanks, Tom, and good morning, everyone. Given Tom highlighted, we continue to see significant improvements in our gross profit margin, staying steadfast in our work smarter initiatives with a focus on operating more efficiently through the use of technology and automation also includes our logistics, labor and inventory optimization efforts. This enabled us to offset what turned out to be a softer than expected second quarter top line performance going into the second quarter, we expected the consumer environment for discretionary spending to remain pressured, but to improve as compared to the past few quarters. Quarter-over-quarter, sales trends did improve with a total revenue declining 8.4% and our e-commerce revenue declining 6.6%. But we had anticipated the pace of improvement to occur at a faster rate. Our gross margin improvement helped offset the softer top line. The pace of improvement is better than we anticipated.
Second-quarter gross margin improved 230 basis points to 43.3%, and this was on top of the 90 basis points improvement a year ago. This represents our fifth consecutive quarter of year-over-year improvement. As you said, we are well on our path to returning to our historical gross profit margin rate, and by the end of this fiscal year, we now expect to be at approximately 40%.
Our gross margin benefited from lower inbound freight costs, a decline in certain commodity costs, lower labor costs and our work smarter initiatives for driving operational efficiencies. A great example of these efficiencies is the labor savings we've been able to produce to our automation efforts. Our main distribution facilities in Medford on Atlanta are all in their second or 3rd year of automation, and we continue to achieve further productivity gains, reduced the labor cost per package at these facilities by approximately 4% for the month of December and the first half of the current fiscal year as compared to a year ago.
Additionally, due to our inventory optimization efforts, our inventory levels were in good shape heading into and out of the holiday season leading to fewer inventory write-offs. We also had a helping hand from Mother Nature provided us with good weather this holiday season, leading to fewer shipping delays and related customer credit. These factors helped to offset a more promotional environment as well as the new fuel shipping surcharge that was introduced later in the holiday period. We also continued to optimize expenses. And excluding the impairment charge and the accounting impact of the nonqualified compensation plan on our P&L, we reduced our operating expenses by $10.8 million as compared to a year ago.
As a result of these factors, our second quarter adjusted EBITDA was $130.1 million as compared to $131.4 million in the prior year. For your view, net income for the quarter, I want to address the non-cash impairment charge we took in the consumer flow and gifts group segment related to the personalization mall trademark. As many of you know, we periodically review the value of our intangible assets.
Our revenue forecast for personalization mall combined with a higher discount rate resulting from the high interest rate environment required us to reevaluate the value of the intangibles on our balance sheet. Consequently, we recorded a $19.8 million noncash impairment charge for our personalization mall business during the quarter.
Net income for the quarter was $62.9 million or $0.97 per share, including the non-cash impairment charge of $19.8 million or $0.30 per share. Adjusted net income was $82.7 million or $1.27 per share compared with adjusted net income of $82.7 million or $1.28 per share in the prior-year period.
Let's review segment results. Our gourmet food and gift basket segment revenues declined 8.2% to $540 million compared with $588.4 million in the prior-year period. Contributed to this decline was our wholesale business, which declined $18.7 million as several retailers had reduced their orders last spring for the holiday season in light of the consumer environment. This segment's gross profit margin expanded 220 basis points to 43.2% compared with 41% in the prior-year period, benefiting from lower freight costs, a decline in certain commodity costs, lower labor costs, and low inventory write-offs.
Segment contribution margin declined $5.4 million to $118.2 million with segment contribution margin of $123.5 million in the prior-year period, primarily due to the revenue decline. Our consumer floral and gift segment revenues decreased 8% to $254.8 million versus $277 million a year ago. Profit margin expanded 230 basis points to 42.8% compared with 40.5% in the prior-year period, improving on lower freight and labor costs. Segment contribution margin, excluding the impairment charge, was $30.4 million compared with segment contribution margin of $27.9 million in the prior-year period.
Our BloomNet segment. Revenues for the quarter decreased 17.1% to $27.2 million. Revenues were impacted by the lower order volume processed by Blue net, which included the expected decline in orders by one of our business partners following the merger with the company.
Gross profit margin was 47.6% compared with 42.2% in the prior-year period, primarily reflecting lower freight costs as well as product mix. Segment contribution margin was $9.1 million compared with $9.3 million in the prior-year period.
Turning to our balance sheet, our cash and investment position was $312 million at the end of the second quarter. Inventory declined to $161.3 million from an inventory of $201.1 million at the end of last year's second quarter.
In terms of debt, we had $195 million in term debt, and no borrowings under our revolving credit facility. As a result, our net cash was $117 million compared with $34.7 million at the end of last year's second quarter. During the quarter, we entered into a 10b5-1 stock repurchase plan and repurchased $5.4 million of our stock under this plan as of last Friday. This amounts to approximately 550,000 shares that were repurchased at an average cost of $9.73 per share.
Let's turn to our guidance. We are lowering our fiscal 2024 revenue guidance while maintaining our adjusted EBITDA guidance as we expect our gross margin improvement, combined with our expense optimization efforts to offset the softer revenue outlook, fiscal 2024, we now expect total revenues on a percentage basis to decline in the 7% to 9% range as compared with the prior year. We are affirming our adjusted EBITDA guidance to be in the range of $95 million to $100 million and our free cash flow to be in the range of 60 millionto 65.
Now I'll turn the call back to Jim for his closing comments.
Before we open it up for Q&A.

