1-800-FLOWERS.COM, Inc. Class A Stock price
Is 1-800-FLOWERS.COM, Inc. Class A a Top Scorer Stock based on the Dividend, High-Growth-Investing or Leverman Strategy?
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Key metrics
📘 Market Capitalization
📈 What is it?
Market capitalization shows how much a company is currently worth on the stock market.
🧮 How is it calculated?
🏛️ Why is it important?
It helps classify companies by size (Large, Mid, Small Cap) and indicates their market presence and relative stability.
🧮 Calculation
🎯 What does this mean for investors?
- Large-cap companies tend to be more stable, often pay dividends, but may grow more slowly.
- Smaller firms may offer higher growth potential but come with more volatility.
- Market capitalization is a useful indicator of company size — but not a measure of whether a stock is undervalued or overvalued.
📘 Enterprise Value (EV)
📈 What is it?
Enterprise Value represents the total cost to acquire a company — including its debt and excluding its cash reserves.
🧮 How is it calculated?
(= Market Cap + Net Debt)
🏛️ Why is it important?
EV gives a more complete picture of a company's value than market cap alone and is used in key valuation ratios like EV/FCF or EV/Sales.
🧮 Calculation
🎯 What does this mean for investors?
- Enterprise Value shows the true cost of buying a company, including all financial obligations.
- It is more accurate than just looking at market cap, especially when comparing companies with different levels of debt or cash.
- Professional investors prefer EV-based multiples because they better reflect the company’s full financial footprint.
📘 Net Debt
📈 What is it?
Net Debt shows how much debt remains after subtracting a company’s available cash reserves.
🧮 How is it calculated?
🏛️ Why is it important?
It indicates how dependent a company is on borrowed money and how easily it can service its debt in the short term.
🧮 Calculation
🎯 What does this mean for investors?
- Low or negative net debt signals financial strength and flexibility.
- Companies with strong cash positions are better positioned in crises.
- High net debt increases financial risk — especially in environments with rising interest rates or economic downturns.
📘 Cash
📈 What is it?
Cash represents all liquid assets a company can access immediately — including cash, bank deposits, and short-term investments.
🧮 How is it calculated?
🏛️ Why is it important?
It reflects a company’s financial flexibility and resilience — enabling investments, buybacks, or buffer in downturns.
🧮 Calculation
🎯 What does this mean for investors?
- A strong cash position means greater room for maneuver and crisis resistance.
- Cash-rich companies can invest, pay down debt, or repurchase shares.
- But excess idle cash might indicate a lack of growth opportunities.
📘 Shares Outstanding
📈 What is it?
Shares outstanding represent the total number of a company’s shares currently held by investors — excluding treasury stock.
🧮 How is it calculated?
🏛️ Why is it important?
It’s the basis for key metrics like Earnings Per Share (EPS), Market Capitalization, or the Price/Earnings ratio (P/E).
🧮 Calculation
🎯 What does this mean for investors?
- Fewer shares in circulation typically increase earnings per share — making each share more valuable.
- Share buybacks reduce the number of shares and boost per-share metrics.
- Issuing new shares does the opposite — diluting shareholder value and lowering per-share figures.
📘 Price-to-Earnings Ratio (P/E)
📈 What is it?
The P/E ratio shows how many times a company's earnings per share are reflected in its current share price — in other words, how "expensive" the stock appears relative to its profits.
🧮 How is it calculated?
🏛️ Why is it important?
The P/E ratio is one of the most widely used valuation metrics. It helps investors assess whether a stock appears cheap or expensive compared to its earnings power.
🧮 Calculation
📊 P/E (TTM) = Based on earnings from the last 12 months (Trailing Twelve Months):🎯 What does this mean for investors?
- A low P/E may indicate undervaluation — or signal underlying issues.
- A high P/E may reflect strong growth expectations — or an overvalued stock.
📘 Price-to-Sales Ratio (P/S)
📈 What is it?
The P/S ratio shows how much investors are paying for $1 of the company’s revenue – regardless of profitability.
🧮 How is it calculated?
🏛️ Why is it important?
P/S is especially useful for evaluating growth companies or businesses not yet profitable. It reflects how the market values the company’s sales.
🧮 Calculation
Market Cap = $164.31m | Revenue (TTM) = $1.50b
Market Cap = $164.31m | Estimated Revenue = $1.49b
🎯 What does this mean for investors?
- A low P/S may indicate undervaluation — or low profitability.
- A high P/S can reflect strong growth expectations — or excessive optimism.
- Especially helpful when evaluating companies where profits are low, volatile, or negative.
📘 Enterprise Value to Sales (EV/Sales)
📈 What is it?
EV/Sales shows how much investors are paying for $1 of revenue — considering not just equity, but also debt and cash. It’s the capital structure–adjusted version of the P/S ratio.
🧮 How is it calculated?
🏛️ Why is it important?
It’s ideal for comparing companies with different levels of debt. It reflects a company's true cost relative to its revenue.
🧮 Calculation
Enterprise Value = $289.12m | Revenue (TTM) = $1.50b
Enterprise Value = $289.12m | Forward Revenue = $1.49b
🎯 What does this mean for investors?
- EV/Sales allows for capital structure–neutral company comparisons.
- A lower ratio may indicate undervaluation; a higher one may signal strong growth expectations or overvaluation.
- Especially helpful when evaluating high-growth companies with low or negative earnings.
📘 Enterprise Value to Free Cash Flow (EV/FCF) | ex SBC
📈 What is it?
EV/FCF compares a company’s enterprise value with its free cash flow. The metric therefore shows the multiple of current free cash flow at which a company is valued. EV/FCF ex SBC additionally accounts for stock-based compensation (SBC). While SBC does not represent a direct cash outflow, issuing shares as compensation can dilute existing shareholders. Therefore, SBC is deducted from free cash flow in this adjusted version.
🧮 How is it calculated?
EV/FCF ex SBC = Enterprise Value ÷ (Free Cash Flow (TTM) − SBC)
🏛️ Why is it important?
EV/FCF provides a valuation based on free cash flow and therefore complements earnings-based valuation metrics such as the P/E ratio. The ex SBC version additionally accounts for the economic impact of stock-based compensation and provides a more conservative view from a shareholder perspective.
🧮 Calculation
🎯 What does this mean for investors?
- A low EV/FCF means that enterprise value is low relative to current free cash flow. The reasons should always be considered in the context of the company and its industry.
- A high EV/FCF means that enterprise value is high relative to current free cash flow. This can, for example, reflect high growth expectations or temporarily weak cash generation.
- When SBC is positive and adjusted free cash flow remains positive, EV/FCF ex SBC is generally higher than the standard EV/FCF.
- The metric is particularly useful for companies with relatively stable and predictable cash flows.
- If free cash flow is negative or very low, EV/FCF has limited usefulness and should not be interpreted like a standard valuation multiple.
📘 Price-to-Book Ratio (P/B)
📈 What is it?
The P/B ratio compares a company’s market value to its book value — showing how much investors are paying for each dollar of net assets.
🧮 How is it calculated?
🏛️ Why is it important?
P/B is commonly used for asset-heavy industries like banks or industrials. It helps assess whether a stock is trading above or below its net asset value.
🧮 Calculation
🎯 What does this mean for investors?
- A P/B below 1 may signal undervaluation — or weak profitability.
- A P/B above 1 implies the market expects future value creation (e.g., brand, IP, growth).
- Best used for companies with tangible assets and strong balance sheets.
📘 Equity Ratio
📈 What is it?
The equity ratio indicates what portion of a company’s total assets is financed by shareholders’ equity – in other words, how much it relies on its own capital.
🧮 How is it calculated?
🏛️ Why is it important?
A high equity ratio reflects financial strength and stability, especially during downturns. It’s a key indicator of a company’s solvency and long-term risk profile.
🧮 Calculation
🎯 What does this mean for investors?
- Companies with high equity ratios are generally more resilient and less dependent on external debt.
- Low equity ratios can signal higher risk or aggressive financial strategies.
- Important: Always assess the equity ratio in combination with the return on equity (ROE). This shows not just how stable the company is – but also how efficiently it uses shareholder capital.
📘 Return on Equity (ROE)
📈 What is it?
Return on equity (ROE) shows how efficiently a company uses its shareholders’ equity to generate profit. In other words: how much net income is earned per dollar of equity.
🧮 How is it calculated?
🏛️ Why is it important?
ROE is a core profitability metric. It helps investors understand whether a company delivers attractive returns on the capital provided by its shareholders.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROE indicates that the company is using its capital efficiently and profitably.
- It’s especially meaningful for capital-intensive businesses or firms with high equity bases.
- Important: A very high ROE can also result from high debt levels – always interpret it alongside the equity ratio to assess financial health.
📘 Return on Capital Employed (ROCE)
📈 What is it?
ROCE measures how efficiently a company generates profits from its total capital – including both equity and interest-bearing debt.
🧮 How is it calculated?
It evaluates the return on all capital employed, regardless of how it’s financed.
🏛️ Why is it important?
ROCE is ideal for comparing companies with different financing structures. It shows how well management uses capital to create value for both shareholders and creditors.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROCE means the company uses its capital efficiently – regardless of whether it's funded by debt or equity.
- The higher the ROCE compared to peers, the more value the company creates with its invested capital.
- Especially relevant for capital-intensive sectors like industrials, energy, or infrastructure.
📘 Return on Invested Capital (ROIC)
📈 What is it?
ROIC measures how efficiently a company generates returns from the capital invested in its core operations – regardless of whether the capital comes from equity or debt.
🧮 How is it calculated?
- NOPAT = Net Operating Profit After Taxes
- Invested Capital = Operating assets minus non-interest-bearing liabilities
🏛️ Why is it important?
ROIC is one of the most accurate indicators of capital efficiency. Unlike return on equity, it is not distorted by leverage and shows how much value is created for all capital providers.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROIC shows how effectively a company uses the capital that is truly invested in its core operations.
- Unlike ROCE, ROIC focuses only on the capital that is actively used to run the business – and that requires a return (i.e. interest-bearing).
- Especially useful when comparing companies with large amounts of excess cash or non-interest-bearing liabilities – giving a more realistic picture of capital efficiency.
📘 Leverage Ratio (Debt-to-Equity)
📈 What is it?
The leverage ratio indicates how much a company relies on interest-bearing debt (such as loans and bonds) relative to its shareholders’ equity.
🧮 How is it calculated?
🏛️ Why is it important?
This ratio helps assess a company’s financial structure and risk profile. High leverage can enhance returns – but also increases exposure to interest rate changes and financial stress.
🧮 Calculation
🎯 What does this mean for investors?
- A low leverage ratio signals financial strength and independence.
- A higher ratio can improve returns in good times but increases risk during downturns or rising interest rate periods.
- 👉 Always interpret in the context of industry, capital intensity, and interest rate environment.
📘 SBC | in % Revenue
📈 What is it?
SBC (Stock-Based Compensation) refers to equity-based compensation granted by a company to its employees and executives. The percentage shows SBC relative to revenue.
🧮 How is it calculated?
SBC as % of Revenue = (SBC ÷ Revenue) × 100
🏛️ Why is it important?
Stock-based compensation is a real cost factor for shareholders. It can increase the number of shares outstanding and therefore dilute existing shareholders. The percentage of revenue shows how heavily a company relies on equity-based compensation and how significant this form of compensation is relative to the size of the business.
🧮 Calculation
🎯 What does this mean for investors?
- A lower figure is generally positive: Stock-based compensation is relatively small compared with the company's revenue.
- A high figure can indicate greater reliance on stock-based compensation and a higher potential risk of dilution. However, it is also important to consider whether the company offsets dilution through share buybacks.
- The trend over time should also be considered. A high but declining percentage presents a different picture from a persistently high or increasing percentage.
- A single-digit SBC-to-revenue ratio is not unusual among many growth-oriented and technology companies.
📘 SBC as % of FCF
📈 What is it?
SBC (Stock-Based Compensation) refers to equity-based compensation granted by a company to its employees and executives. The percentage shows SBC relative to free cash flow (FCF).
🧮 How is it calculated?
SBC as % of FCF = (SBC ÷ Free Cash Flow) × 100
🏛️ Why is it important?
Stock-based compensation is a real cost factor for shareholders. It can increase the number of shares outstanding and therefore dilute existing shareholders. The percentage of free cash flow shows how significant SBC is relative to the cash generated by the company. Since SBC is non-cash compensation, it is typically not deducted as a cash outflow when calculating FCF.
🎯 What does this mean for investors?
- A lower value is generally favorable. Stock-based compensation is relatively small compared with the company's cash generation.
- A high value means that SBC represents a significant portion of the company's reported free cash flow, even though SBC itself is non-cash.
- The higher the value, the more significant SBC can be as an economic cost to shareholders, particularly when it results in share dilution.
📘 SBC Growth 1Y
📈 What is it?
SBC Growth 1Y shows how much a company's stock-based compensation has changed compared to the previous year.
🧮 How is it calculated?
🏛️ Why is it important?
SBC Growth shows whether stock-based compensation is becoming more or less significant for shareholders. If SBC increases significantly, it can lead to greater shareholder dilution over time. At the same time, SBC is a non-cash expense that reduces earnings on the income statement but is added back in the cash flow statement.
🧮 Calculation
🎯 What does this mean for investors?
- A high positive value is generally negative, as rising SBC can increase the burden on shareholders, particularly through potential dilution.
- What matters is whether the development of SBC is sustainable over the long term. Some level of SBC is common among many growth and technology companies.
📘 Share Count Growth 1Y
📈 What is it?
Share Count Growth 1Y shows how much the number of shares outstanding has increased or decreased over a one-year period.
🧮 How is it calculated?
🏛️ Why is it important?
The number of shares determines how many shares the company's earnings and assets are distributed across. If the share count decreases, existing shareholders' relative ownership increases. If it increases, existing shareholders are diluted. The metric therefore makes dilution and share buybacks directly visible.
🧮 Calculation
🎯 What does this mean for investors?
- A negative value is generally positive, as the number of shares outstanding is decreasing.
- A positive value indicates dilution of existing shareholders.
- A declining share count is not automatically positive: It also matters at what price the shares are repurchased and how the buybacks are financed.
📘 Shareholder Yield
📈 What is it?
Shareholder Yield measures how much capital a company returns to shareholders or uses to reduce debt relative to its market capitalization. It goes beyond dividend yield by also including share buybacks and debt reduction.
🧮 How is it calculated?
🏛️ Why is it important?
Dividend yield only tells part of the story. Companies can also return capital through share buybacks, while reducing debt can strengthen the balance sheet. Shareholder Yield combines all three components into one metric, giving investors a broader view of how a company uses its capital.
🧮 Calculation
🎯 What does this mean for investors?
- A higher Shareholder Yield generally indicates more capital being returned to shareholders or used to reduce debt.
- The mix matters: dividends, buybacks, and debt reduction can affect shareholders in different ways.
- Share buybacks are most beneficial when shares are repurchased at attractive valuations.
- Investors should also consider whether dividends, buybacks, and debt reduction are sustainable over time.
📘 Revenue
📈 What is it?
Revenue shows how much a company earns in total from selling its products and services – the gross income before any costs are deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Revenue is one of the key figures to assess a company’s size, market position, and growth potential.
🧮 Calculation
🎯 What does this mean for investors?
- Growing revenue indicates rising demand and can be an early signal of future earnings growth.
- Comparing actual and expected revenue reveals trends in the market environment and analyst sentiment.
- Note: Strong revenue alone isn’t enough – margins and profitability matter just as much.
📘 EBITDA
📈 What is it?
EBITDA stands for “Earnings Before Interest, Taxes, Depreciation, and Amortization.” It reflects a company’s operating profit before the effects of financing, taxes, and accounting depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
EBITDA is widely used to evaluate a company’s operating performance – especially across capital-intensive sectors or international comparisons.
🧮 Calculation
🎯 What does this mean for investors?
- A high or growing EBITDA indicates strong operational profitability – independent of taxes, interest, or accounting methods.
- It’s especially useful for comparing companies across sectors or geographies.
- Important: EBITDA is not a net income figure – it excludes key costs like depreciation and interest.
📘 EBIT
📈 What is it?
