Motley Fool Hidden Gems Investing - Disney’s New Magic: Saving Money

Episode Date: February 8, 2024

Disney’s quarter included sports, games, and a healthy dose of cutting costs. (00:21) Rick Munarriz and Deidre Woollard discuss: - Disney’s ability to cut costs. - How Disney plans to extend its IP into gaming. - ESPN’s power moves. (17:33) Kirsten Guerra explores the complicated logistics that drive 1-800-Flowers. Companies discussed: DIS, FLWS, NFLX, FUBO Claim your Epic Bundle discount: fool.com/epic198 Host: Deidre Woollard Guests: Rick Munarriz, Kirsten Guerra Producers: Ricky Mulvey, Mary Long Engineers: Desiree Jones, Dan Boyd Learn more about your ad choices. Visit megaphone.fm/adchoices

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how are you doing today? I'm doing zippity-doo-dah fantastic today, I think. Well, I'm wondering if Disney's earnings have something to do with that, because I consider you to be a Disney aficionado, a Disney bull, perhaps. And last night's earnings, you know, it seemed to be, it was definitely all over the place, but it seemed to send the message that the strategy's working, earnings per share were up. Companies really done so well at cutting costs, cut $500 million in SG&A expenses. They're headed toward that $7.5 billion goal. You know, it's not the most thrilling thing we've ever heard, but how important are savings to Disney right now? Right now, it's very important. And again, this $7.5 billion, this was $5.5 billion

a year ago. Back in February of 2023, Bob Iger said, hey, I think we can save $5.5 billion in annualized savings costs. In November, just a couple months ago, they said, all right, we can actually raise this to $7.5 billion. Now, he's saying meet or exceed $7.5 billion. That exceed word is new. So, the fact that savings are happening, and you're saying, great, what does this mean that Disney found a few more Disney dollars under its seat cushions and sofa? But what it means is, Disney right now, on the top line, isn't a very exciting story organically. It's had a couple of movies basically strike out at the box office. Cord cutting is hurting its legacy business. Its theme parks, which have been strong, attendance has been

sluggish the last couple of quarters at Disney World in Florida, strong everywhere else. It's not running on all cylinders on the top line. If it can save money and improve as an earnings story, which is exactly what we saw play out this quarter, I think it will continue to get investors excited the way it did this time around. Yeah, it seems like investors were pretty excited about that. They were increasing the dividend. It's not where it was before they had to stop it during the pandemic, but it's up 50% from the last dividend, so that certainly seems like a good start. And they announced some interesting things. Let's start with the first one, which is the $1.5 billion stake in Epic Games. So it seems like it's a little bit about the

Fortnite brand, but it seems like it's more about bringing gaming opportunities to the Disney IP. I'm both ways about this. I mean, I see Netflix and others doing this. I know gaming is very popular. What should we be looking for here? It's probably going to take at least a year or so, I think, for this to figure out if this is money well spent. Yeah, it's going to take time. This isn't something that you just snap your fingers and pixie dust and everything Disney is now. You can just walk into Toy Story in the middle of a Fortnite realm. But I do think that it's a good move for Disney. On the gaming end, they've always sort of struggled when they try to do it in-house. Their best successes have been

when they license it out to someone. And this is their partners with Tim Sweeney, the CEO of Epic Games. They've worked with him before. This makes sense. And Fortnite, even though, who knows what it'll be popularity-wise a couple years ago. It seemed to be sluggish a year or two ago, but it's had a resurgence since the end of last year, where it'll be by the time this launches. But the important thing about Fortnite to me and the whole Epic Games universe is 85% of the gamers on Fortnite are 35 years or younger. And this is a demographic that Disney needs to reach if they want new blood, especially a lot of younger people that are very jaded. They're not listening to branded ads, consumers. They're not even consuming ads for the most part.

