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Harry & David helps grow revenue for 1-800-Flowers

Harry & David is laying its shoulder to the task of pushing 1-800-Flowers.com past $1 billion in annual revenue.

In the second fiscal quarter, with Medford-based Harry & David entering the 1-800-Flowers fold, the floral and gourmet food and gift firm earned revenue of $534.3 million, up from $266.4 million, and net income of $45.8 million, up from $18 million, the company reported Monday.

"We’ve more than doubled our revenues and tripled our bottom line year-over-year," CEO Jim McCann said during remarks to analysts. "This reflects the contribution from Harry & David, which performed as we expected."

Even with an expected fall-off in revenue during the next two quarters, 1-800-Flowers anticipates hitting the $1.1 billion mark.

McCann said Harry & David helped overcome inventory problems and other setbacks caused by a Thanksgiving day fire at its Fannie May Chocolates and Harry London Chocolates warehouse and distribution center in Maple Heights, Ohio. The $13.8 million loss, primarily inventory, was covered by insurance.

Spurred by Harry & David's contribution, 1-800-Flowers' e-commerce orders grew 62.7 percent year-over-year to $5.3 million from nearly $3.3 million. Harry & David also contributed to a 40-percent gain in average order size to $77.13 from $55.04, as it helped bring in 1.3 million new customers.

With the holiday season in the rearview mirror, 1-800-Flowers has begun a comprehensive integration program.

"We have a number of initiatives underway across our business platform, which we believe can generate operating cost efficiencies in excess of $15 million over the next 36 months," CFO Bill Shea said during a morning conference call. "We anticipate that achieving these savings will likely require some investment, which would offset any savings during the current fiscal year. As a result, we expect the full benefit of these operating synergies, which we will realize over a three-year period beginning in fiscal 2016."

The Carle Place, N.Y., firm didn't break out revenue production from its units, but McCann said Harry & David sales grew "about 3 percent" year-over-year in the quarter. Based on the $260.4 million revenue figure the Medford-based unit reported a year ago, Harry & David's second-quarter revenue was roughly $268.2 million.

President Chris McCann said the company hopes to have Harry & David products available on 1-800 Flowers' multi-brand sales site by the holiday campaign of 2015.

Company shares surged 14.6 percent, gaining $1.15 to $9.04 — the highest point since a precipitous fall in late 2007 after reaching $12.82 earlier that year. 

Reach reporter Greg Stiles at 541-776-4463 or business@mailtribune.com. Follow him on Twitter at www.twitter.com/GregMTBusiness, on Facebook at https://www.facebook.com/greg.stiles.31, and read his blog at www.mailtribune.com/Economic Edge

Harry & David's holiday gift baskets, shown being assembled in the company's main Medford plant, helped boost the bottom line of new owner 1-800-Flowers. Mail Tribune / file photo