EBIT stands for “Earnings Before Interest and Taxes.” It reflects a company’s operating profit after depreciation, but before interest and tax expenses.
🧮 How is it calculated?
🏛️ Why is it important?
EBIT is a core profitability metric that shows how well the company performs in its main business operations – independent of capital structure and tax environment.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT indicates strong profitability from the company’s core business – before financial and tax effects.
- It allows better comparison between companies with different debt levels or tax structures.
- Compared to EBITDA, EBIT already accounts for depreciation and reflects capital intensity more clearly.
📘 Net Income
📈 What is it?
Net income is the company’s total profit – the amount left after all expenses, taxes, interest, and depreciation have been deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Net income is the most comprehensive measure of a company’s profitability – showing how much actual profit remains after all business and financing costs.
🧮 Calculation
🎯 What does this mean for investors?
- Growing net income indicates that the company is managing all of its costs efficiently.
- It directly influences valuation metrics like P/E ratio and the company’s dividend capacity.
- Over time, net income trends reveal how resilient and profitable the business model really is.
📘 Free Cash Flow (FCF) | ex SBC
📈 What is it?
Free cash flow shows how much cash remains after a company has covered its operating and capital expenditures. FCF ex SBC additionally deducts stock-based compensation (SBC) to adjust the cash flow for the effect of non-cash SBC.
🧮 How is it calculated?
Free Cash Flow ex SBC = Operating Cash Flow − SBC − Capital Expenditures (CAPEX)
🏛️ Why is it important?
FCF reflects a company’s actual financial strength – independent of reported accounting earnings. It shows how much flexibility a company has for dividends, share buybacks, or debt reduction. FCF ex SBC also deducts stock-based compensation and shows how much cash generation remains after SBC.
🧮 Calculation
🎯 What does this mean for investors?
- High free cash flow indicates that a company has strong financial strength – independent of reported earnings.
- It is often a solid basis for sustainable dividends and share buybacks.
- Declining FCF can be a warning sign, even if reported earnings remain stable.
📘 Revenue Growth
📈 What is it?
Revenue growth shows how much a company’s sales have changed compared to the previous year – both on a trailing basis (TTM) and based on forward projections.
🧮 How is it calculated?
Forward = (Expected revenue ÷ Revenue in prior year − 1) × 100
Forward growth is based on analyst estimates for the current fiscal year.
🏛️ Why is it important?
Rising revenue signals growing demand, business expansion, and market share gains – especially important for growth-oriented companies.
🧮 Calculation
🎯 What does this mean for investors?
- Growth is the engine of long-term value creation – especially in tech and growth sectors.
- What matters is not just current growth, but its sustainability.
- Forward projections reflect whether analysts expect continued momentum – or a slowdown.
📘 EBITDA Growth
📈 What is it?
EBITDA growth shows how much a company’s operating profit (before interest, taxes, depreciation, and amortization) has increased or decreased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBITDA ÷ EBITDA from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
Growing EBITDA indicates improving operational profitability – regardless of financing or accounting effects.
🧮 Calculation
🎯 What does this mean for investors?
- Strong EBITDA growth signals operational efficiency and scalability – especially during growth phases.
- EBITDA growth can be an early indicator of margin and earnings expansion – but should be assessed alongside revenue and EBIT.
📘 EBIT Growth
📈 What is it?
EBIT growth shows how much a company’s operating profit (after depreciation, but before interest and taxes) has increased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBIT ÷ EBIT from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
EBIT growth is a direct indicator of a company’s business performance – taking into account capital intensity through depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- Rising EBIT signals improving operating profitability – even after accounting for depreciation.
- It’s especially important for evaluating companies with significant capital expenditures.
- Combined with revenue and EBITDA growth, EBIT growth provides a well-rounded view of operational progress.
📘 Net Income Growth
📈 What is it?
Net income growth shows how much a company’s bottom-line profit has increased or decreased compared to the previous year – both on a trailing basis (TTM) and based on analyst projections.
🧮 How is it calculated?
Forward = (Expected net income ÷ Net income from prior year − 1) × 100
The forward estimate reflects analysts’ expectations for the current fiscal year.
🏛️ Why is it important?
Net income is the ultimate measure of profitability. Growing net income signals stronger efficiency, cost control, and sustainable earnings power.
🧮 Calculation
🎯 What does this mean for investors?
- Stronger net income boosts valuation, dividend potential, and investor confidence.
- If profits stall while revenue grows, it may signal margin pressure.
📘 Free Cash Flow Growth
📈 What is it?
Free cash flow (FCF) growth shows how a company’s available cash – after covering operating expenses and capital expenditures – has changed compared to the previous year.
🧮 How is it calculated?
🏛️ Why is it important?
Free cash flow reflects real financial strength. Growing FCF indicates more flexibility for dividends, share buybacks, and reinvestment.
🧮 Calculation
🎯 What does this mean for investors?
- Declining FCF may point to rising investments, increasing costs, or weaker operating performance.
- Especially for dividend investors, FCF growth is critical – since dividends are paid from actual available cash.
- A negative trend isn't always bad, but it deserves closer attention.
📘 Gross Margin
📈 What is it?
Gross margin shows how much of a company’s revenue remains after deducting the direct costs of goods sold (like materials and production). It represents the company’s “raw profit” before fixed costs, taxes, and interest.
🧮 How is it calculated?
Or simply: Gross Margin = Gross Profit ÷ Revenue × 100
🏛️ Why is it important?
Gross margin indicates how efficiently a company can produce or procure what it sells. It is a key measure of product-level profitability and pricing power.
🧮 Calculation
🎯 What does this mean for investors?
- A high gross margin suggests strong pricing power and efficient production.
- Falling margins may signal rising input costs or competitive pressure.
- Compared to peers, gross margin offers insights into the quality of a business model.
📘 EBITDA Margin
📈 What is it?
The EBITDA margin shows how much of a company’s revenue remains as operating profit before interest, taxes, depreciation, and amortization.It reflects operating efficiency without being distorted by financing or accounting factors.
🧮 How is it calculated?
🏛️ Why is it important?
The EBITDA margin reveals how much operating income a company generates per dollar of revenue – independent of capital structure and tax effects.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBITDA margin reflects strong core profitability – before accounting distortions.
- It allows for effective comparisons across companies and sectors.
- A stable or growing margin signals efficient cost control and business scalability.
📘 EBIT Margin
📈 What is it?
The EBIT margin shows what percentage of revenue remains as operating profit after depreciation but before interest and taxes.
🧮 How is it calculated?
🏛️ Why is it important?
The EBIT margin reflects a company’s core profitability while accounting for capital intensity (e.g. machinery, infrastructure). It’s especially useful for comparing businesses with different levels of depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT margin shows that the company remains efficient even after factoring in depreciation.
- It’s especially relevant for capital-intensive industries.
- Stable or rising EBIT margins over time are a strong indicator of pricing power and business quality.
📘 Net Margin
📈 What is it?
Net margin shows how much of a company’s revenue remains as bottom-line profit after deducting all costs, interest, taxes, and depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
Net margin reflects a company’s overall efficiency – across operations, financing, and taxation. It shows how much actual profit is generated from each dollar of revenue.
🧮 Calculation
🎯 What does this mean for investors?
- A high net margin means the company is not only strong operationally but also manages financing and taxes efficiently.
- Peer comparisons reveal business quality and competitiveness.
- Declining margins despite revenue growth can be a red flag for rising costs or inefficiencies.
📘 Free Cash Flow Margin | ex SBC
📈 What is it?
The Free Cash Flow Margin shows how much free cash flow a company generates relative to its revenue. In simplified terms, free cash flow is calculated as operating cash flow minus capital expenditures. The Free Cash Flow Margin ex SBC additionally accounts for stock-based compensation (SBC). While SBC does not represent a direct cash outflow, issuing shares as compensation can dilute existing shareholders. Therefore, SBC is deducted from free cash flow in this adjusted metric.
🧮 How is it calculated?
Free Cash Flow Margin ex SBC = (Free Cash Flow − SBC) ÷ Revenue × 100
🏛️ Why is it important?
The Free Cash Flow Margin shows how efficiently a company converts its revenue into free cash flow. Strong free cash flow can provide financial flexibility for dividends, share buybacks, debt repayment, or further investments. The ex SBC version additionally accounts for the economic impact of stock-based compensation and therefore provides a more conservative view of cash generation from a shareholder perspective.
🧮 Calculation
🎯 What does this mean for investors?
- A high Free Cash Flow Margin shows that a company converts a high proportion of its revenue into free cash flow.
- This can provide greater financial flexibility for dividends, share buybacks, debt repayment, or investments.
- The Free Cash Flow Margin ex SBC additionally accounts for potential shareholder dilution from stock-based compensation.
- The long-term trend is particularly important. Declining margins can, for example, result from higher investments, changes in working capital, or weaker operating performance.
📘 Earnings per share (EPS)
📈 What is it?
Earnings per Share (EPS) shows how much profit is attributable to a single share – and is one of the most important metrics for evaluating a company's performance.
🧮 How is it calculated?
The diluted share count reflects potential new shares that could be issued through options, convertible bonds, or other rights.
🏛️ Why is it important?
EPS is the basis for many key valuation metrics like P/E ratio, PEG ratio, or payout ratio. It enables comparisons of profitability across companies, regardless of their size.
🧮 Calculation
🎯 What does this mean for investors?
- EPS captures per-share profitability and is especially useful for comparisons over time or with analyst estimates.
- Rising EPS may signal consistent growth or share buybacks.
- Important: Always use diluted EPS for more realistic valuations – especially in companies with stock-based compensation.
📘 Free cash flow per share (FCF per share)
📈 What is it?
Free Cash Flow per Share shows how much free cash flow a company generates per outstanding share – after investments, but before dividends or debt repayments.
🧮 How is it calculated?
Free cash flow is calculated as operating cash flow minus capital expenditures (CapEx).
🏛️ Why is it important?
FCF per Share reveals how much real cash is available per share – useful for dividends, buybacks, or reducing debt. Unlike net income, free cash flow is harder to manipulate and often seen as a more reliable metric.
🧮 Calculation
🎯 What does this mean for investors?
- High FCF per share signals strong financial flexibility.
- It shows how much capital the company can effectively reinvest or return to shareholders.
- Particularly relevant for dividend payers and capital-efficient businesses.
📘 Short interest
📈 What is it?
Short interest indicates how many shares of a company are currently sold short – that is, borrowed and sold by investors who expect the price to decline.
🧮 How is it calculated?
It reflects the percentage of a company’s shares that are being shorted relative to the total shares available.
🏛️ Why is it important?
Short interest serves as a sentiment indicator: A high value may signal skepticism or bearish expectations – but also increases the potential for a short squeeze if prices rise unexpectedly.
🧮 Calculation
🎯 What does this mean for investors?
- Low short interest usually indicates market confidence in the company.
- High short interest can be a warning sign – or an opportunity if sentiment shifts.
- Especially relevant in volatile markets or ahead of key earnings releases.
📘 Employees
📈 What is it?
The employee count shows how many people a company employs worldwide – offering insights into its size, structure, and business model.
🧮 How is it calculated?
🏛️ Why is it important?
It helps assess operational scale, labor intensity, and cost structure. Combined with revenue and profit, it enables key metrics like revenue per employee or productivity.
🧮 Calculation
🎯 What does this mean for investors?
- A high headcount can signal operational complexity – but also significant growth capacity.
- Revenue per employee is a key indicator of efficiency.
- Especially useful for comparing tech, industrial, or service-heavy companies.
📘 Revenue per employee
📈 What is it?
Revenue per employee indicates how much revenue a company generates on average per employee – a key measure of efficiency and productivity.
🧮 How is it calculated?
The employee count is typically taken from the most recent annual report.
🏛️ Why is it important?
This metric helps compare business models – especially between labor-intensive and technology-driven companies. A high value suggests automation, operational efficiency, or strong value creation per head.
🧮 Calculation
🎯 What does this mean for investors?
- A high revenue per employee indicates a scalable and margin-strong business model.
- A low figure may reflect labor-intensive operations or lower value-add.
- Especially helpful when comparing tech companies to industrial or service sectors.
1-800-FLOWERS.COM, Inc. Class A Stock Analysis
Analyst Opinions
7 Analysts have issued a 1-800-FLOWERS.COM, Inc. Class A forecast:
Analyst Opinions
7 Analysts have issued a 1-800-FLOWERS.COM, Inc. Class A forecast:
1-800-FLOWERS.COM, Inc. Class A Events
Past Events
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SEP
10
Q4 2026 Earnings Call
25 days ago
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MAY
7
Q3 2026 Earnings Call
5 months ago
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JAN
29
Q2 2026 Earnings Call
8 months ago
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OCT
30
Q1 2026 Earnings Call
11 months ago
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StocksGuide Free
1-800-FLOWERS.COM, Inc. Class A — Q4 2026 Earnings Call
1. Management Discussion
Thank you. Welcome to the 1-800-FLOWERS.COM, Inc. Fourth Quarter Fiscal Year 2026 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. [Operator Instructions] Please note this event is being recorded.
I would now like to turn the conference over to Andy Milevoj, Senior Vice President, Investor Relations. Please go ahead.
Good morning and welcome to our fiscal 2026 fourth quarter and year end earnings call. Joining us on today's call are Adolfo Villagomez, Chief Executive Officer, and James Landrock, Chief Financial Officer. Before we begin, I'd like to remind you that some of the statements we make on today's call are covered by the Safe Harbor disclaimer contained in our press release and public documents. During this call, we will make forward-looking statements with predictions, projections, and other statements about future events. These statements are based on current expectations and assumptions that are subject to risks and uncertainties, including those contained in our press release and public filings with the Securities and Exchange Commission. The Company disclaims any obligation to update any of the forward-looking statements that may be made or discussed during this call. Additionally, we will discuss certain supplemental financial measures that were not prepared in accordance with GAAP.
Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures can be found in the tables of our earnings release. Now, I'll turn the call over to Adolfo.
Thanks, Andy, and good morning, everyone. This morning, I would like to discuss some of the announcements we made earlier today. Reflect on the progress we made during fiscal 2026 and share how we are entering the next phase of our transformation in fiscal 2027. As we announced this morning, we'll reach an agreement with our banking partners to amend our credit facility, providing us with additional financial flexibility. The amended credit agreement provides us with greater flexibility to retain a portion of potential assets sale proceeds and reinvest them in the business. It also better positions the Company to pursue a successful capital raising process.
Any additional capital would enable us to fund the investments required to improve customer acquisition, engagement, retention, and ultimately return the Company to sustainable growth. This agreement gives us the flexibility to continue executing while we evaluate those capital raising alternatives. James will discuss this in more detail. When we began this journey a little more than a year ago, priorities were clear. We needed to strengthen the foundation of the business, improve the customer experience, simplify how we operate, and build the capabilities necessary to return the Company to sustainable profitable growth. As I reflect on fiscal 2026, I am proud of what our team has accomplished. Together, we made meaningful changes across the organization that have strengthened our capabilities and positioned us to become a more customer-first, data-driven company.
While there is still important work ahead, I believe we are exiting fiscal 2026, as a stronger company than when we entered the year. Throughout fiscal 2026, we strengthened our leadership team, simplified our organization, began to modernize our digital and marketing capabilities, improved operational efficiency, and increasingly put the customer at the center of everything we do. One of the most significant changes we have made is how we operate internally. As part of our transition to a function-based organization, we have created clearer ownership and accountability across the customer journey. Historically, our marketing organization was responsible for a broad range of activities, including customer acquisition and retention, promotional discounts and cadence that vary by marketing channel, and other elements of the customer experience. Today, those responsibilities are more clearly defined across our marketing, merchandising, and digital experience teams, with each team accountable for a specific part of the customer journey. Marketing is focused on attracting new customers and retaining and engaging our existing customers.
