1-800-FLOWERS.COM, Inc.: Navigating Headwinds and Emerging Stronger

In the ever-evolving landscape of consumer behavior, 1-800-FLOWERS.COM, Inc. (NASDAQ: FLWS) has been navigating the challenges and opportunities presented by shifting consumer engagement patterns. The company's fiscal 2025 second quarter results, announced on January 30, 2025, reflect the impact of these changes and the strategic initiatives implemented to address them.



The company reported total consolidated revenues of $775.5 million, a 5.7% decrease compared to the prior year period. Despite this decline, the company's gross profit margin remained flat at 43.3%, demonstrating its ability to maintain profitability amidst challenging market conditions. Operating expenses declined by $19.9 million to $244.5 million, with adjusted operating expenses excluding non-recurring charges and impairment charges declining by $2.9 million to $239.1 million. Net income for the quarter was $64.3 million, or $1.00 per diluted share, compared to net income of $62.9 million, or $0.97 per diluted share, in the prior year period. Adjusted Net Income was $69.2 million, or $1.08 per diluted share, compared to $82.7 million, or $1.27 per diluted share, in the prior year period. Adjusted EBITDA for the quarter was $116.3 million, compared to $130.1 million in the prior year period.



The new Harry & David order management system implementation had a significant impact on the company's revenue and gross profit margin. The issues associated with the implementation resulted in lost revenue of approximately $20 million for the Gourmet Foods and Gift Baskets segment, which declined by 4.0% to $518.5 million compared to the prior year period. Despite this, the gross profit margin for this segment increased by 30 basis points to 43.5%, benefiting from the company's inventory and labor optimization efforts that offset the incremental costs associated with the order management system issues.

To address these issues, the company is implementing actions to accelerate its Work Smarter efficiency initiatives, which will in turn fund investments in its growth-oriented Relationship Innovation™ initiatives and marketing and sales strategies. This approach aims to enhance engagement and build deeper relationships with customers, ultimately helping the company navigate these headwinds and emerge stronger.



The company's Relationship Innovation™ initiatives have contributed to expanding its product offerings, broadened price points, and enhanced user experience. By introducing new brands and products, such as Alice's Table®, the company has expanded its offerings to cater to a wider range of customer preferences and occasions. This expansion allows the company to attract and retain a larger customer base by offering a mix of premium, mid-range, and affordable products. Additionally, the company's initiatives have focused on improving the ordering process, personalization options, and overall customer engagement, enhancing the user experience for its customers.

The expected outcomes of these initiatives include attracting and retaining a larger customer base, enhancing customer engagement and loyalty, increasing revenue and market share, and strengthening the company's competitive position by differentiating its offerings and providing more value to customers. The company's guidance for the year 2025 anticipates that its revenue trends will improve as the fiscal year progresses, benefiting from its Relationship Innovation initiatives.

In conclusion, 1-800-FLOWERS.COM, Inc. has been navigating the challenges and opportunities presented by shifting consumer engagement patterns by implementing strategic initiatives to address the impact of these changes. The company's fiscal 2025 second quarter results reflect its ability to maintain profitability amidst challenging market conditions, and its Relationship Innovation™ initiatives have contributed to expanding its product offerings, broadened price points, and enhanced user experience. As the company continues to focus on expanding its customer base and leveraging new technology to enhance engagement and build deeper relationships with customers, it is well-positioned to navigate these headwinds and emerge stronger.