Mother's Day Has Become More Than Just Flowers

foods and gift baskets. In fact, Flowers dot Com Incorporated has made more money from the latter than the former in recent time. Springing Chris McCann right now. He's the president and CEO. UM. Chris talked to us first about the product mix. Um, I've got to guess you sell more flowers on Sunday than any other day of the year, but you sell a lot more than that. Sure, thanks thanks for having us. It's just such a crepet week on a mother is all around the world. It's just

such an important role that they play. And you're right, Flowers in a traditional way to say thank you, in a way to say happy Mother's Day. But as we've branched out, gourmet foods from Harry and David h charcolate covered berries from Shari's Berries, or our newest brand, personalization Mall is just doing great this holidays. People are uploading photos to us. We're putting it in a picture frame for them, personalizing the message on the frames, sending it

to their recipients. Mother's Day has become much more than just flowers. And as a company whose mission is to help our customers express, connect and celebrate, we're just so well positioned for that. So, Chris, give us a sense of how your business was impacted by the pandemic and maybe how you think your business is going to uh

kind of kind of come out of this pandemic. But we've been very fortunate really that, you know, to all the troubles that we've had, you know, in our personal lives and even the challenges that we faced in the business, we were very fortunate that we were in front of two major shifts that took place during the pandemic, the tectonic shift from offline sales to online sales, and as an e commerce platform that's built for growth, we're right

in front of that trend. The other one is I think we've all learned through this time relationships are so important, the need to stay connected to needs for human beings to express themselves, and that's who we are as a company. So we had good momentum going into the pandemic, good growth momentum that was accelerated significantly, just as the pandemic accelerated change in every area of life. So the year later, just over a year later, we're a much bigger, better,

stronger company than we ever were. In fact, we got guided for double digit growth this quarter on top of phenomenal same quarter last year, and based on what we see, we see double digit growth going forward into our next fiscal year as well. How do you compete in um, the age of the Internet. You know, you've got competitors who are dropping vowels from their names, and you've still got kind of an old school phone number in front of yours. Um, what do you do to take on

the kids in Silicon Valley? Well, I think, first of all, misspelling a brand name is is not as not the smartest thing to do to makes people try and figure out how do you spell that? Again? And over the years we've built such great brand recognition, such great brand attributes behind the one Flowers. The younger generation doesn't even realize that it actually was ones a phone number. Still is and we still get some cold volume there, but the vast majority of our business comes online on the

e commerce channels. And that's why I say, over the years we've gone from this one Flower shop to this platform for expressions, connections and celebrations with all star lineup of brands and Harry and David personalization, mall Sharry's Berries, Flowers of course, and just constantly expanding the products and services we offer our customers to help them have better relationships in their lives. But what what kind of what

kind of tech operation have you got going there? Because I noticed, I mean, it's always been the case when I put in flowers on Google, you pop up first. So you've got the search a search engine optimization down. Um, do you have a group of kids working out of Syosset on the internet? How's this going on? How's this

going down? We had a group of wonderful people actually all over the country and frank quite frankly all over the world on our technology team, and we we we just made a major migration this past year or two into a whole new platform. It's a headless commerce platform built on pw A technology. It resides in the clouds, so it gives us a significantly enhanced flexibility and scalability. Uh and so it's tremendous capabilities there. But then it

really comes down to the people. And as you say and Seo, we have some great people as young ladies Sarah, that does it h job heading that unit for us. But all about digital marketing, we've grown up as a digital marketing company, so we have great expertise and that's one of the things that brings that we bring to the table for some of the acquisitions that we've done.

And in the past two years, we've taken Sherry's Berries, which was a bankrupt company and it has now been been a rowing success since we plugged it into our platform. And then most recently during the pandemic this August, we made our largest acquisition ever, Personalization Mall, and since moving that into our platform, last quarter of the holiday season, team ball grew for us. So so wheels are turning well. All right, Chris, thanks so much for joining us. We

always appreciate chatting with you. Getting uh the latest on the gift at giving a business and nobody does it better than the good folks at one Flowers dot Com. Christma can't see Flowers dot Com Incorporated giving us his thoughts as we head in to Mother's Day weekend. Now, stocks are down and the broader indexes um, but not as bad in the big indexes as they are in small caps. That's bringing Dave Wilson right now for a look at what's going on um with the smaller cap companies. Dave,

