James McCann: And we can’t go much further in the call without mentioning AI, so that we’re consistent with every other company on the planet.
William Shea: Good, absolutely. So certainly from a manufacturing and distribution from an automation standpoint, we’ve talked about these in the past. The capital efforts that we’ve done at both our Ohio, Medford, and — Medford, Oregon, and Atlanta facilities, we’ve invested within our service center platform from an automation standpoint, using some AI. But certainly from a chat standpoint, using bots from a self-service portal to improve the customer experience, from a Work Smarter standpoint, inventory management, bringing our inventory down to more in line with where our current demand is, has saved us money from both a working capital standpoint, as well as from an inventory write-off perspective.
James McCann: Why don’t you touch on that inventory point? It might help Stephan to understand the achievements we’ve already had there. Last year at this time, inventory levels versus this year, and how we’ve spread the inventory out to meet where we anticipate demand to be, which gives us a freight savings and enables us to lower our overall inventory investment.
William Shea: Yes, the inventory is down around $60 million or so, a little more than $60 million at the end of the first quarter this year versus it was a year ago. And we have it better placed around the country.
James McCann: Well, we think we do.
William Shea: And we’re producing it in a more efficient manner, closer to the holiday. So we’re saving on labor. We’re ultimately saving on freight costs by having it better placed around the country.
James McCann: Does that help you, Stefan?
Unidentified Analyst: Yes. And, I guess, that leads to my last question. Can you talk about seasonal labor availability and labor rates for the current holiday quarter? And how does that compare to last year?
James McCann: Sure. It’s a good story for us, Stefan, in that two years ago, so Christmas of ’21, we really struggled. We wound up the season with 2,000 positions we never filled. And that just kicked us in the head from a labor cost point of view because it required so much over time. Last year, we filled those spots better. And we just got reports as recently as Monday of this week that we’re really not having a problem with labor anywhere in the country. Now, I will caution you that when we talk about reversion to the mean, we have no illusion that on the cost of labor side that there is a reversion to the mean to get back to pre-COVID levels. We were pre-COVID $12 to $13 an hour, Bill, for entry-level seasonal holiday help.
And now it’s much $20 or so. And that’s not going back. That genie is not going back in a bottle. So, our planning anticipates that labor costs overall will be a constant. I will say, though, the asterisk there is, it’s not higher than it was last year for us.
William Shea: That’s right.
Unidentified Analyst: Thank you so much. I’ll jump back into queue.
James McCann: Thanks, Stefan.
Operator: [Operator Instructions] Our next question comes from Alex Fuhrman from Craig-Hallum Capital Group. Please go ahead with your question.
Alex Fuhrman: Great. Thanks guys for taking my question. Jim, it sounds like you’re pretty optimistic about your positioning for the holidays. Can you talk about what you’re doing to attract consumers this holiday season that might be watching their spending a little more than in prior years?
James McCann: Well, I don’t mean to betray optimism, but we’re hopeful. Maybe that’s a better term. The things we’re doing and all that, it’s not — I won’t be the only answer on this question. I’ll ask Tom and Bill to contribute. But Tom mentioned in his remarks, Alex, about how we’re broadening the range of our price points on products. I think that we have a lot of opportunity on the high side to offer more attractive products that the average consumer wouldn’t go for, but the well-heeled customer who really wants to make a splash will find attractive. And frankly, we just always surprise ourselves all these years later about what the elasticity in demand would be at the higher price points. And so we’re making an effort to go after that.
On the other hand, as we look at — we were just chatting before we started this morning about the comments that Brian Cornell from Target had made on CNBC this morning about what they are experiencing. And it’s very similar to us in that the tighter-walleted consumer is struggling right now. And you can see that — I was reading in the Wall Street Journal an article by Greg Ip about how the University of Michigan long-running consumer sentiment index is at recession-like levels. And it just seems to me — I told everyone here this story that when I was in LA a couple of weeks ago, I was running around a lot and I Ubered everywhere. And I had maybe 14 — 12 to 15 different Uber rides over the course of the four days I was running around LA.
And every single driver that I had, all of them nice, the experience was good in every case, every single one of them chatted about how they were under pressure. Cost of fuel, they pointed frequently to the gasoline price signs on the roadway. We were on Lincoln Boulevard a lot. And it started with a seven. And they talked about the cost of fuel. They talked about the cost of housing, rent for them. And they talked about food cost. And that consumer, 62%, I read in the Wall Street Journal piece, 62% of consumers are working paycheck to paycheck, 62% of Americans. And that’s — they’re not — they don’t have the discretionary dollars to say, oh, let me go buy a birthday gift for $50 from one of our brands. But our thought is, when it comes to Thanksgiving, when it came to Halloween, and especially when it comes to Christmas, they move from discretionary items to need-to-buy items.
And Tom, I think you would add that we’ve added a lot more price points that would be affordable and attractive to a consumer who’s struggling a bit.
Thomas Hartnett: Yeah, Alex, it’s Tom. We’ve definitely doubled down in the lower price points. We’ve — on the Harry & David brand, we have a number of new products at a $29.99 price point. We’ve — on our 1-800-FLOWERS brand, we’ve also entertained and have a number of lower price points than we’ve ever had on the site. And especially around our other brands where they are start off at lower price points, we’re in a $15 to $19 price. We don’t — the bottom line is, in really reinforcing the ability to price — shop by price et cetera in those brands. So we understand that a certain segment of our customer base is under pressure. We want to meet them where they are so they can convey their expressions for the holiday. So we’re really focused on that.
William Shea: But we’ve also introduced some higher price point items and some bundled products that combine some of the things that are more affluent consumer and customer wants to buy. And we’ve seen some positive responses to those items.
James McCann: Tom, why don’t you shed a little light on what the bundled product that Bill referenced, that we’re seeing some good traction.
