Love for Mom is a given, but buying flowers on her big day may not be. A slump in flower sales since late last year will likely continue through Mother's Day, another example of Americans cutting back on spending due to recession fears and escalating food and gasoline prices.
LOS ANGELES, May 6 (Reuters) - Love for Mom is a given, but buying flowers on her big day may not be.
A slump in flower sales since late last year will likely continue through Mother's Day, another example of Americans cutting back on spending due to recession fears and escalating food and gasoline prices.
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"If you look at what's happened on Valentine's Day and Christmas, the market for flowers has cooled," said Eric Beder, an analyst at Brean Murray. "Growth has slowed in the past two quarters. Mother's Day will probably be a slow quarter, too."
U.S. floral sales for Mother's Day, celebrated in the United States on May 11, will fall 13 percent this year to $2.0 billion, with consumers spending an average of $17.65, according to the National Retail Federation estimates.
Mother's Day, which accounts for a whopping one-quarter of annual holiday purchases, according to the Society of American Florists, is traditionally the day when floral bouquets are delivered to the doorsteps of many American mothers.
But this year, retailers are concerned.
Gabriel Soto, who owns a flower shop beneath an office high-rise in the Los Angeles financial district, is expecting lower sales -- and has ordered 30 percent fewer flowers than normal this Mother's Day.
Last month, Soto, who also operates website downtown-flowers.net, closed another store in a nearby building that was headquarters to a mortgage company. After workers lost their jobs due to the housing crisis, orders dwindled.
Some management companies have cut back on flower orders for office lobbies, he said, and high gasoline prices means smaller orders below $50 aren't profitable.
"The gasoline is expensive," said Soto. "It's affecting us because we've had to raise prices on deliveries."
Things aren't much rosier for the bigger outfits. Revenues at the two largest public floral companies -- 1-800-Flowers.com Inc (FLWS.O: Quote, Profile, Research) and FTD Group Inc (FTD.N: Quote, Profile, Research) -- have been tepid.
In their most recent quarters, 1-800-Flowers' sales rose 2.7 percent, while FTD reported Tuesday a 5 percent revenue gain, but that was largely driven by international sales.
The industry is expecting growth of 1 percent to 3 percent this year compared with high-single-digit growth seen at FTD and 1-800-Flowers in recent years, according to analyst Beder.
"No one in the industry is forecasting this year to be a huge growth vehicle," he said.
According to Troy Mastin, an analyst at William Blair, 1-800-Flowers and FTD results suggest the industry is relatively flat, rather than contracting.
DESIGNER FLOWERS FOR MOM?
Instead of relying on revenue growth, floral companies are cutting costs to preserve profit margins, and diversifying into such areas as gifts, Beder said.
FTD, in the midst of being acquired by Internet service provider United Online Inc (UNTD.O: Quote, Profile, Research), is spending more on marketing for holidays this year, while 1-800-Flowers is hoping a new partnership with Martha Stewart Living Omnimedia Inc (MSO.N: Quote, Profile, Research) will win over skeptical shoppers.
Stewart-branded flowers will cost approximately $10 more than comparable bouquets at other florists. While seeming counter-intuitive in a weak economy, the strategy may appeal to those looking for something unique.
"They're all trying to find partnerships they can leverage to differentiate their offerings and attach a premium to it," Mastin, the Blair analyst, said, citing FTD partnerships with well-known clothing designers Vera Wang and Todd Oldham. (Reporting by Alexandria Sage; editing by Jeffrey Benkoe)