Our merchandising team is responsible for the value proposition we put in front of those customers, including assortment, pricing, delivery fees, product availability, promotional activity, trade-off opportunities, and new product development. And our digital experience team is responsible for the experience customers have once they arrive on our websites, with a particular focus on improving the shopping experience and increasing conversion. We recently promoted one of our leaders into a new role that serves as the store manager for each of our digital platforms. This newly created team is responsible for looking at our websites through the eyes of the customer and identifying ways to make the shopping experience easier, more relevant, and more effective while improving conversion leading to sales growth. This is an important change in how we run the Company. Rather than relying primarily on one team per brand to influence multiple parts of the customer journey, we now have specialized teams with clear responsibilities and accountability across our digital properties. We're also seeing how our teams can work together to better serve the customer.
A good example is our floral assortment. Historically, even within the floral brand, we have separate merchandising teams for our florist fulfilled and direct ship businesses. And they largely operated independently, leading to confusing and sometimes competing value propositions within the same landing page. Today, they are working as one team to align our assortment and make more of our most popular products available through both fulfillment methods, with clearly differentiated value propositions for our customers. This gives customers more choice, clarifies our value proposition, expands our coverage in markets where florist availability may be limited, and creates a more consistent experience regardless of how the product is fulfilled. It is a good example of how breaking down silos and working together around the customer can improve the overall customer experience. This is what is happening underneath our transformation.
We are creating clear accountability across each step of the customer journey, while bringing those teams together around a common objective, serving the customer better while improving business performance. Let me share a few other examples of the progress we are making. First, we launched our redesigned Harry & David website, which is currently in A-B testing. The new site features a mobile-first design, improved navigation, dynamic product ranking, and AI power search. All designed to make it easier for customers to discover products while improving conversion. We also simplified our digital ecosystem by transitioning some of our low-traffic, standalone websites into categories within harryanddavid.com. This allows us to leverage our larger flagship platforms, introduce customers to a broader assortment, and operate more efficiently.
Second, we are modernizing our marketing capabilities. With clear responsibility for customer acquisition and retention, our marketing team is increasingly focused on reaching the right customers, strengthening engagement, and improving the productivity of our marketing investments. We are supporting that effort with investments in our marketing technology platform and a broader, full-funnel approach. Finally, we continue simplifying the business and improving efficiency. We achieved our original two-year cost savings target within the first year, providing us greater flexibility to reinvest a meaningful portion of those savings into marketing, technology, digital capabilities, and the customer experience. As I reflect on fiscal 2026, I see it as a year in which we fundamentally changed how we run the Company. We strengthened our leadership team, simplified the business, began modernizing our customer experience and marketing capabilities, and established clear accountability across the customer journey.
Looking ahead, we remain focused on putting these capabilities to work to improve business performance and position the Company for sustainable, profitable growth. As we move into fiscal 2027, our operational focus shifts to four priorities that we believe will translate our strategy into stronger business performance over time. First, we must accelerate the recovery of our revenue trends. We recognize that our revenue trends remain challenged, and improving those trends is our highest priority. As consumers remain selective in their discretionary spending, it is increasingly important that we give them more reasons to engage with our brands. Whether we are expanding everyday occasions at Harry & David, broadening our assortment, strengthening our loyalty strategy, or delivering more personalized customer experiences, our focus is on building a more durable revenue base over time. As these initiatives continue to mature, we believe they will help increase purchase frequency, strengthen customer relationships, and support improving revenue trends over time.
Second, we will continue to modernize the customer experience. Our objective is simple: Make it easier for customers to discover products, find the right gift, and shop seamlessly across our portfolio. With clear accountability within our digital experience team, we will continue optimizing the customer journey to improve conversion and make the experience more intuitive from the moment a customer arrives on one of our sites through checkout. We will also look for opportunities to encourage customers to shop across more categories to increase average order value and create a more engaging shopping experience. Third, we will increase marketing productivity and make targeted investments to build our brands. Over the past year, we began building a modern marketing organization. With marketing increasingly focused on customer acquisition and retention, we expect to make smarter investment decisions, improve personalization, broaden our full-funnel marketing investments, and more efficiently connect customers with the breadth of our portfolio.
Finally, our team will execute with discipline. We will continue to simplify the business, improve operational efficiency, and allocate capital toward the opportunities we believe offer the greatest long-term returns. We will also leverage the systems and processes we are modernizing to improve productivity and create a simpler, more efficient operating model. We will remain disciplined in how we invest while continuing to strengthen the capabilities that support sustainable profitable growth. Across all four priorities, our objective is to translate investments we have made into better business outcomes. We will not measure success by any single quarter, but by sustained progress across these areas and our ability to translate that progress into improving revenue trends and profitable growth over time. When I joined the Company a little more than a year ago, we knew we needed to strengthen the foundation of the business.
We now have a stronger leadership team, better capabilities, deeper customer insights and a more agile organization. As we enter fiscal 2027, we will continue building those capabilities, but our focus is increasingly on putting them to work and demonstrating what we can deliver. With that, let me turn the call over to James. Thanks, Adolfo, and good morning, everyone.
This morning I will provide some additional perspective on the actions we have taken to enhance our financial flexibility and our evaluation of capital raising options to optimize our capital structure. Then I'll review our fiscal year 2026, fourth quarter, and full year financial results; our balance sheet and liquidity position; and conclude with our fiscal 2027 outlook. As Adolfo mentioned, we amended our credit agreement to extend our existing covenant relief period and provide greater flexibility in the use of proceeds from potential asset sales, including the ability to retain a portion of those proceeds to invest in strategic initiatives to support our transformation. We appreciate the continued support of our banking partners as we execute our transformation and position the business for future growth. We are also evaluating the potential sale of non-strategic assets, along with a range of other capital-raising options intended to optimize our capital structure and provide additional capital to support investments and our transformation and drive future growth. These potential options may include one or more public or private debt or equity financing, potential divestitures of non-strategic assets, or other capital structure transactions. We have retained Guggenheim Securities LLC as our financial advisor in connection with this evaluation. There can be no assurance that the evaluation will result in any transaction or outcome, or if one or more of the transactions ensue, what the terms of any such transaction might be.
The Company is in the early stages of the evaluation and will not comment further during the process. Taken together, these actions are intended to strengthen our financial position and provide greater flexibility to invest in the strategic initiatives we believe can improve the performance of the business and drive sustainable, profitable growth over time. Fiscal 2026 was about strengthening the foundation of our business and positioning the Company for improved financial performance. Throughout the year, we prioritized revenue contribution margin over simply pursuing top-line growth. We streamlined the organization, achieved our cost savings objectives ahead of schedule, and deliberately reinvested a portion of those savings into initiatives designed to strengthen the business over the long term. As we review our financial results, it's important to keep that context in mind. Fiscal 2026 was a year of transition, and our results reflect both the progress we have made and the investments we are making to improve business performance over time.
As we move into fiscal 2027, our financial priorities are focused on maintaining appropriate liquidity, managing the balance sheet with discipline, and deploying capital toward the initiatives we believe offer the greatest opportunity to improve the performance of the business and create long-term shareholder value. With that perspective, let's review our financial results. Consolidated fourth quarter revenue declined 12.9% to $293.1 million. This included a 13.4% decline in our consumer floral and gift segment, a 15.4% decline in our gourmet foods and gift basket segment, which was affected by the timing of Easter, and a 1.9% increase in our BloomNet segment. For the full fiscal year, consolidated revenue declined 10.8% to $1.5 billion. Transactions declined 17.6%, partially offset by a 5.5% increase in AOV and growth in our wholesale business. At the end of fiscal 2026, we had 7.5 million customers, over 800,000 Passport members, and 77% of our revenue came from existing customers.
Multi-category customers and Passport loyalty members continue to represent our best performing customers. We recognized the strong affinity of these customers. During fiscal '26, multi-category customers represented 12% of our customers and 26% of our revenues, while Passport loyalty members represented 9% of our customer base and 19% of our revenues. Today, Passport is primarily centered around providing members with free shipping. Going forward, we see an opportunity to broaden the role of our loyalty program to deepen customer engagement, increase purchase frequency, and reduce the cost of reacquiring existing customers. This is consistent with our broader marketing strategy to build stronger relationships with our customers and reduce reacquisition costs. As Adolfo discussed, accelerating the recovery of revenue trends is our highest priority. We are evolving toward a more full-funnel marketing approach to reach new audiences while modernizing the customer experience to improve conversion and purchase frequency. Combined with greater personalized marketing and more year-round purchasing occasions, these initiatives are designed to strengthen customer acquisition and retention and support a more durable revenue base over time.
Turning to gross margin, fourth quarter adjusted gross margin was 34.7% compared with 35.5% in the prior year period. Gross margin continued to reflect the impact of sales deleveraging, commodity costs and inventory reserves offset in part by our cost reduction and operational efficiency initiatives, with an approximately $7 million benefit related to tariff refunds. For the full fiscal year, adjusted gross margin was 38% compared with 39.1% last year. Turning to operating expenses, excluding non-recurring charges and the impact of the Company's non-qualified deferred compensation plan in both periods, fourth quarter operating expenses decreased $8.9 million as compared with the prior year to $150.8 million. As we discussed throughout the year, our cost savings came from two primary areas: improving the efficiency of our marketing investments and operating. We achieved our $50 million run rate savings target ahead of plan and have identified an additional $15 to $20 million of opportunities across both cost of goods sold and operating expenses. We expect to execute against these additional opportunities during fiscal 2027 with the full benefit expected in fiscal 2028. As a result of these factors, our fourth quarter adjusted EBITDA loss was $31 million, compared with a loss of $24.2 million in the prior year period.
For the full fiscal year, adjusted EBITDA was $2.9 million, compared with $29.2 million in the prior year. Turning to our balance sheet, at fiscal year end, net debt was $128 million compared with $114 million a year ago. Cash totaled $11 million, while inventory ended the year at $153 million, compared with $177 million last year. In terms of our debt, we had $139 million in term debt and no borrowings under our revolving credit facility, as compared with $160 million in term debt a year ago. A continued focus on disciplined working capital management also contributed to a $55 million improvement in free cash flow compared with the prior year. As we discussed on today's call, fiscal 2027 represents the next phase of our transformation. We will continue to build new capabilities while leveraging the investments we have already made.
We plan to reinvest a significant portion of our cost savings back into the business in areas where we believe can drive long-term value. These include marketing, marketing technology, improving the digital customer experience, and increased personalized marketing. We will be very disciplined in how we allocate this capital using a test and learn approach to measure the results and prioritize the investments that demonstrate the greatest potential returns. We expect these investments to improve marketing productivity and the customer experience while supporting customer acquisition and retention. Benefits will take time to build, but we believe they will lead to better business performance and create long-term value. As a result, for fiscal 2027, we expect revenue to decline in the mid-single-digit range. Our revenue outlook does not assume any incremental benefit from investments that may be funded through the capital raising activities or potential divestitures discussed today.
We expect adjusted EBITDA to be in the range of $10 to $15 million, which includes approximately $12 million of additional variable compensation expense compared with fiscal 2026. With that, we will open the call for Q&A. Operator, please provide instructions for those interested in asking a question.
We will now begin the question and answer session. To ask a question, you may press star then 1 on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question today comes from Michael Kupinski with Noble Capital Markets. Please go ahead.
2. Question Answer
Thank you. Good morning. A couple of questions. Let's start with the guide. You are guiding $10 to $15 million in adjusted EBITDA for '27. I was wondering if you can just kind of give us a bridge to that number, particularly, I think there are consulting fees that roll off, but I just wondered if those might be continuing into fiscal '27. Maybe you can walk us through cost savings, gross margin improvement, marketing efficiencies, you know, relative to the guide that you're providing.
Good morning, Michael. How are you doing? This is James. So, you know, I, the way I'd bridge it is, you know, if you start at the $2.9 million of, you know, reported adjusted EBITDA as your starting point, you know, we expect to benefit, you know, from approximately $50 million of our run rate cost savings in fiscal 2027 and, you know, the consultant costs were done with the consultant cost, so we're getting the full benefit of the $50 million in 2027. However, those savings, you know, being partially offset by the expected mid-single-digit revenue decline, so that flows through from a gross margin perspective. We're going to continue to make investments in, you know, marketing, our MarTech stack, and digital customer service experience. So some of those savings we're going to use to reinvest back into the business. And then we have approximately $12 million of incremental variable compensation compared to last year. So that's how you get from the $2.9 to the $10.5 million.
So, you know, the cost savings are providing us with the capacity, you know, to continue to invest in the initiatives that we believe will improve the business performance and support our growth. So that's where we're coming up. So the $2.9 with those puts and takes gets you to the $10 to $15 million of EBITDA, Michael.
Okay, great. Um, and then of course, Gourmet Foods obviously, you know, had an Easter shift there. And I was just wondering if you can give us some thoughts about what the Easter shift in terms of revenues might have been, and then maybe discuss a little bit about the gross margin decline, you know, how temporary that was and how much of that was affected by Easter, but then also how much of that might have been affected by tariffs, commodities, shipping, and that sort of thing.
So the, uh, you know, the reported for the gourmet food and gift basket, we reported, you know, 15.4% decline. So the Easter shift had about a 2.5 to 3.5 percentage point impact on that, and you about a, you know, 1.5% impact on the overall revenue for the quarter. Obviously, Michael, there's no impact on a full year basis. Obviously, it's just a shift between quarters. And I think you had another on the commodities, sure. Yes. And then go ahead. I'm sorry. No. Yes. On the commodities. Yes.
So, on the commodities, kind of, you know, we're seeing the trends generally consistent with what we discussed last quarter, Michael. Cocoa remains, you know, year-over-year, you know, a headwind for us. You know, although the market pricing has moderated from the peak levels, you know, we did see some benefit in, you know, butter, flour, and our liquid eggs. Of course, they're down slightly year-over-year. But we are starting to see, you know, the cost of flour is starting to tick up a little bit as well. And then, you know, the big one that we keep an eye on is on our outbound shipping, the impact of the fuel surcharge. So right now, that impact hasn't been that material to date because, you know, as you know, our Q1 is, you know, our lowest volume quarter.
We're monitoring that situation closely, you know, with the gas prices and the diesel prices where they are. So that one is really kind of a headwind that we're dealing with right now, Michael.
Okay, got you. And then I just want to chat just a little bit about the credit facility in terms of, you know, how should investors primarily view this, um, the amendment, you know, obviously providing additional operating flexibility for you during this transformation. But we're just wondering, is that the reason, or is there also the prospect here that you're there's a prospect here that there's a change in your expectations for liquidity or operating performance of the Company.
I think, Michael, the way we announced today, I think you need to look at the announcement we made today together. You know, it's around the bank amendment, the potential asset sales, and the capital raise evaluation. They're all kind of interconnected. Our broader effort to strengthen the Company's financial position as well as support the execution of our transformation, right? So we believe we have the right strategy. FY 2026 was the year we set the foundation. So, you know, so, you know, the bank amendment, the potential sale of assets and the capital raising evaluation really are intended to strengthen our financial position and provide flexibility to invest in strategic initiatives that will improve the business performance. You know, so what the bank amendment does for us, Michael, is it provides flexibility to invest in additional covenant flexibility and greater flexibility, you know, we can deploy a portion of any potential asset sales that helps us, you know, invest in the, you know, you know, back into the business up for the growth initiatives. You know, when you look at the non-strategic asset sales, you know, we're looking at it as a way to help simplify the business, at the same time of monetizing assets that, you know, not essential to the long-term strategy, but it will generate additional liquidity.
And then kind of combining that, you know, with the capital raise evaluation that will help us determine whether, you know, this incremental capital could further enhance our ability to execute the transformation and support future growth. And as we mentioned on the call, we retained Guggenheim Securities as our advisor to help us evaluate the range of capital, you know, raising and the capital structural alternatives that may be available to the Company. So it's more of a, you know, we need to, you know, we're looking from a liquidity standpoint, a capital structure to help us fund the, you know, fund the growth initiatives that we have out there.
If I could just squeeze one more in, obviously you now have some third party distribution. I was wondering if you have early results on your relationships with Amazon, DoorDash, and so forth. I was wondering if you could just give us an update there and how those relationships are working for you.
Sure, Michael. Good morning. This is Adolfo. Those are going really well. Growing double, sometimes triple digits from a very small base is, and they are marketing contribution margin positive. So we are very excited about where that is going. I think our marketplace team is doing a great job of managing these external marketplaces and customers shopping in those sites are actually liking our products. They are liking our value proposition, so that is expected to continue to grow. Again, it's from a small base, but I think everything is very positive in that area.