They've got that right, Matt. Smaller companies, bigger declines. That's part of the story of the day. The Russell two thousand index now lower by one point four percent, while the SMP five hundred is only down two tenths of a percent. Now the steepest drop in the Russell belongs to James River Group Holdings. The ticker their j R v R. The insurer has lost more than thirty two percent after raising a hundred and seventy five million dollars in a share sale that amounted to a fifteen per

and a half percent steak. Regis ticker RGS is down about twenty six and a half percent. The hair salon owner and franchise are posts the wider loss and lower revenue for the fiscal third quarter than Analystic spected in Bloomberg Survey, and US concrete ticker u SCR is down twenty three First quarter revenue fell more than analysts predicted, as a winter storm in Texas her demand now. The

biggest gain Russell belongs to Avid Technology. The ticker a v i D, the maker of audio and video editing software, is up twenty one percent after reporting first quarter results that surpassed projections, and the Quidity Services ticker l q DT is up nineteen and a half percent. UH, the online marketplace for surplus goods, had fiscal second quarter results that beat estimates. Bloomberk Stocks editor Dave Wilson, thank you so much. We appreciate that small cap report. Let's take

a look now at the high yield business. We do that today with Emmanuel Hayes. He's a senior portfolio manager at Melan. Manuel, thanks so much for joining us here. We've seen in the equity markets really since September, kind of a rotation trade away from some of the big high tech growth names into some more cyclical names, maybe even from a smaller cap kind of banking on this reopening. Are we seeing something similar in the high yield market as well? Hi, thank you for having me pleasure to

be here. The short after is yes, we're seeing something very similar in the broader high old market. Where As the COVID impacted everybody in March and in April, we started seeing a lot of sectors get impacted from a spread perspective, as a widened indie cyclical sectors think of leisures and airline transportation, more consumer cyclical sectors. And then as things started stabilizing and there's more optimism built into the vaccine rollouts, we're starting to see those trades performed

really well. And so that's been very much in line with what we're seeing in the equity markets. But we're also seeing interesting other dynamics take place in high old. It's very exciting time. We're seeing a lot of companies being downgraded from investment grade. We're also seeing a lot of companies getting upgraded back into the investment grade market,

providing nice tailwind performance on both sides. Very interesting time in the higold market right now, and a ton of issuance right manual we see we saw a record issuance last year four or billion dollars in total, and this year in the first quarter we had a hundred forty billion dollars in issue and so does that mean one is going to be another record year? All expectations is that this issuance pace will continue. A lot of issuance

was built into last year after companies were in survival mode. Now, with rates continuing to be as low as they are, you are seeing companies being more opportunistic, looking to refinance their debt, bring down their interest expense, clean up the balance sheet issues that maybe they were encountering last year. So we are seeing record level of issuance. And with

issue wance, there is a concession that takes place. So when issuers kind of the market, they do provide, you know, several bits to a hundred bits of concession just to entice investors to participate, and that provides a nice performance pop if you are able to do it in a very diversive light way across a lot of these bonds that are issued, hey man, will give us a sense of credit quality out there. We're again this pandemic. We're

month fourteen here roughly. We do obviously see some really good light at the end of the tunnel here and a lot of parts of the economy already you know out of that tunnel. If if you will talk to us about the credit quality you've seen in your portfolio over the over the last fourteen months. Yeah, after the pandemic hit, we saw this huge amount of downgrades to take place. So a lot of bonds that were rated shoup will be were downgraded over two billion across twenty

five companies. So naturally, what was the lowest part of the investment grade market migrated down into the high old market. And with that means now the high market for intensive purposes is higher quality, meaning more double BE rated securities. And so you saw the broad high old market naturally increases double BE exposure. Just around half of the overall explosion high old is now rated double B and that's good for the overall credit quality of the company's, the

overall market landscape and high old. And what we see is that segment, that little cohort of double B rated bonds that were downgraded, it's actually a very very strong performer.

What happens with these bonds as they get migrated, they get forsold by a lot of investment grade holders, index ers, active managers, insurance companies, and so when they enter the high old market, not only is the higher quality, but you see these bonds come in at these discounts basis points from our analysis, and that shouldn't be the case. But because there is a inefficient bifurcated corporate market, high

old investors are excited. They come in, they get these cheap bonds, high quality, large camp names, and they get out of its steep discount and then they harvest that premium. It's a great time to be a hiled manager, as you just are here sitting on the side taking advantage of this opportunity. That is truly fascinating insight. Manuel, thanks

so much for joining us. Manuel Hayes, their senior portfolio manager at Melon, talking to us about the fallen angels, getting them at a discount on the way in and then making money obviously on the way back out. Well, when the pandemic hit, the lockdowns went into place, and daily lives as we knew them were greatly disrupted, and that includes going to your dentist, going towards your local doctor for you know, annual checkups for example, that all