this is a way to reach out to them and push out their franchises and eventually, you know, some e-commerce opportunities they were talking about through this venture. So, I think it's a good move. And again, it's hard to talk about a $1.5 billion investment when Disney's trying to save money, on the other hand. But I think there are times where you do have to spend money to make money and to remain relevant. And I do like this deal. Well, you've mentioned something about, you know, attracting younger viewers. Our colleague, Ricky Mulvey, made a list of, some of the new things they announced. And they aren't that new. I mean, everything seems to be either a sequel or an extension of existing IP. And you've got like Deadpool 3, Inside Out 2,

Moana 2. You've got a new Mufasa Lion King movie. I mean, yes, you're betting on sure things, but also is there some concern that there just isn't any place new to go for this company? I mean, I think there's a balance of everything here. Inside Out was just a new franchise just a couple of years ago. So you do have a case where these franchises happen. And again, we can look at like Billy Joel writing his first song in 30 years, but people are still going to Billy Joel concerts, still selling out Madison Square Garden. Not that Disney wants to retread everything that it's put out before, but there's familiarity. The fact that we're getting a Lion King movie, a Moana movie, a Deadpool, Inside Out, an Aliens movie, a Planet of the Apes movies

all this calendar year from Disney, after they had such a terrible year last year, makes me feel comfortable that, hey, this is going to be a good year for Disney at the local multiplex. Whereas, if it was just a bunch of unproven properties, I hope some of these brand new hits hit, because a franchise always starts with that first movie. I do think that if they were relying too much on it, you get to the problem of what Disney's had, where they just play it safe, and that got them into trouble before. But right now, when they need hits, you're going to go to your moneymakers, and I think that's what they're doing right now. At least on the streaming side, they'll have a little extra dose of Taylor Swift, and that will help as well, because they announced the Errors movie with additional content.

So, they'll get the Swifties. Yeah, March 15th, every Tay-Tay fan out there already has that date circled, ready to, you know, whatever eras they prefer, Taylor's version ready to go. Well, let's switch from Taylor to sports. Let's talk a little bit about ESPN. Isn't Taylor sports anyway these days? She's always at a Kansas City Chiefs game, so yeah. It is the Taylor Bowl this year. Well, let's talk a little bit about ESPN. I mean, I've been watching what they've been doing with ESPN for a while, and they keep talking about what they were going to do next and not really delivering. Now it seems like we've got some real concrete plans. So you've got two things happening. The first came out the day before

earnings. They're announced with the ESPN Linear Network. That's going to be in what they call the Skinny Sports Bundle with Warner Brothers, Discovery, Fox. And then there's also going the direct-to-consumer ESPN streaming service that comes out in the fall of 2025. What fascinated me about this was the sports bundle. The Wall Street Journal called it a blindside to the sports leagues. So, does this change the game for them? I think not that it changes the game, but it makes sure that they're the ones running the ball, just as ESPN has been the dominant sports leader. This is a company that they have, as Igervin said on CNBC right before the earnings call, right after the report, he's saying, hey,

I'd rather be disrupted. I'd rather be a disruptor than being disrupted. And he's known for years that cord cutting is basically eating away at the legacy, you know, carrier rights that they have through the cable networks and the satellite television. And he doesn't want to turn their backs on them. His truck deals with them to try to, you know, keep them afloat. But he knows that the real money has to come from the streaming side. And it's better for someone else to get together with two of its biggest rivals in sports content to create that skinny bundle or to go directly over the top and reach consumers directly the way it is with ESPN Plus and the larger ESPN offering that's coming out next year in the fall of next year. I do think that it's the right move.

