UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For the quarterly period ended
or
For the transition period from ___ to ___
Commission File No.
1-800-FLOWERS.COM, Inc.
(Exact name of registrant as specified in its charter)
| | |
| (State of incorporation) | (I.R.S. Employer Identification No.) |
| | ( |
| (Address of principal executive offices) (Zip code) | (Registrant’s telephone number, including area code) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered |
| | | The |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| ☐Large accelerated filer | ☑ |
| ☐Non-accelerated filer | |
| |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
The number of shares outstanding of each of the Registrant’s classes of common stock as of October 28, 2024:
| Class A common stock: |
| Class B common stock: |
1-800-FLOWERS.COM, Inc.
FORM 10-Q
For the quarterly period ended September 29, 2024
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| Part I. |
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| Item 1. |
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| Condensed Consolidated Balance Sheets – September 29, 2024 (Unaudited) and June 30, 2024 |
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| Notes to Condensed Consolidated Financial Statements (Unaudited) |
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| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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| Item 3. |
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| Item 4. |
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| Part II. |
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| Item 1. |
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| Item 1A. |
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| Item 2. |
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| Item 3. |
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| Item 4. |
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| Item 5. |
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| Item 6. |
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PART I. – FINANCIAL INFORMATION
ITEM 1. – CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1-800-FLOWERS.COM, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except for share data)
| September 29, 2024 | June 30, 2024 | |||||||
| (unaudited) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Trade receivables, net | ||||||||
| Inventories | ||||||||
| Prepaid and other | ||||||||
| Total current assets | ||||||||
| Property, plant and equipment, net | ||||||||
| Operating lease right-of-use assets | ||||||||
| Goodwill | ||||||||
| Other intangibles, net | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Current maturities of long-term debt | ||||||||
| Current portion of long-term operating lease liabilities | ||||||||
| Total current liabilities | ||||||||
| Long-term debt, net | ||||||||
| Long-term operating lease liabilities | ||||||||
| Deferred tax liabilities, net | ||||||||
| Other liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (See Note 14) | ||||||||
| Stockholders' equity: | ||||||||
| Preferred stock, $ par value, shares authorized, issued | ||||||||
| Class A common stock, $ par value, shares authorized, and shares issued at September 29, 2024 and June 30, 2024, respectively | ||||||||
| Class B common stock, $ par value, shares authorized, shares issued at September 29, 2024 and June 30, 2024 | ||||||||
| Additional paid-in capital | ||||||||
| Retained earnings | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Treasury stock, at cost, and Class A shares at September 29, 2024 and June 30, 2024, respectively and Class B shares at September 29, 2024 and June 30, 2024 | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See accompanying Notes to Condensed Consolidated Financial Statements.
1-800-FLOWERS.COM, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
(in thousands, except for per share data)
(unaudited)
| Three Months Ended |
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| September 29, |
October 1, |
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| 2024 |
2023 |
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| Net revenues |
$ | $ | ||||||
| Cost of revenues (excludes depreciation and amortization) |
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| Gross profit |
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| Operating expenses: |
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| Marketing and sales |
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| Technology and development |
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| General and administrative |
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| Depreciation and amortization |
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| Total operating expenses |
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| Operating loss |
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| Interest expense, net |
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| Other (income) expense, net |
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| Loss before income taxes |
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| Income tax benefit |
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| Net loss and comprehensive loss |
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| Basic and diluted net loss per common share |
$ | ( |
) | $ | ( |
) | ||
| Basic and diluted weighted average shares used in the calculation of net loss per common share |
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See accompanying Notes to Condensed Consolidated Financial Statements.
1-800-FLOWERS.COM, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders' Equity
(in thousands, except share data)
(unaudited)
| Three Months Ended September 29, 2024 and October 1, 2023 |
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| Accumulated |
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| Common Stock |
Additional |
Other |
Total |
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| Class A |
Class B |
Paid-in |
Retained |
Comprehensive |
Treasury Stock |
Stockholders’ |
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| Shares |
Amount |
Shares |
Amount |
Capital |
Earnings |
Loss |
Shares |
Amount |
Equity |
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| Balance at June 30, 2024 |
$ | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||||||||||||||||
| Net loss |
- | - | ( |
) | - | ( |
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| Stock-based compensation |
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| Exercise of stock options |
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| Acquisition of Class A treasury stock |
- | - | ( |
) | ( |
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| Balance at September 29, 2024 |
$ | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||||||||||||||||
| Balance at July 2, 2023 |
$ | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||||||||||||||||
| Net loss |
- | - | ( |
) | - | ( |
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| Stock-based compensation |
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| Acquisition of Class A treasury stock |
- | - | ( |
) | ( |
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| Balance at October 1, 2023 |
$ | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||||||||||||||||
See accompanying Notes to Condensed Consolidated Financial Statements.
1-800-FLOWERS.COM, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
| Three Months Ended |
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| September 29, |
October 1, |
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| 2024 |
2023 |
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| Operating activities: |
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| Net loss |
$ | ( |
) | $ | ( |
) | ||
| Reconciliation of net loss to net cash used in operating activities, net of acquisitions: |
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| Depreciation and amortization |
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| Amortization of deferred financing costs |
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| Deferred income taxes |
( |
) | ( |
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| Bad debt expense |
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| Stock-based compensation |
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| Other non-cash items |
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| Changes in operating items: |
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| Trade receivables |
( |
) | ( |
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| Inventories |
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) | ( |
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| Prepaid and other |
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| Accounts payable and accrued expenses |
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| Other assets and liabilities |
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| Net cash used in operating activities |
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| Investing activities: |
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| Acquisitions, net of cash acquired |
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| Capital expenditures |
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| Net cash used in investing activities |
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| Financing activities: |
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| Acquisition of treasury stock |
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) | ( |
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| Proceeds from exercise of employee stock options |
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| Proceeds from bank borrowings |
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| Repayment of bank borrowings |
( |
) | ( |
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| Net cash provided by financing activities |
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| Net change in cash and cash equivalents |
( |
) | ( |
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| Cash and cash equivalents: |
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| Beginning of period |
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| End of period |
$ | $ | ||||||
See accompanying Notes to Condensed Consolidated Financial Statements.
1-800-FLOWERS.COM, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(unaudited)
Note 1 – Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared by 1-800-FLOWERS.COM, Inc. and Subsidiaries (the “Company”) in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three months ended September 29, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending June 29, 2025. These financial statements should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended June 30, 2024, which provides a more complete understanding of our accounting policies, financial position, operating results and other matters.
The Company’s quarterly results may experience seasonal fluctuations. 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.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Revenue Recognition
Net revenue is measured based on the amount of consideration that we expect to receive, reduced by discounts and estimates for credits and returns (calculated based upon previous experience and management’s evaluation). Service and outbound shipping charged to customers are recognized at the time the related merchandise revenues are recognized and are included in net revenues. Inbound and outbound shipping and delivery costs are included in cost of revenues. Net revenues exclude sales and other similar taxes collected from customers.