And there's no evidence of cannibalization from your own digital channels?
I mean, we try to make sure that's the key question. We have found very little cannibalization. It's a different – this is the way to think about it, Michael. Even if it is the same individual, the mindset of the transaction is very different. Places like Amazon, Walmart, etcetera, are designed to buy for you. As you know, our main customer objective, it's a gift to somebody else. And our websites are positioned for that. I we believe we have a premier gifting platform. And that occasion actually makes the cannibalization minimal to non-existent.
Got you. Thank you so much. Sure.
The next question comes from Anthony Lebiedzinski with Sidoti and Company. Please go ahead.
Good morning. Thank you for taking the questions. So, I was just curious, as far as your Mother's Day performance, how did the holiday perform versus your expectations? And you know, just going back to your last conference call, we talked about some of the learnings from Valentine's Day, whether those were successful. And then as you get into the holiday season, kind of, how are you looking to perhaps shift your marketing messaging and other initiatives? Yes.
Sure, Michael. Good morning. This is Adolfo. Those are going really well. Growing double, sometimes triple digits from a very small base is, and they are marketing contribution margin positive. So we are very excited about where that is going. I think our marketplace team is doing a great job of managing these external marketplaces and customers shopping in those sites are actually liking our products. They are liking our value proposition, so that is expected to continue to grow. Again, it's from a small base, but I think everything is very positive in that area.
I mean, we try to make sure that's the key question. We have found very little cannibalization. It's a different – this is the way to think about it, Michael. Even if it is the same individual, the mindset of the transaction is very different. Places like Amazon, Walmart, etcetera, are designed to buy for you. As you know, our main customer objective, it's a gift to somebody else. And our websites are positioned for that. I we believe we have a premier gifting platform. And that occasion actually makes the cannibalization minimal to non-existent.
Sure, Anthony. I'm probably going to give you a longer answer than you were hoping for, Anthony, but this is a journey. And again, the key message I want you to hear from me is: It's a trajectory that we are trying to improve on how we go back to growing revenues. So if you go back to Valentine's Day, that was a major shift in the strategy. It used to be that we would favor our direct shipping business. That would lead to significant discounts when we had excess inventory. And for the first time ever in Valentine's Day, we changed that to try to see, again, what the customer wanted, not what we wanted to sell.
We learn a lot. We applied some of those learnings in Mother's Day. It feels like enough timing between one event versus the other, but if you account for the purchase order timing, the communications to florists, etcetera, there's only so many things you can actually change. The trajectory of Mother's Day was aligned with our expectations, and it also provided significant learnings that we are implementing as we speak. I mentioned during the prepared remarks these minor things, which is super important, of aligning the value proposition between the two channels, florists and direct ship. It literally used to be that you would go into our website, and by the way, we're still fixing all of that, but I mean, we know what we are doing and we're executing, that you would find two identical, well, for an uneducated person, you would see two almost identical flower bouquets, think of two dozen roses, and the price gap would be 20%. And you would go like, why is the price gap so much? And you could drive yourself crazy. And the answer was, well, one is direct ship, the other is coming from the florist.
We learned, we tested, said, hey, what if you have the same SKU for both channels? And we tested that on Mother's Day, and we. So all of these little learnings were sequentially applying to improve the trajectory of the business. And again, those are being applied. And on 1-800-Flowers.com, the trajectory of the business is improving significantly. There are weeks in which it's positive sales of that category. So it's moving in the right direction. But there are also the other moving parts, which is, okay, one thing is to sell flowers, but that website was selling flowers, chocolate-covered strawberries, it was selling a lot of many different things, because we manually, we put in those products in front of the customer. And yes, they were buying them, but nobody was measuring incrementality.
Now we're measuring incrementality, we are measuring conversion, and you may be surprised to hear this, but when people go to 1-800-Flowers.com, they want to buy a flower bouquet. So we are now with AI ranking because that's what the customer wants to see, that's what we are showing and that's what we are selling. So the category as flowers it's already growing most days, more weeks but you are compensating for declining sales in the other categories. So all of this to tell you, we are very optimistic about the that we are making, the measurement of incrementality, and when it works, we roll out. Now, you have to keep in mind, we have multiple websites. So every change doesn't impact the $1.5 billion in sales. It just impacts that website. And just as we are talking about flowers, I mentioned, hey, we also have Harry and David.
For Harry and David, the priority right now is Q2, is Christmas, so we have different tests, different things going on, and as I mentioned, that's why we are testing the new platform on an A-B basis at this point. So, positive about the trajectory, satisfied with the results in Mother's Day, and we are learning a lot, and those learnings will allow us to change the trajectory of the business over time.
That's very helpful context. So, just to follow up quickly on that on the just the consumer floral business. So, as you talk about the florist fulfilled and direct fulfillment, what's the mix nowadays between those two and is there an optimal number there that you think would make sense for you guys going forward?
So, Anthony, this is James. So, right now, the mix is plus 60% is florists fulfilled. The remaining is direct and the florist-refilled percentage has been increasing for all the reasons that Adolfo was mentioning. So there is an optimal mix, but it's really more around getting the product and the right product to our customers through the best fulfillment channel.
I mean, and we don't have a target in mind of the optimal mix. The way I think about it is: We want to provide customer choice. If you are a customer living in Manhattan, we have plenty of florists that can provide the bouquets you're looking for. So I don't want to sell you direct products in there because certainly our florist delivery business, it's probably the best experience we can provide. But my favorite example with the team is, if you are a customer that is trying to send a gift to Big Sky, Montana, there isn't a florist in Big Sky, Montana, so you need to actually ship direct and what we are trying to do is to improve that value proposition, align it with our florist delivery business to get to an optimal, an optimal mix driven by what the customer wants.
Got you. Okay. And then just switching gears, you know, BloomNet was a bright spot here with sales increasing slightly. I know it's a, you know, lowest revenue segment, but what's going on there? And do you think you can sustain modest growth in BloomNet?
So, Anthony, as you mentioned, it's about a $500,000 increase year over year. One of the main drivers is what we call the local marketplace or the apps. That's the sales that are being processed through DoorDash, Instacart, and Uber Eats, so that was one of the main drivers. And then there was some, you know, we had a, you know, from a florist with Phil, we had a pretty decent Mother's Day on that front, as Adolfo mentioned. So we got a little uplift there as well. So, and we are excited about the local, we call it local marketplace or the local apps, you know, as a, you know, something that will continue to grow. Yes.
On that, Anthony, I regularly think about BloomNet as a leading indicator into where we are heading. We just discussed two things: how our flowers category is growing, that we are favoring florist-delivered business because that's what the customer wants. And those two things by themselves impact in a positive way our BloomNet revenues. The other thing we discussed was the third-party marketplace, which, as James explained, that's also growing nicely. So if you combine those factors, BloomNet is getting the benefit of those, and that's why you see the positive trajectory in there.
Got you. Okay. And if I could just squeeze one more in. Tariff refunds, so you talked about $7 million in a quarter. Do you expect to get any additional tariff refunds in fiscal '27 perhaps?
No, at this point, Anthony, we believe we've got all the refunds that are due us at the moment.
Understood. Well, thank you very much and best of luck. Thank you.
The next question comes from Linda Bolton-Weiser with Water Tower Research. Please go ahead.
Yes, hi, thank you. I was wondering if you could comment, Adolfo, on your efforts to improve marketing spending productivity. Is there any metrics you can share with us that would help us understand better the progress you've made other than spending as a percentage of revenue? So maybe something like CAC, if your customer acquisition cost has gone down or up, and is there any other metrics that could help us see, you know, the progress that you're making there?
Yes Linda, I don't have hard numbers for you. But let me explain what we are trying to do and what we are seeing. If you step back for a moment, 2026 was, this is the core problem we were trying to solve. We were trying to drive revenues, hoping that the customer acquisition cost would be offset by customer lifetime value. However, so we, our marketing machine would get the customer. I mean, I think we mentioned somewhere in there that about 70-plus percent of our sales come from repeat customers. But the problem we were having is we were paying a customer acquisition cost to get a lot of those customers.
So our marketing investment wasn't measuring incrementality and wasn't really driving customer lifetime value. So, we didn't have the capacity to measure multi-touch attribution, we were only measuring last-touch attribution, which would lead you to believe that buying clicks from Google was the most effective investment you were making. But if you were to measure that using incrementality, you would realize that it was minimal incrementality. So step #1, and this is what we did in 2020, we implemented and we have talked about marketing contribution margin, which was, hey, guys, if it is not contribution margin positive for the transaction including the marketing acquisition cost, don't spend the money. We know we probably left in there some transactions that we may have wanted to have, but we just didn't have the capability to measure what was good and what was bad. And again, the very basic approach we were using for measurement wasn't the right way of measuring customer acquisition cost and customer lifetime value. So we literally just put the brakes, saved a lot of money in the process. I think if you were to look at 2026 in total, marketing contribution margin was positive in most quarters in most months, just because we were spending more money than we should have spent. Now, as part of that process now, so I mean, let me just stop right there.
So in 2026, yes, our customer acquisition costs declined, and yes, our customer lifetime value increased. For the basis of the business, a $1.5, $1.6 billion business, we need to go back to revenue growth for the operational efficiencies to kick in. So as we were doing that and cutting costs, we have been investing in capabilities. I'm not going to declare victory that we have everything, but as we speak, literally every week, we are releasing and implementing new tools, new capabilities within marketing in the different websites that are allowing us to prepare for the upcoming events which are where the majority of our revenues come. I'll give you an example. For the first time ever, we are going to have marketing measurement, multi-touch attribution across all of our websites. That's becoming live in October. We are changing our loyalty program. Our loyalty program was a one-size-fits-all that basically just focused, okay, if you are going to buy multiple orders from us, I'll give you free delivery. That was the only value proposition.
What we are doing right now is we are redesigning that. We're going to bring a wallet to truly measure retention and incrementality and segment our customers. We're finding out our B2B customers are very different from our consumers. Yes, we were offering them the same value proposition. So we are changing those things. We're modernizing our media team. We are doing a lot of things with the idea to get back to a productive, okay, here's the customer acquisition cost we can have. By the way, that varies by wealth. It is not the same, so we need to measure that by website, and then determine how much can we spend to truly deliver a positive customer lifetime value based on conversion, retention, etcetera, etcetera, etcetera.
So Linda, we are moving in the right direction. Now the challenge in 2027 is just to demonstrate that those capabilities actually will allow us to deliver revenue growth. And as I mentioned, the reason we're not saying, hey, it's positive in 2027, it's because this is sequential and you will see the trajectory. The trajectory improving, so as the year goes by, this trajectory should continue to improve as we bring the new capabilities into each of our different websites to increase our acquisition, retention, and repeatability of customers.
That's helpful. Thank you. And it sort of leads into my next question, which is the cadence of sales performance in FY27. You kind of indicated this would improve as the year goes on. So would we expect sales decline to be biggest in the first part of the fiscal year and then to improve as you go on? And do you think by the fourth quarter of fiscal '27, do you think the top line can be flat or even slightly up year over year?
So, Linda, this is James. We, you know, as you mentioned, we expect the rate of revenue decline to moderate as we progress throughout 2027. As Adolfo mentioned, as these initiatives begin to gain traction. And again, we don't expect these improvements to be linear from quarter to quarter. And we're not giving specific quarterly guidance, but we do anticipate that we'll see improvement on the top line, you know, throughout the year.
Yes, but the key thing here, Linda, is we do expect the revenue trajectory to improve.
Okay, great. And then my final question has to do with your discussion about, I guess, potential divestitures. Are you talking more about like brand sales or hard assets like facilities? And then my second question has to do with on the brand. Are you able to give us some sense as to whether there are any brands that are unprofitable like on a standalone basis? Like is that possible for you to measure and convey in terms of the profitability, particularly of each brand individually? Thanks.
So, Linda, so, you know, we're obviously evaluating, you know, potentials of divestitures, you know, to help, you know, simplify the business, you know, and optimize the capital structure. You know, really focused on non-strategic assets where ownership may not be necessary to support our long-term strategy, including situations where we might be able to work with third-party partners and operate with more focus in a capital-efficient model. We're not really commenting right now on the specific divestitures, but we are obviously looking at everything, both from brands as well as hard assets. Thank you very much. I appreciate it. Thank you. Thank you.
This concludes our question and answer session. I would like to turn the conference back over for any closing remarks.
Thank you, everyone, for joining us today and for your continued support. As we close, I want to reinforce a few key points. Fiscal 2026 was an important year for our Company. We strengthened our leadership team, simplified how we operate, began to modernize our customer experience and marketing capabilities, and created clearer ownership and accountability across the customer journey. While there is still important work ahead, we believe we have built a stronger foundation for the business. As we enter fiscal 2027, our focus is increasingly on putting these capabilities to work and translating them into better business performance. Improving our revenue trends remains our highest priority, supported by our efforts to modernize the customer experience, increase marketing productivity, and execute with discipline.
I am confident in the team we have in place and the opportunities ahead of us. Thank you again for joining us today.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
This live transcript is auto-generated without human intervention or review.
1-800-FLOWERS.COM, Inc. Class A — Q3 2026 Earnings Call
1. Management Discussion
Good day, and welcome to the 1-800-FLOWERS.COM, Inc. Fiscal Year 2026 Third Quarter Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Andy Milevoj, Senior Vice President of Investor Relations. Please go ahead.
Good morning, and welcome to our fiscal 2026 third quarter earnings call. Joining us on today's call are Adolfo Villagomez, Chief Executive Officer; and James Langrock, Chief Financial Officer. Before we begin, I'd like to remind you that some of the statements we make on today's call are covered by the safe harbor disclaimer contained in our press release and public documents. During this call, we will make forward-looking statements with predictions, projections and other statements about future events. These statements are based on current expectations and assumptions that are subject to risks and uncertainties, including those contained in our press release and public filings with the Securities and Exchange Commission. The company disclaims any obligation to update any of the forward-looking statements that may be made or discussed during this call.
Additionally, we will discuss certain supplemental financial measures that were not prepared in accordance with GAAP. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures can be found in the table of our earnings release. And now I'll turn the call over to Adolfo.
Thanks, Andy, and good morning, everyone. As we move through fiscal 2026, we remain focused on stabilizing the business and building a stronger foundation for future growth. During the third quarter, we continue to make progress on the key initiatives we outlined earlier this year, and we are starting to see early signs that our actions are improving execution and the overall customer experience. I want to start with our Valentine's Day performance, which is an important indicator of that progress. This year, we delivered a significantly improved customer experience with strong gains across our key service metrics. These results reflect better execution, stronger processes and a clear focus across the organization on delivering a high-quality experience for our customers.
Importantly, this progress validates many of the structural and operational changes we have been implementing. We are now beginning to see tangible evidence that these actions are improving performance across key areas of the business. While there is still work to do, we are encouraged by these results and the direction of the business. From a category perspective, our Gourmet Foods and Gift Baskets segment performed better than our Consumer Floral and Gifts segment. As James will discuss in more detail, this reflects the Easter timing shift and the heavier level of inefficient marketing spend in our Consumer Floral and Gifts segment a year ago, combined with our focus on improving marketing contribution margin.
As part of our efforts to broaden our customer reach, we also continue to expand our presence across third-party marketplaces. Ahead of Valentine's Day, we launched a new partnership with Instacart. This builds on our strategy to meet customers where they are already shopping and to expand access to our floral and gifting value proposition. Through this partnership, our offerings are now available on the Instacart app, supported by our network of local florists. This increases speed and accessibility, particularly during peak occasions while also supporting our florist partners and introducing our brands to new customers. At the same time, we're strengthening our focus on the customer experience across our digital platforms. During the quarter, we fully implemented AI-powered sorting and ranking on 1-800-FLOWERS.com.
This brings customer selected best sellers to the top of our product rankings and reflects a more AI-driven customer-first approach. This is an important step in modernizing the business. Historically, product placement was more heavily influenced by merchants. Today, we are prioritizing the products customers choose, which improves the overall shopping experience and results in higher sales. We are simplifying the shopping experience by reducing choice in certain areas to make it easier for customers to find the right gift. In addition, we are evolving how we operate our floral business, including how we balance florist-fulfilled orders with shipments fulfilled from our distribution centers. We are now operating these areas in a more coordinated way with our florist-fulfilled product team and direct shipment team working together on assortment decisions.
