1-800 FLOWERS.COM Inc.

10/30/2025 | Press release | Distributed by Public on 10/30/2025 14:21

Quarterly Report for Quarter Ending September 28, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This "Management's Discussion and Analysis of Financial Condition and Results of Operations" ("MD&A") is intended to provide an understanding of our financial condition, change in financial condition, cash flow, liquidity, and results of operations. The following MD&A discussion should be read in conjunction with the consolidated financial statements and notes to those statements that appear elsewhere in this Form 10-Q and in the Company's Annual Report on Form 10-K for the fiscal year ended June 29, 2025. The following discussion contains forward-looking statements that reflect the Company's plans, estimates and beliefs. The Company's actual results could differ materially from those discussed or referred to in the forward-looking statements. Factors that could cause or contribute to any differences include, but are not limited to, those discussed under the caption "Forward-Looking Information and Factors That May Affect Future Results," under Part I, Item 1A, of the Company's Annual Report on Form 10-K for the fiscal year ended June 29, 2025under the heading "Risk Factors" and Part II-Other Information, Item 1A in this Form 10-Q.
Business Overview
1-800-FLOWERS.COM, Inc. and its subsidiaries (collectively, the "Company") is a leading provider of thoughtful expressions designed to help inspire customers to give more, connect more, and build more and better relationships. The Company's e-commerce business platform features our all-star family of brands, including: 1-800-Flowers.com®, 1-800-Baskets.com®, Cheryl's Cookies®, Harry & David®, PersonalizationMall.com®, Shari's Berries®, FruitBouquets.com®, Things Remembered®, Moose Munch®, The Popcorn Factory®, Wolferman's Bakery®, Vital Choice®, Scharffen Berger®, and Simply Chocolate®. Through the Celebrations Passport® loyalty program, which provides members with free standard shipping and no service charge on eligible products across our portfolio of brands, the Company strives to deepen relationships with customers. The Company also operates BloomNet®, an international floral and gift industry service provider offering a broad range of products and services designed to help its members grow their businesses profitably; Napco®, a resource for floral gifts and seasonal décor; DesignPac Gifts, LLC, a manufacturer of gift baskets and towers; Alice's Table®, a lifestyle business offering on demand floral, culinary and other experiences to guests across the country; and Card Isle®, an e-commerce greeting card service.
For additional information, see Item 7 of Part II, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Overview" of our Annual Report on Form 10-K for the fiscal year ended June 29, 2025.
Fiscal 2026
The Company is approaching fiscal 2026 as a pivotal period of foundation setting. By transforming the Company into a customer-centric, data-driven organization with clear objectives and return on investment-focused decision making, the Company aims to position itself to fuel future growth.
The Company's strategic priorities are focused on positioning the organization for long-term growth. These priorities include:
•driving cost savings and organizational efficiency,
•building a customer-centric and data-driven organization,
•broadening our reach beyond our e-commerce sites into new channels, and
•strengthening our team through enhanced talent and accountability.
With a renewed commitment to agility and customer-centricity, the Company believes these foundational steps will set the stage for sustainable revenue and profit growth in the years to come.
Definitions of non-GAAP Financial Measures:
We sometimes use financial measures derived from consolidated financial information, but not presented in our financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). Certain of these are considered "non-GAAP financial measures" under the U.S. Securities and Exchange Commission rules. See below for definitions and the reasons why we use these non-GAAP financial measures, and reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures. These non-GAAP financial measures are referred to as "non-GAAP", "adjusted" or "on a comparable basis" below, as these terms are used interchangeably. Reconciliations for forward-looking figures would require unreasonable efforts at this time because of the uncertainty and variability of the nature and amount of certain components of various necessary GAAP components, including, for example, those related to compensation, tax items, amortization or others that may arise during the year, and the Company's management believes such reconciliations would imply a degree of precision that would be confusing or misleading to investors. For the same reasons, the Company is unable to address the probable significance of the unavailable information. The lack of such reconciling information should be considered when assessing the impact of such disclosures.