James Mccann

Thanks, Bill. As we look back on the first half of the year and look forward to the second half of quarter over quarter, sales trends continue to move in the right direction, albeit at a slower pace. We expect this to be offset by the gross profit margin recovery, which is now recurring at a faster pace than we expected. Combined with our relationship, innovation and work smarter initiatives, we are having a clear and direct impact on our business. We expect these factors to further fuel outperformance in a broader consumer discretionary environment improves. While it's difficult to predict when the consumer environment and in particular for the lower-income consumer is going to become more favorable, we believe our results will only be further buoyed by our relationship innovation and work smarter initiatives that are evergreen and well underway.
And before I open the call to your questions, a public service announcement. I've outlined holidays only a couple of weeks away, and we suggest you place your orders for those special people in your life today.
Now to your questions.

Question and Answer Session

Operator

Thank you. We will now begin the question-and-answer session. (Operator Instructions)
Anthony Lebiedzinski with Sidoti & Co., please go ahead.

William Shea

Good morning. This is Alex on for Anthony. My first question is regarding the Celebrations Passport members. Could you share a little bit more about the spending of those members during the holiday season versus non-members and give a little bit of color around Passport membership and order frequency and whether that change much from the prior year.

Anthony Lebiedzinski

Morning, Alex, this is Jim Scibetta revenues and here that was the best pronunciation of his name incurred. So for us, any missed the Q2 typically. But to your question, Alex and Tom will give you the details on your question. But I would say overall, the Passport customers behaving as it has been as it continues now for quite a number of years. I think you'll hear about later on that we are have a lot of program programmatic plans to enhance the Passport program. It's gradually moving from just a free shipping capability to now a loyalty program special offers. So there's a special group of people, and we're trying to treat them in a special way that we should. So we have a stream of programs that you'll see introduced throughout the course of this year.
But Tom, as to the specifics of Alex's question, yes, earning pattern.

James Mccann

So there's a trend lined up year over year, our same as a year ago, which would continue to see that passport customer purchasing two to three times more than our average customer. So although cider continue to move in the same direction.

Thomas Hartnett

So on SFR customer represents about 20% of our revenues.

Right.

William Shea

Appreciate the color. Thank you, guys. And then I think you you commented that commodity costs are normalizing to the mean, curious about one other costs.
And regarding ocean freight, given some of the faulty attacks in the Red Sea, are you seeing any significant freight cost increases?

Andy Milevoj

Alex, I will give you the color on that but the who would have thought a year ago that we'd be talking about booties, but we are we're anticipating some impact, but we haven't yet built specifically what's going on with negotiate freight costs due to the detection of I'd say certainly the spot markets have jumped up pretty dramatically on ocean on ocean freight.

William Shea

We have contracted rates that basically carry us through the end of the fiscal year. And so far the carries on at those levels is those rates, the big unknown is how long the addition of Etsy process and whether that affects your future negotiations and next year's holiday next year holidays. We begin negotiations for those rates in a few months and a lot will depend on what happens there.

Andy Milevoj

Area so out of the overall color on that, too, is like so many companies that are US-based. We're taking the steps we can longer range to lessen our dependency for those commodity items that we do import so that we can source them domestically. I think pretty much every company in the U.S. has started a program like that, and we'll continue to pursue that. But if the tensions in the Red Sea area continue into the summertime, we would anticipate that they would have an impact on our holiday employee set that primarily arrive in the summertime. But where, as Bill said, through the end of the fiscal year, the June fiscal year end, we don't anticipate a hit.

William Shea

Appreciate the color there.
And last question for me. I'm curious how you guys are thinking about acquisition opportunities for M&A for 24 25?

