Good morning, and welcome to the 1800flowers.com, Incorporated 4th Quarter 2021 Conference Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Joe Petitto, Senior Vice President of Investor Relations.
Please go ahead.
Thank you, Jason. Good morning and thank you for joining us today to discuss 1800flowers.com, Inc. Financial results for our fiscal 2021 Q4 and full year. 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 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 ks and quarterly reports on Form 10 Q. In addition, this morning, we will Certain supplemental financial measures that were not prepared in accordance with generally accepted accounting principles.
Reconciliations of these non GAAP financial measures To the most directly comparable GAAP measures can be found in the tables accompanying the company's press release issued this morning. The company expressly disclaims any intent or obligation to update any of the forward looking statements made in today's call, 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'll now turn the call over to Chris McGann.
Thanks, Joe, and thank you all for joining us this morning. We are very pleased to report a strong finish to what was truly an incredible year for our company. Most important, we are very proud of the achievements of all of our associates. They worked diligently throughout the year to overcome the unprecedented challenges of Global pandemic to help millions of our customers stay connected with and express themselves to the important people in their lives. For our Q4, we achieved continued strong double digit revenue growth.
And keep in mind, this is on top of the more than 60% revenue growth that we achieved in last year's Q4. When the pandemic first took hold in our country, consumers began to work from home to shelter in place And shifted much of DECT shopping online. As we noted back in our April call, our 4th quarter, along with the current fiscal Q1, Represent our most challenging year over year comparisons. Despite the challenging comps, both our top and bottom line results for the 4th quarter Exceeded the high end of the guidance that we provided back in April. This reflects our focus on providing our customers With an expanded range of solutions, combined with our ability to leverage our unique e commerce platform, which includes our all star family of brands, Our advanced technology stack, our manufacturing, distribution and logistics capabilities, our digital marketing expertise and Our growing customer file.
These factors helped us drive revenue growth of 42.5% for the full fiscal year and achieved a significant milestone for our company by surpassing $2,000,000,000 in total revenue. We have basically doubled the size of our business In fact, over the past several years, we have significantly transformed our company, Growing from a collection of specialty brands into a unique e commerce platform that inspires and enables our customers to express, connect and to celebrate. As such, we are well positioned to continue to deliver strong growth going forward. We see significantly increased recognition Relevancy for our brands and products for everyday occasions, including Birthday, Sympathy, Get Well, New Baby, Anniversary and Just Because. We further expanded our already broad product offerings to provide more solutions to our customers through the acquisitions of 2 strategic and highly accretive businesses, Sherry's Berries and Personalization Mall.
We grew our customer file significantly in fiscal 2021, And we saw a continuation of the positive customer trends and customer behavior metrics in terms of frequency and retention that we've discussed in our past calls. Our customer file is one of the most important assets and a driver of the strong growth that we see going forward. So to help illustrate the strength of this list, I'd like to share some key metrics with you. In fiscal 2021, we added more than 6,500,000 new customers. One of the strongest areas of new customer growth for us was with millennials, which increased at a double digit pace And now represents 24% of our total customer file.
Existing customers also grew at a strong credit base, resulting in more than 13,000,000 total active customers for the year. Importantly, even within strong new customer growth, Existing customers represented approximately 64% of total revenue. And as we've noted in the past, Our best performing customer cohorts are customers who purchase from more than one product category or brand and customers who belong to our celebrations passport loyalty In both cases, we saw solid growth in fiscal 2021. Customers who bought more than one product category or brand, Excluding PMOL, made up more than 13% of our total active customers and represented approximately 29% of total revenue for the year, up significantly from the prior year period. Further illustrating the importance of this cohort, The average spend of these customers in fiscal 2021 was $3.30 more than double the spend of an average customer, excluding P Mall.
In terms of our celebrations Passport loyalty program, as we noted in April, membership had surpassed the $1,000,000 mark Back in early spring, for the year, membership grew 112% to 1,300,000 members. Passport member revenue per customer was also up for the year at $2.84 nearly double that of the average customers. These metrics really illustrate the tremendous value of our customer file, a key asset and growth driver for our overall business and one that we will continue to develop going forward. In terms of product development, we saw we significantly expanded our product offerings With the acquisition of Personalization Mall, adding thousands of personalized gift items from wine glasses to picture frames, A dozen personalization technology options from laser engraving to custom embroidery and a highly automated operating model that provides industry leading order to ship delivery times. This acquisition significantly extended our capabilities of our operating platform and clearly positions us as a leader in personalized gifting.
Now we've only begun to scratch the surface in terms of what we can do with PersonalizationMall's unique capabilities and their product offerings. So for example, this fall, You will see us roll out personalized products across our brand sites, showcasing our new capabilities to millions of our customers. And we're equally excited by the tremendous opportunities we see in corporate gifting, where personalized products can help our corporate customers Stay connected with both their clients and their employees. Throughout fiscal 2021, we also focused Our product development efforts are creating more cross brand and cross category bundled gifts, leveraging our platform to create truly original and compelling Gift combinations. Give you an example of this.
