This week FTD told shareholders that it may run out of cash by the summer and be forced to shut down. The company is looking for a buyer, but with a debt pile of almost $200 million, a market cap of $30 million, and four straight years of losing millions, it’s unclear if the florist wire service will be able to find an exit. This is less a warning sign for florists and more a day of reckoning for the outdated wire service business model. It’s also a dire warning for any FTD florists – they may not get paid in the event of bankruptcy. What are the risks for FTD member shops? They may not get paid in a bankruptcy.If FTD fails, florist retail partners may not get paid what they are owed. In any bankruptcy there is an order in which debts get paid back – secured debts first, followed by priority debts, and then unsecured debts. Debts to florist partners are not secured and are third in line to get paid back. If FTD fails florist partners may not see a dime. If they do get paid back it may be years later and it might be cents on the dollar. If a bankruptcy came after Mother’s Day rush, that could be disastrous for a retail shop. Do you need to break your contract with FTD?You should probably take a look at your contract fine print. But FTD will owe you money only if you accept incoming orders, so one strategy could be to not take any incoming orders. If you need to send out orders, there are independent alternativesMany florists are members of wire services because they want to be able to send orders to other shops for loyal customers. There are now several independent, wire-service-free florist point of sale and florist website providers (like Floranext) that allow sending orders through an independent wire service network. Retailers increasingly are opting for independent florist software that give them better florist software, less expensively, with greater flexibility. Is FTD failing?FTD is guilty of going on a debt binge, like a number of other retailers (Toys R’ Us comes to mind) – but that is not the fundamental problem. FTD has pile of debt, but the real issue is its shrinking revenue. Their profits are dropping because consumers don’t need their services and neither do retail florists. If you are an FTD florist, you should strongly consider running, not walking, away.
Looking for an FTD alternative? Floranext is offering a free website for 2 months to FTD members. from https://floranext.com/why-ftd-is-failing-florists/
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