A description of our principal revenue generating activities is as follows:
| ● | E-commerce revenues - consumer products sold through our online and telephonic channels. Revenue is recognized when control of the merchandise is transferred to the customer, which generally occurs upon shipment. Payment is typically due prior to the date of shipment. |
| ● | Retail revenues - consumer products sold through our retail stores. Revenue is recognized when control of the goods is transferred to the customer, at the point of sale, at which time payment is received. |
| ● | Wholesale revenues - products sold to our wholesale customers for subsequent resale. Revenue is recognized when control of the goods is transferred to the customer, in accordance with the terms of the applicable agreement. Payment terms are typically 30 days from the date control over the product is transferred to the customer. |
| ● | BloomNet Services - membership fees as well as other service offerings to florists. Membership and other subscription-based fees are recognized monthly as earned. Services revenues related to orders sent through the floral network are variable, based on either the number of orders or the value of orders, and are recognized in the period in which the orders are delivered. The contracts within BloomNet Services are typically month-to-month and, as a result no consideration allocation is necessary across multiple reporting periods. Payment is typically due less than 30 days from the date the services were performed. |
Deferred Revenues
Deferred revenues are recorded when the Company has received consideration (i.e. advance payment) before satisfying its performance obligations. As such, customer orders are recorded as deferred revenue prior to shipment or rendering of product or services. Deferred revenues primarily relate to e-commerce orders placed, but not shipped, prior to the end of the fiscal period, as well as for subscription programs, including our various food, wine, and plant-of-the-month clubs and our Celebrations Passport® program.
Our total deferred revenue as of June 30, 2024 was $
Recently Issued Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07 requires enhanced disclosures about significant segment expenses, includes enhanced interim disclosure requirements, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss, provides new segment disclosure requirements for entities with a single reportable segment, and contains other disclosure requirements. The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. ASU 2023-07 is to be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact of ASU 2023-07 on its consolidated financial statements and related disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 requires the disclosure of additional information with respect to the reconciliation of the effective tax rate to the statutory rate for federal, state, and foreign income taxes and requires greater detail about significant reconciling items in the reconciliation. Additionally, the amendment requires disaggregated information pertaining to taxes paid, net of refunds received, for federal, state, and foreign income taxes. The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024, with early adoption permitted, and allows for either a prospective or retrospective approach on adoption. The Company is currently evaluating the impact of ASU 2023-09 on its consolidated financial statements and related disclosures.
Note 2 – Net Income (Loss) Per Common Share
Basic net loss per common share is computed by dividing the net loss during the period by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed using the weighted average number of common shares outstanding during the period and excludes the dilutive potential common shares (consisting of unvested restricted stock awards), as their inclusion would be antidilutive. As a result of the net loss for the three months ended September 29, 2024 and October 1, 2023, there is no dilutive impact to the net loss per share calculation for the respective periods.
Acquisition of Scharffen Berger
On July 1, 2024, the Company completed its acquisition of certain assets of Scharffen Berger®, a chocolate manufacturing company, expanding the Company's product offerings in the Gourmet Foods & Gift Baskets Segment. The Company used cash on hand to fund the purchase.
The total consideration of $
Scharffen Berger annual revenues and results of operations, based on its most recent available financial information, is deemed immaterial to the Company's consolidated financial statements, and, as such pro forma results of operations have not been presented.
Acquisition of Card Isle
On April 3, 2024, the Company, within its BloomNet segment, completed its acquisition of certain assets of Card Isle®, an e-commerce greeting card company, expanding the Company’s presence in the greeting card category across all brands. The Company used cash on hand to fund the purchase.
The total consideration of $
Card Isle annual revenues and results of operations, based on its most recently available financial information, is deemed immaterial to the Company's consolidated financial statements, and, as such pro forma results of operations have not been presented.
Note 4 – Inventory
The Company’s inventory, valued at the lower of cost or net realizable value, includes purchased and manufactured finished goods for sale, packaging supplies, crops, raw material ingredients for manufactured products and associated manufacturing labor, and is classified as follows:
| September 29, 2024 | June 30, 2024 | |||||||
| (in thousands) | ||||||||
| Finished goods | $ | $ | ||||||
| Work-in-process | ||||||||
| Raw materials | ||||||||
| Total inventory | $ | $ | ||||||
Note 5 – Goodwill and Intangible Assets, Net
The following table presents goodwill by segment and the related change in the net carrying amount:
| Gourmet | ||||||||||||||||
| Consumer | Foods & | |||||||||||||||
| Floral & | Gift | |||||||||||||||
| Gifts | BloomNet | Baskets | Total | |||||||||||||
| (in thousands) | ||||||||||||||||
| Balance at June 30, 2024 | $ | $ | $ | $ | ||||||||||||
| Acquisition of Scharffen Berger | ||||||||||||||||
| Balance at September 29, 2024 | $ | $ | $ | $ | ||||||||||||
The Company’s other intangible assets consist of the following:
| September 29, 2024 | June 30, 2024 | ||||||||||||||||||||||||||
| Gross | Gross | ||||||||||||||||||||||||||
| Amortization | Carrying | Accumulated | Carrying | Accumulated | |||||||||||||||||||||||
| Period | Amount | Amortization | Net | Amount | Amortization | Net | |||||||||||||||||||||
| (in years) | (in thousands) | ||||||||||||||||||||||||||
| Intangible assets with determinable lives | |||||||||||||||||||||||||||
| Investment in licenses | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Customer lists | |||||||||||||||||||||||||||
| Other | |||||||||||||||||||||||||||
| Total intangible assets with determinable lives | |||||||||||||||||||||||||||
| Trademarks with indefinite lives | - | - | |||||||||||||||||||||||||
| Total identifiable intangible assets | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Future estimated amortization expense is as follows: remainder of Fiscal 2025 - $
Equity investments without a readily determinable fair value
Investments in non-marketable equity instruments of private companies, where the Company does not possess the ability to exercise significant influence, are accounted for at cost, less impairment (assessed qualitatively at each reporting period), adjusted for observable price changes from orderly transactions for identical or similar investments of the same issuer. These investments are included within “Other assets” in the Company’s consolidated balance sheets. The aggregate carrying amount of the Company’s cost method investments was $
Equity investments with a readily determinable fair value
The Company also holds certain trading securities associated with its Non-Qualified Deferred Compensation Plan (“NQDC Plan”). These investments are measured using quoted market prices at the reporting date and are included within the “Other assets” line item in the consolidated balance sheets (see Note 9 - Fair Value Measurements).
