1-800-FLOWERS.COM(FLWS) - 2025 Q3 - Quarterly Report

Part I. Financial Information Condensed Consolidated Financial Statements The company reported a significant Q3 net loss of $178.2 million, driven by a $138.2 million impairment charge, which also contributed to a decrease in total assets and a sharp decline in operating cash flow Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 30, 2025 | June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $84,684 | $159,437 | ($74,753) | | Goodwill | $43,228 | $156,537 | ($113,309) | | Other intangibles, net | $89,820 | $116,216 | ($26,396) | | Total assets | $806,217 | $1,032,648 | ($226,431) | | Long-term debt, net | $142,278 | $177,113 | ($34,835) | | Retained earnings | $116,892 | $264,978 | ($148,086) | | Total stockholders' equity | $317,730 | $466,342 | ($148,612) | Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Q3 2025 | Q3 2024 | 9 Months 2025 | 9 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net revenues | $331,454 | $379,405 | $1,349,036 | $1,470,509 | | Gross profit | $104,999 | $138,717 | $532,911 | $596,342 | | Goodwill and intangible impairment | $138,220 | $0 | $138,220 | $19,762 | | Operating income (loss) | ($193,430) | ($27,929) | ($149,334) | $25,744 | | Net income (loss) | ($178,244) | ($16,903) | ($148,086) | $14,762 | | Diluted net income (loss) per share | ($2.80) | ($0.26) | ($2.32) | $0.23 | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Nine Months Ended Mar 30, 2025 | Nine Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $706 | $100,051 | | Net cash used in investing activities | ($35,431) | ($26,482) | | Net cash used in financing activities | ($40,028) | ($16,420) | | Net change in cash and cash equivalents | ($74,753) | $57,149 | - The company recorded a significant non-cash goodwill and intangible impairment charge of $138.2 million in the quarter ended March 30, 2025, related to the Consumer Floral & Gifts reporting unit[28][50] - Due to a three-year cumulative loss position and the impairment charge, the company established a valuation allowance of $24.9 million against its deferred tax assets as their realization is no longer more likely than not[74][168] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes revenue declines to macroeconomic conditions, leading to a significant impairment charge, a new transformation plan, the withdrawal of financial guidance, and a sharp reversal in free cash flow - Broader macro-economic conditions continue to impact consumers, leading to a reduction in 'everyday or just-because' gift giving and customers shopping later in holiday seasons[84] - The company announced 'Celebrations Wave,' a comprehensive strategic evolution to transform the customer experience, expected to result in restructuring charges of $10.0 million to $15.0 million[90] - Citing the rapidly evolving macroeconomic landscape and a focus on its transformational strategy, the company has withdrawn its near-term financial guidance[91] Free Cash Flow (Non-GAAP, in thousands) | Period | Nine Months Ended Mar 30, 2025 | Nine Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $706 | $100,051 | | Capital expenditures | ($32,431) | ($26,482) | | Free cash flow | ($31,725) | $73,569 | Results of Operations Third-quarter revenue fell 12.6% due to e-commerce declines, while a $138.2 million impairment charge drove a substantial operating loss and contracted gross margins Net Revenue by Segment - Q3 YoY Change (in thousands) | Segment | Q3 2025 Revenue | Q3 2024 Revenue | % Change | | :--- | :--- | :--- | :--- | | Consumer Floral & Gifts | $196,030 | $221,207 | -11.4% | | BloomNet | $28,552 | $27,314 | +4.5% | | Gourmet Foods & Gift Baskets | $107,088 | $130,989 | -18.2% | | Total Net Revenues | $331,454 | $379,405 | -12.6% | - E-commerce revenues decreased 14.2% in Q3 and 9.8% in the nine-month period, primarily due to a decline in order volume[118][119] - Gross profit percentage for Q3 decreased by 490 basis points (from 36.6% to 31.7%) and for the nine-month period by 110 basis points (from 40.6% to 39.5%)[130][132] - A non-cash goodwill and intangible impairment charge of $138.2 million was recorded in Q3 2025 for the Consumer and Floral & Gifts segment and the PersonalizationMall tradename[144] Liquidity and Capital Resources The company's liquidity tightened with decreased working capital and cash balances, driven by near-zero operating cash flow, capital expenditures, and net debt repayments - Working capital stood at $108.1 million as of March 30, 2025, down from $157.9 million at June 30, 2024, while cash and cash equivalents decreased from $159.4 million to $84.7 million[151] - Cash generated from operations allowed the company to repay the $110.0 million borrowed under its revolving credit facility and make a $27.5 million payment on its Term Loan[153] - Net cash used in financing activities was $40.0 million for the nine months, primarily from net repayments of bank borrowings, a $30.0 million payment on the Term Loan, and $9.9 million in common stock repurchases[157] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate changes on its variable-rate debt, with a hypothetical 50 basis point increase adding $0.7 million to nine-month interest expense - The company is exposed to interest rate risk through its variable-rate long-term debt; a hypothetical 50 basis point increase in rates would have increased interest expense by approximately $0.7 million for the nine-month period[175] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 30, 2025, with no material changes to internal control over financial reporting - Based on an evaluation as of March 30, 2025, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[176] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[177] Part II. Other Information Legal Proceedings Management believes the final resolution of various incidental claims and lawsuits will not materially harm the company's financial position, results, or liquidity - Management opines that pending legal proceedings are not expected to have a material adverse effect on the Company's financial condition or results of operations[179] Risk Factors There have been no material changes to the company's risk factors as disclosed in its Annual Report on Form 10-K for the fiscal year ended June 30, 2024 - No material changes to the Company's risk factors were reported for the period[180] Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 276,760 shares for $2.2 million in Q3, with $11.7 million remaining authorized for future repurchases under the existing plan Common Stock Repurchases - Q3 2025 | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | 12/30/24 – 1/26/25 | 199,103 | $7.98 | | 1/27/25 - 2/23/25 | 73,144 | $8.30 | | 2/24/25 - 3/30/25 | 4,513 | $5.93 | | Total | 276,760 | $8.03 | - As of March 30, 2025, $11.7 million remained available for repurchase under the company's stock repurchase plan[181]