1-800-FLOWERS.COM(FLWS) - 2025 Q2 - Quarterly Report

Part I. Financial Information Item 1. Condensed Consolidated Financial Statements Unaudited condensed consolidated financial statements for Q2 FY2025, including balance sheets, operations, equity, and cash flows Condensed Consolidated Balance Sheets Total assets increased to $1.14 billion due to cash, with liabilities at $642.7 million and equity at $495.1 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 29, 2024 (Unaudited) | June 30, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $247,220 | $159,437 | | Total current assets | $492,894 | $385,732 | | Total assets | $1,137,770 | $1,032,648 | | Liabilities & Equity | | | | Total current liabilities | $325,636 | $227,819 | | Total liabilities | $642,663 | $566,306 | | Total stockholders' equity | $495,107 | $466,342 | Condensed Consolidated Statements of Operations Q2 net revenues decreased to $775.5 million, but net income slightly rose to $64.3 million or $1.00 diluted EPS Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended Dec 29, 2024 | Three Months Ended Dec 31, 2023 | Six Months Ended Dec 29, 2024 | Six Months Ended Dec 31, 2023 | | :--- | :--- | :--- | :--- | :--- | | Net revenues | $775,492 | $822,054 | $1,017,582 | $1,091,104 | | Gross profit | $335,593 | $355,697 | $427,912 | $457,625 | | Operating income | $91,077 | $91,250 | $44,096 | $53,673 | | Net income | $64,348 | $62,907 | $30,158 | $31,665 | | Diluted EPS | $1.00 | $0.97 | $0.47 | $0.49 | - In the prior-year quarter (ended Dec 31, 2023), the company recorded a significant intangible impairment charge of $19.8 million, which was absent in the current quarter, contributing to the stable operating income despite lower revenues[9] Condensed Consolidated Statements of Cash Flows Operating cash flow was $151.3 million, with net cash increasing by $87.8 million after investing and financing activities Cash Flow Summary - Six Months Ended (in thousands) | Activity | Dec 29, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $151,307 | $212,760 | | Net cash used in investing activities | ($26,023) | ($17,807) | | Net cash used in financing activities | ($37,501) | ($9,743) | | Net change in cash | $87,783 | $185,210 | Notes to Condensed Consolidated Financial Statements Notes detail seasonal business, $3.3 million Scharffen Berger acquisition, and prior-year $19.8 million impairment - The company's business is highly seasonal, with the second fiscal quarter (Thanksgiving through Christmas) expected to generate over 40% of annual revenues and all of its earnings[19] - On July 1, 2024, the company acquired certain assets of Scharffen Berger®, a chocolate manufacturer, for a total consideration of $3.3 million, funded with cash on hand[32][33] - In the prior-year quarter ended December 31, 2023, the company recorded a non-cash impairment charge of $19.8 million to reduce the carrying value of the PersonalizationMall tradename[25][43] Net Revenues by Segment - Six Months Ended (in thousands) | Segment | Dec 29, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Consumer Floral & Gifts | $369,529 | $397,029 | | BloomNet | $45,912 | $56,106 | | Gourmet Foods & Gift Baskets | $602,457 | $638,072 | | Total Net Revenues | $1,017,582 | $1,091,104 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q2 revenue decline from macro pressures, updated guidance, and liquidity with $247.2 million cash Business Overview and Macro-economic Conditions H1 FY2025 performance impacted by macro conditions, leading to 5.7% Q2 and 6.7% H1 revenue decline - Total consolidated revenues decreased 5.7% to $775.5 million for the three months and 6.7% to $1,017.6 million for the six months ended December 29, 2024[74] - Sales trends were challenged by a reduction in everyday or 'just-because' gift giving due to consumers moderating discretionary spending[74] Company Guidance Updated fiscal 2025 guidance anticipates mid-single-digit revenue decline, with lower Adjusted EBITDA and Free Cash Flow Updated Fiscal 2025 Guidance | Metric | Guidance | | :--- | :--- | | Total Revenues | Decline in the mid-single digits (%) | | Adjusted EBITDA | $65 million to $75 million | | Free Cash Flow | $25 million to $35 million | Results of Operations Q2 revenue declined 5.7% due to lower e-commerce volume and a $20 million system impact, with gross profit flat - Net revenues decreased 5.7% in Q2 and 6.7% in H1, primarily due to lower e-commerce order volume across all three segments[106] - The implementation of a new order management system for the Harry & David brand negatively impacted sales by approximately $20 million in the current period[106][121] - E-commerce revenues decreased 8.3% in Q2, with a 7.2% decrease in the number of orders and a 1.2% decrease in average order value to $92.02[111][112] - Gross profit percentage was flat at 43.3% for the three months ended December 29, 2024, compared to the prior year[123][125] Liquidity and Capital Resources Liquidity is strong with $167.3 million working capital and $247.2 million cash, sufficient for the next twelve months - At December 29, 2024, the company had working capital of $167.3 million, including $247.2 million in cash and cash equivalents[140] - Free cash flow for the six months ended December 29, 2024, was $128.3 million, a decrease from $195.0 million in the prior-year period[147] - During the quarter, the company made a payment of $27.5 million on its Term Loan, which included a $25.0 million prepayment[142] Item 3. Quantitative and Qualitative Disclosures About Market Risk Primary market risk is interest rate exposure on variable-rate debt; a 50 basis point increase would raise interest expense by $0.3 million - The company's main market risk exposure is from changes in interest rates on its variable-rate long-term debt[157][158] - A 50 basis point increase in current interest rates would increase interest expense by approximately $0.3 million for the three-month period[158] Item 4. Controls and Procedures Management concluded disclosure controls were effective as of December 29, 2024, with no material changes in internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of December 29, 2024[159] - No material changes in internal control over financial reporting occurred during the quarter[160] Part II. Other Information Item 1. Legal Proceedings Management believes pending legal actions will not have a material adverse effect on the company's financial position or results - Management does not expect the final resolution of various pending legal actions to have a material adverse effect on the Company's financial position or results[162] Item 1A. Risk Factors No material changes to the company's risk factors were reported since the Annual Report on Form 10-K for FY2024 - No material changes to the Company's risk factors were reported since the last Annual Report on Form 10-K[163] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 790,514 shares at $8.11 average, with $13.9 million remaining for future repurchases Common Stock Repurchases (Q2 FY2025) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | 09/30/24 – 10/27/24 | 200,000 | $8.02 | | 10/28/24 – 11/24/24 | 283,913 | $8.41 | | 11/25/24 – 12/29/24 | 306,601 | $7.89 | | Total | 790,514 | $8.11 | - As of December 29, 2024, $13.9 million remained authorized for repurchase under the company's stock repurchase plan[165] Item 5. Other Information No directors or executive officers adopted or terminated Rule 10b5-1 trading plans during Q2 FY2025 - No directors or executive officers adopted or terminated a Rule 10b5-1 trading plan during the three months ended December 29, 2024[169] Item 6. Exhibits Exhibits include CEO and CFO certifications pursuant to Sarbanes-Oxley Act and Inline XBRL data files - The report includes required certifications from the principal executive officer and principal financial officer, as well as Inline XBRL Instance Documents[173]