The Company’s current and long-term debt consists of the following:
| September 29, 2024 | June 30, 2024 | |||||||
| (in thousands) | ||||||||
| Revolver | $ | $ | ||||||
| Term Loans | ||||||||
| Deferred financing costs | ( | ) | ( | ) | ||||
| Total debt | ||||||||
| Less: current maturities of long-term debt | ||||||||
| Long-term debt, net | $ | $ | ||||||
On June 27, 2023, the Company, certain of its U.S. subsidiaries, the lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent entered into a Third Amended and Restated Credit Agreement (the “Third Amended Credit Agreement”). The Third Amended Credit Agreement amended and restated the Company’s Second Amended and Restated Credit Agreement, dated as of May 31, 2019 (as amended by the First Amendment, dated as of August 20, 2020, the Second Amendment, dated as of November 8, 2021, and the Third Amendment, dated as of August 29, 2022). The Third Amended Credit Agreement, among other modifications: (i) increased the amount of the outstanding term loan (“Term Loan”) to $
For each borrowing under the Third Amended Credit Agreement, the Company may elect that such borrowing bear interest at an annual rate equal to either: (1) a base rate plus an applicable margin varying based on the Company’s consolidated leverage ratio, where the base rate is the highest of (a) the prime rate, (b) the New York fed bank rate plus
The Third Amended Credit Agreement requires that while any borrowings or commitments are outstanding the Company comply with certain financial covenants and affirmative covenants as well as certain negative covenants that, subject to certain exceptions, limit the Company’s ability to, among other things, incur additional indebtedness, make certain investments and make certain restricted payments. The Company was in compliance with these covenants as of September 29, 2024. The Third Amended Credit Agreement is secured by substantially all of the assets of the Company.
The principal of the Term Loan is payable at a rate of $
Future principal term loan payments under the Third Amended Credit Agreement are as follows: $
Note 8 – Property, Plant and Equipment, Net
The Company’s property, plant and equipment, net consists of the following:
| September 29, 2024 |
June 30, 2024 |
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| (in thousands) |
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| Land |
$ | $ | ||||||
| Orchards in production and land improvements |
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| Building and building improvements |
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| Leasehold improvements |
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| Production equipment |
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| Furniture and fixtures |
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| Computer and telecommunication equipment |
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| Software |
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| Capital projects in progress |
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| Property, plant and equipment, gross |
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| Accumulated depreciation and amortization |
( |
) | ( |
) | ||||
| Property, plant and equipment, net |
$ | $ | ||||||
Note 9 – Fair Value Measurements
Cash and cash equivalents, trade and other receivables, prepaids, accounts payable and accrued expenses are reflected in the consolidated balance sheets at carrying value, which approximates fair value due to the short-term nature of these instruments. Although no trading market exists, the Company believes that the carrying amount of its debt approximates fair value due to its variable nature (these are level 2 investments). The Company’s investments in non-marketable equity instruments of private companies are carried at cost and are periodically assessed for other-than-temporary impairment when an event or circumstances indicate that an other-than-temporary decline in value may have occurred. The Company’s remaining financial assets and liabilities are measured and recorded at fair value (see table below). The Company’s non-financial assets, such as definite lived intangible assets and property, plant and equipment, are recorded at cost and are assessed for impairment when an event or circumstance indicates that an other-than-temporary decline in value may have occurred. Goodwill and indefinite lived intangibles are tested for impairment annually, or more frequently, if events occur or circumstances change such that it is more likely than not that an impairment may exist, as required under the accounting standards.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability, in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants at the measurement date. The authoritative guidance for fair value measurements establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under the guidance are described below:
| Level 1 | Valuations based on quoted prices in active markets for identical assets or liabilities that the entity has the ability to access. |
| Level 2 | Valuations based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities. |
| Level 3 | Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
The following table presents by level, within the fair value hierarchy, financial assets and liabilities measured at fair value on a recurring basis:
| Carrying | Fair Value Measurements | |||||||||||||||
| Value | Assets (Liabilities) | |||||||||||||||
| Level 1 | Level 2 | Level 3 | ||||||||||||||
| (in thousands) | ||||||||||||||||
| Assets (Liabilities) as of September 29, 2024 | ||||||||||||||||
| Trading securities held in a “rabbi trust” (1) | $ | $ | $ | $ | ||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Assets (Liabilities) as of June 30, 2024 | ||||||||||||||||
| Trading securities held in a “rabbi trust”(1) | $ | $ | $ | $ | ||||||||||||
| $ | $ | $ | $ | |||||||||||||
| (1) | The Company has established a NQDC Plan for certain members of senior management. Deferred compensation plan assets are invested in mutual funds held in a “rabbi trust,” which is restricted for payment to participants of the NQDC Plan. Trading securities held in a rabbi trust are measured using quoted market prices at the reporting date and are included in the “Other assets” line item, with the corresponding liability included in the “Other liabilities” line item in the consolidated balance sheets. |
Note 10 – Income Taxes
The Company computed the interim tax provision using an estimated annual effective rate, adjusted for discrete items. This estimate is used in providing for income taxes on a year-to-date basis and may change in subsequent interim periods. The Company’s effective tax rate for the three months ended September 29, 2024 was
The Company evaluates the realizability of its deferred tax assets on a quarterly basis and establishes valuation allowances when it is more likely than not that all or a portion of a deferred tax asset may not be realized. In completing this evaluation, the Company considers available positive and negative evidence. Such evidence includes historical operating results, the existence of cumulative earnings and losses in the most recent fiscal years, taxable income in prior carryback year(s) if permitted under the tax law, the time period over which our temporary differences will reverse, the implementation of feasible and prudent tax planning strategies, and expectations for future pre-tax operating income. Estimating future taxable income is inherently uncertain and requires judgment. Deferred tax assets are reduced by a valuation allowance if, based on the weight of this evidence, it is more likely than not that all or a portion of the recorded deferred tax assets will not be realized in future periods. As of September 29, 2024, and June 30, 2024, the Company had valuation allowances of approximately $
The Company files income tax returns in the U.S. federal jurisdiction, various state jurisdictions, and various foreign countries. The Company’s Fiscal years 2023, and 2021 remain subject to U.S. federal examination. Due to nonconformity with the U.S. federal statute of limitations for assessment, certain states remain open from Fiscal The Company's foreign income tax filings from fiscal are open for examination by its respective foreign tax authorities, mainly Canada and Brazil.
The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. At September 29, 2024, the Company has an unrecognized tax benefit, including accrued interest and penalties, of approximately $
Note 11 – Business Segments
The Company’s management reviews the results of its operations by the following business segments:
| • | Consumer Floral & Gifts, |
| • | BloomNet, and |
| • | Gourmet Foods & Gift Baskets |
Segment performance is measured based on contribution margin, which includes only the direct controllable revenue and operating expenses of the segments. As such, management’s measure of profitability for these segments does not include the effect of corporate overhead (see (a) below), nor does it include depreciation and amortization, other (income) expense, net and income taxes, or stock-based compensation, which are included within corporate overhead. Assets and liabilities are reviewed at the consolidated level by management and not accounted for by segment.
| Three Months Ended | ||||||||
| September 29, | October 1, | |||||||
| 2024 | 2023 | |||||||
| (in thousands) | ||||||||
| Net Revenues: | ||||||||
| Segment Net Revenues: | ||||||||
| Consumer Floral & Gifts | $ | $ | ||||||
| BloomNet | ||||||||
| Gourmet Foods & Gift Baskets | ||||||||
| Corporate | ||||||||
| Intercompany eliminations | ( | ) | ( | ) | ||||
| Total net revenues | $ | $ | ||||||
| Operating Income (Loss): | ||||||||
| Segment Contribution Margin: | ||||||||
| Consumer Floral & Gifts | $ | $ | ||||||
| BloomNet | ||||||||
| Gourmet Foods & Gift Baskets | ( | ) | ( | ) | ||||
| Segment Contribution Margin Subtotal | ( | ) | ||||||
| Corporate (a) | ( | ) | ( | ) | ||||
| Depreciation and amortization | ( | ) | ( | ) | ||||
| Operating loss | $ | ( | ) | $ | ( | ) | ||
(a) 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 Customer Service Center functions, 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, other than those of the Customer Service Center, which are allocated directly to the above categories based upon usage, are included within corporate expenses as they are not directly allocable to a specific segment.