all was disrupted. Now as we come out on the other side, what's that Are we going to go back to a normal behavior? Let's check in with Stanley Berman. He's a chairman and chief executive officer of Henry Shine. Henry Shin is a worldwide distributor of medical and dental supplies, including vaccines, pharmaceuticals, financial services, and equipment. It is a publicly traded UH stock. Stanley, thanks so much for joining

us here. When do you think and to what degree do you think we will go back to kind of pre pandemic levels in terms of going to our dentists, hopefully every six months, going to our doctor for that annual check up. What are you hearing from the doctor's offices that you guys interact with. Thank you, Paul Matte for your interview today. Very very good question. Actually, the data is quite uh, it's really good and it's reassuring

the lay. About two weeks ago, the American Dental Association reported that to the population are returning to the dentist, and that's up from about sixty sixty or seventy six months ago. And we expect the public to be going back to the dentist in full swing within a few months. I'm excited to go back to the dentist myself. Good for you. Um, your r hygiene test and your regular visits are really important because there's a direct correlation between

good oral care and good health care. Well, tell me about it. And I'm getting older, you know, so I I want to keep these teeth. I don't need to trade them in for any plastic dentures. But um, what what what kind of gear are you selling the most of? Because I imagine you did incredibly well with PPE obviously, but that's got a kind of taper off. Um, what's what's what's in the what's in the future for you? Rather than you know, during the pandemic? What are you?

What are you selling in in the reopening? Right? So, of course pre E has been important. Rapid point of care tests are very very important physician officers, some dental officers, but the big area has been in digital dentistry, in other words, a scan of the mouth rather than using an impression material and to take an impression and using that to mill a crown or bridge share side. So it's one visit to the dentist to replace crown or put in a new crown or a place or put

in a new bridge. All right, So one of the issues is telehealth, virtual care. They've really come to the fore here during this pandemic. How's that impacted your business? Am I gonna make fewer visits to the doctor's office? Um? I'm not sure you're gonna make a significantly fewer visits, but I think your business will be more productive because the practitioner will be ready for you when you arrive.

Telehealth has gone up in a significant way. We of course offer telehealth systems to our customers, but I think the visit will be much more productive as the practitioner will be ready for you, the staff will be ready, and I think this hybrid health care system will be very, very effectivating increasing the quality of health in this country. In terms of vaccines, Um, are people coming in? You think to the dentisty get vaccine? And then uh can they can they do that? Can? Can the dental hygiene

has give you a vaccine? Well, I think we've done a terrific job in rolling out the first phase of a vaccination. A lot of people have the vaccination, but we have a challenge. It's relatively stalled. There's vaccine hesitancy, and only our physicians in the United States are offering vaccines and a small amount of dentists. This is because the system is not yet geared up to providing office space practitioners with vaccines. The majority of Americans, of course,

received their fluid traditional flu vaccine, their other vaccines. In fact, almost many percent from an office space practitioner who's very much trusted. And we are advocating for the greater allocation of vaccine to be provided to office space dentists and physicians. So, Stanley, that kind of goes to the issue here of you know, hesitancy of the vaccine. Here, what do you what would you like to see in terms of programs to address vaccine hesanity, because it's not just for the COVID vaccine.

We've had you know, anti vaxxers for lack of a better term, um you know, you know throughout the country about different vaccines. But how do we overcome that? I think the number one priority is to put the physicians and the dentists in the driver's seat on vaccine education. Physicians and Dennis are in every community, multiple practitioners in every community, and we need to engage the office space trusted dentists and physician in educating the public on the

importance of ACT means. We need to allocate vaccines, the COVID vaccines to these office space practitioners, and we need to do it quickly and make it easy for them to have access to these vaccines. Right now, it's not easy, a lot of paperwork for the practitioners. Yet they can easily obtain other kinds of vaccines. We need to make the COVID vaccine easily accessible to offer space practitioners. Standing away from maybe away from your business and and thinking

more about the health and welfare of mankind. How concerned are you about what we're seeing in India and what we could soon see? You know, we could see similar problems spikes in Africa in South America. Um, what do you think needs to be done about that? I'm very, very concerned for two reasons. There's a morality issue and there's also the issue of ensuring that our own safety is protected. Excuse me vaccines. Sorry, the viruses do not

have passports. You cannot be kept out through visas. We need to make sure that the entire world has access to P P and E quality that we know works tests, rapid tests for COVID and the vaccine, and I'm fearful that the wealthier countries in the world are keeping these products for ourselves. Yes, it's not moral, but from a practical point of view, if we don't provide these products to the whole world, this virus will not be contained.