EBITDA and Adjusted EBITDA
We define EBITDA as net income (loss) before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted for the impact of stock-based compensation, Non-Qualified Deferred Compensation Plan ("NQDC Plan") investment appreciation/depreciation, and certain items affecting period-to-period comparability.
The Company presents EBITDA and Adjusted EBITDA because it considers such information meaningful supplemental measures of its performance and believes such information is frequently used by the investment community in the evaluation of similarly situated companies. The Company uses EBITDA and Adjusted EBITDA as factors to determine the total amount of incentive compensation available to be awarded to executive officers and other employees. The Company's credit agreement uses EBITDA and Adjusted EBITDA to determine its interest rate and to measure compliance with certain covenants. EBITDA and Adjusted EBITDA are also used by the Company to evaluate and price potential acquisition candidates.
EBITDA and Adjusted EBITDA have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP. Some of the limitations are: (a) EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, the Company's working capital needs; (b) EBITDA and Adjusted EBITDA do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments on the Company's debts; and (c) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future and EBITDA does not reflect any cash requirements for such capital expenditures. EBITDA and Adjusted EBITDA should only be used on a supplemental basis combined with GAAP results when evaluating the Company's performance.
The following table presents EBITDA and Adjusted EBITDA:
Reconciliation of net loss to Adjusted EBITDA (non-GAAP): Three Months Ended
September 28,
2025 		September 29,
2024
(in thousands)
Net loss $ (52,957) $ (34,190)
Add: Interest expense and other, net 1,963 1,593
Add: Depreciation and amortization 12,902 13,038
Add: Income tax expense (benefit) 481 (14,384)
EBITDA (37,611) (33,943)
Add: Stock-based compensation 2,312 2,479
Add: Compensation charge related to NQDC Plan investment appreciation 2,352 1,738
Add: System implementation costs - 1,780
Adjusted EBITDA $ (32,947) $ (27,946)
Adjusted net income (loss) and adjusted or comparable net income (loss) per common share
We define adjusted net income (loss) and adjusted or comparable net income (loss) per common share as net income (loss) and net income (loss) per common share adjusted for certain items affecting period-to-period comparability. We believe that adjusted net income (loss) and adjusted or comparable net income (loss) per common share are meaningful measures because they increase the comparability of period-to-period results. Since these are not measures of performance calculated in accordance with GAAP, they should not be considered in isolation of, or as a substitute for, GAAP net income (loss) and net income (loss) per common share, as indicators of operating performance and they may not be comparable to similarly titled measures employed by other companies.
The following table presents the adjusted net loss and adjusted net loss per common share:
Reconciliation of net loss to adjusted net loss (non-GAAP): Three Months Ended
September 28,
2025 		September 29,
2024
(in thousands, except for share data)
Net loss $ (52,957) $ (34,190)
Adjustments to reconcile net loss to adjusted net loss (non-GAAP)
Add: System implementation costs - 1,780
Deduct: Tax related adjustments - (527)
Adjusted net loss (non-GAAP) $ (52,957) $ (32,937)
Basic and diluted loss per common share $ (0.83) $ (0.53)
Basic and diluted adjusted net loss per common share (non-GAAP) $ (0.83) $ (0.51)
Weighted average shares used in the calculation of basic and diluted net loss and adjusted net loss per common share
63,630 64,198
Segment contribution margin and adjusted segment contribution margin
We define segment contribution margin as earnings before interest, taxes, depreciation and amortization, before the allocation of corporate overhead expenses. Adjusted segment contribution margin is defined as contribution margin adjusted for certain items affecting period-to-period comparability. When viewed together with our GAAP results, we believe segment contribution margin and adjusted segment contribution margin provide management and users of the financial statements meaningful information about the performance of our business segments.