The following tables represent a disaggregation of revenue from contracts with customers, by channel:
| Three Months Ended | ||||||||||||||||||||||||||||||||||||||||
| Consumer Floral & | Gourmet Foods & | Corporate and | ||||||||||||||||||||||||||||||||||||||
| Gifts | BloomNet | Gift Baskets | Eliminations | Consolidated | ||||||||||||||||||||||||||||||||||||
| September 29, 2024 | October 1, 2023 | September 29, 2024 | October 1, 2023 | September 29, 2024 | October 1, 2023 | September 29, 2024 | October 1, 2023 | September 29, 2024 | October 1, 2023 | |||||||||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||||||||||||||||
| Net revenues | ||||||||||||||||||||||||||||||||||||||||
| E-commerce | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
| Other | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Total net revenues | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||||||||||
| Other revenues detail | ||||||||||||||||||||||||||||||||||||||||
| Retail and other | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
| Wholesale | ||||||||||||||||||||||||||||||||||||||||
| BloomNet services | ||||||||||||||||||||||||||||||||||||||||
| Corporate | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||
| Eliminations | - | - | - | - | - | - | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Total other revenues | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||||||||||
The Company currently leases plants, warehouses, offices, store facilities, and equipment under various leases through Fiscal 2036. Most lease agreements are of a long-term nature (over a year), although the Company does also enter into short-term leases, primarily for seasonal needs. Lease agreements may contain renewal options and rent escalation clauses and require the Company to pay real estate taxes, insurance, common area maintenance and operating expenses applicable to the leased properties. The Company accounts for its leases in accordance with ASC 842.
At contract inception, the Company determines whether a contract is, or contains, a lease by determining whether it conveys the right to control the use of the identified asset for a period of time, by assessing whether the Company has the right to obtain substantially all of the economic benefits from use of the identified asset and the right to direct the use of the identified asset.
At the lease commencement date, the Company determines if a lease should be classified as an operating or a finance lease (the Company currently has no finance leases) and recognizes a corresponding lease liability and a right-of-use asset on its Consolidated Balance Sheet. The lease liability is initially and subsequently measured as the present value of the remaining fixed minimum rental payments (including base rent and fixed common area maintenance) using discount rates as of the commencement date. Variable payments (including most utilities, real estate taxes, insurance and variable common area maintenance) are expensed as incurred. Further, the Company elected a short-term lease exception policy, permitting it to not apply the recognition requirements of this standard to short-term leases (i.e. leases with terms of 12 months or less) and an accounting policy to account for lease and non-lease components as a single component for certain classes of assets. The right-of-use asset is initially and subsequently measured at the carrying amount of the lease liability adjusted for any prepaid or accrued lease payments, remaining balance of lease incentives received, unamortized initial direct costs, or impairment charges relating to the right-of-use asset. Right-of-use assets are assessed for impairment using the long-lived assets impairment guidance. The discount rate used to determine the present value of lease payments is the Company’s estimated collateralized incremental borrowing rate, based on the yield curve for the respective lease terms, as the Company generally cannot determine the interest rate implicit in the lease.
The Company recognizes expense for its operating leases on a straight-line basis over the lease term. As these leases expire, it can be expected that in the normal course of business they will be renewed or replaced. Renewal option periods are included in the measurement of lease liability, where the exercise is reasonably certain to occur. Key estimates and judgments in accounting for leases include how the Company determines: (1) lease payments, (2) lease term, and (3) the discount rate used in calculating the lease liability.
Additional information related to our leases is as follows:
| Three Months Ended | ||||||||
| September 29, | October 1, | |||||||
| 2024 | 2023 | |||||||
| (in thousands) | ||||||||
| Lease costs: | ||||||||
| Operating lease costs | $ | $ | ||||||
| Variable lease costs | ||||||||
| Short-term lease cost | ||||||||
| Sublease income | ( | ) | ( | ) | ||||
| Total lease costs | $ | $ | ||||||
| Cash paid for amounts included in measurement of operating lease liabilities | $ | $ | ||||||
| Right-of-use assets obtained in exchange for new operating lease liabilities | $ | $ | ||||||
| September 29, | ||||
| 2024 | ||||
| Weighted-average remaining lease term - operating leases (in years) | ||||
| Weighted-discount rate - operating leases | % | |||
Maturities of lease liabilities in accordance with ASC 842 as of September 29, 2024 and reconciliation to the consolidated balance sheet are as follows (in thousands):
| Fiscal Year: | ||||
| Remainder of 2025 | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Thereafter | ||||
| Total Future Minimum Lease Payments | ||||
| Less: Imputed Remaining Interest | ||||
| Total Operating Lease Liabilities | ||||
| Less: Current portion of long-term operating lease liabilities | ||||
| Long-term operating lease liabilities | $ |
Note 13 – Accrued Expenses
Accrued expenses consisted of the following:
| September 29, 2024 |
June 30, 2024 |
|||||||
| (in thousands) |
||||||||
| Payroll and employee benefits |
$ | $ | ||||||
| Deferred revenue |
||||||||
| Accrued marketing expenses |
||||||||
| Accrued florist payout |
||||||||
| Accrued purchases |
||||||||
| Other |
||||||||
| Accrued Expenses |
$ | $ | ||||||
Note 14 – Commitments and Contingencies
Litigation
There are various claims, lawsuits, and pending actions against the Company and its subsidiaries incident to the operations of its businesses. It is the opinion of management, after consultation with counsel, that the final resolution of such claims, lawsuits and pending actions will not have a material adverse effect on the Company's consolidated financial position, results of operations or liquidity.
ITEM 2. 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 30, 2024. 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 30, 2024 under 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 gifts 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 fully digital 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 30, 2024.
Macro-economic Conditions
Overall, broader macro-economic conditions continue to impact our consumers as they continue to moderate their discretionary spending. Consumers remain pressured by persistent inflation and higher interest rates. Our fiscal first quarter contains no major holiday occasions, which means that our e-commerce sales for the quarter are primarily comprised of everyday or just-because gift giving. Based on this, we expected our sales to be the most challenged during the first quarter of Fiscal 2025. In line with our expectations, total consolidated revenues in the first quarter of Fiscal 2025 decreased 10.0% to $242.1 million, compared with total consolidated revenues of $269.1 million in the same prior year period. As we look ahead to the holiday period in the current environment, we expect our sales trends to improve as our gifting business has historically proven to be more resilient during holiday periods as consumers tend to view holiday gifting periods as being somewhat less discretionary.