And I don't think the leagues will be too upset. There are people upset that they'll watch a playoff game on Peacock this NFL season. So it's better to have just the network that everybody knows is the one that do it rather than go, oh, it's Thursday. Do I need to have to fire up Amazon Prime this time? Do I need to have YouTube TV to catch the NFL Sunday ticket? There's a lot of weird choices people have to make. ESPN is like the default setting. So I think anything they do is a good thing. Yeah. Yeah. I've, I've experienced that myself and trying to figure out where something I want to watch actually is located. The other thing I find interesting about this is the, the ESPN solo thing. Cause you mentioned that CNBC interview with Bob Iger. I listened to

that too. And you described that experience as more immersive, uh, with shopping and with betting, you know, it didn't come up on the earnings call, but I'm very curious about their sports betting business, their collaboration with, uh, with, with Penn seems like it's certainly being promoted a lot, but is it going to be a while before we actually hear how it's doing and it ends up in, in the reporting? Yeah, I think Disney's, they've always tiptoed around the gambling aspect of it. If you go on a Disney cruise ship and again, I haven't been one in a couple of years. But every time, that's the one cruise line where I know I'm not going to go to a casino because they don't have them. At least, they didn't have them a couple of years ago.

So, they've been very careful about this. So, obviously, they weren't just going to launch their own online sportsbook. They start to deal with Penn for ESPN Bet. It's been out for a couple months now. And it makes sense that if you're going to be doing it at a point, now everybody, everything's FanDuel this, DraftKings this, it's MGM Bet this. The sportsbooks are everywhere. they're commonplace, and it will become acceptable for Disney possibly to do it on its own eventually. But right now, I think it makes sense, if you're putting out this bundled package of sports programming, you may as well realize that I'm reaching fans of fantasy sports, fans of actual wagering on games. Why am I not cashing in on this when they are basically, you know, in the driver's

seat? If it's a standalone streaming thing, I mean, is there a point where you're betting with your remote? I mean, it sounded like that was what Iger was hinting at. Yeah, and it was. So, I mean, FuboTV, to bring out a company that basically hates this news because they thought they had this market cornered and they basically got crushed on the Warner Brothers and the Fox and the Disney ESPN collection. They hate that. Yeah, but you could have actually used your remote and they were trying to test it out before they pulled out of the online sportsbook market where you can use your remote or an app tied to what you're watching. In real time, it follows you so it knows what you're watching and you get real-time bets on your phone. So, who knows what

the future will be. Hopefully, again, and gambling is an addiction, so hopefully it's done in a way that doesn't destroy us all. But clearly, it's a money-making opportunity for Disney. Yeah, definitely. Well, speaking of money-making a little bit, you mentioned earlier the parks and experience business. It's great globally, but there is, you mentioned that weakness domestically. Some of that, they're coming off the 50th anniversary celebrations, but some of that, there's a lot of media out there about it's too expensive, a lot of families complaining. You're in Florida. What have you seen? Yeah, it is expensive. And every year, and it's not just Disney World, the rivals too. One of them raises prices. The other one's going

to raise prices. If annual passes get more expensive, sometimes Disney's even stopped selling annual passes. They do that in Disneyland. And they even did it for a little while at Disney World that they're saying, hey, there are just too many people in the parks. Now it's the opposite where they want more people in the parks. They're putting more promotional aspects to it. But yeah, I think there's a lot of factors into it. But again, Disneyland is doing fine. They opened a year later, about technically nine months after Disney World. Disney World opened in July 2020, Disneyland in April 2021. So, the whole travel, revenge travel phase played out earlier in Florida than it did out in California. But you do have a case where they had that 100th

celebration. Disney World opened a couple of really big rides, two very sort of game-changing roller coasters and two of its theme parks uh but that ended that was back in march and since then things have been pretty sluggish so i do think that uh it's a matter of everything settling uh and the economy settling and saying hey we're comfortable again to start traveling again by no means is disney world uh you know this this vast uh you know tumbleweed uh you know wasteland it is very crowded especially uh during the holidays but i do think that yeah it could definitely use a little love right now and yeah it is a little expensive that's that's that comes with the territory. But even though they've had attendance maybe the same that it was in 2019,

they're generating 40% revenue per capita higher than they did in 2019. So people are paying more. There's premium experiences you can buy to get into the fast pass lane, the old fast pass lane, which is lightning lane now. So they do have things to take more money out of you, extract more money out of you, which is what all the other theme park operators do. Disney was just the last one to hop onto that bandwagon. From fast to lightning. And they're spending more money on the parks themselves, right? It sounds like they are doing some investing there. Even as they're trying to save money, they're still investing in the parks. Yeah. And I was at Disneyland two weeks ago, so I covered both coasts just in this past couple of weeks. Next week, I will be at