For Mother's Day, we bundled Sherry's Berries, roses from 1-eight 100 Flowers and award winning wines from Harry and David, creating a hit product that we have now expanded into a growing collection that we call our deliciously decadent series. We've also created shop in shop experiences to take advantage of brand affinities, such as the 1-eight 100 Flowers shop on the Harry and David site and the Moosemont shop on the Popcorn Factory site, introducing customers to our expanded product offerings with authentic and organic experiences. And for everyday gifting occasions, We expanded our Birthday and Sympathy collections that now feature more multiple brand combinations. Now before I turn the call to Bill for his review of our financial results, I'd like to cover our expanded initiatives to engage with our customers and build a community that goes beyond transactions. Deepening the relationships we have with our customers Through a combination of highly relevant content, interactive experiences and platforms that promote a two way dialogue We'll further enhance our position as our customers' go to resource for all of their expressive and connective needs.
One way that we measure the success of our initiatives in this area is through specific touch points that we have with consumers across a broad range of communication and social channels. In fiscal 2021, we created nearly 80,000,000 consumer engagements, 80,000,000 consumer engagements. Many of these engagements happened around key holiday periods such as Mother's Day and Father's Day, where we build programs called MVP Moms and MVP Dads, featuring popular chefs like Antonio LaFoxo And well known athletes like Ali Krieger and Ray Allen, we created video profiles showing their roles at the heart of their families, And these videos reached more than 10,000,000 consumers. Throughout the year, we also worked to create a growing range of online events Through social channels like Facebook and Instagram, for example, our Breakfast at Wolframan's Series was a great success watched by nearly 2,000,000 consumers and effectively introducing a new younger demographic to our Wolfman's Bakery brand with a mix of lifestyle tips, personal experiences and live recipe demonstrations. We've also continued to innovate our digital experiences, evolving our design and creative to better mix content with commerce as we evolve both desktop and mobile channels.
There's many more interactive engagements, And these have all helped us to introduce millions of people to our broad range of solutions for their connected and expressive needs. We plan to continue to broaden these efforts and extend our engagement reach going forward. Now I'd like to turn the
call to Bill to review the financial metrics. Bill? Thank you, Chris. We are very pleased to have finished a very challenging and very successful fiscal 2021 with Solid performance in our Q4. As Chris noted, last year's 4th quarter results posed a particularly challenging comparison due to the initial impact of the pandemic in the prior year period.
Nonetheless, we were able to deliver results above the top end of our guidance for revenues, adjusted EBITDA and EPS. We achieved overall revenue growth of 16.5% Organic revenue growth of 3.8% compared with the prior year period. To put our revenue growth for the quarter in perspective, Compared with our fiscal 2019 Q4, our overall revenue growth was 88% and our organic growth was 58%. Our results for the quarter and the full year reflect the decisions we've made over the past several years to manage the various headwinds we have faced and to lean into the growth opportunities that we saw. We made the decision to invest in expanded digital marketing programs that have helped us accelerate new customer growth, Significantly growing membership in our Celebrations Passport loyalty program and increased awareness in our All Star family of brands, both holiday and everyday occasions.
We made the decision to acquire Sherry's Berries in August of 2019 and to acquire Personalization Mall in August of 2020. Both acquisitions have proven to be highly accretive top and bottom line illustrating the strength of the unique business platform that we have built. We continue to see significant opportunities to drive growth in these businesses and across our family of brands by leveraging our platform. Now breaking down some of the key metrics for the Q4 year. For the Q4, total revenues increased 16.5% to $487,000,000 compared with $418,000,000 in the prior year period.
For the year, total revenues increased 42.5 percent to 2,120,000,000 reflecting strong growth across our 3 business segments as well as contributions from Personalization Mall. Excluding Personalization Mall, total net revenues grew 26.6% compared with the prior year. Gross margin The quarter increased 20 basis points to 40.7 percent and for the year increased 40 basis points to 42.2%. For the quarter, operating expenses as a percent of total revenues improved 10 basis points to 37.5%. Excluding the impact of the company's non qualified deferred 4 0 1 compensation plan and in fiscal 2020, the costs associated with closing Of the Harry and David Retail Stores and the acquisition costs of Personalization Mall, operating expenses as a percent of total revenues increased 180 basis points to 37.2 percent for the quarter compared with 35.4% in the prior year.
This increase reflects the higher digital marketing and advertising costs compared with the prior year period. For the year, Operating expense improved 120 basis points to 35.2% compared with 36.4%. Excluding the aforementioned one time costs, operating expenses improved 110 basis points to 34.7% compared with 35.8% in the prior year. This, despite the numerous cost headwinds we incurred, shows the leverage in the model as we grow. For the quarter, adjusted EBITDA was $30,200,000 compared with $32,500,000 in the prior year period.