Acquisition of Scharffen Berger
On July 1, 2024, the Company completed its acquisition of certain assets of Scharffen Berger, a chocolate manufacturing company, expanding the Company's product offerings in the Gourmet Foods & Gift Baskets Segment. The Company used cash on its balance sheet to fund the approximately $3.3 million purchase – See Note 3 – Acquisitions, in Item 1.
Acquisition of Card Isle
On April 3, 2024, the Company completed its acquisition of certain assets of Card Isle, an e-commerce greeting card company, expanding the Company’s presence in the greeting card category across all brands. The Company used cash on its balance sheet to fund the $3.6 million purchase – See Note 3 – Acquisitions, in Item 1.
Company Guidance
For Fiscal 2025, the Company continues to expect its revenue trend to improve as the fiscal year progresses. The Adjusted EBITDA range reflects the acknowledgement that the consumer environment remains uncertain.
As a result, for Fiscal 2025 the Company continues to expect:
| ● |
Total revenues on a percentage basis to be in a range of flat to a decrease in the low single digits, as compared with the prior year; |
| ● |
Adjusted EBITDA to be in a range of $85 million to $95 million; and |
| ● |
Free Cash Flow to be in a range of $45 million to $55 million. |
Refer to "Definitions of non-GAAP Financial Measures" for reconciliation of non-GAAP results to applicable GAAP results.
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 significant 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 the EBITDA and Adjusted EBITDA for the three months ended September 29, 2024 and October 1, 2023, respectively.
| Reconciliation of net loss to Adjusted EBITDA (non-GAAP): |
Three Months Ended |
|||||||
| September 29, |
October 1, |
|||||||
| 2024 |
2023 |
|||||||
| (in thousands) |
||||||||
| Net loss |
$ | (34,190 | ) | $ | (31,242 | ) | ||
| Add: Interest expense and other, net |
1,593 | 3,956 | ||||||
| Add: Depreciation and amortization |
13,038 | 13,194 | ||||||
| Add: Income tax benefit |
(14,384 | ) | (10,291 | ) | ||||
| EBITDA |
(33,943 | ) | (24,383 | ) | ||||
| Add: Stock-based compensation |
2,479 | 2,364 | ||||||
| Add: Compensation charge related to NQDC Plan investment appreciation (depreciation) |
1,738 | (504 | ) | |||||
| Add: System implementation costs |
1,780 | - | ||||||
| Adjusted EBITDA |
$ | (27,946 | ) | $ | (22,523 | ) | ||
Adjusted net loss and adjusted or comparable net 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 for the three months ended September 29, 2024 and October 1, 2023, respectively.
| Reconciliation of net loss to adjusted net loss (non-GAAP): |
Three Months Ended |
|||||||
| September 29, |
October 1, |
|||||||
| 2024 |
2023 |
|||||||
| (in thousands, except for share data) |
||||||||
| Net loss |
$ | (34,190 | ) | $ | (31,242 | ) | ||
| Adjustments to reconcile net loss to adjusted net loss (non-GAAP) |
||||||||
| Add: System implementation costs |
1,780 | - | ||||||
| Deduct: Income tax effect on adjustments |
(527 | ) | - | |||||
| Adjusted net loss (non-GAAP) |
$ | (32,937 | ) | $ | (31,242 | ) | ||
| Basic and diluted net loss per common share |
$ | (0.53 | ) | $ | (0.48 | ) | ||
| Basic and diluted adjusted net loss per common share (non-GAAP) |
$ | (0.51 | ) | $ | (0.48 | ) | ||
| Weighted average shares used in the calculation of basic and diluted net loss and adjusted net loss per common share |
64,198 | 64,785 | ||||||
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 this measure by looking at other GAAP measures, such as operating income and net income.
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, for the three months ended September 29, 2024 and October 1, 2023, respectively.
| Three Months Ended |
||||||||||||||||||||
| System |
As Adjusted |
|||||||||||||||||||
| Implementation |
(non-GAAP) |
% | ||||||||||||||||||
| September 29, 2024 |
Costs |
September 29, 2024 |
October 1, 2023 |
Change |
||||||||||||||||
| (dollars in thousands) |
||||||||||||||||||||
| Net revenues: |
||||||||||||||||||||
| Consumer Floral & Gifts |
$ | 135,180 | $ | - | $ | 135,180 | $ | 142,194 | -4.9 | % | ||||||||||
| BloomNet |
23,075 | - | 23,075 | 28,870 | -20.1 | % | ||||||||||||||
| Gourmet Foods & Gift Baskets |
84,003 | - | 84,003 | 98,109 | -14.4 | % | ||||||||||||||
| Corporate |
89 | - | 89 | 270 | -67.0 | % | ||||||||||||||
| Intercompany eliminations |
(257 | ) | - | (257 | ) | (393 | ) | 34.6 | % | |||||||||||
| Total net revenues |
$ | 242,090 | $ | - | $ | 242,090 | $ | 269,050 | -10.0 | % | ||||||||||
| Gross profit: |
||||||||||||||||||||
| Consumer Floral & Gifts |
$ | 53,929 | $ | - | $ | 53,929 | $ | 56,322 | -4.2 | % | ||||||||||
| 39.9 | % | 39.9 | % | 39.6 | % | |||||||||||||||
| BloomNet |
11,528 | - | 11,528 | 14,498 | -20.5 | % | ||||||||||||||
| 50.0 | % | 50.0 | % | 50.2 | % | |||||||||||||||
| Gourmet Foods & Gift Baskets |
26,844 | - | 26,844 | 30,907 | -13.1 | % | ||||||||||||||
| 32.0 | % | 32.0 | % | 31.5 | % | |||||||||||||||
| Corporate |
18 | - | 18 | 201 | -91.0 | % | ||||||||||||||
| 20.2 | % | 20.2 | % | 74.4 | % | |||||||||||||||
| Total gross profit |
$ | 92,319 | $ | - | $ | 92,319 | $ | 101,928 | -9.4 | % | ||||||||||
| 38.1 | % | - | 38.1 | % | 37.9 | % | ||||||||||||||
| EBITDA (non-GAAP): |
||||||||||||||||||||
| Segment Contribution Margin (non-GAAP) (a): |
||||||||||||||||||||
| Consumer Floral & Gifts |
$ | 4,944 | $ | - | $ | 4,944 | $ | 8,826 | -44.0 | % | ||||||||||
| BloomNet |
6,841 | - | 6,841 | 9,387 | -27.1 | % | ||||||||||||||
| Gourmet Foods & Gift Baskets |
(12,253 | ) | 913 | (11,340 | ) | (11,028 | ) | -2.8 | % | |||||||||||
| Segment Contribution Margin Subtotal |
(468 | ) | 913 | 445 | 7,185 | -93.8 | % | |||||||||||||
| Corporate (b) |
(33,475 | ) | 867 | (32,608 | ) | (31,568 | ) | -3.3 | % | |||||||||||
| EBITDA (non-GAAP) |
(33,943 | ) | 1,780 | (32,163 | ) | (24,383 | ) | -31.9 | % | |||||||||||
| Add: Stock-based compensation |
2,479 | - | 2,479 | 2,364 | 4.9 | % | ||||||||||||||
| Add: Compensation charge related to NQDC Plan Investment Appreciation (Depreciation) |
1,738 | - | 1,738 | (504 | ) | 444.8 | % | |||||||||||||
| Adjusted EBITDA (non-GAAP) (c) |
$ | (29,726 | ) | $ | 1,780 | $ | (27,946 | ) | $ | (22,523 | ) | -24.1 | % | |||||||
(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 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 Customer Service Center functions, 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, other than those of the Customer Service Center, which are allocated directly to the above categories based upon usage, 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 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 operating activities, a GAAP Measure, to free cash flow, a non-GAAP Measure for the three months ended September 29, 2024 and October 1, 2023, respectively.