This approach has multiple advantages. It improves the overall value proposition for our customers by simplifying the shopping experience, improving conversion and better aligning pricing for similar bouquets. Importantly, we made significant progress on our cost savings initiatives, achieving our previously announced $50 million in savings 2-year target in less than a year. This reflects the discipline and execution across the organization and strengthens our ability to reinvest in the business while continuing to improve efficiency. As we realize these savings, we are beginning to thoughtfully reinvest a portion back into the business to support our strategic priorities, including marketing and customer experience. These results are driven by the continued progress we are making on our cost and efficiency initiatives. As part of our transition to a function-driven operating model, we have streamlined the organization, improving alignment, driving synergies and enabling more efficient decision-making across the business.
Since January 2025, we have reduced core headcount by approximately 20% as we align resources with our strategic priorities and improve efficiency across the organization. We are beginning to see cost savings from these actions, although in the short term, they are partially offset by consultant costs, incentive compensation and tariffs. Looking ahead, as our strategic initiatives take hold, we are beginning to shift toward a more balanced approach that includes targeted marketing investments to support future growth. Last year, our marketing efforts were heavily focused on bottom of the funnel activities, primarily focused on driving transactions, and we did not have the systems or infrastructure in place to effectively drive customer retention.
Over the past 9 months, we have made meaningful progress in developing those capabilities. We are now in a position to begin rebuilding our brands. We're also expanding our reach to younger customers through top and mid-funnel initiatives, including influencer marketing and platforms like Instagram and TikTok. At the same time, we're improving our ability to retain customers. As I mentioned earlier, we have significantly enhanced the customer experience by improving areas such as delivery fees and overall customer satisfaction, which are key drivers of long-term retention. Beginning in the fourth quarter, we're accelerating and testing these targeted marketing investments. While these efforts are expected to take time to translate into revenue, they are an important step in rebuilding demand in a more sustainable way.
As part of this shift, we expect marketing spend in the fourth quarter as a percent of sales to be approximately flat compared to the prior year period. In addition to these marketing investments, we're also beginning to invest in building out our Martech stack. These investments will begin in the fourth quarter and continue into the next fiscal year as we strengthen the capabilities needed to support long-term growth. More broadly, while cost discipline remains a priority, we believe these actions, combined with our structural improvements are strengthening the foundation to stabilize the business and enable long-term growth. Now I will turn the call over to James for the financial review.
Thanks, Adolfo, and good morning, everyone. During the third quarter, revenue came in line with our expectations, reflecting continued execution against our disciplined marketing approach and the ongoing impact of changes in search engine results and pressure on direct traffic. Valentine's Day was consistent with our expectations, particularly given the difficult day placement as the holiday fell on a Saturday and during President's Day weekend. As we progressed into March, we began to see a moderation in the rate of revenue decline in our Consumer Floral and Gift segment as we anniversaried some of the strategic shifts in our marketing approach. From a category perspective, our Gourmet Foods and Gift Baskets segment performed meaningfully better than our Consumer Floral and Gift segment during the quarter.
Gourmet Foods and Gift Baskets segment benefited from an approximate 5% revenue lift from the timing of Easter. This performance also reflects the more pronounced impact of prior year inefficient marketing spend in our Consumer Floral and Gift segment, along with ongoing changes in search engine results and pressure on direct traffic. During the quarter, we recorded a noncash goodwill and trade name impairment charge related to our Consumer Floral and Gift segment and the Personalization Mall trade name. While this impacted earnings, it did not affect cash flow. From a profitability standpoint, we saw improvement in our ad-to-sales ratio and marketing contribution margin compared to last year. Overall, our contribution margin improved year-over-year, reflecting stronger pricing discipline and improved marketing efficiency.
Our efforts to streamline operations and manage costs are beginning to have a positive impact on the business. As of the third quarter, we have achieved the full $50 million in annualized run rate cost savings that we had initially targeted across fiscal year 2026 and fiscal year 2027, ahead of plan. Building on this progress, we are now targeting an incremental $15 million to $20 million in additional run rate cost savings over the next fiscal year. This brings our total identified cost savings opportunity to approximately $65 million to $70 million, spanning both cost of goods sold and operating expense reductions, reflecting continued opportunities to streamline the business and improve efficiency. Importantly, we are being thoughtful about how we deploy these savings. As we move into the fourth quarter and into next fiscal year, we are transitioning from a primary focus on marketing contribution margin toward a more balanced approach that includes strategic investment. This shift is expected to impact our fourth quarter performance.
As part of this shift, we are accelerating and testing targeted marketing investments, including top and mid-funnel initiatives, which are intended to support longer-term demand generation and may take time to translate into revenue. Consistent with this approach, we expect total marketing spend as a percentage of sales in the fourth quarter to be approximately flat compared to the prior year period. In addition, we are beginning to invest in enhancing our digital experience and expanding our Martech capabilities, which will support improved customer acquisition, retention and overall marketing effectiveness over time. Investments will begin in the fourth quarter and continue into the next fiscal year.
This approach reflects our focus on building a stronger and more sustainable operating foundation by balancing profitability with the investments needed to stabilize the business and position it for future growth. Now let's review our third quarter performance. Consolidated revenue for the quarter decreased 11.6%. Our Gourmet Foods and Gift Baskets segment was essentially flat. Our Consumer Floral and Gifts segment declined 18.7% and our BloomNet segment declined 5.9% for the reasons discussed earlier. Excluding the impact of system-related issues in the prior year period, our gross margin improved 10 basis points to 33.2%, reflecting benefits from our cost reduction initiatives, partially offset by tariffs, commodity costs and fixed cost absorption. Excluding items affecting period-to-period compatibility and the impact of the company's nonqualified deferred compensation plan in both periods, operating expenses declined $16.4 million as compared to prior year to $144.3 million.
As a result of these factors, our third quarter adjusted EBITDA loss was $31.2 million compared with an adjusted EBITDA loss of $34.9 million in the prior year period, reflecting a modest year-over-year improvement. Now turning to our balance sheet. At quarter end, net debt was $94.3 million, compared with $75.3 million a year ago. Our cash balance was $51 million at the end of the third quarter. Inventory was $146 million, compared with $160 million a year ago. In terms of our debt, we had $145 million in term debt and no borrowings under our revolving credit facility as compared with $160 million a year ago. As we look ahead, we continue to view fiscal 2026 as a foundational year focused on stabilizing the business, improving execution and building a stronger platform for long-term growth. Our strategic priorities remain centered on enhancing our customer-first approach, expanding third-party distribution, improving marketing efficiency and driving structural cost savings.
We believe these actions are strengthening the foundation for sustainable revenue and profit growth over time. Fiscal year 2026, we expect revenue to decline by approximately 10% to 12% as compared with the prior year and adjusted EBITDA to be approximately breakeven within a range of plus or minus $2 million, which includes approximately $22 million of anticipated incentive compensation and consultant costs incurred during the fiscal year. These expectations reflect our more disciplined marketing strategy, ongoing changes in search engine results affecting organic traffic and our transition toward a more efficient demand generation model. Now we'll open the call for Q&A. Operator, please provide instructions for those interested in asking a question.
[Operator Instructions] Our first question comes from Anthony Lebiedzinski with Sidoti & Company. Please go ahead.
2. Question Answer
Good to hear that you had a successful Valentine's Day even with an adverse calendar day placement. So I guess, first on that topic, I guess, can you share any additional details as far as the customer experience metrics that improved? And what are some of the learnings from that holiday that you're looking to apply towards Mother's Day, which is coming up in a few days?
Anthony, this is Adolfo. So there are a lot of learnings coming out of Valentine's Day. We're literally transforming the business from a merchandising perspective, a digital perspective and marketing. So let me -- and by the way, also our post-purchase experience has significantly improved. Before I go to the learnings, I also want to be mindful that between Valentine's Day and Mother's Day, there is not a lot of room to make a lot of changes. I mean you need to buy flowers ahead of time. So you can make some changes, but not all of them. So Mother's Day, it's going to do better across those metrics, but don't expect the full performance impact just yet. But as we think about the changes we're making, let me start with digital. It used to be that the merchants would place a buy and they decided, "Hey, you're buying roses," or "You are buying lilies."
And they would be at the top of the product page, which most customers make a decision on those products. 65% of the sales come above the fold on any website. So if you don't have the right product, your conversion declines. As I mentioned, we are now using AI-driven sorting and ranking. So number one, conversion is improving. But most importantly, we are also finding out what customers really want and what they are willing to pay, not only from a type of spend, but also from delivery method and delivery fees they are willing to pay. So we learned a lot from that perspective.
From a marketing perspective, I want to remind everybody that, I mean, the reason Flowers did worse than Food is our marketing spend there last year was heavily unproductive. As an example, we were buying transactions for $40 and making $20 margin on each transaction, then you would say, well, that's great because we are acquiring a customer.
Well, yes, that's true if you retain the customer. But if you don't retain them, then you are just wasting dollars. So we're working on both is lowering our customer acquisition cost and improving our retention. The second one requires the Martech stack. We're making improvements, but we are not 100% there yet. But on the first one, the team started experimenting going top of the funnel and mid-funnel. In the past, the company just wouldn't like that because there was so much focus on the -- they were so focused on the transaction and the measurement capabilities we have would lead you to believe that buying clicks was the most effective marketing method. What we are finding out as we have more, I would say, better measurement capabilities, is that's not true. If you do it right, top of the funnel and mid-funnel investments also drive customer acquisition.
By the way, it allows you to acquire younger customers, which also longer term, it's better. So the team was experimenting with podcasts, TikTok, Instagram, all of them with huge success and which will be expanded in the future. From an assortment perspective, one of the things we started testing was just first, our mix between florist delivered and direct from our warehouses. In the past, the team, because they had already made the purchase and we own the inventory, using this manual sorting and ranking would favor the direct delivery, which combined with the assortment we were offering there, led to lower conversion. And by the way, then at the end of the event, because we had a lot of inventory, they would do heavy discounting. We are managing through that. There were huge learnings during Valentine's Day.
Again, some of those are being applied on Mother's Day. And we continue to learn in Mother's Day. I'm actually super excited about the learnings and the implications for assortment. But it's a process. The other thing we -- I think on our operations, this is the type of stuff you don't see in the short term on the balance sheet. But our customer satisfaction post-purchase increased. Our calls to the call center declined on a per order basis. And now that we're also using AI on the call center, we're able to be significantly more productive with a better customer experience. So all in all, again, it was one event, one of the multiple businesses we have. But a lot of learnings that some of them are being applied during Mother's Day. But certainly, they will be fully applied during the upcoming holidays. So very optimistic about the improvements to the overall experience in the future.
Just switching gears to the cost savings program. So you talked about completing the $50 million cost savings program, but you're also looking to reinvest some of that into the business. So how should we think about cost savings on a net basis? And maybe you could just talk about OpEx versus the cost of goods, how to think about that?
So Anthony, to answer the second question, right now, the $50 million savings is probably split equally between cost of goods sold and SG&A. So that's on that front. As we -- as you think of the cost savings, as we mentioned on the call, some of those savings will be reflected, but not all of those will flow through this year. Near term, we have the consulting costs for implementing initiatives. And again, we still have some of the headwinds around tariffs and commodity costs. So that's offsetting some of those benefits. So we'll see the consulting costs starting in FY '27. We'll no longer have those consulting costs. So more of that will flow through. But we're being very thoughtful on how we deploy those savings, Anthony.
So as you look to going into '27, those savings give us more flexibility in the model, but we're going to be very deliberate on how we deploy those and start investing back in the business. So it's not going to be a dollar-for-dollar flow-through through EBITDA. So we're not -- we haven't given guidance yet for FY '27, but think of it in the context, we have the savings, but we are going to deploy those. So it will not be a dollar-for-dollar flow-through on the EBITDA side.
Right. Okay. And can you just remind us about the consultant costs, how much for this fiscal year?
So the consultant costs will be the total between incentive compensation and the consulting costs, Anthony, it's about $22 million that's in this year's current P&L. The consultant costs are about $12 million to $13 million of that.
And the next question comes from Michael Kupinski with NOBLE Capital Markets.
With your changes in marketing, have you kind of opened the door to competitors? And I was just wondering if you can talk a little bit about whether or not you have seen increased marketing from competitors, especially during Valentine's or certainly around Mother's Day, particularly like from low-cost providers like Bouqs or any impact from them, for instance?
Short answer is yes. Flowers, it's a very competitive business, especially during those events. And I think Google makes it very easy for anybody just to buy other people's brands. So which was, I think, primarily the reason why if you only focus on buying clicks, your customer acquisition cost becomes significantly higher. What we are doing now is leveraging the brand awareness of 1-800-FLOWERS.com. Anywhere I go and I talk to people, they tell me, say, "Hey, Adolfo, I think your company is the only one that gets, I'm going to call it, natural or direct traffic, and everybody else needs to buy the clicks." The way you do more of that is you need to continue to build the brand. And that's what we are doing. And in general, the bottom-of-the-funnel transactions do not build a brand. They just lead to transactions.
Middle and top funnel build the brand, build awareness so that you're in the subconscious of the customer and eventually, when they have a need, they think about you. We have been, as I mentioned, successful on that. But as James mentioned, you need to make investments. And sometimes this top-of-the-funnel, you will invest now and you won't see the benefits until next month or next quarter. That's why we are being cautious about how we invest, how we learn about the business. But the idea is that the most important asset we have, it's our brand. And unfortunately, we hadn't invested in the brand for a while. We are reversing that. We're reinvesting in the brand. And as I mentioned, we are reinvesting on the digital experience.
Our product discoverability in the website is improving. I think every day, we have new enhancements, and we are also improving our ability to retain customers. That flywheel is what will allow us to differentiate ourselves versus our competitors. Personalization to the customer, a better experience, AI to drive reminders, to drive recommendations to the customer to increase conversion. And as I mentioned, we're modernizing the brand to continue building that brand awareness.
Got you. And I know that the business is heavily correlated to consumer confidence. I was wondering if you can determine whether or not there was an impact by the war in Iran. And then also, I was just wondering if you can just talk a little bit about your third-party platforms like Amazon, DoorDash. And I was wondering if you can just kind of talk a little bit about what percent of revenue do you expect to achieve from marketplaces like, let's say, over the next 2 to 3 years?
Got it. So let me start with the first one. Impact of the Iran war, very difficult to see that in the numbers. What we are seeing is, I think, what this country has seen for a while, which is higher income spenders are doing okay, lower income are not. You can clearly see that in the numbers, the AOV that it's selling and what's not selling. honestly, that hasn't changed much since I joined the company. So whether there was an impact from the war or not, it is very difficult to say. What was the second one? I'm sorry. Marketplace. So marketplace, the way I think about it or the way we are thinking about it as a team is it's a way -- it's a twofold strategy. Number one, by selling to, I would say, professional e-commerce marketplaces like Amazon, you do learn a lot. You learn a lot about your own operations. You learn a lot about what's working on websites, what drives conversion. So that one will have a second level impact on everything we do. It's fascinating what we have learned in the last 6 months since we started selling on Amazon.
Now to -- okay, how much should we expect on that? I mean if you are talking about 3 years from now, I think the sales from our -- sales outside our own e-commerce site should definitely be double digits of the company. And again, when I think about these, keep in mind, we are doing marketplaces like Amazon, Walmart and Etsy. And we're also doing delivery service providers, especially for our flowers business. We announced Instacart, but we're also doing DoorDash and Uber Eats. The intention here is we want to be where the customers are shopping. We do have a website, but we also have operations. We manufacture product and we represent our florists. So I think there was a huge miss from our side not to be in those channels, which we are trying to correct. It's early days, but we are -- it's growing really, really fast from low numbers, but we're optimistic about that.
And as we kind of think of the inflection point and coming out of the -- more of the growth phase of the company, I was just wondering what would be now the true baseline growth rate of the businesses now? Like historically, we had looked at 3% to 5% revenue growth and about 8% EBITDA growth. And I was just wondering if you had any thoughts in terms of the baseline growth rate coming out of this inflection point.