Disney World, so I'm there often. There's a lot of construction activity happening in both parks, both resorts. But yeah, Disney said just a couple of months ago that they're going to spend $60 billion in the next decade in capital expenditures for their theme parks and experiences. This includes their cruise ships, where they keep expanding their fleet, but mostly going into their theme parks. And we're seeing that a lot of upgrades are happening. We just had some big upgrades in Asia for those two parks, two resorts over there. And you're going to see this happen in the U.S. in the next couple of years. I wanted to also talk about, they're taking Paige out of Netflix's book. They're sharing Crackdown. We've heard this from them before.

We heard it a lot more this time. They want that same success that Netflix had. They said, it's one of these things that gives us confidence in our subscriber growth numbers. They really feel like they can do this. Is it the same thing? Is this an apples-to-apples comparison, in your view? On the one hand, I would say no. Netflix has earned the right. They are the standard cable of streaming services. You have to have Netflix, or if not, you're going to be irrelevant the next time you're together with friends talking about what they're watching on TV. Disney Plus is not so much that case. Again, if you have a family, you're going to need to watch Bluey. The reason that a Moana movie is happening in November, instead of it, they're working on a direct,

it was going to be a series, it's going to be on Disney+. They said, hey, this is coming out so great, we're going to turn it into an actual movie that'll come out in November, was because the Moana movie was the most streamed movie on any platform, including Netflix, in terms of hours viewed in 2023. They have the data on what's important. They are very relevant in that regard. uh yeah let them flex their muscles netflix again a lot of people said netflix is going to suffer uh when they're when they're cracking down on password sharing and now we've seen a couple quarters and networks netflix is doing just fine i don't know i don't think any i don't think every service can go ahead and do this but again it's you can't blame that they're leaving money on the

table if they're letting people do this out of just the goodness of we need our numbers we can't churn we can't have a high turnover rate at the end of the day netflix is proving that hey we can do this, you can do this too. They tried a lot of things. They tried a lot of things this quarter. It was a great quarter. The, you know, the market seems to love it so far. One person who didn't love it is Nelson Peltz, the activist investor who's been trying to get on the board and is still trying to get on the board. You know, CNBC reached out to his company after the earnings and they said, oh, you know, we've seen this movie before. So I don't know, because I looked at they have this site called Restore the Magic, and they've got these shareholder letters. And

Disney's pretty much doing everything that they asked them to do. What do you think they're trying to see here? Yeah, I think Pelton, they got burned last time. They were going to have the proxy battle, talk to Iger, and they came to terms. It's all right, we're fine. We like what he's doing. And apparently, there wasn't enough for them. So they're launching this other battle. They're going to be a little more skeptical this time around. But again, Disney did everything in this quarter, not so much just blow out earnings and increase, you know, they could probably have bigger savings than expected. But just notice one thing that I think no one's ever really talked about, but to me, it's very interesting. It was February 7th, 2024, and they announced a dividend

increase that's going to happen in July. I've never seen a company announce an increase or something that happens five months from now. To me, this was them saying, hey, we know our annual shareholder meeting is in April. This is our last time to speak up. We're going to throw everything possible into, you know, load this chamber with everything we have, tell you about that Moana movie in November that no one was expecting, you know, all these other things that are happening. And the dividend meet is their way of saying, hey, we have this. And again, $0.45 every six months for a stock that's over $100, you know that's less than 1% yield. It's not going to excite income investors. But I do think it's definitely their way of saying, hey, we came to