All right, Stanley, thanks so much for joining us. I think really important to get your take on this and also obviously great to hear about the business. At Henry Shine, Stanley Bergman is the chairman and chief executive officer, and he has been incredibly active, written a letter um to Congress about why this issue can't be overlooked in the direct consequences in terms of vaccine acceptance. This is Bloomberg.

Let's get now to Mark Barry Bow. He joins us from Jennison Associates, the fundamental equity and fixed income business a P JIM and he is their head of Global Equity. Mark, we've seen this big rotation and we've been talking about it for months and months now, but you don't think investors should make major changes to their portfolios during market rotations, instead focusing on investing for the longer term. How long term are you thinking, well, you know, we're typically going

to look out um, you know, the next three years. Uh, just in terms of secular trends. And you know, obviously rotations can be painful, particularly if you're a growth investor in this environment. But actually there's some really good stock setting up here we think, going into the second half of the year and into two. So it's it's very a little unusual to say that a good economy is bad for tech, because um, that would be the first cycle we've ever had were good economies bad for tech.

Good economy is good for tech. So I think it's a little bit overdone. So you don't think this rotation is going to stick, is basically what you're saying. No, I think once you as you're working through earnings, we're seeing some amazing prints at a big companies like Apple

or Amazon, Google, Tesla, etcetera. And um, you know Mercado Libre last night out of Latin America, and uh, these leading companies are building major platforms that that are going to you know, thrive for years to come, we think. And so I think once the cyclical kind of you know, rallied you know, reaches its crescendo as it were, because there is nothing secular about it. It's just a cyclical

bounce off the bottom. Uh, it's going to be. Investors are just gonna win with companies that are that are gaining market share and creating goods and services that people really like. And I think, you know, you're just back to basic fundamentals instead of just macro trading. So how do you generate alpha in with the strategy like that mark in the in the context of not really going

to where the puck is going? Uh? And and over the last you know, kind of nine months, ten months, it's been some of those cyclical trade maybe even some of the small caps as well. Yeah, no, you know, we've of course over the last year. Uh. As long as you're in the right names, you can consistently generate alpha. Of course, if if the whole cluster sells off as it did in March, you know, obviously in one month,

it's tough. So what we try to do is not let all the short term movement get in the way of evaluating how big can a specific company become, how dominant in its particular niche, how important is that company to a local market, And if you approach it from that perspective, you tend to get some really good long term investments that pay off. Um, although every one of them periodically is going to take a breather, right, because sometimes they'll get ahead of themselves as stocks. But you know,

if you look at Amazon, for example, it's kind of stunning. Uh, you know, they just reported revenue growth on a multi hundred billion dollar revenue base and um, you know, you just don't find scale like that generally in the market. So their revenues in the first quarter, we're up forty year every year, the stocks only up thirty nine percent year over year. So there seems to be a disconnect. It's not not not extended. It makes sense you can't go more compelling. It makes sense that you can't go

wrong there with the with the big fan companies. I mean, Amazon is just a killer. But what do you like blow, um, you know, trillion dollar valuations? What do you like in terms of sectors other than Amazon? Apple? Um, you know, Tesla, Google? Sure? Well, you know it's what's really interesting, Okay, if you if you take a step back and you say, what, what's the most important trend that's out there today that's shaping new business formation? Shaping the industry structure, and it's this

digital transformation of the consumer. It's this direct to consumer business model. So it doesn't matter if you're really powerful brand like Louis Lutan or Nike. UM, you need to um go direct to consumer. You need that relationship, and you either do it through your own private store base or your own website that you control so you can monitor inventory pricing, um uh and control your own destiny.

So what we see in that movement is both um early days of directed consumer sales like an e commerce in Latin America where it's very underpenetrated. So that's like Mercado Libre I mean just ironically reported last night sales up a hundred fifty constant currency Brazil, Mexico, Argentina. They're big markets, all of triple digit I mean, just an

amazing company. UM. And of course they're building digital payments platform as well to grease the skids of commerce in markets where people don't have credit cards or there is low penetration, and so you have, you know, look to emerging markets for these next markets. We got We've got to leave it there just because of time, but we really appreciate you taking time Mark Barry bow Head, a global equity Jennison Associates. Thanks for listening to the Bloomberg

Markets podcast. You can subscribe and listen to interviews the full podcasts, or whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller three. Pet On Fall Sweeney I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio