1-800-FLOWERS.COM(FLWS) - 2025 Q4 - Annual Report

PART I Item 1. Business Overview A leading e-commerce gift provider with diverse brands, focusing on customer relationships, strategic acquisitions, and highly seasonal operations Company Profile and Brands The company operates a leading e-commerce platform with a family of brands, a loyalty program, and B2B services - The Company operates a leading e-commerce platform with a family of brands including 1-800-Flowers.com®, Harry & David®, and PersonalizationMall.com®[13] - The Celebrations Passport® loyalty program offers members free standard shipping and no service charge, aiming to deepen customer relationships[13] - The Company also provides services to the floral and gift industry through BloomNet® and other brands[13] Business Strategy and Evolution The company aims to be the leading authority in thoughtful gifting, expanding offerings through acquisitions and a sentiment-led customer journey - The Company's objective is to be the leading authority on thoughtful gifting, serving expanding celebratory needs and building trusted relationships[16] - The strength of the 1-800-FLOWERS.COM® brand has enabled expansion into complementary products like gourmet popcorn, cookies, and personalized items[17] - Recent acquisitions include Things Remembered® (Jan 2023), Card Isle (Apr 2024), and Scharffen Berger® (Jul 2024), broadening the product portfolio[17] - In fiscal 2025, the Company announced a multi-year 'Celebrations strategy' to transform the customer journey into a sentiment-led experience[20] Business Segments and Offerings The company operates in Consumer Floral & Gifts, BloomNet, and Gourmet Foods & Gift Baskets segments, offering diverse products and services - The Consumer Floral & Gifts segment provides direct-to-consumer, multi-channel offerings of fresh flowers, plants, fruit and gift basket products, and personalized gifts[23][26] - The BloomNet segment offers products and services to professional florists, including settlement processing, advertising, web hosting, and e-commerce greeting cards via Card Isle[23][28] - The Gourmet Foods & Gift Baskets segment includes brands like Harry & David®, Cheryl's Cookies®, and Scharffen Berger®, offering premium fruit, gourmet food, baked goods, and chocolates[24][27] Marketing and Customer Engagement The company employs an integrated marketing strategy to strengthen brand equity, acquire customers, and enhance lifetime value through data-driven personalization - The Company's marketing strategy focuses on strengthening brand equity, accelerating customer acquisition, and enhancing customer lifetime value through a comprehensive celebratory ecosystem[29] - An omnichannel approach leverages digital advertising, traditional media, direct-response marketing, public relations, social media, and strategic partnerships[30] - Investment in advanced analytics, marketing automation, AI-driven personalization, and enhanced mobile commerce capabilities is prioritized to improve targeting[31] Technology and Fulfillment The company uses advanced technology and a hybrid fulfillment system for seamless shopping, offering various delivery options while optimizing capital investment - The Company's technology infrastructure enables direct order transmission from websites into a proprietary transaction processing system, routing orders via BloomLink®[33] - A hybrid fulfillment system, combining BloomNet members, Company distribution centers, and direct-ship vendors, offers same-day, next-day, and any-day delivery options[34] - Floral orders are mostly fulfilled by BloomNet members for immediate delivery, while personalized gifts are manufactured and distributed from Bolingbrook, IL[35] - Gourmet foods and gift baskets are manufactured in various facilities (e.g., Westerville, OH; Medford, OR) and distributed from shared Company-owned and leased facilities[36] Raw Materials and Supply Chain Raw materials for manufactured products, packaging, and transportation are sourced globally, with prices and availability subject to fluctuation and supplier compliance - Raw materials include ingredients for manufactured products (e.g., sugar, flour, cocoa, eggs, fruit, flowers), packaging supplies, and transportation supplies[37] - Most raw materials are purchased from third parties, some of whom are single-source suppliers, and prices/availability are subject to fluctuation[37] - The Company utilizes a global supply chain, with suppliers subject to standards of conduct including compliance with local labor and worker safety laws[37] Seasonal Business Fluctuations The company's business is highly seasonal, with the second fiscal quarter generating over 40% of annual revenues and all earnings - The Thanksgiving through Christmas holiday season (fiscal Q2) generates over 40% of annual revenues and all of the Company's earnings[38] - Revenues also rise during fiscal Q3 and Q4 due to major floral gifting occasions like Mother's Day and Valentine's Day, compared to Q1[38] Fiscal 2025 Revenue Distribution by Quarter | Quarter | % of Annual Revenues | | :------ | :------------------- | | Q2 | 46% | | Q1 | 14% | | Q3 | 20% | | Q4 | 20% | - Seasonal inventory build, peaking in November, is financed by cash flows from operations and borrowings under the revolving credit facility, typically repaid before the end of Q2[39] Competitive Landscape The company operates in highly competitive floral, gift, and gourmet food industries, facing risks of price reductions and market share loss - The Company faces intense competition from established e-commerce businesses, mass merchants, telemarketers, retail specialty shops, online retailers, and mail-order catalogs[40] - Competitors in the floral industry include retail floral shops, online marketplaces, catalog companies, floral telemarketers, wire services, supermarkets, and specialty retailers[42] - Increased competition could result in price reductions, decreased revenues, lower profit margins, loss of market share, and increased marketing expenditures[43] - The Company believes its brand strength, product selection, customer relationships, technology infrastructure, and fulfillment capabilities provide a competitive advantage[41] Regulatory Environment The company is subject to evolving e-commerce, consumer protection, and internet-related regulations, increasing compliance costs and operational burdens - The Company is subject to a growing number of evolving local, state, and national laws and regulations, including those applicable to e-commerce[44] - Legislatures are considering increasing laws and regulations pertaining to the Internet, addressing user privacy, pricing, content, and taxation[49] - More stringent consumer protection laws could impose additional burdens, decreasing demand and increasing costs of doing business[45] Intellectual Property Protection The company considers its intellectual property critical, but faces risks of infringement, misappropriation, and costly litigation to defend its rights - The Company regards its service marks, trademarks, trade secrets, and domain names as critical to its success, holding registrations for brands like '1-800-FLOWERS.COM' and 'Harry & David'[47] - Protection of proprietary rights in Internet-related industries is uncertain and evolving, with foreign laws potentially offering less protection than in the U.S[48] - The Company has experienced past infringements and expects them to continue, potentially leading to expensive and time-consuming litigation that could divert management resources[50][51] Human Capital Management The company focuses on attracting and retaining talent, with approximately 3,900 employees, emphasizing an inclusive culture, competitive benefits, and workplace safety - As of June 29, 2025, the Company had approximately 3,900 full and part-time employees, all located in the United States, with significant increases during peak periods[52] - The Company is committed to building an inclusive and equitable culture, offering competitive compensation and benefits, career development, and a respectful environment[53][54] - Workplace safety is a continuous focus, with emphasis on training, awareness, behavioral-based work observation practices, and identifying/addressing safety risks[55] Item 1A. Risk Factors The company faces macroeconomic, supply chain, operational, competitive, technology, cybersecurity, legal, and regulatory risks Macroeconomic and Global Supply Chain Risks The company is vulnerable to macroeconomic conditions, international vendor dependence, increased shipping costs, and supply chain disruptions impacting consumer spending and product availability - Consumer spending patterns are sensitive to general economic climate, disposable income, debt, and confidence, with adverse changes potentially reducing demand and prices[60] - Dependence on international vendors for flowers and components exposes the Company to risks including import duties, agricultural limitations, trade restrictions, and political instability[61][67] - Increased shipping costs and supply chain disruptions (e.g., carrier price increases, capacity constraints) can negatively impact sales, customer relationships, revenues, and earnings[63] - Limited flower supply due to weather, farm closures, or political conditions can cause price increases or unavailability, leading to reduced customer demand and declining revenues/gross margins[64] Operational and Competitive Risks Operating results fluctuate due to seasonality, competition, and reliance on temporary staff, with risks including brand maintenance failure, inaccurate demand prediction, and impairment charges - Operating results may fluctuate due to seasonality, the retail economy, marketing program timing/effectiveness, new product introductions, supplier reliability, severe weather, and competition[69] - Failure to develop and maintain brands, or ineffective advertising, could lead to a reduction in customer base and revenues[71] - If local florists or third-party vendors fail to satisfy customer orders, it could lead to customer dissatisfaction and decreased revenues[75] - Intense competition in floral, plant, gift basket, gourmet food, and specialty gift industries could result in price reductions, decreased revenue, lower profit margins, and increased marketing expenditures[78][80] - The Company incurred significant non-cash impairment charges for goodwill and intangible assets in fiscal 2025 ($143.8 million), fiscal 2024 ($19.8 million), and fiscal 2023 ($64.6 million), negatively impacting operating results[90] Information Technology and Cybersecurity Risks The company relies heavily on its computer systems, facing significant risks from cybersecurity threats, system disruptions, AI integration complexities, and credit card fraud - Failure to protect websites, networks, and computer systems against disruption