play with this earnings report, and we had enough little stuff in there to please everybody. I don't think that peltz will be successful this time but it doesn't mean that he doesn't have good ideas yeah that's true well thanks for talking to me with me rick thank you you just found out that your sales team is at risk of missing quota don't panic just ask rippling ai since it's built on your real-time people and business data rippling ai can pull metrics from rippling and salesforce into a meeting ready dashboard showing quota attainment headcount plan and monthly revenue to quota by region. In seconds, you'll see exactly what's behind your quota risk and fix it before it's missed. Question answered, action taken, crisis averted. When you

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out a new offering. It's called Epic Bundle. The service includes seven stock recommendations every month, model portfolios, and stock rankings, all based on your investor type. We're offering Epic Bundle to Motley Fool Money listeners at a reduced rate. As a thanks for listening to the show. So for more information, head to fool.com slash epic198. We'll also include a link in the show notes for you. You may know the name 1-800-Flowers, but there's more than Valentine's Day roses going on there. I spoke with Kirsten Guerra about the business behind the name. We are in Valentine's week mode. It's love season. So people may be sending something special to someone special, but as you may have guessed,

it's also is a massive week for florists. In fact, I was doing a little digging with the Society of American Florists. It's about 30% of transactions, but we're not going to talk just flowers today. We're going to talk 1-800-Flowers, a ticker F-L-W-S. Kirsten, this is, it's the flower company, but it's a lot more, right? Yeah. The name here is a little deceptive and certainly outdated. Relatively very few orders still come in through the phone, despite the preserved toll-free number and the .com naming is a relic of its 1999 IPO. But, it's a brand well-known by the name. And so, yes, today, 1-800-Flowers is only one brand under a much larger umbrella. In 2013, they started talking about what they call the

celebratory ecosystem, which is their idea that they wanted to be the go-to place to order all types of gifts online. And that started a long series of acquisitions for them. So, some may recognize acquired names like Sherry's Berries, Cheryl's Cookies, Things Remembered, certainly Harry and David. In some cases, they built and launched a few lines of their own as well. So 1-800-BASKETS, Simply Chocolate, things like that. And what all that means to the end consumer is that if you're looking to send someone a gift, you can start on the website of any one of their properties and you're presented with a wide variety of options, whether that's flowers, fruit baskets, popcorn,

little monogrammed knickknacks through Personalization Mall, pastries through Wolf Herman's Bakery, or even seafood through brands like Vital Choice. They've really tried to build out a one-stop shop gift-giving experience. Of course, they've also got a loyalty program to go along with that, where subscribers can get discounts, early access, free shipping, other benefits like that, in a way that works out for them if they send enough gifts through the 1-800-Flowers ecosystem. That keeps the dedicated gift-givers coming back. So yes, overall, certainly way more than flowers today. Celebratory ecosystem, not a phrase I've heard before, but I kind of love it.

No, for me, I find it to be questionable branding, but it's not something that they sell with, right? It's just an internal name. Well, one of the things that is sort of anxiety provoking about when you're ordering things online is you never know if the picture that you're getting is what the recipient is getting. And a lot of times, uh, there's that disappointment of like, you, you see this beautiful bouquet or you see this abundant gift basket and then the person sends you a picture of what they got and you're like, eh, I don't know. But, uh, it seems like 1-800-Flowers, they're, they're very into, uh, into quality control

and really delivering what's, what's kind of on, on, on online, you know, delivering on those expectations. How, how do they do some of that? That really is such an important part of gift delivery like this. not only that the gift arrives looking how you expect, but also that it arrives exactly when you expect. And the logistics of that, to your point, is actually incredibly complicated, especially when you consider that people often want to send flowers or gifts right around the same times of year, for example, Valentine's Day. And there's an added layer of difficulty when