So Michael, we're not giving guidance yet for FY '27. So we believe longer term, further out, we would get back to those growth rates.
And let me build on that, Michael. It's a process and we are sequencing. I think -- I mean, I've been in this role, I think to this day, it's a year. When I joined, we were declining at a rate of 20-plus percent. From there, you need to suddenly stop declining, you get to 1 or 2 days of positive comps, then you get to a week in one business and then you want the entire company to drive growth. We are seeing those positive days and those positive weeks in businesses. But I mean, it's a process. We -- at some point, we want the company to grow. And then it's going to be or we're building a very different business model. The previous one was manually driven. And the new one is going to be AI technology-driven. So I'm cautiously optimistic about what this company can deliver in the future, but it is a process. And the only thing we can tell you at this point is we are ahead of where we thought we would be, but there's still a lot of work in front of us.
It sounds like you made a lot of progress.
Okay. The next question comes from Doug Lane with Water Tower Research.
Just staying on the whole margin cost side of things. It looks like your EBITDA outlook this year improved a little bit despite the fact that you have $10 million more of the incentive comp and consulting costs running through it than you had last quarter. So it looks like the underlying margin outlook has improved pretty decently since you last reported results. So where are the 2 or 3 key areas that you're seeing the improved margins on the EBITDA level?
So Doug, it's -- part of it, as you mentioned, part of it is we are starting to see some of the cost benefits flow through on the gross margin. So we're seeing that. And as Adolfo mentioned, with -- on the floral side, with the florist-fulfilled versus direct, we're seeing much more pricing discipline, more targeted promotional activity, as we mentioned, a better coordination between the florist-fulfilled and the direct shipment. So we're seeing that overall improve the gross margin and improved AOV. So we're being more consistent with our pricing decisions and again, reducing discounts, which is improving our overall margin quality. Now part of that's still being offset, Doug, by the higher tariff and commodity and shipping costs. But overall, our gross margin on a year-over-year basis was up about 10 basis points. So we are starting to see that flow through and the strategy is working.
Well, that's what I wanted to probe because you got the $10 million more of the consultants and incentive comp, and you've also got a commodity cost environment that arguably has deteriorated since you last reported results. And then I don't even know what cocoa prices are doing these days, but are the commodity inputs actually down? Is that another thing that you're trying -- that you're having to offset here? I'm just trying to get an order of magnitude of what you're really seeing from your internal cost savings efforts. And it sounds like it's a little bit more than it's obvious by the numbers on the surface.
So I just want to be clear, Doug, that the $22 million is an annualized number, just wasn't for the quarter, right? So I want to make sure that I'm clear on that. So on a -- from a commodity perspective, obviously, cocoa prices are still elevated on a year-over-year basis. What we are seeing is butter, flour and eggs are down on a year-over-year basis. So we're starting to see a little relief on that. As you mentioned, obviously, we are starting to see a little bit of the impact on the fuel surcharges on our outbound shipping because of the increase in the oil prices.
Inbound, we're not -- there's no impact yet on inbound from a fuel standpoint because we have the contracts in place for the remainder of the year. So yes, we have commodity headwinds with cocoa starting to see some relief on the other commodities, still have the impact of tariffs, but we are getting the benefit of the cost savings as well as I just talked about the pricing discipline that we have. So that's what's flowing through. And that's why you're seeing gross margin up slightly this year versus last year.
And are you still expecting the consultants to roll off at the end of June? Or are they going to be spilling over into '27?
The costs roll off at the end of June. So we will not have that starting July 1, Doug.
And then tariffs as well, you've got some tariff relief here and then you start to anniversary the implementation of tariffs in 2025. So the tariff impact should begin to recede in the first part of fiscal '27 as well, right?
Yes. We still have -- right now, there still are tariffs in place. But yes, we will start to anniversary that, and we'll start to get the benefit of the lower tariff rates in 2027, Doug.
Okay. And just one last one for me. You raised the flag that marketing spend as a percent of sales -- not a flag, but just to let us know that marketing spend as a percent of sales will be flat in the June quarter. But going forward, the base case should be improved marketing spending lowers as a percent of sales because it will be more efficient. Is that still the base case? I know you're not giving guidance for '27, but just directionally.
Doug, I would say, potentially, we're planning with some of the savings that we're getting in cost of goods sold and SG&A. Part of that savings is going to be redeployed in marketing. So it's not necessarily that you're going to see marketing percentage as a percentage of sales going down in FY '27 as we make strategic investments in marketing.
Let me build on that.
But longer term, Doug. So in the short run, as Adolfo mentioned, we need to invest back in the brand and some of the top-of-the-funnel and mid-funnel. So in the shorter term, you may not see that. But longer term, absolutely, you will start to see the improvement in the spend becoming more efficient.
The other thing I would say, building on that, Doug, is 1-800-FLOWERS.com, it's a very different company right now because every investment we make, it's being evaluated and measured versus a control group. So we are making investments. And if there is a lift, whether it's sales of margin, it goes through. If it doesn't -- if we don't see a lift, we can just declare a victory by failing fast and move on. So we are not going to make crazy investments, but we are making investments and we are experimenting. I'm convinced, and I think we all are convinced in this company that really our future is we need to find a way to drive growth. So the investments that I mentioned on marketing, on the Martech stack, on digital capabilities and so on and so forth are targeted towards that, is how do we invest to drive efficiencies on conversion on the website, traffic from a marketing perspective, conversion from an assortment perspective.
And every investment we make is being tested, measured and we decide whether it goes forward or not. So the $50 million in run rate that we already have in our pocket, some of that will flow through the bottom line. Some of that is going to go through investments. But rest assured that when we invest, it's because we want to see a return on that. So that should help the company in the midterm.
This concludes our question-and-answer session. I would like to turn the conference back over to Adolfo Villagomez for any closing remarks.
Thank you all once again for joining us today and for your continued support. Fiscal 2026 continues to be a year of stabilization for the company. During the third quarter, we continued to make progress on the initiatives that matter most, and we're beginning to see tangible evidence that these actions are improving execution, strengthening the customer experience and driving more disciplined performance across the business. We're also taking the next step in our transformation as we begin to balance cost discipline with targeted investments, supported by the progress we have made on our cost savings initiatives.
These investments, including marketing and digital capabilities, are beginning in the fourth quarter and will continue into the next fiscal year to support stabilization and future growth. While we recognize that progress will not be linear, we remain focused on executing our strategy with discipline and consistency. The actions we are taking today are intended to stabilize the business and build a strong and durable foundation to support improved performance over time. We appreciate your continued interest in and support of the company, and we look forward to keeping you updated on our progress. Thank you.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
1-800-FLOWERS.COM, Inc. Class A — Q2 2026 Earnings Call
1. Management Discussion
Good day, and welcome to the 1-800-FLOWERS.COM Fiscal 2026 Second Quarter Earnings Conference Call. [Operator Instructions] Please note that this event is being recorded.
I would now like to turn the conference over to Andy Milevoj, Senior Vice President of Investor Relations. Please go ahead.
Good morning, and welcome to our fiscal 2026 second quarter earnings call. Joining us on today's call are Adolfo Villagomez, Chief Executive Officer; and James Langrock, Chief Financial Officer.
Before we begin, I'd like to remind you that some of the statements we make on today's call are covered by the safe harbor disclaimer contained in our press release and public documents. During this call, we will make forward-looking statements with predictions, projections and other statements about future events. These statements are based on current expectations and assumptions that are subject to risks and uncertainties, including those contained in our press release and public filings with the Securities and Exchange Commission. The company disclaims any obligation to update any of the forward-looking statements that may be made or discussed during this call. Additionally, we will discuss certain supplemental financial measures that were not prepared in accordance with GAAP. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures can be found in the tables of our earnings release.
And now I'll turn the call over to Adolfo.
Thanks, Andy, and good morning, everyone. The holiday season was operationally strong and most importantly, our operations ran smoothly throughout the period. We addressed the order management system issues that we experienced last year, and the stability of our systems this holiday season represents a clear and substantial improvement.
Revenue came in slightly below our expectations, reflecting our continued focus on improving marketing contribution margin and changes in search engine results page, including increased paid placements and AI-driven content, which negatively impacted organic visibility and direct traffic. While direct traffic declined more than we anticipated during the holiday period, this was partially offset by stronger performance in our B2B and wholesale businesses. At the same time, we continue to execute on our marketing strategy, which is focused on improving profitability and efficiency as well as the quality and effectiveness of our paid and earned traffic over time. We believe this approach is important to building a more sustainable and disciplined demand generation model.
During the second quarter, we continued to make steady progress on the key initiatives we outlined earlier this year to stabilize the business and support future growth. One of the most important changes this quarter was simplifying our organization and moving to a function-based operating structure. Previously, we were organized by individual brands, which created duplication, limited collaboration and slow decision-making. The new structure is already driving greater efficiency, clearer ownership and improved collaboration across the business. As part of this transformation, we reduced costs and streamlined the organization through workforce reductions and leadership realignments. While these were difficult decisions, they were necessary to improve accountability and better align resources with our strategic priorities. Additionally, we're also reducing layers, applying best practices more consistently and enabling faster, more effective decision-making across functions. With this structure and recent leadership additions in place, the team is now fully focused on execution.
To support this next phase, I am pleased to share that Alex Zelikovsky joined us as our Chief Information Officer. Alex brings more than 25 years of technology leadership experience and will lead our enterprise-wide technology strategy, including IT applications, data architecture, cybersecurity and business intelligence, as we modernize our platforms and support our AI and optimization initiatives.
We also continue to make progress in improving the efficiency of our marketing investments. During the quarter, we saw improvement in our ad spend to sales ratio as we reduced marketing spend on a dollar basis. Marketing contribution margin in Q2 was impacted by the scale of the holiday quarter and the decline in direct traffic. While this approach can create some pressure on the top line in the near term, we believe it is an important step toward building a more sustainable and profitable demand generation model.
As part of this more disciplined approach, we also evaluated our physical retail performance during the holiday season. Our pop-up stores were intentionally designed as short-term pilots during the holiday season and provided valuable insight into customer behavior, product preferences and how customers engage with our brands in a physical retail environment. Based on the results of these tests, we concluded that the return on invested capital for the temporary pop-up stores was not attractive. As a result, we do not plan to pursue additional pop-up locations. Instead, as part of our testing culture, we are redesigning our retail approach to evaluate a full year store concept that is better suited for a permanent year-round location. This will allow us to apply what we learned from the holiday tests while taking a more disciplined approach to capital deployment as we look to optimize and selectively grow our multichannel strategy over time.
As we move into the Valentine's Day period, our teams are focused on applying this more disciplined marketing approach to a key gifting occasion with an emphasis on execution, merchandising and improving the customer experience. Looking ahead, we expect several key initiatives to drive improved performance. Our updated marketing approach is driving a better ad-to-sales ratio. Enhancements to product discoverability are improving conversion across our online experiences. The elimination of unprofitable initiatives is sharpening our focus on core businesses, and the continued expansion of our third-party marketplace offerings, including Uber, DoorDash, Amazon and Walmart.com is growing rapidly and expanding our reach to customers across the channels where they are shopping today. Together, these efforts are helping us build a more stable foundation for future growth over time.
With our leadership team now fully in place, we are confident we have the right team executing against a clear and focused strategy that will continue to improve performance. While there is still meaningful work ahead, the progress we are making gives us confidence that we are moving in the right direction.
And now I will turn the call over to James for the financial review.
Thanks, Adolfo, and good morning, everyone. During the second quarter, revenue came in below our prior view, driven by our continued focus on improving marketing contribution margin and changes in search engine results pages that negatively impacted direct traffic. As a result, our e-commerce revenue declined, which was partially mitigated by growth in our wholesale business. Our gross margin declined due to lower fixed cost absorption, higher commodity costs and the impact of tariffs. At the same time, our ongoing cost reduction initiatives helped mitigate the impact on overall profitability.
As Adolfo discussed, we continue to meaningfully improve the efficiency of our operating model. Our cost actions, including organizational simplification, workforce reductions and tighter expense management are beginning to benefit the business. While we are executing on our cost reduction actions and realizing savings on a run rate basis, the full benefit of those actions is not yet reflected in our P&L. In the near term, the savings are being partially offset by consulting fees incurred as part of the work to identify, implement and operationalize these initiatives. These consultant costs are temporary and largely front-loaded. As implementation progresses, we expect a greater portion of the run rate savings to be retained in the business and increasingly reflected in our P&L over time. To date, we have already achieved approximately $15 million in annualized run rate cost savings for fiscal 2026. As previously discussed, we continue to expect to achieve approximately $50 million of total cost savings on a run rate basis across fiscal 2026 and fiscal 2027.
Now let's review our performance. Consolidated revenue for the second quarter decreased by 9.5%. This included a 22.7% decline in Consumer Floral and Gifts segment, a 3.8% decline in the Gourmet Foods and Gift Baskets segment, and a 3.1% decline in the BloomNet segment. These results were primarily driven by a strategic shift towards more efficient marketing spending as well as greater-than-expected decline in direct traffic.
Turning to gross margin. Our second quarter gross margin decreased 120 basis points to 42.1% compared with 43.3% in the prior year period. This was primarily due to deleveraging on the sales decline, combined with the impact of higher tariff, commodity and shipping costs. Operating expenses for the second quarter decreased $23.4 million to $221.1 million as compared with the prior year period, primarily due to lower marketing and labor costs. Excluding items affecting period-to-period compatibility (sic) [ comparability ] and the impact of the company's nonqualified deferred compensation plan in both periods, operating expenses declined $25.9 million as compared to prior year to $213.2 million. As a result of these factors, our second quarter adjusted EBITDA was $98.1 million compared with adjusted EBITDA of $116.3 million in the prior year period.
Now turning to our balance sheet. At quarter end, our net cash position was $42.3 million, cash balance was $193.3 million and inventory was $148.9 million. Borrowings under the revolver were fully repaid during the fiscal second quarter. Looking ahead to the second half of the year, we do not expect progress to be linear. However, we remain focused on executing our strategic initiatives and continuing to advance our cost reduction efforts. We believe this disciplined approach will allow us to further stabilize the business and position the company for improved performance over time.
In addition, it is worth noting that Valentine's Day falls on a Saturday this year, which historically has been a more challenging day placement compared to midweek holidays. As we move forward, our focus remains on strengthening the foundation of the business. This includes improving efficiency, maintaining cost discipline and ensuring we are positioned to capitalize on future growth opportunities as the turnaround progresses.
For the second half of fiscal 2026, we expect revenue to decline in the low double-digit range, reflecting a continued focus on improving marketing contribution margin, the impact of changes to search engine result pages on direct traffic and tougher comparisons following higher levels of less efficient marketing spend in the prior year. For the second half of fiscal year 2026, we expect adjusted EBITDA to decline slightly compared to the prior year. On a normalized basis, for the second half of fiscal 2026, adjusted EBITDA is expected to increase slightly year-over-year, excluding approximately $12 million of anticipated incentive compensation and consultant costs in the period. Ongoing cost optimization initiatives and organizational streamlining efforts are expected to offset top line pressure.
And now we'll open the call for Q&A. Operator, please provide instructions for those interested in asking a question.
[Operator Instructions] The first question comes from Anthony Lebiedzinski with Sidoti & Company.
2. Question Answer
So first on the Consumer Floral and Gifts segment, it was down more than we expected. Was that mostly driven by Pmall? Or -- can you provide any additional color on that?
Yes. So Anthony, Pmall was down more than Flowers during the quarter. A lot of it was driven, as we said in our prepared remarks, on the inefficient marketing spend. We were spending heavily on Pmall and pulled down quite a bit of the marketing spend this quarter and improved their ad spend ratio as well as their overall contribution margin percentage. So a lot of that was known, Anthony, but they were impacted the most by the marketing spend -- the inefficient marketing spend last year versus this year. So that was the main driver. But yes, Pmall was a bigger component of the decline than the Flowers business.
That's very helpful color, James. So just wondering also if you're seeing any different behaviors from your Passport members, whether you've seen still outperformance versus nonmembers. Can you comment on that, and whether or not there's been any movement in terms of your Passport membership?