| Three Months Ended |
||||||||
| September 29, |
October 1, |
|||||||
| 2024 |
2023 |
|||||||
| (in thousands) | ||||||||
| Net cash used in operating activities |
$ | (177,241 | ) | $ | (143,884 | ) | ||
| Capital expenditures |
(12,075 | ) | (6,974 | ) | ||||
| Free cash flow |
$ | (189,316 | ) | $ | (150,858 | ) | ||
Net revenues
| Three Months Ended |
||||||||||||
| September 29, |
October 1, |
% | ||||||||||
| 2024 |
2023 |
Change |
||||||||||
| (dollars in thousands) |
||||||||||||
| Net revenues: |
||||||||||||
| E-Commerce |
$ | 193,174 | $ | 209,911 | -8.0 | % | ||||||
| Other |
48,916 | 59,139 | -17.3 | % | ||||||||
| Total net revenues |
$ | 242,090 | $ | 269,050 | -10.0 | % | ||||||
Net revenues consist primarily of the selling price of the merchandise, service or outbound shipping charges, less discounts, returns and credits.
Net revenues decreased 10.0% during the three months ended September 29, 2024, compared to the same period of the prior year, due to lower order volume across the Company's three segments, reflecting a continuation of the trends that the Company had experienced throughout the prior fiscal year, as consumer discretionary income remains pressured, and consumers continue to moderate their spending.
The Company acquired Scharffen Berger and Card Isle on July 1, 2024 and April 3, 2024, respectively. Revenues related to these acquisitions were not significant during the three months ended September 29, 2024.
| Three Months Ended |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Consumer Floral & Gifts |
BloomNet |
Gourmet Foods & Gift Baskets |
Corporate and Eliminations |
Consolidated |
||||||||||||||||||||||||||||||||||||||||||||||||||||
| September 29, 2024 |
October 1, 2023 |
% Change |
September 29, 2024 |
October 1, 2023 |
% Change |
September 29, 2024 |
October 1, 2023 |
% Change |
September 29, 2024 |
October 1, 2023 |
September 29, 2024 |
October 1, 2023 |
% Change |
|||||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net revenues |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| E-commerce |
$ | 133,544 | $ | 140,335 | -4.8 | % | $ | - | $ | - | - | % | $ | 59,630 | $ | 69,576 | -14.3 | % | $ | - | $ | - | $ | 193,174 | $ | 209,911 | -8.0 | % | ||||||||||||||||||||||||||||
| Other |
1,636 | 1,859 | -12.0 | % | 23,075 | 28,870 | -20.1 | % | 24,373 | 28,533 | -14.6 | % | (168 | ) | (123 | ) | 48,916 | 59,139 | -17.3 | % | ||||||||||||||||||||||||||||||||||||
| Total net revenues |
$ | 135,180 | $ | 142,194 | -4.9 | % | $ | 23,075 | $ | 28,870 | -20.1 | % | $ | 84,003 | $ | 98,109 | -14.4 | % | $ | (168 | ) | $ | (123 | ) | $ | 242,090 | $ | 269,050 | -10.0 | % | ||||||||||||||||||||||||||
| Other revenues detail |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Retail and other |
$ | 1,636 | $ | 1,859 | -12.0 | % | $ | - | $ | - | - | $ | 1,784 | $ | 1,934 | -7.8 | % | $ | - | $ | - | $ | 3,420 | $ | 3,793 | -9.8 | % | |||||||||||||||||||||||||||||
| Wholesale |
- | - | - | 10,112 | 11,797 | -14.3 | % | 22,589 | 26,599 | -15.1 | % | - | - | 32,701 | 38,396 | -14.8 | % | |||||||||||||||||||||||||||||||||||||||
| BloomNet services |
- | - | - | 12,963 | 17,073 | -24.1 | % | - | - | - | - | - | 12,963 | 17,073 | -24.1 | % | ||||||||||||||||||||||||||||||||||||||||
| Corporate |
- | - | - | - | - | - | - | - | - | 89 | 270 | 89 | 270 | -67.0 | % | |||||||||||||||||||||||||||||||||||||||||
| Eliminations |
- | - | - | - | - | - | - | - | - | (257 | ) | (393 | ) | (257 | ) | (393 | ) | 34.6 | % | |||||||||||||||||||||||||||||||||||||
| Total other revenues |
$ | 1,636 | $ | 1,859 | -12.0 | % | $ | 23,075 | $ | 28,870 | -20.1 | % | $ | 24,373 | $ | 28,533 | -14.6 | % | $ | (168 | ) | $ | (123 | ) | $ | 48,916 | $ | 59,139 | -17.3 | % | ||||||||||||||||||||||||||
Revenue by sales channel:
E-commerce revenues (combined online and telephonic) decreased 8.0% during the three months ended September 29, 2024, compared to the same period of the prior year, primarily due to the decline in demand across our three segments, as a result of the macro-economic conditions noted above. These external influences have negatively impacted consumer discretionary spending.
During the three months ended September 29, 2024, the Company fulfilled approximately 2.5 million orders through its e-commerce sales channel (online and telephonic sales), a decrease of 6.5%, compared to a year-over-year decrease of 16.1% for the same period in the prior year. During the three months ended September 29, 2024, average order value decreased 1.5% to $78.25 compared to the same period in the prior year. The average order value decreased as a result of product mix as the Company has introduced a wider selection of more modestly priced items to target a broader consumer base.
Other revenues are 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 29, 2024, decreased 17.3%, compared to the same period of the prior year, due to slightly lower wholesale volumes within the Gourmet Foods & Gift Baskets segment largely due to timing of shipments from the first quarter to the second quarter, as well as lower BloomNet revenues due to lower shop-to-shop volumes, as well as wholesale volumes.
Revenue by segment:
Consumer Floral & Gifts – this segment, which includes the operations of the 1-800-Flowers.com, PersonalizationMall, the 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 within this segment decreased 4.9% during the three months ended September 29, 2024, compared to the same period of the prior year, due to continued macro-economic pressure.
During the three months ended September 29, 2024, Consumer Floral & Gifts orders through its e-commerce sales channel (online and telephonic sales) decreased 2.8%, compared to the same period of the prior year. In addition, the average order value decreased 2.1%, as a result of product mix trending towards lower price point items.