The strong adjusted EBITDA for the quarter, while down slightly compared with the prior year period, primarily reflects higher revenue and gross margin achieved, somewhat offset by the increased marketing costs compared to the record low marketing rates in the prior year period. For the year, strong revenue growth combined with enhanced gross profit margin and lower operating expense ratio resulting in adjusted EBITDA growth of 64.5 percent to $213,000,000 Net income and adjusted net income for the quarter of $13,300,000 or $0.20 per diluted share compared with net income of $9,800,000 or $0.15 per diluted share and adjusted net income of 15 point $1,000,000 or $0.23 per diluted share in the prior year period. Net income for the year was $118,700,000 or $1.78 per diluted share compared with $59,000,000 or $0.89 per diluted share in the prior year. And adjusted net income for the year was $122,600,000 or $1.84 per diluted share compared with $65,000,000 or $0.98 per diluted share in the prior year period. Turning to our segment results.
In our Gourmet Food and Gift Baskets, revenue for the quarter was 152,200,000 down 1.1% compared with the prior year period. For perspective, revenue for the quarter was up 110% compared with our fiscal 2019 Q4. For the year, revenue in this segment increased 21.6 percent to 955.6 1,000,000 compared with $785,000,000 in the prior year period. Segment contribution margin for the quarter was $4,200,000 compared with $10,100,000 in the prior year period and adjusted contribution margin of $15,300,000 in the prior year period. The decline in the quarter reflected the higher year over year marketing rates as well as higher labor and shipping costs.
Adjusted segment contribution margin for the year was $148,900,000 compared with $115,800,000 in the prior year, We're looking to strong revenue growth along with enhanced leveraging of operating expenses. In our Consumer Plow and Gift segment, Revenue for the quarter increased 27.2 percent to $297,700,000 compared with $234,100,000 in the prior year period. This primarily reflects the contributions of Personalization Mall, combined with solid growth for the Mother's Day holiday. Excluding the contributions for Personalization Mall, revenue growth in this segment was 4.4% for the quarter. From perspective, revenue growth for the quarter, excluding personalization wall, was up 53% compared with our fiscal 2019 Q4.
And for the year, revenues increased 72.8% to $1,030,000,000 compared with $593,200,000 in the prior year. Excluding contributions from Personalization Mall, revenue in this segment was up 33% for the year. Segment contribution margin for the quarter was $41,200,000 compared with $39,000,000 in the prior year period. And for the year, segment contribution margin With $128,600,000 compared with $73,800,000 in the prior year. This reflects contributions from Personalization Mall, combined with the continued robust performance in the segment's flagship 1-eight 100 Flowers consumer floral brand.
In our Blue Moon segment, Revenues for the quarter increased 23.5 percent to $37,300,000 compared with $30,200,000 in the prior year period. For the year, revenue increased 27.9 percent to $142,900,000 compared with $111,800,000 in the prior year. Segment contribution margin for the quarter was $11,300,000 compared with $7,600,000 in the prior year period, in part due to the decision in the year ago period to waive certain fees to help support our florist members. Segment contribution margin for the year was $45,900,000 compared with $35,100,000 in the prior year, driven by strong top line growth. In terms of corporate expense, for the fiscal Q4, corporate expense, including stock based compensation, But excluding the impact of the company's non qualified deferred 4 1 compensation plan was $29,100,000 compared with $31,300,000 in the prior year period.
For the year, corporate expense, including stock based compensation, but excluding the impact of the company's deferred four zero one plan And one time costs associated with the acquisition of Pmall were $121,200,000 compared with $103,500,000 in the prior year. The increase in corporate expense for the year was primarily related to increased support services, Personalization Mall, overall company growth and COVID related expenses. Regarding free cash flow, we generated free cash flow for the year of $118,100,000 We're $104,700,000 in the prior year. Turning to our balance sheet. At the end of the year, our cash and investment was $173,600,000 Inventory was $153,900,000 primarily reflecting the acquisition of Personalization Mall and our conscious decision to build inventory ahead of the new fiscal year.
Our term debt balance, net of deferred financing costs, $181,500,000 and we had 0 borrowings outstanding under the working capital line within our revolving credit facility. As a result, total net debt at the end of the year was 7,900,000 Providing guidance for fiscal 2022. Last year, due to the significant uncertainty in the overall economy related to the early days of the COVID-nineteen pandemic, We did not provide guidance for the full fiscal year, instead providing guidance on a quarter by quarter basis. This year, While there remains considerable uncertainty in the economy due to the ongoing pandemic, we are moving back to the practice to our prior practice of providing full year guidance. This is based on both the improvements, albeit uneven, in the overall economy that we've been seeing for some months now as well as the macro economy trends and the factors we see in our business that support our growth outlook, including the significant shift of consumers to e commerce shopping, which we believe will continue, Along with our expansion of our product offering, both organically and through strategic acquisitions like Sherry's Berries and Personalization Law, The strong growth and positive behaviors in our customer file, including strong new to file customer growth as well as increased demand from existing customers and Continued strong growth in our celebrations passport loyalty program, which is helping drive increased frequency, retention and cross category cross brand purchases.