Anthony, it's Adolfo. At a high level, our Passport members perform a lot better than non-Passport members. That has been the case. Having said that, we're getting feedback from our customers that the value proposition on our loyalty program needs to improve. And even though the current loyalty program is doing okay, we believe we can do it a lot better. So the team has already made investments, and we're getting ready to significantly improve our loyalty program over the next few months. But those customers are our most loyal customers.
Okay. And then as we think about the revenue guidance for the back half of the year, which segments do you think will perform better than others? Or do you think it will be kind of consistent more or less across the brands and different segments?
So let me take that, and then I'll pass it to James. The way to think about our business is, so James just shared that the performance of Pmall was slightly behind Flowers. And as you also see, Food was way ahead of the other 2 businesses. To start with, the main driver was the exposure to incremental spend in fiscal year 2025, which is one of the reasons we wanted to move away from the Brand President role. They were not sharing of best practices. So in that order, Pmall, Flowers and Food, that's how much more marketing spend they used in 2025 to drive growth.
So as you know, we implemented marketing contribution margin, and that is actually working quite well. And this is why we are able to lower marketing spend while improving marketing contribution margin dollars. Now over the second half, primarily what you are seeing is just a mix shift. During the first half, Harry & David, our food business, is significantly more important. The second half, the Flowers business is the one that is the most important and represents the majority of our revenues. So the performance is consistent, if not slightly improving versus the first half, it's just a mix shift.
That's very helpful.
And Anthony, as you mentioned, another thing to take into consideration is Valentine's Day falls on a Saturday this year. So that obviously has an impact on a year-over-year comparison as well.
Well, there's going to be an impact, but we are preparing for it.
Got it. Okay. So just to follow up quickly on the Valentine's Day placement, obviously, on a Saturday, which is the least favorable time frame. Are you planning to do anything significantly different from a marketing perspective given the day placement? Just wondering if you could comment on that.
Yes. The merchandising and marketing strategy adjusted for that. And again, we are preparing for it. We are not just assuming it's going to happen. So we are trying to reverse that trend. So we are absolutely prepared for that.
Got you. Okay. And the last question for me, just more or less kind of housekeeping. Can you just comment on order volumes and AOV for the quarter?
Yes. So Anthony, for the quarter, our AOV was up 5.2% and order volume was down about 16%.
The next question comes from Michael Kupinski with NOBLE Capital Markets.
I just kind of want to circle back to the Floral segment for a second. Given your shift in marketing initiatives, I was just wondering outside of Pmall, can you talk a little bit about the decline you've seen in Floral? Do you feel that maybe -- are you still seeing gains in share in Consumer Floral? And then I was wondering how do your initiatives change your competitive positioning, not just for Floral, but maybe for your other channels as well?
So at this point, Michael, the focus is in the bottom line. We believe that with a better marketing approach and honestly, a better merchandising strategy. As we said, this year is a transition year. So we are going to be better positioned for the future. As you know, our Flowers business has 2 segments, one that depends on the florist and the other that is direct. We are proactively managing the business to minimize the impact on our florist network. So again, it's a transition year, and I believe it's going to make us stronger in the future. But I think this transition to being focused on driving profitable traffic versus just driving traffic to drive revenue growth, you're seeing the impact in the short term on the top line.
Got you. And I was hopeful that, I guess, we would start to begin to see a little bit of improvement on the commodity prices. And you indicated that you're still seeing pressure there. I was just wondering if you can talk a little bit about commodity price trends, particularly I know that we are still seeing pressure on chocolate and so forth. But can you just kind of give us your overall feel about commodity trends going forward?
Yes, Michael, as you mentioned, cocoa is still, on a year-over-year basis, is up quite significantly. But we're seeing the other commodities, eggs, butter and sugar starting to come down and stabilize. And at this point, we're seeing that those should no longer be a headwind in the back half of the year, assuming they hold, but we are seeing improvement in the other commodities, but cocoa is still elevated.
And then, I guess, what are the biggest swing factors that could positively or negatively impact the full year performance at this point?
One of them is obviously, we're working on the cost savings initiatives. We implemented $15 million of cost savings in Q2. We are continuing to implement cost savings initiatives. So to the extent that we could accelerate some of those cost savings, that will help the bottom line. And then obviously, if we get some upside on the top line, that always helps as well, Michael. But right now, we're controlling what we can control. And the one lever would be on the cost savings if we can accelerate some of those savings. So that's kind of the big one that we can control right now.
Yes. The other thing, building on that, the new functional structure that we have live since November, the whole intention of doing that is to bring best-in-class functional practices. I think the best example right now or the hope that is going to give us a lot of top line growth is merchandising. We have a new merchandising leader, Nelson Tejada, who has commercial experience, and we completely changed the leadership of the Flowers business to bring more pricing and assortment planning discipline to that business.
As we start gathering facts and start gathering data, being more disciplined on our retail practices, comparing our pricing versus competitors, we are finding that we have lots of opportunities for improvement that little by little are going to improve the business over time. So we believe that what you are going to see is as these functional levers start taking action, I mentioned in the prepared remarks also product discoverability. We have tests going right now that significantly improve conversion as we improve our online experience. So those are going to be tailwinds to the business. And so as we said, I mean, we're very optimistic that bringing best-in-class practices to the functional areas, merchandising, online and even now the growth in our external marketplaces, I mean, it's from a small base, but it's growing significantly, we believe that all of those will be positive factors on the performance of the business going forward.
Got you. And just a couple of quick ones here. Interestingly, GDP numbers were pretty strong in the third quarter. Interest rates are coming down, albeit modestly. The consumer confidence is super weak. And traditionally, your business follows consumer confidence. And I was just wondering, what are you seeing in terms of the consumer at this point, and kind of give us your thoughts of what you're seeing out there?
So on the consumer front, we are still seeing the bifurcation. We still feel that the higher end household income is holding up better, Michael. And we're still seeing some softness on the lower end household income spectrum. So we're kind of still seeing that trend.
Got you. I can't think of a period where you've gone through such a big corporate reorganization. In the past, during periods like this, you've kind of looked and we were able to pick up some pretty interesting companies and made some acquisitions. And how are you thinking about capital allocation priorities right now in terms of just the reinvestment, shareholder returns and things like that?
I mean, as Adolfo mentioned, and we've been mentioning, Michael, we're looking at fiscal 2026 as like a foundational year for us. So the priority right now is really on stabilizing the performance and building the capabilities, as Adolfo mentioned, within the organization for sustainable profitable growth. So clearly, we're taking a disciplined approach, and we'll allocate capital towards operational efficiencies, customer experience improvements and adding technology capabilities. But clearly, if there's something out there that makes sense, we would look at it. But right now, we're really focused on the turnaround and the foundation setting from a capital allocation standpoint.
Would there be anything that you would sell?
I mean, at this point, the more we strengthen the core, the better we are going to be. So everything is on the table.
The next question comes from Doug Lane with Water Tower Research.
James, remind me, you do not take consultant costs out of your adjusted profit numbers, right? They're included in there at this point. Is that right?
Correct. Yes, they are in there.
So at some point, they'll roll off. So I don't know if you've talked about how long you expect the consultants to be working for you? Is this going to be a couple of quarters, a couple of years? Just any kind of characterization there?
Yes. So Doug, what we said is the consultant costs are front-loaded. So we believe right now that the costs will kind of last through this fiscal year through June, and then they'll stop going into fiscal 2027. That doesn't mean if we see an opportunity where we think we may need some help with some initiatives that we're working on that they may not come back. But right now, the consultant costs will go through the end of the year. And that's going to total roughly about $11 million of consultant costs this year that will be in our -- but we're not adding back to the adjusted EBITDA.
Got it. And just switching gears here. You talked about Valentine's Day being on a Saturday. Isn't Easter a little earlier this year? Is that going to impact the timing between the third quarter and the fourth quarter?
Yes. Easter falls, I think, April 4. So that actually -- a lot of the orders will come in, in the end of March. So that will be a shift in the quarter. And actually, with Easter falling a little further away from Mother's Day, it does help us as well. So that day placement is helpful. So there will be a shift into Q3, but also typically, that day placement is a little better. The closer Easter is to Mother's Day, that's not as strong for us. So the day placement we like in early April.
Got it. That makes sense. And also looking at the sales number here, the total number was literally within $1 million of our forecast, but Floral missed by $30 million and Food beat by $30 million. So there's a big divergence between Floral and Food here. And you've touched on it, but what do you think is the real source of the deterioration in the Floral and Gifts business and the better-than-expected performance in the Food and Gift Baskets business?
So I mean, again, I mentioned the impact in 2025 of incremental marketing spend. I think it was significant in Flowers. The Food business was a lot more disciplined, although they also overspent a little. The second factor that is important is Food is a lot more exposed to B2B, and that business has been very solid for us. So those are the factors. There's some other competitive things, but those 2 are primarily the difference between one and the other.
Is this also where we see that bifurcated consumers since Pmall's in the Floral side and Harry & David's on the Food side, and they're clearly opposite ends of the economic spectrum?
Probably, yes.
Okay. Fair enough. Lastly, could you talk a little bit about what your learnings were in the quarter from your pop-up stores?
So I mean, again, as I said in the prepared remarks, we have a strategic belief that we eventually should become an omnichannel player. Today, we have physical retail stores that are EBITDA positive and have a very attractive return on invested capital. There was a belief on the pop-up stores that, hey, we're going to open them. They will not only drive sales, but they will also drive brand awareness in the locations where they are and probably the sales would increase online. There was a little of that. But one of the things we're trying to implement, James and I, going forward is capital discipline. If the return on invested capital is not attractive, we are simply not going to do it. And I think it's twice that we tested the pop-ups and twice that we're below expectations. So enough is enough.
Having said that, as I said, we're still looking for that physical retail model. So you will see us testing things. But again, these tests are with the idea to find a way to significantly grow the physical retail segment of our business. But definitely, it's not going to be through pop-up stores.
This concludes our question-and-answer session. I would like to turn the conference back over to Adolfo Villagomez for any closing remarks.
Thank you once again for joining us today and for your continued support. Fiscal 2026 continues to be a year of stabilization for the company. During the second quarter, we continued to make progress on the initiatives that matter most, including simplifying the organization, improving cost efficiency and strengthening our leadership team and broadening our customer reach.
While we recognize that progress will not be linear, we remain focused on executing our strategy with discipline and consistency. The actions we are taking today are intended to stabilize the business and build a strong and durable foundation to support future growth over time. We appreciate your continued interest in and support of the company, and we look forward to keeping you updated on our progress.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
1-800-FLOWERS.COM, Inc. Class A — Q1 2026 Earnings Call
1. Management Discussion
Good morning, and welcome to the 1-800-FLOWERS.COM Fiscal 2026 First Quarter Earnings Call. [Operator Instructions] Please note, this event is being recorded.
I would now like to turn the conference over to Andy Milevoj, Senior Vice President, Investor Relations. Please go ahead.
Good morning, and welcome to our fiscal 2026 first quarter earnings call. Joining us on today's call are Adolfo Villagomez, Chief Executive Officer; and James Langrock, Chief Financial Officer. Before we begin, I'd like to remind you that some of the statements we make on today's call are covered by the safe harbor disclaimer contained in our press release and public documents.
During this call, we will make forward-looking statements with predictions, projections and other statements about future events. These statements are based on current expectations and assumptions that are subject to risks and uncertainties and including those contained in our press release and public filings with the Securities and Exchange Commission. The company disclaims any obligation to update any of the forward-looking statements that may be made or discussed during this call.
Additionally, we will discuss certain supplemental financial measures that were not prepared in accordance with GAAP. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures can be found in the tables of our earnings release.
And now I'll turn the call over to Adolfo.
Thanks, Andy, and good morning, everyone. I am excited to share some of the early progress that we have made on the strategic initiatives that we discussed in our last call. As I mentioned in our last call, we view fiscal 2026 as a year of stabilization for the company, focused on building a foundation for long-term sustainable growth. We are only one quarter into our turnaround strategy, but we have already begun to move from identifying problems to taking actions. As James will discuss in more detail, our underlying profitability has begun to show a clear positive trend when we adjust for timing-related items. While there is much more work to be done and inevitably, there will be some challenges we are beginning to see some benefits from the changes we have made.
Before I share some updates, let me begin by quickly reviewing the strategic initiatives we outlined on our last call. These include 4 key areas: strengthening our customer focus, enhancing talent and accountability, achieving cost savings and organizational efficiency and expanding our reach beyond e-commerce into new channels.
Let's begin with strengthening our customer focus. We began to make major changes in our customer acquisition and marketing strategy during the first quarter. Historically, our company relied too heavily on bottom of the funnel marketing activities, that focus on driving revenues without fully taking into account the overall impact on profitability.
This was highly inefficient and negatively impacted our financial performance. In Q1, we made a fundamental shift to focus on marketing contribution margin, which allows us to better allocate resources and optimize spending, ensuring that our marketing dollars drive measurable returns.
As James will discuss further, we are already seeing positive results from this change. In the short term, we could see additional pressure on the top line as we recalibrate our approach towards a positive marketing contribution margin on paid traffic. As we pivot toward a greater focus on contribution margin, we are placing a stronger emphasis on optimizing our marketing spend to drive profitable growth, not just higher sales. This optimization delivers a twofold financial benefit that improves both efficiency and effectiveness.
Efficiency ensures we are maximizing our marketing dollars, reducing waste and aligning spend with our highest return channels. Effectiveness, on the other hand, ensures our investments are more precisely targeted driving stronger engagement and results. Together, these improvements directly impact our top and bottom lines by increasing awareness, accelerating customer acquisition and improving retention. At the end of the day, this strategy positions us for stronger and more sustainable growth and profitability.
Additionally, this quarter, we began testing a paid traffic consolidation strategy by redirecting visitors from our lower traffic websites to our main platforms, landing them on the same categories they were originally seeking. This approach is intended to improve productivity and maximize return on investment by increasing conversion and average order value as customers attach other categories merchandise on our primary platforms. Early results are promising, and we are confident that these efforts will help create a more scalable and efficient digital ecosystem.
Expanding into new channels has been another key focus area for us. Historically, as a consumer products company with many selling options, we became too dependent on our own websites and on traffic coming directly from web browsers. The company didn't adjust its strategy as customer preferences shifted toward beginning their shopping journeys on third-party marketplaces. I'm excited to announce that we are now selling our products through third-party marketplaces including Amazon and walmart.com, making our offerings more accessible to a broader audience.
Additionally, we have successfully opened our holiday pop-up shops which have been well received by customers. These pop-ups will help us test and refine a physical retail concept that we can expand to multiple locations, leveraging our broad range of product categories. Having the right talent in the right roles is foundational to our transformation. Recently, we made a key hire to strengthen our leadership team. I am thrilled to welcome Melanie Babcock to our company as Chief Marketing and Growth Officer. This is a pivotal moment for our company, and Melanie is just the right leader to help us accelerate our transformation, with a proven track record of building teams and businesses that deliver outsized sustainable returns.
She was key in leveraging AI to transform the Home Depot marketing platforms from product focus to a customer-centric experience. Her proven ability to scale brands, build high-performing businesses and create customer-centric growth strategies make her the perfect partner for this new chapter of our journey. In this newly created role, she will lead our marketing evolution across the enterprise and will be focused on building a full funnel marketing approach that drives awareness, acquisition and retention, modernizing our digital experience to improve product discoverability, enhancing our merchandising strategy through stronger data infrastructure and AI and streamlining our brand architecture to create a more intuitive and connected customer journey.
This customer first approach will help us build a customer lifetime value flywheel, where efficient acquisition and strong retention reinforce each other to drive profitable growth.
As part of our effort to drive greater efficiency and agility across the organization, we have made great progress partnering with our external consultants to identify and prioritize additional efficiency opportunities. We have already started to implement targeted organizational changes including centralizing our marketing team and improving coordination between customer service and website development. These adjustments are designed to streamline operations, eliminate unnecessary complexity and better align our teams with strategic priorities. We have also taken steps to increase accountability at all levels of our organization, ensuring that decision-making is faster and more closely tied to bottom line results. We believe these changes position us to execute with greater focus and deliver improved results over the long term.
