1-800-FLOWERS.COM, Inc. (FLWS) Q2 2026 Earnings Call Transcript
Consolidated Revenue Decreased by 9.5% year-over-year. This was driven by a strategic shift towards more efficient marketing spending and a greater-than-expected decline in direct traffic.
Consumer Floral and Gifts Segment Revenue Declined by 22.7% year-over-year. This was primarily due to the strategic shift in marketing and a decline in direct traffic.
Gourmet Foods and Gift Baskets Segment Revenue Declined by 3.8% year-over-year. This was influenced by the same strategic marketing shift and traffic decline.
BloomNet Segment Revenue Declined by 3.1% year-over-year. This was also due to the strategic marketing changes and traffic decline.
Gross Margin Decreased by 120 basis points to 42.1% from 43.3% in the prior year. This was primarily due to deleveraging on the sales decline, higher tariff, commodity, and shipping costs.
Operating Expenses Decreased by $23.4 million to $221.1 million year-over-year, primarily due to lower marketing and labor costs. Excluding certain items, operating expenses declined by $25.9 million to $213.2 million.
Adjusted EBITDA Decreased to $98.1 million from $116.3 million year-over-year. This was influenced by the decline in revenue and gross margin, despite cost reduction efforts.
Net Cash Position $42.3 million at quarter end. Borrowings under the revolver were fully repaid during the fiscal second quarter.
Cash Balance $193.3 million at quarter end.
Inventory $148.9 million at quarter end.
Annualized Run Rate Cost Savings Achieved approximately $15 million for fiscal 2026. This is part of an ongoing initiative to achieve $50 million in total cost savings across fiscal 2026 and 2027.
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1-800-Flowers.com Surprises with Earnings, Stock Jumps
- Earnings Surprise: 1-800-Flowers.com reported an 11% increase in adjusted net income to $76.7 million, or $1.20 per share, exceeding Wall Street's estimate of $0.86, indicating a significant enhancement in profitability.
- Revenue Decline: Despite a 9.5% year-over-year revenue drop to $702.2 million, management emphasized prioritizing profitability through reduced marketing spend, laying the groundwork for a sustainable demand generation model.
- Cost Optimization: The shift to a function-based operating model allowed the company to cut operating expenses by $23.4 million to $221.1 million, demonstrating substantial progress in cost control and organizational streamlining amid structural challenges.
- Positive Market Reaction: As of 1:35 p.m. EST, shares of 1-800-Flowers.com surged 18.71% to $4.80, reflecting investor optimism regarding the company's potential for future profit growth.
1-800-Flowers.com Reports Increased Q2 Profit
- Profit Growth: 1-800-Flowers.com reported a net profit of $70.55 million for Q2, translating to $1.10 per share, which marks a significant increase from last year's $64.35 million and $1.00 per share, indicating improved profitability.
- Adjusted Earnings: Excluding items, the company reported adjusted earnings of $76.66 million or $1.20 per share, demonstrating strong core business profitability despite the overall revenue decline.
- Revenue Decline: The company's revenue fell 9.5% to $702.18 million from $775.49 million last year, reflecting challenges from weakened market demand and intensified competition.
- Market Outlook: Despite the revenue drop, the improvement in profitability may support the company's future strategic adjustments, particularly in optimizing costs and enhancing customer experience.