Andy Milevoj

Well, I'd say we're always in the market looking to see if there's a way that we can flesh out the offerings we have to work for our customers or find a a service that would be beneficial to our service offerings. A suite of several service offerings we have for our customers and the third area that we look for acquisitions to help us with talent acquisitions. I would say there's a lot available right now because I think the cost of capital, which has changed so dramatically in the last 12 months, 24 months has really put the burden I heard on so many companies. So there's lots available, but we're being very judicious about what we look at. It really being disciplined about does it genuinely help us? Does it genuinely make us a better company? Does it improve our service offering for our customers. So we're active that's a lot available, but I wouldn't I wouldn't expect it would we're going to be doing anything too dramatic.

William Shea

Appreciate all the context there, and thanks for taking questions through.

Operator

Michael Kupinski with NOBLE Capital Markets. Please go ahead.

Michael Kupinski

Thank you, and thank you for taking my questions. A couple of them on. Can you talk about maybe I'm going to parse the commodity price opportunity there. Can you talk about how commodity prices and where they are relative to the mean in terms of maybe a percent. So you can kind of give us a sense of what are the opportunities left yet from where we are right now in terms of commodity prices relative to the means?
Well, I would say this, Jim, Michael, I would say two years ago it was a peak in terms of how we got hit with commodity prices. It started, of course, with fuel when it went to well over $100 a barrel surcharges. Why we did Bill already mentioned that we did have a surcharge that came at the very beginning of December this year. That cost us a few million dollars this this year. The the other commodities that are important to us we pay a lot. We prepare a lot of food. So butter, flour, eggs are all commodities that we use a lot of bill, where would you say we are in asking I know we're not back to the 2019 kind of levels where labor, by the way is one. It's not a a commodity, but it's a and it's hitting cost ingredient and that's it. That's not going to come back. Whatever we did in terms of increases are going to stay. But the pressure there is Olivier, where are we on actual commodities now, Bill?

William Shea

Yes, it's split with there's certain commodities, dimensions of bottlenecks. Those are certainly back to more their historical means. But there are others like sugar and cocoa that is still still very, I think a big step back from a gross margin standpoint, we're actually exceeding where our expectations were of 230 basis points for the quarter, up 280 basis points of the first two quarters of the year. You kind of split those gains into two buckets, the kind of some of the macro items, ocean freight some of those commodity costs. I know that you mentioned labor availability and having labor availability on just gives us a lot of flexibility to allows us our automation efforts, operational efficiencies our logistics initiatives. Originally planning inventory build both in and out of the quarter was that the of the profit levels that we needed to be at, which led to less inventory why or spoke last year on the on the inventory.

Andy Milevoj

So like so many companies we inventoried up because it was just the challenges. So we were sure we had the product this year, we didn't have to we didn't have the by so much. So I think that's right.

William Shea

So again, as a result of maybe some of the macro trends and the global supply chain being more secure time us being able to manage inventory at the appropriate level, which led to less inventory write-offs we had to improve the margin. So really a combination of both macro from our internal works and a lot of initiatives that we have.

Andy Milevoj

So overall, commodity costs are still higher than the mean we talked about, but they have been improving?

William Shea

That's correct. Certain certain components of commodity costs have come back to the mean, but others are still at a very high level.
Okay.

Andy Milevoj

And when do we when do we begin to comp against the substantial portion of the work smarter initiatives you implemented.

William Shea

First of all, it is an ongoing effort. So we continue to add to add to that but certainly no, an example is our automation efforts were, you know, in many of our distribution facilities. We're now in the 2nd year in one facility within the 3rd year of those automation efforts yet our labor efficiencies are down and all the labor cost per package and down like 4% this year over last lower our efficiency throughout our labor efficiencies around our labor costs on average are down because of the automation exactly.

Andy Milevoj

And we'll continue, Michael with those automation efforts. So as Bill mentioned, we're in the third and second or 2nd year depending on the facility, and we will implement the new programs on top of that now.

William Shea

So this is an ongoing effort, Michael, and we think we're going to continue to get savings into the future.

Operator

Got you.

Andy Milevoj

And then can you talk a little bit about personalization, Marvin, in terms of its performance and how you are looking at Personalization Mall for the balance of this year and what expectations you might have there?
It is a combination of things that have happened with personalization.