Segment contribution margin and adjusted segment contribution margin are used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures. The material limitation associated with the use of segment contribution margin and adjusted segment contribution margin is that they are an incomplete measure of profitability as they do not include all operating expenses or non-operating income and expenses. Management compensates for this limitation when using these measures by looking at other GAAP measures, such as Operating income (loss) and Net income (loss).
The following table presents the net revenues, gross profit, segment contribution margin, and adjusted segment contribution margin from each of the Company's business segments:
Three Months Ended
September 28, 2025 September 29, 2024 System Implementation Costs
As Adjusted
(non-GAAP)
September 29, 2024
%
Change
(dollars in thousands)
Net revenues:
Consumer Floral & Gifts $ 115,430 $ 135,180 $ - $ 135,180 -14.6 %
BloomNet 23,125 23,075 - 23,075 0.2 %
Gourmet Foods & Gift Baskets 76,784 84,003 - 84,003 -8.6 %
Corporate 68 89 - 89 -23.6 %
Intercompany eliminations (207) (257) - (257) 19.5 %
Total net revenues $ 215,200 $ 242,090 $ - $ 242,090 -11.1 %
Gross profit:
Consumer Floral & Gifts $ 43,744 $ 53,929 $ - $ 53,929 -18.9 %
37.9 % 39.9 % 39.9 %
BloomNet 11,030 11,528 - 11,528 -4.3 %
47.7 % 50.0 % 50.0 %
Gourmet Foods & Gift Baskets 21,961 26,844 - 26,844 -18.2 %
28.6 % 32.0 % 32.0 %
Corporate 27 18 - 18 50.0 %
39.7 % 20.2 % 20.2 %
Total gross profit $ 76,762 $ 92,319 $ - $ 92,319 -16.9 %
35.7 % 38.1 % 38.1 %
EBITDA (non-GAAP):
Segment Contribution Margin (non-GAAP) (a):
Consumer Floral & Gifts $ 4,501 $ 4,944 $ - $ 4,944 -9.0 %
BloomNet 5,939 6,841 - 6,841 -13.2 %
Gourmet Foods & Gift Baskets (13,358) (12,253) 913 (11,340) -17.8 %
Segment Contribution Margin Subtotal (2,918) (468) 913 445 -755.7 %
Corporate (b) (34,693) (33,475) 867 (32,608) -6.4 %
EBITDA (non-GAAP) (37,611) (33,943) 1,780 (32,163) -16.9 %
Add: Stock-based compensation 2,312 2,479 - 2,479 -6.7 %
Add: Compensation charge related to NQDC Plan investment appreciation 2,352 1,738 - 1,738 35.3 %
Adjusted EBITDA (non-GAAP) (c) $ (32,947) $ (29,726) $ 1,780 $ (27,946) -17.9 %
(a) Segment performance is measured based on segment contribution margin or segment Adjusted EBITDA, reflecting only the direct controllable revenue and operating expenses of the segments, both of which are non-GAAP measurements. As such, management's measure of profitability for these segments does not include the effect of corporate overhead, described above, depreciation and amortization, other expense (income), net, and other items that we do not consider indicative of our core operating performance.
(b) Corporate expenses consist of the Company's enterprise shared service cost centers, and include, among other items, Information Technology, Human Resources, Accounting and Finance, Legal, Executive, and stock-based compensation, as well as changes in the fair value of the Company's NQDC Plan. In order to leverage the Company's infrastructure, these functions are operated under a centralized management platform, providing support services throughout the organization. The costs of these functions are included within corporate expenses as they are not directly allocable to a specific segment.
(c) See reconciliation of the Company's net loss to Adjusted EBITDA (non-GAAP) above.
