1-800-FLOWERS beats on profit, warns of revenue decline
Gifting company cuts $23.4M in costs but guides H2 sales down amid 'structural challenges'
1-800-FLOWERS.COM delivered an earnings beat in its fiscal second quarter while warning investors that revenue will continue declining through the remainder of the year, highlighting the structural challenges facing the gifting company.
The floral and gourmet gift retailer reported adjusted earnings per share of $1.20 for the quarter ended December 28, surpassing analyst expectations of $0.86, according to market data. Net income reached $70.6 million, or $1.10 per share, bolstered by a $23.4 million reduction in operating expenses driven by lower marketing and labor costs.
However, revenue fell 9.5% year-over-year to $702.2 million, while adjusted EBITDA declined 15.7% to $98.1 million, reflecting margin pressure in a business struggling with shifting consumer behavior and digital marketing dynamics.
Looking ahead, the company guided for second-half revenue to decline in the "low double-digit range," a pessimistic outlook that overshadows the quarterly profit beat. The guidance reflects ongoing efforts to improve marketing contribution margins, the impact of changes to search engine results pages—including increased paid placements and AI-driven content affecting organic visibility—and more challenging comparisons due to higher, less efficient marketing expenditures in the previous year.
Chief Executive Officer Adolfo Villagomez acknowledged the difficulties facing the 46-year-old company. "While the topline impact of our initiatives will take time as we address structural challenges within the business, we made solid progress in the second quarter on our cost-optimization and organizational-streamlining efforts," Villagomez said in a statement. He added that these actions are "strengthening our operating foundation and better positioning the Company to achieve sustainable, profitable growth."
Those structural challenges include intensifying competition, pressures on profit margins, and issues with the effectiveness of technology investments. The company's multi-brand strategy—which includes 1-800-Flowers, Harry & David, and Shari's Berries—has led to operational complexities and a fragmented brand identity, according to market analysis. Financial concerns include deteriorating customer economics, declining return metrics, and weakening cash flow efficiency.
The Carle Place, New York-based company has positioned fiscal 2026 as a "stabilization year," with a strategic focus on achieving $50 million in cost savings over two years. Management is also expanding into third-party marketplaces including Amazon and Walmart to diversify sales channels.
Analysts maintain mixed views on the stock. The sole covering analyst rates FLWS a hold, with an average target price of $6.00, according to market data. Noble Capital previously downgraded the company to "Market Perform" from "Outperform" following fiscal third quarter 2025 results, citing an "uncertain fundamental environment" and lowered expectations for fiscal 2026.
The shares have experienced significant volatility, trading within a 52-week range of $2.93 to $9.12. The stock currently commands a market capitalization of approximately $258 million, with substantial insider ownership at 44% and institutional holdings at 84%.
For the fiscal year ending in June, analysts forecast an annual revenue decline of 2.2%, with annual earnings expected to grow significantly—124.6% per year—though from a negative base, according to market analysis.
1-800-FLOWERS' results reflect broader pressures in the specialty retail and gifting sectors, where companies are navigating post-pandemic demand normalization, rising customer acquisition costs, and the need to adapt digital marketing strategies to a landscape increasingly dominated by paid search and algorithm-driven content discovery.