As we enter the critical holiday period, our primary focus is on providing an exceptional experience for our customers during this important season. While we remain committed to driving organizational change, continuously refining our marketing approach, and improving agility and efficiency, we recognize the importance of maintaining stability and delivering a seamless customer experience through the holiday rush. Therefore, we are prioritizing our turnaround road map accordingly. We look forward to keeping you updated on our progress.
And now I will turn it over to James for the financial review.
Thanks, Adolfo, and good morning, everyone. This morning, I will review our fiscal 2026 first quarter performance. Please note that all comparisons are made to the prior year period and represent adjusted results unless otherwise stated. During the first quarter of fiscal 2026, we saw a clear and immediate benefit from our strategic shift in marketing spend toward a marketing contribution margin focus. This metric is calculated as gross profit less credit card fees and marketing fees expressed as a percentage of sales.
Both the first and second months of the quarter experienced profitability improvements as our marketing resources were more efficiently allocated, driving higher returns on investment. Third month of the quarter also benefited from this approach. The results were impacted by timing items, including the shift of certain wholesale orders from Q1 in the prior fiscal year into Q2 of this fiscal year.
After adjusting for timing-related items, the trend in adjusted EBITDA was slightly positive for the quarter. Notably, this represents the first year-over-year improvement in adjusted EBITDA trends over the past 7 quarters. By focusing on marketing contribution margin, optimizing spend and streamlining operations, we were able to partially mitigate the effects of softer sales.
As is the case of many companies, a portion of our cost of goods sold is fixed which creates some gross margin pressure due to sales deleveraging. We believe the changes we are implementing provide a strong foundation for stabilization as we progress through the remainder of the fiscal year and positions us for future growth.
Looking ahead, we will remain disciplined in our marketing investments while becoming more effective. We will continue to partner with our external consultants to explore additional opportunities for operational efficiency. We are encouraged by the early positive momentum generated by our new approach and are confident that these efforts will drive sustainable financial performance as we progress through fiscal 2026.
Now let's review our performance. Consolidated revenue for the first quarter decreased by 11.1%. This included a 14.6% decline in the Consumer Floral and Gift segment and an 8.6% decline in the Gourmet Foods and Gift Baskets segment. Revenues in our BloomNet segment were essentially flat with the prior year period. These results were primarily driven by a strategic shift toward emphasizing positive marketing contribution margin and to a lesser extent, changes in wholesale order timing, which shifted from the first quarter of the previous year to the second quarter of this fiscal year.
Now turning to gross margin. Our first quarter gross margin decreased 240 basis points to 35.7% compared with 38.1% in the prior year period. This was primarily due to deleveraging on the sales decline combined with the impact of higher tariffs. Operating expenses decreased $12 million to $127.3 million, primarily due to lower marketing and labor costs. Excluding nonrecurring charges and the impact of the company's nonqualified deferred compensation plan in both periods, operating expenses declined $10.9 million as compared to prior year to $124.9 million.
As a result of these factors, our first quarter adjusted EBITDA loss was $32.9 million as compared with a loss of $27.9 million in the prior year period. Before I review our balance sheet, I want to briefly update you on our cost reduction efforts. We continue to collaborate with external consultants to streamline operations and drive greater efficiency across the business.
As we shared last quarter, we have already implemented $17 million in annualized cost reductions. We are beginning to see the early benefits of our cost reduction initiatives flow through the P&L. However, those savings are currently being offset by the impact of tariffs, investments in people and higher transportation costs.
Based on the analysis we have done in collaboration with our external consultants, we anticipate we can achieve an incremental $50 million in cost savings over the next 2 years on a run rate basis. Please note this figure excludes onetime expenses such as consultant fees and severance costs. Additionally, this amount does not account for savings associated with improvements in marketing spend efficiency.
Now turning to our balance sheet. At quarter end, net debt was $259.3 million compared with $224.1 million a year ago. Our cash balance was $7.7 million. Inventory was $269.8 million compared with $275.3 million a year ago. In terms of our debt, we have $157 million in term debt and borrowings of $110 million under our revolving credit facility in preparation for the upcoming holiday season. We expect borrowings under the revolver to be fully repaid during fiscal second quarter.
And now we'll open the call for Q&A. Operator, please provide instructions for those interested in asking a question.
[Operator Instructions] And the first question comes from Michael Kupinski with NOBLE Capital Markets.
2. Question Answer
I have quite a few questions here. First of all, I know last year, you were talking a little bit about gas prices. They have seemed to come down a little bit from last year. I was wondering if you're still dealing with price surcharges on gas prices? Or have they gone away?
So Michael, this is James. So the fuel surcharge is always part of the FedEx charges. So they've moderated. They haven't gone away, but they haven't increased.
Okay. And in terms of your marketing efforts, I know you made changes there, but have you also included changes in products and price points on your products?
Michael, this is Adolfo. Yes, the merchandising organization continuously review their assortment strategy and pricing strategy to adjust their costs accordingly.
Okay. And then in terms of -- in the last call, you mentioned that consumer floral had become very price competitive. And I was wondering if you can just give us an update on the competitive environment on the consumer floral space?
So the way I would characterize that is there are more competitors emerging in the space. And what that is doing is not so much on the pricing side of the product. It's on the cost of buying clicks. Sometimes we are competing to buy the same search terms and that increases the marketing costs and therefore, reduces the marketing productivity.
Got you. And then it has always been said that how back-to-school goes, so does Christmas. Can you just provide your thoughts on how back-to-school looked for you and how Christmas is looking? Any thoughts on your -- and then maybe if you could just kind of give us some thoughts on how the wholesale business is looking as you go into the holiday season?
Yes. So Michael, on the back-to-school, that's obviously not -- for the PMall, it's part of the business, but it's a smaller part of the business. The real holiday peak for us, as you know, is the Christmas holiday season. So -- and as you know, it's still early -- it's early days in the holiday season. So that's sort on that front. As it relates to wholesale, we did have a shift, as you know, timing of wholesale orders between the end of September and early October always kind of impacts us historically. So we did have a shift from Q1 into Q2 of this year, but we are seeing really strong wholesale sales and anticipate that will be up on a year-over-year basis for this holiday season.
Michael, let me build on that. The team recently was analyzing the sales per week throughout the quarter and the fiscal year. Basically, all the way from the beginning of Q1, so July through, I would say, October, we sell per week about the same. You see the significant increases that what really matters to us, as James was suggesting, it's the holiday season. And that will start in the next week or in the next couple of weeks. That's when the season really starts for us, and that's what really moves the needle.
I got you. Okay. I was just wondering in terms of the tone of the environment right now. Are you seeing any particular changes in the tone? We saw some Fed rate action and whether or not you're starting to see the benefits from that. I'm just wondering how you're seeing what the consumer is feeling right now and just the general environment for the consumer.
I don't think nothing meaningful to comment on.
And the next question comes from Anthony Lebiedzinski with Sidoti & Company.
So just wanted to follow up on the wholesale piece. Is there any way you guys could quantify what you think the revenue impact was of the shift between first quarter and second quarter?
Yes, it was several million dollars, $3 million, $4 million, Anthony.
All right. That's very helpful, James. And then just thinking about the -- in terms of the $50 million in gross savings, how should we think about the timing of those savings? And is there any way you could say what the savings will be on a net basis?
So let me just first take the first question, Anthony. So of the $50 million we believe, on a run rate basis, that will get half of it in fiscal '26 and half of it remaining in fiscal '27. We've started already to take actions -- immediate actions, but there's certain areas like, say, supply chain and procurement that take a little longer to get implemented. So again, half this year, half next year, started to implement some of those actions as we speak. Quantifying the cost of that is a little difficult right now as we work through it, Anthony, but we believe that we'll probably -- this year, we'll have more of the cost than in next year. But at this point, it's hard to quantify. I don't want to give you a number until we have more finalized numbers.
Understood. Okay. And then for the quarter, you guys had a small tax expense. Normally, you guys have a tax benefit in the quarter. Can you talk about what happened there? And what should we expect for the tax rate for the fiscal year?
Yes. So Anthony, what's happened is we've had 3 years of cumulative losses. So typically, we would have a tax benefit in Q1. But being that we've had 3 years of cumulative losses, we are now setting up a valuation allowance for those deferred tax assets. So it's more of an accounting thing. Obviously, as we return to profitability, we'll be able to start using those benefits, but it was a -- due to -- we had to set up a valuation allowance this quarter because of the 3 years of cumulative losses.
Understood. And then as far as your move into Amazon and walmart.com. I know it's recent, but can you give us any early read on what you're seeing in terms of sales coming through those sites?
So what I would say, it's early days, but it is going quite well. I see the benefit of selling on Amazon and Walmart, not only incremental top and bottom line, which -- I mean, it's a small number, but it is growing very nicely. But the other thing is the best practices that those websites have -- the team is learning those. And as we are learning, we are also -- you are going to see us adjust our websites to better align with best practices these days. So I'm very optimistic about where that is going. We haven't even started to optimize our value proposition, pricing offering. All the team is working on right now is our top sellers are being sold on those websites. And we are seeing early traction. It's actually quite positive from the traffic that those websites have, which is why we're doing this. They already have the traffic. We're putting our value proposition in front of them and conversion happens. So far, so good.
All right. That's good to hear. And my last question before I pass it on to others. Can you also just on the increased commodity costs, what was the impact of that? And how do you see that going forward?
So Anthony, on the commodities, as I mentioned, on a year-over-year basis for the quarter, chocolate is up year-over-year. We also have -- eggs are up slightly on a year-over-year basis. And then the other major commodities are either flat or down with the prior year. So it's a little bit of a mixed bag. So it didn't have a significant impact on our Q1. Obviously, it had more of an impact was the tariffs, but the commodities kind of almost netted themselves out.
And the next question comes from Doug Lane with Water Tower Research.
I want to talk about tariffs and recently, President Trump threatened Colombia with very stiff tariffs because of the drug trade. Can you comment on how that would impact your business? And what would be the workaround if you didn't enact those tariffs?
So as you know, Colombia represents about 60%, 70% of the fresh flowers coming into the country. So it would clearly have a significant impact on the U.S. floral industry. So with that, it would have a significant impact in creating higher prices across the ecosystem. So it does happen, hopefully, it hasn't and he hasn't given a number yet. So -- but clearly would have an impact and most likely would just be an increase because so many of the flowers do come in from Colombia. We would try to offset that with other areas, but it would be very difficult to do that. So it would have an impact on the overall industry, not just 1-800-FLOWERS.
No, clearly, on the overall industry, but what is the practicality of moving your sourcing from Colombia to say, Ecuador or somewhere else in the area?
You can -- we would absolutely try, but everyone would be doing the same thing, right? So I mean there's -- we can move some of it. Obviously, you could try to change arrangements and the flowers that are in it, but -- like I said, it would definitely put price pressure on the overall industry.
Yes, clearly. No question. Shifting gears to your pop-up stores. Can you remind us what the -- what you're doing this holiday season with regards to pop-up stores and how that relates to what you did last season -- last holiday season?
So short answer is, this season we are doing 9 different locations, 8 of those for Harry & David and 1 for Things, remember. Last year, we did about the same. The way to think about these pop-ups, it's twofold. One is a nice way to -- yes, drive some sales, but really, I think we would do it for the awareness of the brand and the categories we carry. But the second more valuable reason we are doing this is I have challenged the team to identify a physical retail concept that we can roll out across the country to multiple stores. We have stores that are profitable, our Cheryl's Cookies stores in Ohio are highly profitable. They take in half have the space, I think it's 80%, 90% of the sales.
We have so many categories that I do believe that you can find the right combination of categories that we already -- products that we already manufacture and we have with the right combination of branding to truly create a physical retail concept that you can just roll out across the country. So again, it's a few samples, see it as a test. It's only 9 pop-ups. But the real benefit is longer term identifying this physical retail concept that would allow us to profitably grow into physical retail.
No, that makes sense. And you're selling now on amazon.com and walmart.com. And I get what you're doing here, but then the name of the company is 1-800-FLOWERS.COM. So I wonder if there's a rebranding that needs to happen here so that you can expand so you can really be able to benefit from this expanded distribution into multiple retail channels or multiple distribution channels.
I'll say great question. We hire an external marketing and brand consultant to help us answer that question. And as everything you will see us do going forward. We are customer back. So we are going to do whatever resonates better with the customer.
No, that makes sense. And so far, Adolfo I have to say I like what you're doing. And everything seems to be on the table and look forward to tracking your progress over the next several quarters and years.
And this concludes the question-and-answer session. I would like to turn the conference to Adolfo Villagomez for any closing comments.
Thank you all once again for taking the time to join us on today's call and for your continued support on 1-800-FLOWERS.COM. Fiscal 2026 marks a pivotal year of stabilization for 1-800-FLOWERS.COM, during which we are establishing the foundation for sustainable long-term growth.
While we are in the early stages of our turnaround, we had 2 significant achievements this quarter. First, we shifted towards prioritizing marketing contribution margin, which is already producing positive results. And second, we identified an additional $50 million in cost savings. We are seeing some early benefits of our turnaround strategy, and I am encouraged by the momentum that is building across the enterprise. We look forward to keeping you updated on our progress. Thank you.
Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.
Financial data from 1-800-FLOWERS.COM, Inc. Class A
Revenue
Revenue is the sum of all sales generated by a company, e.g. for its products or services.
Revenue (TTM) metric explainedDirect Costs
Direct costs are the costs incurred directly in connection with the manufacture of the product or service.
Gross Profit
Gross Profit indicates how much of the revenue remains in the company after deducting direct production costs. If the percentage share of sales is calculated, this is referred to as the gross margin.
Gross Profit metric explainedSelling and Administrative Expenses
Selling, general and administrative expenses (SG&A) include all expenses for marketing and sales as well as the general administration of the company.
Research and Development Expense
Research and development costs (R&D) provide information on how much the company invests in the research and development of its products. The costs are particularly interesting as a percentage of revenue and in comparison to direct competitors.
EBITDA
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is the company's earnings before interest, taxes, depreciation and amortization. The EBITDA margin is calculated as a percentage of sales.
Depreciation and Amortization
Depreciation represents reductions in the value of the company's assets (e.g. due to wear and tear on machinery).
EBIT (Operating Income)
EBIT (Earnings Before Interest and Taxes) is the company's profit before interest and taxes, also known as the operating income. The EBIT Margin is calculated as a percentage of sales at
.
Net Profit
Net Profit represents the profit or loss after deduction of all costs.
Net Profit metric explainedStocksGuide Premium
| Jun '26 |
+/-
%
|
||
| Revenue | 1,504 1,504 |
11%
11%
100%
|
|
| - Direct Costs | 932 932 |
10%
10%
62%
|
|
| Gross Profit | 571 571 |
12%
12%
38%
|
|
| - Selling and Administrative Expenses | 542 542 |
9%
9%
36%
|
|
| - Research and Development Expense | 58 58 |
7%
7%
4%
|
|
| EBITDA | -28 -28 |
285%
285%
-2%
|
|
| - Depreciation and Amortization | 54 54 |
0%
0%
4%
|
|
| EBIT (Operating Income) EBIT | -82 -82 |
34%
34%
-5%
|
|
| Net Profit | -135 -135 |
33%
33%
-9%
|
|
In millions USD.
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1-800-FLOWERS.COM, Inc. Class A Stock News
Company Profile
1-800-FLOWERS.COM, Inc. engages in the provision of gifts for all celebratory occasions. It operates in three segments: Consumer Floral, Gourmet Food and Gift Baskets and BloomNet Wire Service. The Consumer Floral segment comprises the operations of the company's flagship brand 1-800-Flowers.com, Celebrations and FineStationery.com. The Gourmet Food and Gift Baskets segment consists the operations of Fannie May Confections Brands, Cheryl's, The Popcorn Factory, Stockyards.com, DesignPac and 1-800-Baskets. The BloomNet Wire Service segment includes the operations of BloomNet, BloomNet Technologies, BloomNet Products and Napco. The company was founded by James F. McCann in 1976 and is headquartered in Carle Place, NY.
StocksGuide Premium
| Head office | United States |
| CEO | Mr. Villagomez |
| Employees | 3,900 |
| Founded | 1976 |
| Website | www.1800flowers.com |