For fiscal 2022 full year, we anticipate total revenue growth of 10% to 12% compared with the prior year. Adjusted EBITDA growth of 5% to 8%. EPS in line with fiscal 2021 as improved EBITDA is offset by higher depreciation and a higher effective tax rate and free cash flow to again exceed $100,000,000 We are well aware of several headwinds affecting our business as we enter the new fiscal year, including A challenging labor market with both limited availability and rising wage rates and significant increases in both inbound and outbound shipping rates as well as certain commodity costs. We are confident in our ability to manage these headwinds and continue to leverage the strength of our business platform to drive strong revenue growth and solid bottom line performance in fiscal 2022 and over the longer term and continue to enhance shareholder value. Regarding our current fiscal Q1, our smallest in terms We anticipate modest revenue growth reflecting the comparison to last year's COVID driven summer months But most of the country was in near complete lockdown and consumers were moving their purchases online as well as reduced operating leverage, reflecting the increased labor and transportation costs and higher digital marketing rates compared with the prior year period when the impact of the pandemic Reduced marketing costs to historic lows.
We anticipate significantly improved performance in our fiscal second quarter in the second half of our fiscal year, which drives our strong growth guidance for the year. I will now turn the call back to Chris.
Thanks, Bill. Fiscal 2021 was a record year of top and bottom line results, which illustrate the strength of the unique business platform that we've been building over past several years. I'm so proud of our team's efforts to transform and once again reinvent our company From a collection of specialty brands to become a leading e commerce platform that inspires our customers to express, connect and celebrate. Looking ahead, we are extremely well positioned to deepen the relationships we have with our customers by engaging with them across a broad range of communication channels as we work to build a true community and offer our customers the most robust online gifting assortment. Our success can be seen by our strong growth rates in our customer file and a sharp rise in our new customer base.
As a result of our strategic initiatives, we've seen tremendous growth driven both organically and through strategic acquisitions. We have an exciting runway ahead of us, which will enable our company to drive solid, sustainable, Double digit revenue growth and strong cash flows in fiscal 2022 and the years beyond. We are confident that we will drive long term shareholder value as we continue to leverage the strengths of the unique business platform that we've built. Now I'd like to turn the call back to the operator, so we can take your questions. Operator, please repeat the Q and A instructions.
Thank you. We will now begin the question and answer session. Our first question comes from Anthony Lebiedzinski from Sidoti and Company. Please go ahead.
I guess, good morning and thank you for taking the questions. So certainly, it's impressive year as you said. Kind of looking forward to fiscal 'twenty two, the revenue growth implies certainly continued Solid trends. Now, Chris, you touched on a little bit on the expanded product offerings that you expect as well as So continued growth from your active customer base. Can you just further give us some a little bit more details as to the Standard, product offerings that you're looking to do and how will that drive engagement and growth?
Sure, Anthony, and thank you for the comments. There's a couple of things here as we look at expanding the product catalog. We see as we expand our product offerings, our product catalog, our customers are seeing more and more options and more solutions for more of their gifting and connective needs. That helps increase their frequency and their retention rates with us, especially when they join our passport program or even if they don't and they're more of a cross category purchaser. So while simultaneously while we're expanding the product catalog, We're also working on more cross merchandising capabilities like the shop in shop example that I gave or the bundled gifts that I gave in the formal remarks where we combine wine from Harry and David with Sherry's Berries with Flowers.
So those two efforts simultaneously on what will really drive the growth going forward. And as we look at expanding our product catalog, we really look to do it 3 ways: Organic development from our existing brands and our existing capabilities, I think Harry and David Gourmet line was a good example of that. The bundled gifts that we're now doing, the combined gifts that we're now doing are good examples of that. We'll look to also do it through acquisition, as we mentioned. We've expanded our catalog significantly by bringing on all the Sherry's Berries products as well as the thousands of products We brought on in the personalized gifting category with our acquisition of Personalization Mall and then through more of a marketplace strategy where we have 100 and growing makers and sellers on our platform bringing their product into our catalog, we could put those products in front of our customers.
Again, our philosophy is to help our customers express themselves and connect and to celebrate. And that's to do that, we have to have more and more product solutions and not only products that we own, but more through third party products as well.
Got it. Okay. That's very helpful, Chris. Thank you very much for that. And then in terms of the Q1 guidance, This certainly is the comparison, but then last year, if I recall, I think the wholesale piece of the business was still hurt because of the initial uncertainty because of it.
Are you Seeing the wholesale piece of your business coming back and just want to get some more color on that.
Yes, sure. I think really as we look at again, we're very pleased with the guidance that we're providing next year for double digit growth next year on top of what was Phenomenal year this year as you pointed out. So looking at that growth of 10% to 12%. As we get into Q1, it's clearly our most difficult comparison quarter. Bill, why don't you speak specifically to what we're seeing in the wholesale side of things.
Some of that impacts Q1, but also moves into Q2.
Yes. In fact, Anthony, most of that is Q2. It's all the wholesale baskets that we deliver to the big box Guys, it's mainly a Q2 and we do have some crossover between September October sometimes that will affect Some of the timing. We will have a much stronger wholesale business this year as a rebound from last year. We have some challenges on the margin side with the ocean freight and probably everything you've read with about to ocean freight and getting product in Yes, major.
But we're going to have a very robust wholesale year.
Got it. That's great to hear. And then just Bill, As far as the guidance that you put out for fiscal 2022, so what is your expectation for the tax rate and depreciation expenses?
