Tom Moeller, executive vice president of the florist division at FTD

FTD this week announced that it has filed for chapter 11 bankruptcy protection and entered into a purchase agreement with Nexus Capital Management LP, a Los Angeles-based investment firm with a history of buying distressed companies.

The news comes after months of corporate restructuring at the company — a process that is still ongoing — and growing speculation among growers, wholesalers, retailers, suppliers and the media about the future of one of the floral industry’s oldest and most recognized brands.

The deal with Nexus Capital includes FTD’s florist and consumer businesses, including ProFlowers. In addition, FTD has agreed to sell certain other assets, including its non-floral brands Personal Creations and Shari’s Berries. The company has already sold the U.K.-based Interflora to Teleflora.

In an email to member florists, Scott Levin, FTD’s president and CEO, sought to reassure people unsettled by the news. “I want to be clear about what this means,” he wrote. “ is a legal process that provides us the tools to implement our strategic initiatives and protect our important relationships while we continue operating.”

FTD, which was founded in 1910, implemented a corporate restructuring and cost-savings plan last year in large part to address a $217.7 million debt that comes to maturation in September. The company’s disappointing results on Valentine’s Day and lower-than-expected sales for the fourth quarter of 2018 compounded its problems, and created public relations challenges, as some publications predicted the company would be out of business by this month — news stories Tom Moeller, executive vice president of the florist division at FTD, called “distortions” of the facts.

Repositioning ProFlowers, Addressing Payment Concerns

In its communications this week with member florists — including an FAQ sheet and dedicated website — FTD has emphasized a number of points, including its planned restructuring of ProFlowers from a “drop-ship operation focused on value-priced flowers to a business model that leads with FTD florist designed and delivered offerings.”

ProFlowers was once a fierce competitor of FTD. The company, which relied not only on drop shipments of boxed flowers but also, in its early days, on ads that disparaged local florists, was seen by many in the industry as a negative force, a business that built up consumer expectations with low-priced offerings but ultimately delivered sub-par experiences and products. FTD’s decision to purchase the company in 2014 was viewed in some quarters as a way to reign in a renegade business — and in others as proof that FTD was moving further from its local florist members and roots.

In conversations this week with EBrief editors, Moeller said the new changes to ProFlowers — flipping the model from mostly drop-shipped to mostly florist-designed and delivered and eliminating TV and radio ads that promote ProFlowers’ low-cost, drop-ship bouquets — will “be huge” for those member florists “that have the capability, quality and the desire to fill more incoming orders.” The changes, he promised, “will result in hundreds of thousands of additional incremental orders into the FTD florist network annually.”

Moeller acknowledged that the company’s current financial position has forced it to reckon with the ProFlowers model. “When we acquired ProFlowers in 2014, it was a growing, big brand somewhat disruptive,” he said. Today, with new other start-ups in the industry working off a drop-ship model, “the value proposition isn’t as strong as it used to be. To address our debt, we realized we’d have to sell it or change the model.”

He also acknowledged that filling incoming orders isn’t a model for all florists and pointed to other company resources, including its web-hosting and POS capabilities as valued services and products. (FTD is on track to launch its new florist websites later this month, according to a company representative, who said the sites will offer improved functionality and more customization — updates many florists have said in the past are overdue. In addition, the company is finalizing an agreement with a third party to provide cloud-based POS technology.)

FTD executives have sought to reassure florists that they will be paid for orders as the company moves through chapter 11 and continues its restructuring process, and that business will run as usual. No additional changes have been announced at the leadership level. (On June 5, the company received approval to, among other things, continue ongoing payments and services without interruption to member florists and business partners, manage its continuing relationships with vendors and customers, and pay wages and benefits for continuing employees.)

Moeller added that the team at FTD is focused on the future, and pointed to a new partnership with Legacy.com for “high-value, florist-filled sympathy orders” and year-over-year growth in ProFlowers’ Florist Express orders, along with strong year-to-date performance in FTD florist and consumer businesses.

“We experienced order growth for the first time in a while on FTD.com for Mother’s Day which benefits florists since the vast majority of orders are florist-filled,” he said. “We have a lot of momentum and going forward into the future, the restructure of ProFlowers.com to higher value, florist-filled products will continue to drive more orders into the network.”

The Future of FTD?

At Polites Flores, in Springfield and Upper Darby, Pennsylvania, Chris Polites said this week’s news didn’t surprise him. The shop has been a member of FTD since the 1930s and Polites has worked closely with the FTD in recent years to find solutions that better fit his business. (For instance, limiting his delivery range for incoming orders.)

He said that while the company has made missteps in recent years — he pointed to the purchase of ProFlowers and the fact that FTD fell behind on website technology as examples — he thinks “in the long run, if they can return to their core model, florists, they should be fine.”

“They lost track of who they were for a while,” he said. “But there are a lot of good people still working for the company, and they still have one of the best systems in the industry. I think they can turn things around.”

Elton Soriano of The Flower Factory in Tarzana, California, and a member of FTD for 25 years, said that like Polites, he is happy to hear the company is returning to its “heritage and member florists’ interests.”

“I feel positively about this and about the fact that they are looking at their core business,” he said.

Rakini Chinery of Allan’s Flowers & More in Prescott, Arizona, said, for her, the FTD news underscores a reality throughout the industry: Businesses that want to survive must adapt.

“I feel like FTD did not change soon enough, and instead they just tried to steamroll through,” said Chinery, a member of SAF’s Retailers Council who discontinued her longtime FTD affiliation more than a year ago. “For me, it really speaks to what has happened and what continues to happen in the industry — the rate of change and the decisions we all have to make. Businesses have to be willing to adapt and think outside the box. I don’t think FTD has done that.”

SAF President-Elect Chris Drummond, AAF, PFCI, of Penny’s by Plaza Flowers in Philadelphia said he gives credit to FTD for finding a buyer, proactively communicating with florists and investors, and restructuring ProFlowers.

“To get cash for their non-core business and to focus on their core business, in my opinion, that’s a smart way to go,” he said. Given the company’s disappointing financial filing in March, “I think this is the best interim position that FTD could be in,” he added. “The question now is, how will they execute? Is their marketing smart? Are they generating business? How will consumers respond?”

Tim Galea of Norton’s Flowers & Gifts, with locations in Ann Arbor and Ypsilanti, Michigan, and the chairman of SAF’s Retailers Council agreed that many questions remain unanswered.

“They have a commitment from their buyers, but the question will be, how committed are these buyers to florists?” said Galea, who maintains an FTD membership but said those orders represent less than half a percentage point of volume at his stores.  “Is there a synergy between those new owners and the executives at FTD? If there’s not, I think industry confidence in FTD will continue to disintegrate — more than it has already.”

For his part, Moeller said he believes the teams will work well together. “Nexus is a private-equity company and values the management and associates within the organization to run the day-to-day business,” he said. “They also value and understand the importance of the relationship with the member florists.”

Find out more about FTD’s plans, as presented by the company. Look for more information in upcoming issues of SAF’s publications.

Mary Westbrook is the editor in chief of Floral Management magazine.

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