you're telling customers, like 1-800-Flowers is, hey, I see you're ordering flowers. Would you like to add some chocolate-covered strawberries to that. Fortunately, 1-800-Flowers started a heavy investment cycle around 2019 into the backend tech required to make those intelligent cross-product suggestions for upsells, making sure that they're in those same warehouses for delivery and things like that. To that point, they also revamped their warehouses to be brand agnostic, making it far easier to fulfill those multi-brand bundles. Those are really key to the business. When I say multi-brand bundle, you can think like they mentioned actually in their latest earnings call a new trio for them, which is a bundle of 1-800

Flowers Roses, Harry and David Wine, and Sherry's Berries Chocolate-Covered Strawberries. That's a multi-brand type of purchase. Only 13% of customers purchase multi-brand, but those multi-brand purchases account for 28% of revenue. That's a big area of potential future growth for them, so it was critical. It turns out very timely for them to make those big investments. Topping it off, they also layered on a lot of automation in their distribution centers. For example, before they re-outfitted one of their largest facilities in Ohio, it could handle around 80,000 packages on a peak day. Remember, peak days are critical for this company. They can generate a substantial amount of revenue, but all concentrated in

deliveries that are supposed to go out on the same day. So, 80,000 pre-automation. And afterward, that same facility could handle 125,000. So, more than a 40% increase in output just in that one facility, all while cutting labor costs by about a third, which is really an even bigger deal for a company like this that requires a lot of seasonal workers. And to your initial point that I think I've strayed from a bit, that automation also really helps ensure the consistent quality in all deliveries and also the quality of the product itself that 1-800-Flowers is really known for. I'm old enough to remember when the CEO, Jim McCann, used to do his 1-800-Flowers commercials on TV. I don't think he does that anymore. He was the CEO. He's now the CEO again.

Tell us a little bit about the McCann's because this is a family business. Yeah. I don't think I've seen those commercials recently, but I have seen some of the old versions from the 90s and around that time. Jim McCann, a well-known name, and actually, when I first mentioned this to Tim Byers, he recognized him immediately from those commercials, but he founded the company under the name 1-800-Flowers back in 1995. He served as CEO then, he's still CEO today. But as you mentioned, there was some change there. Technically, his brother, Chris McCann, actually took over as CEO in 2016 and ran the company until last year, in 2023 when he needed to step away for some personal health reasons. So now it's back with

founder and CEO again, Jim McCann. And so one way or another, this has always been a family business between the two of them. They still own 47% of the company. Of course, most of that with Jim McCann who owns 45% of it, uh, nearly 30 years after founding it, which is very impressive that he's managed to hang on to so much of the business. Yeah. And he's very, very passionate about it in the earnings, it's definitely clear that he's very identified with it. Yeah, absolutely. This is his whole life, right? And he's done very well with it, clearly. Well, thinking about 1-800-Flowers and the whole business in general, there's been some consumer weakness in recent quarters with the business. Some of that might be reduced corporate

giving, you know, the year of efficiency that has sort of, you know, a lot of companies have cut back on all sorts of things. But when you're looking at this company, how tightly tied do you think it is to the economy, to the ways that we spend? Or do we just always have to give something? If it's Valentine's Day or if it's Mother's Day, if you don't do it, you're going to be in trouble, right? Right. Yes. That's what I'm told. Flowers are considered an ephemeral gift. That's what they call them. They can't be used. They can't be consumed. And so that means that they are typically the first gift class that most people cut in tougher economic times. But as we've talked about 1,800 flowers has diversified into a lot of other gift options. In fact, today,

more than half of their revenue actually comes from gourmet food and gift baskets. Roughly, the other half comes from flowers, but still, technically, not as much from flowers today. So, that diversification and the steady stream of acquisitions over the years means that revenue, at least, has historically climbed every year, except through the great financial crisis, despite potential fluctuations in demand. And so, revenue did finally drop again in 2023, breaking that trend, again, amidst economic pressure. But 1-800-Flowers talks about this. They break their revenue down into what they would call holidays and everyday buckets. And they continue to see strong demand in the holidays category. So, to your question, yes,