Yes. So we have the benefit in fiscal 2020. So our effective tax rate was around 20% a little over 20 This year, so we had the benefit of some discrete items, some of which came out of the Jobs Act and Tax Cut, but also some other discrete items this year that will not repeat in fiscal 2022. So, our effective tax rate should be in the 23%, 24% next in fiscal 2022. Depreciation is going to be up as our CapEx is going up.
One of the to support the huge growth that we've been experiencing and we've had to continue to invest in our infrastructure. So both the combination of adding PMOL to the business as well as the strong growth we had last year and the expectation of strong growth Going forward for multiple years, we're investing capital behind the infrastructure of the business as well as technology behind the business. So as a result, you saw CapEx at $55,000,000 for fiscal 2021 and you have that going up in fiscal 2022 beyond that. So depreciation will be up another $10,000,000 or so in fiscal 2022.
Got it. Okay. And the CapEx should be also in that $10,000,000 plus range versus fiscal 2021?
Yes. That's right. We're in a $60,000,000 $65,000,000 Okay.
Got it. Okay. That's very helpful. Well, thanks a lot and best of luck.
Thanks, Anthony.
The next question comes from Michael Kupinski from NOBLE Capital Markets. Please go ahead.
Yes. First of all, Congratulations on a solid quarter and a great year. It obviously was a very good quarter. In terms of the consumer quarrel, the operating expenses had a meaningful jump. And I was just wondering, you mentioned about marketing expenses.
Certainly, when you look at the expenses, it was about 27% of segment revenues. And in fact, that's still below 2019 Q4 levels on a percentage of revenues basis, but I was wondering if you can just give us some color on the expense increase, how much Labor, how much is increased marketing? If you can just give us some color there.
Yes, Michael, the large increase on the consumer flow was almost Entirely driven by marketing. Again, as Chris mentioned earlier, last year in Q4 and ultimately came into Q1 of this year, We saw marketing rates drop to historic close as many companies were closed and had to leave the advertising So we got the benefit of that. We saw a $35,000,000 increase in EBITDA in the Q4 of a year ago. That's what created the kind of tough comp that we had This year and a lot of that was not only driven by the strong top line growth we had a year ago, but marketing rates were about I'll give you a 50% of what they were historically.
And that was because we saw the opportunity and leaned into it. So we took advantage of those rates. Those rates change pretty quickly, Bill.
They did. So by Q2 of this year, our fiscal 'twenty one, we saw them bounce back. We had about a 6 month window where marketing rates were significantly low Q4 of fiscal 2020 and Q1 of fiscal 2022. And then By Q2, as we added to our big quarter, those advertising rates bounced right back up.
And are you seeing any intense competition? Is the competition increased? Or is that just purely just Related to rates, I'm just trying to get a sense of the competitive landscape.
It's really just related to rates. We haven't seen anything in this Competitive nature, whether in the floral category, gourmet food category or in the personalization, nothing different, nothing special. So it still gives us opportunity to continue to what we're doing, focusing on our brands, leaning in where we see opportunities, expanding market share in all of the categories and continuing to grow our platform.
And the increase in marketing expenses, I know Bill that you had mentioned that you felt that As the company grows and scales that you felt that one of the benefits of that scale would be that marketing expenses would not Would it not materially increase in that you would see an expansion of margins in that basis. I was just wondering if you are still thinking that The scale would actually give you that type of leverage on the marketing spend?
Yes, Michael, I think every time we spoke about that, that was over the long term horizon that eventually more and more of the Revenues and our growth will come from existing customers as frequency continues to increase and as a result that we leverage in the marketing Right now, we're facing tough comps in again the quarter we just reported and in Q1. So that's more of a longer term vision that We'll get leverage on the marketing spend side.
And then if you look at the metrics that we reviewed, supporting that long term vision there, You look at the customer file that we built, the growth in the passport program, the growth in customers buying from more than one category, Now those all come with significantly increased retention rates. So the value of that customer file is continuing to grow, which will help our marketing spend going forward.
And just a clarification on the guidance. I think you mentioned that the guidance in fiscal 'twenty two is also based in part from Strategic acquisitions like Sherry's Berries, can you give me some color on the prospect of acquisitions and what areas seem interesting at this point?
No, the guidance that we gave is almost purely organic. It does not contemplate any additional acquisitions. We usually don't do that. So the 10 12 is purely organic. We do point out the great acquisitions that we've done over the past 18 plus months of Sherry's Berries and Personalization Mall.
We stay active in the M and A market looking to see what's appropriate out there that can either add to our platform like Personalization Mall did or significantly leverage our platform like Sherry's Berries did. So as you'll as we continue to look for opportunities for products, for capabilities, We're just looking for things that add to the platform, add value to the consumer, add value to our Passport program, Bring more products into our catalog, expand it, as I mentioned, to Anthony. The more we grow that product catalog, The more opportunity our customers have to buy with us. So I think that's where you'll see us continue to look from an M and A perspective.
Got you. Congratulations again.
Great. Thanks, Mike.
The next question comes from Dan Kurnos from The Benchmark Company. Please go ahead.