Free Cash Flow
We define free cash flow as net cash provided by (used in) operating activities, less capital expenditures. The Company considers free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business after the purchases of fixed assets, which can then be used to, among other things, invest in the Company's business, make strategic acquisitions, strengthen the balance sheet, and repurchase stock or retire debt. Free cash flow is a liquidity measure that is frequently used by the investment community in the evaluation of similarly situated companies. Since free cash flow is not a measure of performance calculated in accordance with GAAP, it should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP. A limitation of the utility of free cash flow as a measure of financial performance is that it does not represent the total increase or decrease in the company's cash balance for the period.
The following table reconciles net cash (used in) provided by operating activities, a GAAP measure, to free cash flow, a non-GAAP measure:
Three Months Ended
September 28,
2025 		September 29,
2024
(in thousands)
Net cash (used in) provided by operating activities $ (138,974) $ (177,241)
Capital expenditures (6,652) (12,075)
Free cash flow $ (145,626) $ (189,316)
Results of Operations
Net revenues
Three Months Ended
September 28,
2025 		September 29,
2024 		%
Change
(dollars in thousands)
Net revenues:
E-Commerce $ 169,014 $ 193,174 -12.5 %
Other 46,186 48,916 -5.6 %
Total net revenues $ 215,200 $ 242,090 -11.1 %
Net revenues consist primarily of the selling price of the merchandise, service and outbound shipping charges, less discounts, returns and credits.
Net revenues decreased 11.1% during the three months ended September 28, 2025, mainly due to a focus on marketing effectiveness and profitability being prioritized over near-term revenue growth, combined with changes in wholesale order timing from the first quarter a year ago into the second quarter of this fiscal year.
Three Months Ended
Consumer Floral & Gifts BloomNet Gourmet Foods & Gift Baskets Corporate and Eliminations Consolidated
September 28, 2025 September 29, 2024 % Change September 28, 2025 September 29, 2024 % Change September 28, 2025 September 29, 2024 % Change September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024 % Change
(dollars in thousands)
Net revenues
E-commerce $ 114,086 $ 133,544 -14.6 % $ - $ - - % $ 54,928 $ 59,630 -7.9 % $ - $ - $ 169,014 $ 193,174 -12.5 %
Other 1,344 1,636 -17.8 % 23,125 23,075 0.2 % 21,856 24,373 -10.3 % (139) (168) 46,186 48,916 -5.6 %
Total net revenues $ 115,430 $ 135,180 -14.6 % $ 23,125 $ 23,075 0.2 % $ 76,784 $ 84,003 -8.6 % $ (139) $ (168) $ 215,200 $ 242,090 -11.1 %
Other revenues detail
Retail and other 1,344 1,636 -17.8 % - - - 1,920 1,784 7.6 % - - 3,264 3,420 -4.6 %
Wholesale - - - % 10,976 10,112 8.5 % 19,936 22,589 -11.7 % - - 30,912 32,701 -5.5 %
BloomNet services - - - % 12,149 12,963 -6.3 % - - - - - 12,149 12,963 -6.3 %
Corporate - - - % - - - - - - 68 89 68 89 -23.6 %
Eliminations - - - % - - - - - - (207) (257) (207) (257) 19.5 %
Total other revenues $ 1,344 $ 1,636 -17.8 % $ 23,125 $ 23,075 0.2 % $ 21,856 $ 24,373 -10.3 % $ (139) $ (168) $ 46,186 $ 48,916 -5.6 %
Revenue by sales channel:
E-commerce revenues (combined online and telephonic)decreased 12.5% during the three months ended September 28, 2025, compared to the same period of the prior year, primarily due to the decline in demand across our segments.
During the three months ended September 28, 2025, the Company fulfilled approximately 2.1 million orders through its e-commerce sales channel (online and telephonic sales), a decrease of 14.4% compared to the same period of the prior year. During the three months ended September 28, 2025, the average order value was $79.98, an increase of 2.2% compared to the same period in the prior year.
Other revenuesare comprised of the Company's BloomNet® segment, as well as the wholesale and retail channels of its Consumer Floral & Gifts and Gourmet Foods & Gift Baskets segments.
