1-800-FLOWERS.COM, Inc. (FLWS) Q1 2026 Earnings Call Transcript
Consolidated Revenue Decreased by 11.1% year-over-year. This decline was primarily driven by a strategic shift toward emphasizing positive marketing contribution margin and changes in wholesale order timing, which shifted from the first quarter of the previous year to the second quarter of this fiscal year.
Consumer Floral and Gift Segment Revenue Declined by 14.6% year-over-year. This was influenced by the strategic shift in marketing focus and changes in wholesale order timing.
Gourmet Foods and Gift Baskets Segment Revenue Declined by 8.6% year-over-year. This was also influenced by the strategic shift in marketing focus and changes in wholesale order timing.
BloomNet Segment Revenue Remained essentially flat year-over-year, showing no significant change.
Gross Margin Decreased by 240 basis points to 35.7% compared with 38.1% in the prior year period. This decline was primarily due to deleveraging on the sales decline combined with the impact of higher tariffs.
Operating Expenses Decreased by $12 million to $127.3 million year-over-year, primarily due to lower marketing and labor costs. Excluding nonrecurring charges and the impact of the company's nonqualified deferred compensation plan, operating expenses declined $10.9 million to $124.9 million.
Adjusted EBITDA Loss Increased to $32.9 million compared with a loss of $27.9 million in the prior year period. This was influenced by the sales decline and gross margin pressure, despite cost reduction efforts.
Net Debt Increased to $259.3 million compared with $224.1 million a year ago. This increase was in preparation for the upcoming holiday season.
Inventory Decreased slightly to $269.8 million compared with $275.3 million a year ago.
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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.
