1 800 FLOWERS COM (FLWS)·Q2 2026 Earnings Summary

1-800-FLOWERS Delivers Surprise EPS Beat as Turnaround Takes Hold; Stock Jumps 5%

January 29, 2026 · by Fintool AI Agent

1-800-FLOWERS.COM (FLWS) posted a strong earnings beat in its fiscal Q2 2026, with adjusted EPS of $1.20 significantly topping the $0.86 consensus estimate—a 39.5% surprise. Revenue came in essentially in line at $702.2 million versus $700.6 million expected, though down 9.5% year-over-year as the company continues its strategic shift away from unprofitable marketing spend. Shares jumped 5% in aftermarket trading to $4.24 as investors cheered the cost discipline.

Did 1-800-FLOWERS Beat Earnings?

Yes—convincingly on the bottom line. The company's turnaround strategy is showing tangible results:

The EPS beat came from aggressive operating expense reductions. Total operating expenses fell $23.4 million year-over-year to $221.1 million, primarily due to lower marketing and labor costs.

Order metrics reveal the trade-off: Average order value rose 5.2% but order volume dropped 16% as the company deprioritized low-margin customer acquisition.

How Did the Stock React?

Shares were roughly flat during regular trading at $4.04 but popped 5% in aftermarket trading to $4.24 following the earnings release. The stock has been beaten down over the past year, trading 56% below its 52-week high of $9.12.

The turnaround remains early-stage. Since Q3 FY2024, the company had missed EPS estimates in six consecutive quarters until this Q2 FY2026 beat—a notable inflection point.

What Changed From Last Quarter?

Key improvements:

1. Marketing efficiency gains accelerating — Operating expenses down $25.9 million on an adjusted basis, primarily from more disciplined marketing spend

2. First EPS beat in 7 quarters — After six consecutive misses, this represents the first positive surprise since Q2 FY2024

3. Cost savings momentum — $15 million in annualized run-rate savings achieved in Q2

Ongoing challenges:

1. Consumer Floral segment struggling — Revenue down 22.7% YoY, driven heavily by PMOL pullback

2. AI disruption to organic traffic — Management cited "changes in search engine results page, including increased paid placements and AI-driven content, which negatively impacted organic visibility and direct traffic"

3. Top-line pressure persists — Revenue down 9.5% reflects intentional pullback from unprofitable marketing

What Did Management Say?

CEO Adolfo Villagomez struck a cautiously optimistic tone:

"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."

Management has framed FY2026 as a year of stabilization focused on building "a strong and durable foundation to support future growth over time."

Segment Performance: Where's the Pain?

Gourmet Foods & Gift Baskets (71% of revenue) held up relatively well. This segment is more exposed to B2B, which "has been very solid."

Consumer Floral & Gifts (26% of revenue) bore the brunt of the marketing pullback. CFO James Langrock noted: "PMOL was down more than flowers during the quarter... we were spending heavily on PMOL and pulled down quite a bit of the marketing spend."

BloomNet (3% of revenue) remained resilient as a B2B florist network with the highest margins (50.9%).

What Did Management Guide?

For H2 FY2026, management provided tempered expectations:

Key headwinds: continued marketing efficiency focus, AI-driven search changes, and tougher YoY comparisons.

Important calendar note: Valentine's Day falls on a Saturday this year, "which historically has been a more challenging day placement compared to midweek holidays." However, Easter falls April 4th, shifting more orders into Q3—a favorable timing shift.

What's the Turnaround Strategy?

Management outlined four strategic priorities:

1. Driving cost savings and organizational efficiency — $15M in annualized run-rate savings achieved in Q2, with $50M total targeted across FY2026 and FY2027

2. Building a customer-centric, data-driven organization — Hired Alex Zelikovsky as CIO (25+ years tech leadership experience) to lead IT, data architecture, cybersecurity, and AI initiatives; Nelson Tejada brought in as merchandising leader with commercial experience

3. Expanding beyond e-commerce — Third-party marketplace offerings (Uber, DoorDash, Amazon, Walmart.com) "growing rapidly and expanding reach" . Pop-up retail tests concluded with unattractive ROIC—management will instead evaluate full-year permanent store concepts

4. Functional reorganization — Moved from brand-based to function-based operating structure in November, eliminating duplication and enabling faster decision-making

Balance Sheet Health

The balance sheet improved meaningfully during the holiday quarter. Borrowings under the revolver were fully repaid during Q2.

Risks and Concerns

1. Commodity headwinds — Cocoa remains "significantly elevated" year-over-year, though eggs, butter, and sugar are stabilizing and should no longer be a headwind in H2

2. AI disruption — Search engine changes with AI-driven content are reducing organic traffic, forcing higher paid acquisition costs

3. Revenue trajectory — Top-line declines could accelerate before stabilizing; H2 guidance calls for low double-digit decline

4. Valentine's Day on Saturday — Historically a "more challenging day placement compared to midweek holidays" per management; team is preparing to counteract this trend

5. Consumer bifurcation — Higher-end households holding up, but "softness on the lower-end household income spectrum" continues

Q&A Highlights

On PMOL performance: "PMOL was down more than flowers during the quarter... we were spending heavily on PMOL and pulled down quite a bit of the marketing spend this quarter and improved their ad-to-sales ratio as well as their overall contribution margin percentage."

On loyalty program: "Our passport members perform a lot better than non-passport members... we're getting feedback from our customers that the value proposition on our loyalty program needs to improve... we're getting ready to significantly improve our loyalty program over the next few months."

On consultant costs: "The consultant costs will go through the end of the year... that's going to total roughly about $11 million of consultant costs this year."

On Easter timing: Easter falls April 4th this year, shifting more orders into Q3. "That day placement's a little better. The closer Easter is to Mother's Day, that's not as strong for us."

On capital allocation: When asked about M&A: "We're looking at fiscal 2026 as a foundational year for us. So the priority right now is really on stabilizing the performance." Asked if anything is for sale: "Everything is on the table."

What Should Investors Watch Next?

Near-term catalysts:

• Valentine's Day performance (despite Saturday placement)
• Easter shift into Q3 (April 4th)
• Continued cost savings realization ($15M achieved, $50M target)
• Loyalty program relaunch in coming months

Key questions for Q3:

• Can Consumer Floral stabilize, or will declines accelerate?
• Will AI search traffic headwinds persist?
• Progress on full-year store concept evaluation
• Passport loyalty program improvements

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Earnings announced January 29, 2026. Conference call at 8:00 AM ET. View full transcript.