Other revenues during the three months ended September 28, 2025 decreased 5.6% compared to the same period of the prior year, primarily due to lower wholesale volumes within the Gourmet Foods & Gift Baskets segment, which were largely due to a shift in the timing of shipments from the first quarter a year ago to the second quarter of this fiscal year.
Revenue by segment:
Consumer Floral & Gifts- this segment, which includes the operations of the 1-800-Flowers.com®, Personalization Mall®, Things Remembered® and Alice's Table® brands, derives revenue from the sale of consumer floral products and gifts through its e-commerce sales channels (telephonic and online sales), retail stores, and royalties from its franchise operations.
Net revenues decreased 14.6% during the three months ended September 28, 2025, compared to the same period of the prior year, due to a focus on marketing effectiveness and profitability being prioritized over near-term revenue growth.
During the three months ended September 28, 2025, Consumer Floral & Gifts orders through the Company's e-commerce sales channel (online and telephonic sales) decreased 17.1% compared to the same period of the prior year. In addition, during the three months ended September 28, 2025, the average order value increased 3.0% compared to the same period of the prior year.
BloomNet® - revenues in this segment are derived from membership fees, as well as other product and service offerings.
Net revenues increased 0.2% during the three months ended September 28, 2025 compared to the same period of the prior year. Revenue increased for the three months ended September 28, 2025 compared to the same prior year period primarily due to a slight increase in wholesale orders related to timing, partially offset by lower florist-to-florist revenue associated with a decline in order volume processed through the network and lower directory revenues.
Gourmet Foods & Gift Baskets- this segment includes the operations of Harry & David®, Wolferman's Bakery®, Cheryl's Cookies®, The Popcorn Factory®, 1-800-Baskets.com®/DesignPac®, Shari's Berries®, Vital Choice®, and Scharffen Berger®. Revenue is derived from the sale of gourmet fruits, cookies, baked gifts, premium chocolates and confections, gourmet popcorn, gift baskets, dipped berries, prime steaks, chops, and fish, through the Company's e-commerce sales channels (telephonic and online sales) and company-owned and operated retail stores under the Harry & David and Cheryl's Cookies brand names, as well as wholesale operations.
Net revenues within this segment decreased 8.6% during the three months ended September 28, 2025, compared to the same period of the prior year, primarily due to lower e-commerce revenue due to a focus on marketing effectiveness and profitability being prioritized over near-term revenue growth, and lower wholesale volumes largely due to a shift in the timing of shipments from the first quarter a year ago to the second quarter of this fiscal year.
During the three months ended September 28, 2025, Gourmet Foods & Gift Baskets orders through its e-commerce sales channel (online and telephonic sales) decreased 8.4% compared to the same period of the prior year. In addition, the average order value for the three months ended September 28, 2025 increased 0.6% compared to the same period of the prior year.
Gross profit
Three Months Ended
September 28,
2025 		September 29,
2024 		%
Change
(dollars in thousands)
Gross profit $ 76,762 $ 92,319 -16.9 %
Gross profit % 35.7 % 38.1 %
Gross profit consists of net revenues less cost of revenues, which is comprised primarily of florist fulfillment costs (fees paid directly to florists), the cost of floral and non-floral merchandise sold from inventory or through third parties, and associated costs, including inbound and outbound shipping charges. Additionally, cost of revenues includes labor and facility costs related to direct-to-consumer and wholesale production operations, as well as payments made to sending florists related to order volume referred through the Company's BloomNet network.
Gross profit decreased 16.9% during the three months ended September 28, 2025 compared to the same period of the prior year, primarily due to lower revenues as noted above.
During the three months ended September 28, 2025, the gross profit percentage decreased 240 basis points, compared to the same period of the prior year. The gross profit percentage declines were across all segments.