BloomNet - revenues in this segment are derived from membership fees, as well as product and service offerings.
Net revenues decreased 20.1% during the three months ended September 29, 2024, compared to the same period of the prior year. The net revenue decline was due to soft wholesale product revenues, as well as lower services revenues, attributable to a decline in order volume processed through the network.
Gourmet Foods & Gift Baskets – this segment includes the operations of Harry & David, Wolferman’s, Cheryl’s Cookies, The Popcorn Factory, 1-800-Baskets/DesignPac, Shari’s Berries, Vital Choice, and since July 1, 2024, 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 segmentdecreased14.4% during the three months ended September 29, 2024, compared to the same period of the prior year, as a result of lower e-commerce revenues, primarily due to macro-economic weakness and the timing of wholesale shipments.
During the three months ended September 29, 2024, Gourmet Foods & Gift Baskets orders through its e-commerce sales channel (online and telephonic sales) decreased 13.8%, compared to the same period of the prior year. In addition, the average order value decreased 0.5%, as a result of product mix trending towards lower price point items.
Gross profit
| Three Months Ended |
||||||||||||
| September 29, |
October 1, |
% | ||||||||||
| 2024 |
2023 |
Change |
||||||||||
| (dollars in thousands) |
||||||||||||
| Gross profit |
$ | 92,319 | $ | 101,928 | -9.4 | % | ||||||
| Gross profit % |
38.1 | % | 37.9 | % | ||||||||
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 9.4% during the three months ended September 29, 2024, compared to the same period of the prior year, due to lower revenues as noted above, partially offset by a favorable gross profit percentage.
Gross profit percentage increased 20 basis points during the three months ended September 29, 2024, compared to the same period of the prior year, driven by improved inventory management, production efficiencies, and lower florist fulfillment costs.
Gross profit by segment follows:
Consumer Floral & Gifts segment - Gross profit decreased by 4.2% during the three months ended September 29, 2024, compared to the same period of the prior year, due to the impact of the lower revenues noted above, partially offset by favorable gross profit percentage attributable to production efficiencies and lower florist fulfillment costs.
BloomNet segment - Gross profit decreased by 20.5% during the three months ended September 29, 2024, compared to the same period of the prior year, due to the decrease in revenues noted above, as well as a slight decline in gross profit percentage. Gross profit percentage decreased in comparison to the prior year due to higher cost of merchandise, delivery and shipping, and labor costs, partially offset by lower florist rebates.
Gourmet Foods & Gift Baskets segment – Gross profit decreased by 13.1% during the three months ended September 29, 2024, compared to the same period of the prior year, due to the decrease in revenue noted above, partially offset by improved gross profit percentage. Gross profit percentage increased 50 basis points during the three months ended September 29, 2024, compared to the same period of the prior year. The increased gross profit percentage was attributable to lower cost of merchandise, which was the result of operational efficiencies and strong inventory management.
Marketing and sales expense
| Three Months Ended |
||||||||||||
| September 29, |
October 1, |
% | ||||||||||
| 2024 |
2023 |
Change |
||||||||||
| (dollars in thousands) |
||||||||||||
| Marketing and sales |
$ | 82,097 | $ | 82,518 | -0.5 | % | ||||||
| Percentage of net revenues |
33.9 | % | 30.7 | % | ||||||||
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 expense decreased 0.5% during the three months ended September 29, 2024, compared to the same period of the prior year, mainly related to decreased labor costs.
Technology and development expense
| Three Months Ended |
||||||||||||
| September 29, |
October 1, |
% | ||||||||||
| 2024 |
2023 |
Change |
||||||||||
| (dollars in thousands) |
||||||||||||
| Technology and development |
$ | 15,639 | $ | 15,304 | 2.2 | % | ||||||
| Percentage of net revenues |
6.5 | % | 5.7 | % | ||||||||
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 increased by 2.2% during the three months ended September 29, 2024, compared to the same period of the prior year, primarily due to higher maintenance and support costs for the Company's technology platform enhancements, including duplicate costs relating to the implementation of a new customer service platform, partially offset by lower labor and consulting costs.
General and administrative expense
| Three Months Ended |
||||||||||||
| September 29, |
October 1, |
% | ||||||||||
| 2024 |
2023 |
Change |
||||||||||
| (dollars in thousands) |
||||||||||||
| General and administrative |
$ | 28,526 | $ | 28,489 | 0.1 | % | ||||||
| Percentage of net revenues |
11.8 | % | 10.6 | % | ||||||||
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 were essentially flat during the three months ended September 29, 2024, compared to the same period of the prior year, primarily due to increases in labor costs driven by changes in the value of the Company’s NQDC Plan investments (offset in Other (income) expense below), partially offset by lower bad debt expense and discretionary spending.
Depreciation and amortization expense
| Three Months Ended |
||||||||||||
| September 29, |
October 1, |
% | ||||||||||
| 2024 |
2023 |
Change |
||||||||||
| (dollars in thousands) |
||||||||||||
| Depreciation and amortization |
$ | 13,038 | $ | 13,194 | -1.2 | % | ||||||
| Percentage of net revenues |
5.4 | % | 4.9 | % | ||||||||
Depreciation and amortization expense was essentially in-line with the prior year, during the three months ended September 29, 2024.
Interest expense, net
| Three Months Ended |
||||||||||||
| September 29, |
October 1, |
% | ||||||||||
| 2024 |
2023 |
Change |
||||||||||
| (dollars in thousands) |
||||||||||||
| Interest expense, net |
$ | 3,360 | $ | 3,482 | -3.5 | % | ||||||
Interest expense, net consists primarily of interest expense and amortization of deferred financing costs attributable to the Company’s credit facility (See Note 7 - Debt, Net in Item 1 for details), net of income earned on the Company’s available cash balances.
Interest expense was relatively in-line with the prior year, during the three months ended September 29, 2024.
Other (income) expense, net
| Three Months Ended |
||||||||||||
| September 29, |
October 1, |
% | ||||||||||
| 2024 |
2023 |
Change |
||||||||||
| (dollars in thousands) |
||||||||||||
| Other (income) expense, net |
$ | (1,767 | ) | $ | 474 | 472.8 | % | |||||
Other (income) expense 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 line item).
Income Taxes
The Company recorded an income tax benefit of $14.4 million and $10.3 million, during the three months ended September 29, 2024 and October 1, 2023, respectively. The Company’s effective tax rate for the three months ended September 29, 2024 was 29.6%, compared to 24.8% in the same period of the prior year. The Company’s effective tax rate for the three months ended September 29, 2024 and October 1, 2023 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 7 - Debt, Net in Item 1 for details). At September 29, 2024, the Company had working capital of $118.7 million, including cash and cash equivalents of $8.4 million, compared to working capital of $157.9 million, including cash and cash equivalents of $159.4 million, at June 30, 2024.
