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18

1 800 FLOWERS COM INC (FLWS)·Q1 2026 Earnings Summary

Executive Summary

  • Q1 FY26 revenue fell 11.1% to $215.2M and GAAP EPS was -$0.83; gross margin compressed 240 bps to 35.7% as sales deleveraging and tariffs weighed on profitability .
  • Results missed S&P Global consensus modestly: revenue $215.2M vs $217.8M* and EPS -$0.83 vs -$0.64*, largely due to strategic shift to prioritize marketing contribution margin and wholesale order timing shifting ~$3–4M from Q1 to Q2* .
  • Management highlighted early traction from a new marketing focus, marketplace expansion (Amazon/Walmart.com), holiday pop-up shops, and incremental $50M run-rate cost savings targeted over two years, offset near term by tariffs and higher transportation costs .
  • Balance sheet positioned for holiday: inventory $269.8M, net debt $259.3M (vs $224.1M YoY), with revolver expected to be fully repaid in Q2 on seasonal cash inflows .
  • Near-term stock narrative catalysts: execution on holiday demand, visibility on tariff risks (including potential Colombia flower tariffs), pace of cost takeout vs marketing efficiency, and traction from new channels .

What Went Well and What Went Wrong

What Went Well

  • Marketing pivot to contribution margin delivered “clear and immediate” profitability improvements month-to-month; underlying adjusted EBITDA trend turned slightly positive after timing adjustments, first Y/Y improvement in seven quarters .
  • Channel expansion: initial sales traction on Amazon and Walmart.com; learnings from marketplace best practices to modernize FLWS sites; holiday pop-up shops piloting a scalable physical retail concept .
  • Cost discipline: OpEx down $12.0M to $127.3M (ex-NQDC and non-recurring down $10.9M to $124.9M); identified incremental $50M run-rate savings over two years, building on $17M implemented .

What Went Wrong

  • Top-line pressure: consolidated revenue -11.1% YoY, with Consumer Floral & Gifts -14.6% and Gourmet Foods & Gift Baskets -8.6%; BloomNet essentially flat .
  • Margin headwinds: gross margin down 240 bps to 35.7% on sales deleveraging and higher tariffs; segment GMs declined across categories .
  • EPS and EBITDA deterioration: adjusted EBITDA loss widened to -$32.9M vs -$27.9M YoY; GAAP net loss -$53.0M; tax valuation allowance set up due to three years of cumulative losses, eliminating typical Q1 tax benefit .

Financial Results

MetricQ3 2025Q4 2025Q1 2026
Revenue ($USD Millions)$331.5 $336.6 $215.2
Gross Margin %31.7% 35.5% 35.7%
Operating Expenses ($USD Millions)$298.4 $174.8 $127.3
Adjusted EBITDA ($USD Millions)-$34.9 -$24.2 -$32.9
GAAP EPS ($)-$2.80 -$0.82 -$0.83
Adjusted EPS ($)-$0.71 -$0.69 -$0.83

Actual vs S&P Global consensus

MetricQ3 2025Q4 2025Q1 2026
Revenue Actual ($MM)$331.5 $336.6 $215.2
Revenue Consensus ($MM)$364.2*$330.0*$217.8*
Revenue Surprise ($MM)-$32.8*+$6.6*-$2.6*
EPS Actual ($)-$0.71 -$0.69 -$0.83
EPS Consensus ($)-$0.34*-$0.565*-$0.64*
EPS Surprise ($)-$0.37*-$0.13*-$0.19*

Values retrieved from S&P Global.*

Segment breakdown (Q1 2026 vs Q1 prior year)

SegmentRevenue ($MM)YoY %Gross Margin %Segment Contribution Margin ($MM)
Consumer Floral & Gifts$115.4 -14.6% 37.9% $4.5
Gourmet Foods & Gift Baskets$76.8 -8.6% 28.6% -$13.4
BloomNet$23.1 +0.2% 47.7% $5.9
Total$215.2 -11.1% 35.7% Adjusted EBITDA -$32.9

KPIs and Balance Sheet

KPIQ1 2026Prior Year Q1
Net Debt ($MM)$259.3 $224.1
Cash ($MM)$7.7 —
Inventory ($MM)$269.8 $275.3
Term Debt ($MM)$157.0 —
Revolver Borrowings ($MM)$110.0 —

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Cost savings run-rateFY26–FY27$17M annualized implemented (FY25) Incremental $50M run-rate over two years (ex one-time costs) Raised
Revolver borrowingsQ2 FY26Not specifiedExpect revolver fully repaid during fiscal Q2 Clarified (positive)
Tax rateFY26Historically Q1 tax benefitSet up valuation allowance due to 3 years cumulative losses; expect benefits when profitability returns Policy change
Revenue/EPS guidanceFY26Near-term guidance withdrawn in Q3 FY25 No formal quantitative guidance; focus on stabilization and profitable growth Maintained no guidance
Marketing strategyOngoingHeavy bottom-funnel focus Shift to marketing contribution margin, consolidation of paid traffic, full-funnel approach Strategic shift