Consumer Floral & Gifts segment - Gross profit decreased by 18.9% during the three months ended September 28, 2025 compared to the same period of the prior year, due to the impact of the lower revenues noted above, as well as unfavorable gross profit percentage primarily attributable to deleveraging on the sales decline and increased tariffs, commodity, and shipping costs.
BloomNet®segment- Gross profit decreased by 4.3% during the three months ended September 28, 2025, compared to the same period of the prior year due to the impact of the lower revenues noted above, as well as unfavorable gross profit percentage primarily due to higher florist fulfillment costs and a less favorable mix between wholesale and service revenue.
Gourmet Foods & Gift Baskets segment - Gross profit decreased by 18.2% during the three months ended September 28, 2025, compared to the same period of the prior year, due to the decrease in revenue noted above, as well as unfavorable gross profit percentage primarily attributable to deleveraging on the sales decline and increased tariffs, commodity, and shipping costs.
Marketing and sales expense
Three Months Ended
September 28,
2025 		September 29,
2024 		%
Change
(dollars in thousands)
Marketing and sales $ 69,105 $ 82,097 -15.8 %
Percentage of net revenues 32.1 % 33.9 %
Marketing and sales expense consists primarily of advertising and promotional expenditures, catalog costs, online portal and search costs, retail store and fulfillment operations (other than costs included in cost of revenues) and customer service center expenses, as well as the operating expenses of the Company's departments engaged in marketing, selling and merchandising activities.
Marketing and sales expenses decreased 15.8% during the three months ended September 28, 2025 compared to the same period of the prior year and also decreased as a percentage of revenues, primarily due to a focus on marketing effectiveness and profitability, as well as lower labor costs.
Technology and development expense
Three Months Ended
September 28,
2025 		September 29,
2024 		%
Change
(dollars in thousands)
Technology and development $ 14,150 $ 15,639 -9.5 %
Percentage of net revenues 6.6 % 6.5 %
Technology and development expense consists primarily of payroll and operating expenses of the Company's information technology group, costs associated with its websites, including hosting, design, content development, and maintenance and support costs related to the Company's order entry, customer service, fulfillment, and database systems.
Technology and development expense decreased by 9.5% during the three months ended September 28, 2025, compared to the same period of the prior year, primarily due to lower labor costs, as well as the prior year period including costs related to a new customer service platform and order management system.
General and administrative expense
Three Months Ended
September 28,
2025 		September 29,
2024 		%
Change
(dollars in thousands)
General and administrative $ 31,118 $ 28,526 9.1 %
Percentage of net revenues 14.5 % 11.8 %
General and administrative expense consists of payroll and other expenses in support of the Company's executive, finance and accounting, legal, human resources and other administrative functions, as well as professional fees and other general corporate expenses.
General and administrative expenses increased 9.1% during the three months ended September 28, 2025 compared to the same period of the prior year, primarily due to higher professional fees, insurance costs, and changes in the value of the Company's NQDC Plan investments (offset in Other expense (income), net below).
Depreciation and amortization expense
Three Months Ended
September 28,
2025 		September 29,
2024 		%
Change
(dollars in thousands)
Depreciation and amortization $ 12,902 $ 13,038 -1.0 %
Percentage of net revenues 6.0 % 5.4 %
Depreciation and amortization expense during the three months ended September 28, 2025 was in line with the prior year period.
Interest income
Three Months Ended
September 28,
2025 		September 29,
2024 		%
Change
(dollars in thousands)
Interest income $ (311) $ (660) -52.9 %
Interest income consists of income earned on the Company's available cash balances.
Interest income decreased 52.9% during the three months ended September 28, 2025, due to a decline in interest earned on lower available cash balances.
Interest expense
Three Months Ended
September 28,
2025 		September 29,
2024 		%
Change
(dollars in thousands)
Interest expense $ 4,621 $ 4,020 15.0 %
Interest expense consists primarily of interest expense and amortization of deferred financing costs attributable to the Company's credit facilities (See Note 10 - Long-Term Debt, Item 1for details).