James Mccann

Both Tom and Tom will give you the full color on that, Michael, on the Personalization Mall business was roughly in line with the segment, maybe a little bit better performance than than the segment for the quarter. And we're expecting just like our other segments that of the rate of but the sales trends and for the core for the second half of the year will be in a better direction than they were in the first half of the year pilot program being introduced there in Personalization Mall as we launched the at the very rich, Chris and IP. around Things Remembered.

Andy Milevoj

So that's a new brand with a new product line and a different range of product of that brand is a well-known brand and it gives us the opportunity to being a broader range of products. So we have a higher price points, really fancy items like the files. We have the airlines that Rick, Tom, Michael, about that.

Yes.

James Mccann

So that's one of our better sellers every day. And it does that, I think retails for over $150 in. Obviously, it's personalized and it's a wonderful beautiful and beautiful item so our AOVs and again, we're just kind of getting started there because we are we acquired the IP is taking us some time to build up the inventory and their best sellers. So we got to a portion of that this holiday season, but the average ticket is 175 basis points higher or 100, 75 times in the Personalization Mall of ALD. So have a good good price point, great gifts and dealing and addressing a different cohort of customers that would be weddings or retirement and or special moments in people's lives.

Andy Milevoj

So all leveraging off the same fixed cost bring the same fixed facility that we have there.
Personalization Mall, Michael.
And just one last question. If you don't mind up in terms of your revenue guidance for the year, what expectations are baked into your guidance in terms of like the general economy are you can you kind of give us some sense of what those expectations are built?

William Shea

Well, Michael, we revised our revenue guidance to be down 7% to 9% with the first half of the year. You'll be down around 9%. So implying a slightly better trend on into the second into the second half of the year. I think we'd modify our guidance. I think at the beginning of the year, we would know we were hopeful of that. The improvements that we're seeing would be even with the even be more accelerated, both in the second quarter and into the second half of the year. So it is improving at a slower pace than what we originally anticipated. And some of that is tied to the to the macro environment not being as robust as we hoped it would.

Andy Milevoj

So baked into that as the trend continues to improve, just not at the pace we were hoping for petchem.

Okay.

William Shea

That's all I have.

Andy Milevoj

Thank you.
Thank you, Mike.

Operator

Linda Bolton-Weiser, D.A. Davidson.

Linda Bolton Weiser

Yes, hello. Hi. So I was wondering just your comments about the consumer environment. I mean, consumer sentiment, Michigan Consumer Sentiment has been below 70 now for like two years. So it just seems like we're stuck in this room, this low consumer sentiment thing, which is not good for your business, obviously. But if it does persist, let's say for another year, what would you do differently in your business is there is there anything additional you can do in terms of cost structure or like how would you think about things if this just continue down like that with revenue declines like this for another year. How would you think about what would you think about doing differently?

Andy Milevoj

Well, thanks for your question, Linda. We initially the last quarter, of course, was a really good question. And one, we've talked a lot about over the last month or two. And the answer is a couple of things. One is we're still recovering from the the COVID bounce shake. So many of our e-commerce kinds of companies like us experienced. So we're still in that back end of the wave of that.
The second thing is that I think the consumer sentiment generally is pretty good, but it's bifurcated and there are categories like ours are saying that we look very hard at the competitive data that we have that we buy and the good news, bad news, bad news is everyone in our categories has gotten hit with the back end of this COVID wave. The good news is that we're holding share or gaining share. So so good and bad. And what we think would if this trend didn't continue on the pace of this recovery and it went the other way we have several levers that we could pull to make sure that we and then we continued on the profitability trends that were off, which is quite healthy, but we think could be if the consumer trend continues on this pace and maybe improves a little bit that it's really good if we can declines from the trend we're on and gets worse that we have quite a bit of leverage in our operating model to make that the three to make up for that and to make sure our bottom line continues to be strong Yes, what else would you add to that?

William Shea

Yes, just from a top line perspective, we continue to continuously evaluate all of our offerings, our pricing of bundling opportunities to ensure we have the appropriate price points of each. Our consumer segments are segments and we have some pricing elasticity in that. So we know we are very similar focused trying to improve the consumer experience on it and ultimately to to fight against some of those macro trends.
So when you talk about elasticity, you mean price points, both at the higher end and lower end from a quarterly perspective, our trend lines on our gross margin will be as an accelerated pace back towards us. The mean of the kind of the low, no low 40s so we continue to expect that gross margins will improve and our expense optimization, you've seen that for the last the last year and a half, and we're going to continue those efforts to try to offset any softness in the top line.