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 FY25, Q4 FY25)Current Period (Q1 FY26)Trend
Marketing efficiencyQ3: Celebrations Wave, relationship-led marketing ; Q4: cost discipline and customer-centric priorities Shift to contribution margin; consolidation of paid traffic; centralizing marketing Improving
Marketplace expansionLimited prior commentaryLaunched on Amazon and Walmart.com; early traction Improving
Physical retail pilotsCheryl’s stores profitable (background)9 holiday pop-ups (8 Harry & David, 1 Things Remembered); concept testing for rollout Improving
Cost savingsQ4: $17M realized Targeting +$50M run-rate over two years Improving
Tariffs/input costsQ3: commodity/mix pressures Tariffs cited as larger GM headwind; risk from potential Colombia tariffs (60–70% U.S. flowers) Deteriorating risk
Wholesale timingNot highlighted$3–4M revenue shifted Q1→Q2 Neutral (timing)
Tax valuation allowanceNot notedValuation allowance established; alters quarterly tax pattern One-time reset
Competitive dynamicsQ3: promotional environment Higher cost to buy clicks; more competitors in floral Deteriorating
Fuel surchargeNot notedModerated but persists Stable

Management Commentary

  • CEO on strategic pivot: “We view fiscal 2026 as a year of stabilization… underlying profitability has begun to show a clear positive trend… we made a fundamental shift to focus on marketing contribution margin… early results are promising” .
  • CEO on new channels and talent: “We are now selling our products through third-party marketplaces including Amazon and Walmart.com… [and] welcome Melanie Babcock as Chief Marketing and Growth Officer” .
  • CFO on profitability and drivers: “Adjusted EBITDA was slightly positive for the quarter after timing-related items… gross margin decreased 240 bps to 35.7%… primarily due to deleveraging… combined with the impact of higher tariffs” .
  • CFO on cost actions and balance sheet: “Anticipate an incremental $50 million in cost savings over the next two years… Net debt was $259.3 million… expect borrowings under the revolver to be fully repaid during fiscal second quarter” .
  • Press release framing: “Total consolidated revenues decreased 11.1% to $215.2 million… Adjusted EBITDA loss… ($32.9) million… segment trends detailed across Consumer Floral & Gifts, Gourmet Foods, and BloomNet” .

Q&A Highlights

  • Competitive paid search: “More competitors… increases the marketing costs and therefore reduces marketing productivity” (CEO) .
  • Wholesale timing: “Several million dollars, $3 million, $4 million” shifted from Q1 to Q2 (CFO) .
  • Marketplaces traction: “It’s early days, but… growing very nicely… team is learning best practices… will adjust our websites accordingly” (CEO) .
  • Commodities: “Chocolate is up… eggs up slightly… other commodities flat or down… tariffs had more impact than commodities” (CFO) .
  • Tariff risk (Colombia): “60%–70% of fresh flowers… significant impact on U.S. floral industry… would create higher prices; difficult to fully offset” (CFO) .
  • Tax valuation allowance: “Set up… due to three years of cumulative losses… expect to use benefits upon return to profitability” (CFO) .
  • Fuel surcharge: “Always part of FedEx charges… moderated” (CFO) .
  • Pop-up shops and rebranding: 9 pop-ups to test retail concept; brand and marketing consultant engaged to assess brand architecture (CEO) .

Estimates Context

  • Q1 FY26 missed consensus modestly: revenue $215.2M vs $217.8M* and EPS -$0.83 vs -$0.64*; drivers include deliberate top-line trade-off from marketing profitability focus, gross margin pressure from tariffs, and wholesale timing shift .
  • Prior quarters: Q4 FY25 revenue beat ($336.6M vs $330.0M*), but EPS missed (-$0.69 vs -$0.565*); Q3 FY25 missed both revenue and EPS significantly amid promotional environment and impairment charges .
  • Implication: Street models may need to lower near-term revenue assumptions given marketing mix changes, and reflect higher tariff risk; medium-term EBITDA trajectories could improve if $50M run-rate savings materialize and marketplaces scale .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Near-term execution hinges on holiday performance; management expects strong wholesale sales in Q2, which should drive revolver repayment and working capital normalization .
  • Strategic shift to contribution-margin marketing is compressing revenue but improving unit economics; watch repeat rates and acquisition costs as leading indicators .
  • $50M run-rate cost savings over two years is a key bridge to EBITDA recovery; monitor cadence by function (supply chain, procurement, marketing efficiency) and any one-time costs .
  • Marketplace expansion (Amazon/Walmart) and physical retail pilots diversify demand channels; track SKU breadth, pricing, and cross-channel cannibalization vs website .
  • Tariffs represent the largest external risk to gross margins—particularly if Colombia flower tariffs are enacted; pricing power and mix management will be critical .
  • Balance sheet seasonality should improve in Q2; inventory is positioned for holiday, but net debt remains elevated YoY—focus on free cash flow trajectory post-holiday .
  • With no formal revenue/EPS guidance, narrative catalysts are operational: margin stabilization, cost takeout, and customer experience modernization under new CMO leadership .