Interest expense increased 15.0% compared to the prior year, during the three months ended September 28, 2025, due to an increase in borrowings and interest rates.
Other expense (income), net
Three Months Ended
September 28,
2025 		September 29,
2024 		%
Change
(dollars in thousands)
Other expense (income), net $ (2,347) $ (1,767) 32.8 %
Other expense (income), net consists primarily of investment losses (gains) on the Company's NQDC Plan investments (for which the offsetting expense was recorded in the general and administration expense above).
Income Taxes
The Company recorded an income tax expense of $0.5 million during the three months ended September 28, 2025, compared to an income tax benefit of $14.4 million during the three months ended September 29, 2024. The Company's effective tax rate for the three months ended September 28, 2025 was (0.9)%, compared to 29.6% in the same respective period of the prior year. The Company's effective tax rate for the three months ended September 28, 2025 differed from the U.S. federal statutory rate of 21.0% primarily due to the change in valuation allowance, state income taxes and interest on uncertain tax positions. The Company's effective tax rate for the three months ended September 29, 2024 differed from the U.S. federal statutory rate of 21.0% primarily due to state income taxes and non-deductible executive compensation including tax deficiencies (shortfalls) from stock-based compensation, partially offset by tax credits.
Liquidity and Capital Resources
Liquidity and borrowings
The Company's principal sources of liquidity are cash on hand, cash flows generated from operations, and borrowings available under the Company's credit agreement (see Note 10 - Long-term debt, net in Item 1for details). At September 28, 2025, the Company had working capital of $11.7 million, including cash and cash equivalents of $7.7 million, compared to working capital of $61.3 million, including cash and cash equivalents of $46.5 million, at June 29, 2025.
Due to the seasonal nature of the Company's business, and its continued expansion into non-floral products, the Thanksgiving through Christmas holiday season, which falls within the Company's second fiscal quarter, is expected to generate over 40% of the Company's annual revenues, and all of its earnings. Due to the number of major floral gifting occasions, including Mother's Day, Valentine's Day, Easter, and Administrative Professionals Week, revenues also have historically risen during the Company's fiscal third and fourth quarters in comparison to its fiscal first quarter.
As of September 28, 2025, the Company had $110.0 million outstanding under its revolving credit agreement in order to fund pre-holiday manufacturing and inventory procurement requirements. Working capital borrowings typically peak in November, after which time cash generated from operations during the Christmas holiday shopping season is expected to enable the Company to repay such borrowings.
While we believe that our sources of funding will be sufficient to meet our anticipated operating cash needs for at least the next twelve months, any projections of future cash needs and cash flows are subject to substantial uncertainty. We continually evaluate, and will, from time to time, consider the acquisition of, or investment in, complementary businesses, products, services, capital infrastructure, and technologies, which might affect our liquidity requirements or cause us to require additional financing.
Cash Flows
Net cash used in operating activities of $139.0 million, for the three months ended September 28, 2025, was primarily attributable to the seasonal changes in net working capital, including increases in inventory, trade receivables, and prepaid and other assets, as well as the Company's net loss during the period adjusted for depreciation and amortization and stock-based compensation.
Net cash used in investing activities of $6.7 million, for the three months ended September 28, 2025, was primarily attributable to capital expenditures related to the Company's technology initiatives.
Net cash provided by financing activities of $106.9 million, for the three months ended September 28, 2025, related primarily to net proceeds from the bank borrowings under the Company's working capital line of credit.
Free Cash Flow
Free cash flow was negative $145.6 million for the three months ended September 28, 2025, compared with free cash flow of negative $189.3 million for the three months ended September 29, 2024. The improvement of $43.7 million was primarily due to improved working capital management, coupled with favorable timing. Refer to "Definitions of non-GAAP Financial Measures" for reconciliation of non-GAAP results to applicable GAAP results.
Stock Repurchase Program
See Item 2 in Part IIbelow for details.
