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18

1 800 FLOWERS COM INC (FLWS)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 FY25 materially missed consensus: revenue $331.5M vs $364.2M estimate and Primary EPS -$0.71 vs -$0.34 estimate, driven by weak “everyday” demand, a highly promotional environment, and order-management-system (OMS) remediation costs; GAAP EPS was -$2.80 due to a $138.2M non-cash impairment . Estimates from S&P Global: revenue $364.2M*, EPS -$0.34*, actuals - see tables below.
  • Management withdrew near‑term guidance and unveiled “Celebrations Wave,” a multi‑year strategy to build a sentiment‑led ecosystem, alongside naming Adolfo Villagomez as CEO effective May 12, 2025; targeted annualized cost reductions of ~$40M, with ~$17M already executed .
  • Segment mix: Consumer Floral & Gifts fell 11.4%, Gourmet Foods & Gift Baskets fell 18.2% (OMS issues/rebates/write‑offs), while BloomNet grew 4.5% with margin expansion; consolidated adjusted EBITDA was -$34.9M vs -$5.7M LY .
  • Credit facilities were amended to increase flexibility and modestly adjust commitments; term debt stood at ~$160M, no revolver draw at Q3 end; cash ~$85M, net debt ~$75M, inventory ~$160M .

What Went Well and What Went Wrong

What Went Well

  • BloomNet resilience: revenue +4.5% YoY to $28.6M and gross margin +150 bps to 46.9% on lower florist rebates; segment contribution rose to $8.5M .
  • Strategic pivot and leadership: Launch of “Celebrations Wave” (sentiment-led app + site, loyalty revamp, AI personalisation) and appointment of an external CEO to accelerate execution .
  • Clear cost agenda and targets: Annualized cost reductions of ~$40M targeted (with ~$17M already executed), aimed at restoring margins and improving cash flow over time .

What Went Wrong

  • Demand softness and promos: Revenue -12.6% to $331.5M; adjusted gross margin down 350 bps to 33.1% ex-$4.6M OMS costs, reflecting a highly promotional environment and deleverage on lower sales .
  • OMS implementation fallout: $4.6M of rebates/replacements/write‑offs in Q3; management called the OMS rollout a “colossal screw up,” with ~$20M top‑line hit in Q2 and ~$11M cumulative incremental costs across Q2–Q3 .
  • Large non‑cash impairment: $138.2M goodwill/trade name charge (Consumer Floral & Gifts, Personalization Mall), pushing GAAP EPS to -$2.80 .

Financial Results

Sequential trend (oldest → newest)

MetricQ1 2025Q2 2025Q3 2025
Revenue ($M)$242.1 $775.5 $331.5
Gross Profit Margin % (GAAP)38.1% 43.3% 31.7%
Gross Profit Margin % (Adj)—43.5% (ex OMS) 33.1% (ex OMS)
Adjusted EBITDA ($M)-$27.9 $116.3 -$34.9
Net Income ($M)-$34.2 $64.3 -$178.2
Diluted EPS (GAAP)-$0.53 $1.00 -$2.80
Adjusted EPS-$0.51 $1.08 -$0.71

Q3 YoY comparison (oldest → newest)

MetricQ3 2024Q3 2025
Revenue ($M)$379.4 $331.5
Gross Profit Margin % (GAAP)36.6% 31.7%
Gross Profit Margin % (Adj)—33.1% (ex OMS)
Adjusted EBITDA ($M)-$5.7 -$34.9
Net Income ($M)-$16.9 -$178.2
Diluted EPS (GAAP)-$0.26 -$2.80
Adjusted EPS-$0.28 -$0.71

Q3 2025 vs S&P Global consensus

MetricActualConsensus# of Est
Revenue ($M)$331.5 $364.2*2*
Primary EPS-$0.71 -$0.34*2*
Values marked with * retrieved from S&P Global.

Segment breakdown – Q3 2025 vs Q3 2024

SegmentRevenue ($M) Q3’24Revenue ($M) Q3’25Gross Margin % Q3’24Gross Margin % Q3’25Segment Contribution (Adj, $M) Q3’24Segment Contribution (Adj, $M) Q3’25
Consumer Floral & Gifts221.2 196.0 39.3% 36.8% 22.8 6.5 (ex impairment)
Gourmet Foods & Gift Baskets131.0 107.1 29.9% 18.1% GAAP; 22.5% ex-OMS -7.6 -22.3 (ex OMS/severance)
BloomNet27.3 28.6 45.4% 46.9% 7.6 8.5
Intercompany/Corp(0.3) (0.3) ————
Total379.4 331.5 36.6% 31.7% ——

KPIs and balance sheet highlights (Q3 FY25)

  • Cash and cash equivalents: ~$85M; Net debt: ~$75M; Inventory: ~$160M; Term debt: ~$160M; Revolver borrowings: $0 .
  • Non‑cash impairment: $138.2M (Consumer Floral & Gifts; Personalization Mall trade name) .
  • Adjusted operating expenses (ex impairment, OMS/severance/NQDC): $160.7M, essentially flat YoY .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue growth (YoY)FY2025Mid‑single‑digit decline Withdrawn Withdrawn
Adjusted EBITDA ($M)FY2025$65–$75 Withdrawn Withdrawn
Free Cash Flow ($M)FY2025$25–$35 Withdrawn Withdrawn