Yes, good morning. Good to see you guys keep the guidance sort of intact. I don't think really any surprises On either front here, maybe Chris or Bill, just as we go, I know you just gave September quarter, but We're all trying to kind of get a gauge on sort of how the holiday quarter is shaping up just in terms of inventory availability, Product availability, how you guys are already planning ahead to try to mitigate shipping costs, we've heard Some of the driver costs coming back down, you guys have used like the Ubers and DoorDash of the world to circumvent some of the shipping costs or last mile anyway. There is an increase in postage coming as well. So maybe if you can kind of just talk through sort of the puts and takes how you're sort of planning for the holiday season now and sort of your assumptions on your availability of inventory depending on consumer demand.
Sure. So to start off, Dan, thank you, first of all. And as we look at the guidance going forward, we're real proud of the double digit guidance that we've given for next year On top of what has been a truly tremendous year for us this past year. And Bill pointed out and we'll get into some of the headwinds and the challenges that we have. But I think as we go through each of the different challenges and the cost challenges that we have on the spray, the capacity, some of the product costs that we face, I'm very, very proud of the team that we have in place.
It's proven over the past several years to be very capable at helping Really mitigate these costs and cost increases that we get faced with from time to time and how to manage around that and mitigate it as best we can, whether it be labor, whether it be shipping costs, etcetera. Bill, you want to give a little more color on what we're seeing and then maybe how exactly we're going after it? Yes.
First off, Dan, we are bullish on the holiday quarter. But from a cost perspective, as we Kind of spoke about in our formal remarks and as Chris was referring, we do have headwinds. Labor continues to be Both availability and labor rates continue to be a challenge. We've talked about some of the increase in CapEx is all about automation, both in our Manufacturing our distribution self-service on customer on our customer service platform to help address the and reduce the number of Seasonal Helpers that we have. Advertising, as we discussed, is a headwind in Q4 and Q1, but that self corrects when we get to Q2 because last year with the political campaigns investing heavy both on digital as well as TV, advertising rates came back in October to more normalized levels.
So we won't have that negative comp as we go into Q4. From a shipping perspective, you have seen a lot of stories On Ocean Freight, trucking rates are up and the 3rd party carriers are all in the driver's seat and driving higher costs. So we continue to work with our partners to manage through kind of the cost aspects of these things. We will be putting through Some strategic pricing increases to pass along some of those costs to the consumer to help offset some of those costs. But so I think we've done a good job in the past.
I think we've demonstrated a good job in the past of managing through a lot of the headwinds that we face, and we anticipate we'll be able to do so again in fiscal
Yes, I mean the guide clearly implies expectations for strong holiday quarter if you're looking at sort of modest growth in So that's helpful color. And just to be clear here, I mean, look, given your expectations for PMOL Or PMOL in the bucket and hearing David continuing to grow nicely even though probably in the near term Still some tough comps. Would you I don't want to put you on a put it out there, but maybe a trough next year in Adjusted EBITDA just on the headwind cost without a crystal ball based on kind of the mix shift that you expect going forward?
I mean, our EBITDA guidance does give growth of 5% to 8%. So we're expecting growth
I meant from a margin perspective, Bill, sorry,
not from a total dollars. Yes, some of that will because of those headwinds, Gross margins will be a little more challenged than they've been because most of these headwinds do affect gross margin.
Okay. I'll follow-up with you after. Chris, just one other thing and thanks for all the help on all the KPIs. Can you maybe just talk through what you're seeing in and I think you mentioned this before, but just kind of what you're continuing to see from sort of Pre COVID cohorts versus cohorts you picked up during the pandemic and then cohorts you picked up after the pandemic in terms of Repeat or anything that you could just kind of parse through there?
Great, Dan. Yes, first of all, we're really happy with the customer Metrics that I reported, the growth that we're seeing in Passport are 1,300,000 members. You see the average revenue per member there. And the new membership on Passport, new customer accounts on people buying from more than one brand or more category Our growth continuing to grow at significant rates, we had great growth in each of them last year as evidenced by growing to 1 point We're seeing growth rates continue very strong and we're seeing the behavior metrics of customers from post pandemic to pre pandemic Holding up like we saw in the early days, whether at least even if not slightly better performance metrics than those from pre COVID days. So it's I think that's reflective of the new type of consumer.
An example, the reason I gave the color that About new customer growth, a significant number of them were millennials, which now make up 24% of our 12 month active file. So those are newer types of customers on to our platform that are more inclined to be more sticky and join test Utilize most of the platform. So everything we're seeing there just gives us real great confidence going forward.
Got it. Thanks for all the color, Chris. We'll wait for the new vegan eco friendly options coming out to address that customer base.
The next question comes from Doug Lane from Lane Research. Please go ahead.
Yes. Hi. Good morning, everybody. Seems to me that last year during the holiday season, the big concern was really not on demand, but on capacity. So can you sort of run us through what you've done to try to alleviate the capacity constraints in your peak season there?
Doug, there's been a number of things. Bill has been a little bit closer to it from the operations side. So Bill, why don't you hit
on those? Well, first off, you saw it on our balance sheet. Our year end inventory is $55,000,000 more than it was a year ago. So We have such a strong balance sheet. We are utilizing that balance sheet to put ourselves in a better position.
So part of that increase was due to the acquisition of Personalization Mall, but it really was a conscious On our part, to build more inventory going into the fiscal year, you're absolutely right. At holiday time last year, we had challenges both with inventory availability, so we're addressing that. Plus all the news that you read about the supply chain challenges and everything else, we wanted to get So that's what we've done and we've used our balance sheet to get ahead of that. We're still working with our 3rd party carriers. I mean capacity from delivery capabilities with our carriers continues to be a challenge.
They are limiting Certain customers as to what their volumes could be with the continued very strong e commerce numbers that are out there. We're working with all our carriers to address that and we're confident we'll be able to work through that.
Great. That's helpful. And then Can we just step back and take a look at where we are with Personalization Mall a year into it? Where would you rank the level of integration with your business? And what do you see going forward that you can add to the continued growth?
Because it's obviously tremendously exceeded your original expectations. So The question I guess is where do we go from here?
Yes, great. So I think as we said, we're thrilled with the acquisition of Pemar and the performance Since it's really become part of our platform. I would say just from an integration point of view, we took a slower approach than we normally would on integrating this business, mainly because it was right in the middle of the pandemic and all of the other things that we were focused on and priorities that we had to pay attention to. That's why in my formal remarks, I pointed out that we're just beginning to scratch the surface. I think the things that we're doing now is getting With personalized products up across all of our sites this fall, that ties into more of the marketplace kind of things that we're doing as well, The collections will now be more multi branded.
We'll be exposing more and more of our product catalogs, including Personalization Mall Into more of the everyday birthday collections, the sympathy collections, the search results that you get on our site as we significantly improved our search capabilities. So you'll see more efforts from cross brand merchandising really helping to drive that The cohort that I spoke about of customers who buy from more than one category, which represented 13% of our customer Active customer file and 29% of our revenue and then those customers come with significantly enhanced retention rates as well once they're doing that. So Pmall, we're just really getting to the early stages of doing that and beginning to do that. So we see tremendous opportunities with Pmall going forward As we continue to integrate, the other example I referenced was corporate gifting. We're seeing that was a small business of PMOL.
We've seen some good growth there this year. And as we integrate that capability across all of our corporate sales teams across the brands, We see significant opportunities.
Thank you. That's helpful. And just lastly, Your balance sheet now is back to being under leveraged and the acquisition market is difficult to predict, but I imagine prices remain high there. Can we look for an accelerated stock buyback here in the meantime until the right acquisition comes along?
Well, I think one of the things that you've seen from last We announced the authorization, new authorization and increased authorization from our Board to $40,000,000 to use the stock buybacks, Which we've been utilizing. We feel certainly at these rates, it's a very good investment and a good way for us to return shareholder value. With that said, the most important focus for us to utilize our cash is to grow our business. And I think we've demonstrated a great ability to do that through the strategic acquisitions that we've been doing as well as the internal investments.
Hey, Doug, you saw in the press release On the same store cash flow, we spent $22,000,000 on stock buyback. So that was a start of a step up in buybacks. We bought back about 820,000 shares this past year. And then at that time in the April timeframe, we got the authorization to increase the buybacks of $40,000,000 loan position.
Great. Thank you.
Thanks, Doug.
The next question comes from Linda Bolton Weiser from D. A. Davidson. Please go ahead.
Yes, hi. Thank you. So congratulations on the great performance. So can you just talk about, you mentioned some metrics on the cross brand bundles That you're doing for your products, how are the margins on a cross brand bundle? I would think it's a little more expensive To put the bundle together, etcetera, but how are the margins on those products?
Right. So we didn't really give any metrics on Linda, but we talked about the early success that we're seeing and really the leverage of the platform by putting those bundles together. When we do so, We actually can increase the gross margin on larger. Now again, those are taking from especially if you look at taking Shari's Berries Roses from 1-eight 100 Flowers, combining that with Harry and David White, when you combine that, you can get more pricing power. So we're able to increase the gross margin.
So We're very happy with what we're doing there. And as we continue to develop our distribution capabilities, you'll see more and more of those bundled products, which customers are just loving. And that's why we're really getting behind those and we think that will really help drive more of that cross category purchasing.
That's great. Thank you. And then can you talk about you kind of said modest revenue growth in the Q1. I would assume that means below the 10% to 12% for the year. Is that correct?
Yes.
And then do you expect EBITDA to be positive or negative in the Q1?
Yes. So we're not giving specific guidance On a quarter by quarter basis, what we wanted to do is go back to our prior practice of giving annual guidance, but give you some kind of pace for Q1, because It is a tough comp year over year because of the reasons Chris outlined. Now, do we have the cost inputs, Tough marketing cost inputs year over year. Again, the cost headwinds that we've talked about and are seeing. And again, remember the environment of it a year ago, everybody was in kind of lockdown mode in their homes during the summer months and not seeing anybody.
And so they were gifting this year, people are out and about, which is great for the overall economy. But obviously, it makes it a tough conference.