Contractual Obligations
At September 28, 2025, the Company's contractual obligations consist of:
•Long-term debt obligations - payments due under the Company's credit agreement (see Note 10 - Long-term debt, net in Item 1for details and payments due by period).
•Operating lease obligations - payments due under the Company's long-term operating leases (see Note 8 - Leases in Item 1for details).
•Purchase commitments - consisting primarily of inventory and IT-related equipment purchase orders and license agreements made in the ordinary course of business - see below for the contractual payments due by period.
Payments due by period
(in thousands)
Remaining
Fiscal
2026 		Fiscal
2027 		Fiscal
2028 		Fiscal
2029 		Fiscal
2030 		Thereafter Total
Purchase commitments $ 86,446 $ 14,190 $ 6,125 $ 3,863 $ 88 $ - $ 110,712
Critical Accounting Estimates
As disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended June 29, 2025, the discussion and analysis of the Company's financial condition and results of operations are based upon the consolidated financial statements, which have been prepared in conformity with U.S. generally accepted accounting principles. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. Management bases its estimates and assumptions on historical experience and on various other factors that are believed to be reasonable under the circumstances, and management evaluates its estimates and assumptions on an ongoing basis. Actual results may differ from these estimates under different assumptions or conditions. The Company's most critical accounting policies relate to goodwill and other intangible assets. There have been no significant changes to the assumptions and estimates related to the Company's critical accounting policies since June 29, 2025.
Recently Issued Accounting Pronouncements
See Note 1 - Accounting Policies in Item 1for details regarding the impact of accounting standards that were recently issued on our consolidated financial statements.
Forward Looking Information and Factors that May Affect Future Results
Our disclosure and analysis in this report contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent the Company's current expectations or forecasts concerning future events and can generally be identified by the use of statements that include words such as "anticipate," "estimate," "expects," "project," "intend," "plan," "believe," "foresee," "forecast," "likely," "should," "will," "goal," "target," or similar words or phrases. These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of the Company's control that could cause actual results to differ materially from the results expressed or implied in the forward-looking statements, including, but not limited to:
•the Company's ability:
•to achieve revenue and profitability;
•to leverage its operating platform and reduce its operating expense ratio;
•to manage the seasonality of its business;
•to cost effectively acquire and retain customers and drive purchase frequency;
•to successfully integrate acquired businesses and assets;
•to reduce working capital requirements and capital expenditures;
•to mitigate the impact of supply chain cost and capacity constraints;
•to compete against existing and new competitors;
•to manage expenses associated with sales and marketing and necessary general and administrative and technology investments;
•to address the effects of changes in accounting policies, practices, or assumptions, including changes that could potentially require future impairment charges;
•to successfully execute its strategic priorities; and
•to reduce promotional activities and achieve more efficient marketing programs;
•the outcome of contingencies, including legal proceedings in the normal course of business; and
•general consumer sentiment and economic conditions that may affect, among other things, the levels of discretionary customer purchases of the Company's products and the costs of shipping, imported products, and labor.
We cannot guarantee that any forward-looking statement will be realized, although we believe we have been prudent in our plans and assumptions. Achievement of future results is subject to risks, uncertainties, and inaccurate assumptions. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could vary materially from past results and those anticipated, estimated, or projected. Investors should bear this in mind as they consider forward-looking statements.
We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our Forms 10-Q, 8-K and 10-K reports to the Securities and Exchange Commission. Our Annual Report on Form 10-K for the fiscal year ended June 29, 2025listed various important factors that could cause actual results to differ materially from expected and historic results. We note these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995. Readers can find them in Part I, Item 1A, of that filing under the heading "Cautionary Statements Under the Private Securities Litigation Reform Act of 1995". We incorporate that section of that Form 10-K in this filing and investors should refer to it. In addition, please refer to any additional risk factors in Part II, Item 1Ain this Form 10-Q.
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