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 29, 2024, the Company had $45.0 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 $177.2 million, for the three months ended September 29, 2024, was primarily attributable to the Company’s net loss during the period, adjusted by non-cash charges for depreciation and amortization and stock-based compensation, combined with seasonal changes in net working capital, including increases in inventory, trade receivables, and prepaid and other current assets.
Net cash used in investing activities of $15.1 million, for the three months ended September 29, 2024, was attributable to capital expenditures primarily related to the Company's technology and automation initiatives, and the acquisition of Scharffen Berger as noted above.
Net cash provided by financing activities of $41.3 million, for the three months ended September 29, 2024, related primarily to net proceeds from bank borrowings under the Company’s working capital line of credit.
Free Cash Flow
Free cash flow was negative $189.3 million for the three months ended September 29, 2024, compared with free cash flow of negative $150.8 million for three months ended October 1, 2023, a decrease of $38.5 million primarily driven by a decrease in cash flows from operations to fund the build in inventory for the holiday season. 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 II below for details.
Contractual Obligations
At September 29, 2024, the Company’s contractual obligations consist of:
| ● |
Long-term debt obligations - payments due under the Company's credit agreement (see Note 7 - Debt, Net in Item 1 for details and payments due by period). |
| ● |
Operating lease obligations – payments due under the Company’s operating leases (see Note 12 - Leases in Item 1 for details and payments due by period for the long-term operating leases). |
| ● |
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 |
Fiscal |
Fiscal |
Fiscal |
Fiscal |
||||||||||||||||||||||||
| 2025 |
2026 |
2027 |
2028 |
2029 |
Thereafter |
Total |
||||||||||||||||||||||
| Purchase commitments |
$ | 93,077 | $ | 11,223 | $ | 5,093 | $ | 3,447 | $ | 3,447 | $ | - | $ | 116,287 | ||||||||||||||
Critical Accounting Estimates
As disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2024, 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, other intangible assets and income taxes. There have been no significant changes to the assumptions and estimates related to the Company’s critical accounting policies since June 30, 2024.
Recently Issued Accounting Pronouncements
See Note 1 - Accounting Policies in Item 1 for 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 beliefs concerning future events and can generally be identified by the use of statements that include words such as “estimate,” “expects,” “project,” “believe,” “anticipate,” “intend,” “plan,” “foresee,” “forecast,” “likely,” “will,” "should," “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:
| ● |
the Company’s ability: |
| o |
to achieve revenue and profitability; |
|
| o |
to leverage its operating platform and reduce operating expenses; |
|
| o |
to manage the seasonality of its business; |
|
| o |
to cost effectively acquire and retain customers; |
|
| o |
to successfully integrate acquired businesses and assets; |
|
| o |
to reduce working capital requirements and capital expenditures; |
|
| o |
to mitigate the impact of supply chain cost and capacity constraints; |
|
| o |
to compete against existing and new competitors; |
|
| o |
to manage expenses associated with sales and marketing and necessary general and administrative and technology investments; |
|
| o |
to address the effects of changes in accounting policies, practices, or assumptions, including changes that could potentially require future impairment charges; |
|
| o | to achieve its guidance for the full Fiscal year; | |
| o | to successfully execute its strategic initiatives; and | |
| o | 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 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 30, 2024 listed 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 1A in this Form 10-Q.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risk from the effect of interest rate changes.
Interest Rate Risk
The Company’s exposure to market risk for changes in interest rates relates primarily to the Company’s investment of available cash balances and its long-term debt. The Company generally invests its cash and cash equivalents in investment grade corporate and U.S. government securities. Borrowings under the Company’s credit facility bear interest at a variable rate, plus an applicable margin, and therefore expose the Company to market risk for changes in interest rates. The effect of a 50 basis point increase in current interest rates on the Company’s interest expense would be approximately $0.2 million during the three months ended September 29, 2024.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as of September 29, 2024. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have each concluded that the Company’s disclosure controls and procedures were effective as of September 29, 2024.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting identified in connection with the Company’s evaluation required by Rules 13a-15(d) or 15d-15(d) of the Securities Exchange Act of 1934 during the quarter ended September 29, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Effectiveness of Controls and Procedures
Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives, as specified above. Our management recognizes that any control system, no matter how well designed and operated, is based upon certain judgments and assumptions and cannot provide absolute assurance that its objectives will be met.
Litigation
There are various claims, lawsuits, and pending actions against the Company and its subsidiaries incident to the operations of its businesses. It is the opinion of management, after consultation with counsel, that the final resolution of such claims, lawsuits and pending actions will not have a material adverse effect on the Company's consolidated financial position, results of operations or liquidity.
There were no material changes to the Company’s risk factors as discussed in Part 1, Item 1A-Risk Factors in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2024.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The Company has a stock repurchase plan through which purchases can be made from time to time in the open market and through privately negotiated transactions, subject to general market conditions. The repurchase program is financed utilizing available cash. On April 22, 2021, the Company’s Board of Directors authorized an increase to its stock repurchase plan of up to $40.0 million. In addition, on February 3, 2022, the Company’s Board of Directors authorized an increase to its stock repurchase plan of up to $40.0 million. As of September 29, 2024, $20.3 million remained authorized under the plan.
The following table sets forth, for the months indicated, the Company’s purchase of common stock during the first three months of Fiscal 2025, which includes the period July 1, 2024 through September 29, 2024:
| Total |
Dollar |
|||||||||||||||
| Number of |
Value of |
|||||||||||||||
| Shares |
Shares |
|||||||||||||||
| Purchased |
that May |
|||||||||||||||
| as Part of |
Yet Be |
|||||||||||||||
| Total |
Average |
Publicly |
Purchased |
|||||||||||||
| Number of |
Price |
Announced |
Under the |
|||||||||||||
| Shares |
Paid Per |
Plans or |
Plans or |
|||||||||||||
| Period |
Purchased |
Share (1) |
Programs |
Programs |
||||||||||||
| (in thousands, except shares and average price paid per share) |
||||||||||||||||
| 07/01/24 – 07/28/24 |
- | $ | - | - | $ | 21,571 | ||||||||||
| 07/29/24 – 08/25/24 |
- | $ | - | - | $ | 21,571 | ||||||||||
| 08/26/24 – 09/29/24 |
160,413 | $ | 7.79 | 160,413 | $ | 20,316 | ||||||||||
| Total |
160,413 | $ | 7.79 | 160,413 | ||||||||||||
| (1) |
Average price per share excludes commissions and other transaction fees. |
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
Rule 10b5-1 Plans
| 31.1 |
|
| 31.2 |
|
| 32.1 |
|
| 101.INS |
Inline XBRL Instance Document |
| 101.SCH |
Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL |
Inline XBRL Taxonomy Calculation Linkbase Document |
| 101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB |
Inline XBRL Taxonomy Extension Label Document |
| 101.PRE |
Inline XBRL Taxonomy Definition Presentation Document |
| 104 |
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
* Filed herewith.
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| 1-800-FLOWERS.COM, Inc. (Registrant) |
|
| Date: November 1, 2024 |
/s/ James F. McCann James F. McCann |
| Date: November 1, 2024 |
/s/ William E. Shea |