Right. But again, keep in mind, this is in context of the full year guidance that we gave 10% to 12%. So we're very confident that we're looking at this as really being a fantastic year on top of what was a tremendous year this past year.
Great. And then you referred again to the waiving of the BloomNet fees to Fluorus In the prior year, can you remind us how long how many quarters did you waive those fees?
That was just in the Q4 of a year ago. Yes, one time. It's just a one time.
Okay. And then finally, I guess you said 13% of all customers are multi brand customers. What would that percentage be for Passport members? I would think it would be quite a bit higher.
No. Passport customers, if you get the But if I compare the 29% of revenue from multi category purchases, Last year, Passport customers would have accounted for about 19% or 20% of revenue. Let's keep in mind the Passport customer could also be a single brand customer. And as you could see, they have Passport customers still have a lower average order value than those multi
The next question comes from Alex Fuhrman from Craig Hallum Capital Group. Please go ahead.
Hey, guys. Good to talk to you.
Thanks for taking my question. I wanted to ask about the holiday season coming up. It strikes me that over the past year, as everything has been In flux, you guys have done a really good job of responding to demand as it started to increase. Are you still going to be in the position To do that, if demand is a lot higher than your forecast for any given week of the holidays, just given all of the pressure points here With labor and freight, what is your strategy if there are days and weeks during the holiday season where demand really accelerates, what can you do to really Lead into that.
Thank you, Alex. So there's a number of things. That's really how we go into planning in the holidays. Okay, here's what we could expect and how do we react when Demand opportunities there is greater than we originally planned. So there's a lot of flexibility built into our systems.
With that said, as Bill has pointed out, We do run into different challenges with our 3rd party carriers, etcetera. But that's all about working with them on a day in, day out basis, Forecasting on a daily basis, adjusting that on a twice a week basis as we go through the holiday and we see where the demand opportunities are. Keep in mind, last year, we were really tight on inventory because sales were a little bit ahead of what we expected. We expect that to be in a better position this holiday. So there's several areas that we're always identifying, okay, as we look at the plan, What are the risks, but what are the opportunities and when can we react to that?
Yes, Austin, my only other comment is just kind of look at our history. We've been operating now 18 months in the pandemic and it's it created a lot of challenges, right, but we performed Extremely well. So we've been fairly nimble and we've been able to create a work environment that's safe for our employees execute against that. But the pandemic is still with us and we still have challenges going forward. So we We'll be acting at that pretty well.
That's really helpful. Thank you.
The next question comes from Tim Verangel from Northcoast Research. Please go ahead.
Good morning and thank you for taking my question. I was hoping you guys could give us a little bit more color on where you stand in your various Automation initiatives, I think it's 2.5 years into talking about some of these things, targeting 2 things, 1, reducing labor hours and 2, Kind of improving your fulfillment capabilities. So first of all, so one, just could you give us an update where you think you are in this process versus where you want to be? And then 2, what are you prioritizing more? What's the biggest opportunity with automation?
Is it reducing do you think it's reducing labor hours? Or do you think Really improving those fulfillment capabilities. Thank you.
Yes. I'll ask Bill to comment more on some of the kind of operational automation that you're referring to, But keep in mind, when we talk about automation, we're also looking at how do we automate customer interactions as well. So utilizing conversational commerce capabilities To really help in our customer contact, our customer care platform, that not only helps reduce labor, but what we find is it increases the customer experience as they get a good Consistent response from whether it be an AI driven IVR types of product, whether it be AI driven capabilities that we have, bots that we utilize in certain platforms like Apple Business Chat, etcetera. So we're always looking to automate on that side as well. But why don't you give a little bit more update on the operational automation?
Yes. We have been talking about it for a few years, but this is an ongoing effort this is a multi year and I think we always positioned it as multi year. We have our largest distribution center In Southern Ohio, that will be fully automated coming into this holiday season. But we have more discipline. We're opening up a new distribution center in Atlanta this year and that still has to be automated.
So this is going to be ongoing Multiple years, that's where some of this step up in CapEx is going. The benefit of Personalization Mall They were fully automated when we acquired them. So we're trying to replicate some of the things that they actually already do there in some of our distribution centers. And we continue to look at manufacturing. We talked about kind of the automated icing machine at Shells a few years ago.
That was the start of it, right, that allowed us to do Increased production significantly with significantly less employees. So we continue to look at bottlenecks Or areas of the manufacturing and distribution side of it, mainly on the distribution side, because of the Peak days that we have around the holiday, we need to be able to handle significant volumes and that's an ongoing project for us.
There are no more questions in the queue. This concludes our question and answer session. I'd like to turn the conference back over to Chris McCann, CEO, for any closing remarks.
Well, thank you for joining us and thank you for your compliments. We're very proud of the company and the team, what they've done throughout this challenging environment To really make it a record year for our company and really transforming our company as we've said, proud that we've doubled the business over the last 3 years, Transform the company into really this e commerce platform and we thank you for joining us this morning. If you have any additional questions or any follow ups, Please don't hesitate to reach out. Thank you.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.