the gift-giving pressure, especially around the holidays, will probably always exist. and that adds some real stability to the business. More of the revenue fluctuation comes from the everyday category, which might be, for example, me sending you a thank you stake for having me on the podcast. That's not necessarily recurring, right? But it's a one-off I may feel compelled to send. And so, of course, the nature of that type of gift giving is always harder to predict and disappears quicker under economic pressure, but potentially has more room for upside as well because, you know, there's just more potential there. Well, I'm curious a little bit about their membership thing. It sounds almost like a prime for gift givers. So is that sort of the idea is

to make a more steady revenue stream by sort of encouraging people to send gifts for any reason at all? Yeah, I think that's the goal to add a little bit of recurring revenue, but maybe more so the ecosystem aspect, to have that competitive advantage where it's a little bit of sunk cost to a consumer. If you've already paid the upfront fee, which, don't quote me offhand, I think it was like $20 or something. But if I've already paid that to get into the system, then the next time I'm thinking of sending flowers or sending a gift basket, I'm going to be compelled to go right back to 1-800-Flowers. Because not only have I bought into that system, I'm going to get free delivery on that next order. Maybe I also have some sort of discount

or coupon that they've given to me to come back to them and keep staying with them. So I think it's more of the ecosystem more than anything, but it seems to be working. And I'm sure they email you frequently to remind you to do it. Yes. I have had to block them because as you know, I did do an order to just, you know, as I was looking into this as a recommendation, I made an order just to sort of test all of the things I've mentioned, the automation facilities, and see how they worked through all of that. And they did well. But yes, there are a lot of emails that come with it around holidays, certainly reminding

me to come right back to them. Well, thinking about this as an investment, this is a company, it's been going through some stuff. You mentioned the investment in automation and in the warehouses. There's signs of improvement, which is great. The company probably doesn't have to do a lot to impress shareholders at this point because those expectations have been down. And it's been trading at some kind of low price to book value and price to sales multiples. So you mentioned the quarter. Revenue was still down. They lowered their revenue

guidance down to, I think, 7% to 9% for the year. What should we be looking at here? Yeah. It's been very cheap recently based on how I valued the business, at least. And that's one of the benefits to having the outdated name and very few analysts that are following the business, there's not a lot of people looking at this. And when there's not a lot of expectation baked in, as you said, they don't have to do a lot to impress shareholders. So, overall, the main goals of 1-800-Flowers as a company right now and what investors should really be looking for from them is kind of a return to normal more than anything. We want to see the dissipation of economic pressure that's weighed on the top line, hopefully see more of

those everyday purchases come back. And we want to see their gross margins return to historical levels for this company, which is around 41%. That fell to 37% recently with rises in freight costs and all the fluctuating commodity costs that we talked about. But they've already built that back to 39%. I actually started first looking at this company last year when both the company's CFO and its president took money out of their own pockets to buy shares on the open market, where the CFO actually upped his stake by more than 12%. So that's a pretty clear sign that these insiders at least feel confident that their business is being significantly undervalued. Now, I will say they bought at an average share price closer to $6 at the time,

and right around the time of this recording, I think it's around $10. So something to be aware of. But I would say that if they can manage to not only return to business as usual, which is the current goal, but also really leverage all of those tech and fulfillment investments to encourage more multi-brand bundles, attract more consistent gift givers into their loyalty program and push further into corporate gift giving, as you mentioned, then potentially it's still quite fairly valued at this point. As always, people on the program may have interest in the stocks they talk about. And The Motley Fool may have formal recommendations for or against. So don't buy or sell stocks based solely on what you hear. I'm Deidre Willard. Thanks for listening.

We'll see you tomorrow.