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1–Q2 FY25)Current Period (Q3 FY25)Trend
AI/technology initiativesAI used in customer care and e‑com; OMS launch for logistics optimisation Emphasis on AI‑driven personalization “Celebrations Wave”; Chief AI & Transformation Officer hired Expanding scope
Supply chain/OMSOMS rollout in Q1; aimed to lower fulfillment costs; early implementation costs OMS issues persisted; ~$4.6M Q3 margin impact and ~$11M costs across Q2–Q3; “colossal screw up” candidly acknowledged Improving by FY25 year‑end, but near-term drag
Macro/consumer demandEncouraged for holidays; Q2 revenue tailwind expected Everyday demand weak; promotional environment; consumer confidence down; Easter shift impacted Q3 (-12.6% reported, -8.9% adj) Deteriorated in everyday
Tariffs/regulatory—~10% general tariffs; China exposure larger; ~$55M tariff exposure; mitigation via sourcing/pricing New headwind
Product/assortmentSame‑day expansion beyond floral (Cheryl’s, H&D) Continued push; broader price tiers; card‑led ladder strategy Ongoing build
Retail presenceHoliday pop‑ups at Macy’s (Q1) Testing more seasonal + a handful of year‑round stores; early read positive Gradual expansion
Management/toneQ1 leadership continuity; optimistic for holiday New CEO named; strategic reset; candid admission of internal execution issues; cost focus Reset underway

Management Commentary

  • “We are embarking on our sixth wave of evolution… Celebrations Wave… we believe it will be our most transformative yet.” — Jim McCann (prepared remarks) .
  • “We plan to reduce costs by approximately $40 million on an annualized basis, including $17 million in reductions already executed.” — James Langrock (prepared remarks) .
  • “The implementation of the order management system was a colossal screw up on our part… we’ll have that all taken care of by the end of our fiscal 2025.” — Jim McCann (Q&A) .
  • “At present, there is an incremental 10% tariff… we estimate our tariff exposure to be approximately $55 million… most significant impact on our personalization and wholesale businesses.” — James Langrock (prepared remarks) .
  • “BloomNet… gross profit margin increased 150 basis points to 46.9% due to lower florist rebates.” — Press release .

Q&A Highlights

  • Quarter cadence: Everyday demand softness in Jan/Mar offset a decent Valentine’s; Easter timing hurt Q3; revenue would be -8.9% ex‑Easter shift .
  • OMS impact quantified: ~$20M Q2 top‑line hit; ~$4.6M Q3 gross profit impact; ~$11M cumulative incremental costs across Q2–Q3 (incl. inventory write‑offs) .
  • Tariff exposure: ~$55M exposure (about $70M imported COGS; roughly half from China); actions include vendor negotiation, component changes, assortment shifts, selective pricing .
  • Share/mix: Company believes it maintained or gained share in larger brands despite promotions; higher-income customers remained resilient .
  • April/4Q setup: April up on Easter shift; expect Q4 slightly better than Q3; Mother’s Day visibility pending .

Estimates Context

  • Q3 FY25 vs S&P Global: revenue $331.5M vs $364.2M consensus (miss), Primary EPS -$0.71 vs -$0.34 consensus (miss); 2 estimates in each case. Primary drivers: weak everyday demand, elevated promotions, OMS remediation costs, and the $138.2M non‑cash impairment (GAAP only) . Values marked with * are from S&P Global and shown in the “Q3 2025 vs S&P Global consensus” table above.
  • Revisions outlook: Guidance withdrawal and new strategy likely prompt downward EPS and revenue revisions near-term; cost actions could support medium‑term estimate stabilization once execution milestones become visible .
    Values retrieved from S&P Global.

Key Takeaways for Investors

  • The quarter was weak and below consensus on both revenue and EPS as everyday demand remains pressured and promotions intensified; additional OMS clean‑up weighed on margins .
  • Near‑term visibility is low post guidance withdrawal, but management is pursuing ~$40M annualized cost reductions and a strategic pivot to a sentiment‑led ecosystem (Celebrations Wave) to lift frequency, conversion and marketing efficiency .
  • Balance sheet/liquidity adequate with ~$85M cash, ~$75M net debt, no revolver borrowings, and a recently amended credit agreement that modestly adjusted commitments and flexibility .
  • BloomNet remains a bright spot with growth and margin expansion; Consumer Floral & Gifts and Gourmet Food face macro and execution headwinds near‑term .
  • Tariffs (~$55M exposure) and marketing channel shifts (organic→paid/AI overviews) are structural headwinds that FLWS plans to mitigate via sourcing, assortment and price architecture .
  • Upcoming catalysts/risks: Mother’s Day performance, pace of OMS normalization by FY25 year‑end, CEO transition momentum, and evidence of cost savings flowing through P&L .
  • Medium‑term, successful execution on AI‑driven personalization, loyalty, and card‑led ladder strategy could re‑accelerate frequency and support margin recovery; investors should look for sequential improvements in adjusted gross margin and operating expense ratio .