Andy Milevoj

So in summary, we hope it doesn't happen, but we do have the capability and plans that if the trend would have turned negative that we've been a <unk>. We have the ability to respond to it appropriately.

Operator

And Dave, can I ask one more about from Google? I think they've made some additional changes with regard to their blast email marketing that some of my consumer companies have mentioned. They're trying to figure out what that means for them. Have you analyzed what those changes mean for your marketing processes?

Andy Milevoj

We have, Linda, there's a lots of changes. And this both the changes that Google is implementing are talking about implementing what they have implemented and that's also big macro trends that are happening in the marketplace that that we feel we're in. Fortunately, good position to weather and respond to. And frankly, some of the some of the things we experienced during the last quarter, give us hope that we're going to be less dependent on the big search engines in the future. And we were one of the big assets we've accumulated through the COVID burst was a huge increase in our database, and that gives us some flexibility and less dependency on search engine activity. But Tom, you know, really well the specifics of this quarter.

Yes.

James Mccann

I mean, I think we're talking up lenders just another arm, another change for Google, which is a very dynamic business and always has on changes going on. Certainly, we also saw some significant changes in just the server. And now the landing pages for Google showed up this year, which we're always reacting to and overall, this was on a competitive environment. Their CPMs and CPAs were up, et cetera, and we kind of expected that to occur.

Andy Milevoj

And if you're if you all of your marketing budget or a substantial part of your marketing budget is at that have a bottom of the funnel kind of activity there. It's going to have big ramifications, unfortunately, for us that's not the case.

Operator

Thank you very much. I appreciate it especially kind of as a reminder, if you'd like to ask a question, please press star and one. Today's next question comes from Alex Fuhrman with Craig-Hallum. Please go ahead.

William Shea

Hey, guys, thanks very much for taking my question and congratulations on the strong bottom line results in the quarter.

James Mccann

On the I was wondering if you could unpack the lower revenue guidance a little bit more. It seems like the Q2 results were not very far off from what we were all expecting, but the change to the full year revenue guidance is not insignificant. So is it something maybe you're seeing in kind of the lull period between Christmas and Valentine's Day that was maybe a little bit disappointing or just curious if you're seeing any kind of early trend lines into Valentine's Day now, or if that's maybe too early?

Andy Milevoj

Well, it's I would say definitely to early Valentine's Day is a real pain in the neck because it's very, very busy from several days. Mother's Day is a two week ramp up of the holiday quarter. It's from Thanksgiving on that's maybe a week or two before Thanksgiving Valentine's Day. It's a big burst of business customer dynamic changes. It goes from majority of women to majority men of which are wonderful customers, but they don't come back as regularly and frequently as our female customers do. So it's something we it's expensive to prepare for our cost of goods jumps way up and we have this big burst of business. So yes, it's a little difficult for us to project exactly what will happen at Valentine's Day. But as Tom mentioned, day placement is critical for Valentine's Day and last year for the first time, Super Bowl was right before Valentine's Day. So Valentine's Day was Tuesday last year, and the Super Bowl was a Sunday and it moved back a week and it's from its normal schedule to allow more time for the extra regular season game and still have two weeks from the visual play out until the Super Bowl. So we think that we're still going to have that this year. So still close to Valentine's Day, but now you have three selling days, Monday, Tuesday and Wednesday with people in a normal work routines and not having the distraction of the Super Bowl, just 48 hours before that translates. So we're expecting all of those things will inure to our benefit, but also we have to watch the weather carefully because that's a big variable. So nothing we're excited about today is coming from. It's a pain in the deck. As I've mentioned, I've been through a few of these, but we don't see anything trend wise that would give us any concern or frankly, any we didn't get up and kick on yields.

William Shea

But Alex, I mean, our bar sales trends did improve in the in the second quarter in New York at the pace of recovery that we had anticipated a little softer than we wanted it to be. So as a result, our second half of the year, which we had originally thought to be on a faster improvement and team that's why we changed our that.

Okay.

James Mccann

That's very helpful.

Andy Milevoj

Thank you both sections.

Operator

And ladies and gentlemen, this concludes your question and answer session. I would like to turn the conference back over to Jim McCann for any closing remarks.

Andy Milevoj

Well, thanks so much for your time and interest today, but please let us know if you have any other questions. We're available to answer them for you, please reach out and do remembers.
As Alex just mentioned, Valentine's Day is fast approaching today's February first. Valentine's Day is a 14th Valentines weekend begins around the April ninth. So make sure the people in your life that you care about know how much you care for them.
Thanks for your time today.

Operator

Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.
And.