and cybersecurity threats, or to protect confidential customer information, could damage relationships and harm reputation[91] - Systems increasingly incorporate AI features, which are complex, subject to scrutiny, and may produce errors, infringe rights, or not align with business goals, leading to legal liability or reputational harm[94] - An increase in remote employees amplifies cybersecurity risks, including phishing attacks and securing more endpoints like laptops and mobile devices[96] - Significant credit card, debit card, and gift card fraud could decrease revenues, lead to charge-backs, or cause the Company to lose the ability to accept these payment forms[98] - Unexpected system interruptions, long response times, or service degradation, especially during peak holiday periods, could result in reduced revenues and harm the Company's brand[99][101] Legal, Regulatory, and Financial Risks The company faces risks from intellectual property infringement, product liability claims, evolving government regulations, and stock price volatility - Unauthorized use of the Company's intellectual property by third parties may damage its brands and reputation, potentially leading to a loss of customers[103] - If third parties acquire rights to similar domain names or phone numbers, or if the Company loses its right to use its phone numbers (e.g., 1-800-FLOWERS), its brands could be damaged and sales lost[105][106] - Product liability claims, particularly for perishable food and alcoholic beverage products, could subject the Company to increased costs and negative publicity[108] - A privacy or data security breach could expose the Company to costly government enforcement actions, private litigation, and adverse effects on its business and reputation[110] - Failure to comply with federal, state, and international laws and regulations relating to privacy, data protection, and consumer protection, or the enactment of new laws, could adversely affect business and financial condition[114][115] - Evolving corporate governance and public disclosure regulations, including increased scrutiny on ESG matters, result in higher general and administrative expenses and management time[118] Item 1B. Unresolved Staff Comments No unresolved SEC staff comments were received regarding current or periodic reports preceding fiscal year-end June 29, 2025 - No unresolved written comments from the SEC staff were received regarding current or periodic reports issued 180 days or more preceding the fiscal year ended June 29, 2025[120] Item 1C. Cybersecurity The company maintains a multifaceted cybersecurity risk management program overseen by the Board, with no material impact to date Cybersecurity Risk Management and Strategy The company employs a comprehensive cybersecurity risk management program to protect systems and information, including policies, incident response, and third-party evaluations - The Company has processes to identify, assess, and manage material cybersecurity threat risks as part of its enterprise risk management program[121] - Strategy includes robust security policies (PCI-DSS compliant), an incident response plan, comprehensive system security vulnerability scanning, and a 24/7/365 Security Operation Center[123] - Periodic third-party evaluations, tabletop exercises, and PCI-DSS compliance certifications are conducted to test and validate systems[124] Cybersecurity Governance The Board of Directors, through its Technology and Cybersecurity Committee, oversees cybersecurity risk management, led by the Senior Vice President, IT Operations - The Board of Directors, through its Technology and Cybersecurity Committee, oversees the Company's risk management process, including information technology use and protection, data governance, privacy, and cybersecurity[126][127] - The cybersecurity program is led by the Senior Vice President, IT Operations, who reports to the CEO and provides periodic updates to the Board and Committee[128] - The information security team monitors systems, assesses incident severity, and follows escalation procedures to inform management and the Board[129] Item 2. Properties The company's material properties include owned and leased offices, plants, warehouses, and orchards across several states Material Properties as of June 29, 2025 | Location | Type | Principal Use | Square Footage / Acres | Ownership | | :---------------- | :----------------------- | :--------------------------------- | :--------------------- | :-------- | | Medford, OR | Office, plant, warehouse | Manufacturing, distribution, admin | 1,112,000 | owned | | Bolingbrook, IL | Office, plant, warehouse | Manufacturing, distribution, admin | 361,176 | leased | | Hebron, OH | Office, plant, warehouse | Manufacturing, distribution, admin | 330,900 | owned | | Medford, OR | Warehouse | Storage | 324,500 | leased | | Obetz, OH | Warehouse | Distribution | 301,176 | leased | | Atlanta, GA | Warehouse | Manufacturing and distribution | 272,821 | leased | | Groveport, OH | Warehouse | Distribution | 255,070 | leased | | Melrose Park, IL | Office and warehouse | Distribution, admin, customer svc | 250,000 | leased | | Jacksonville, FL | Office and warehouse | Distribution and administrative | 180,000 | owned | | Lake Forest, IL | Office, plant, warehouse | Manufacturing, distribution, admin | 148,000 | leased | | Hebron, OH | Warehouse | Storage | 116,000 | leased | | Burr Ridge, IL | Office, plant, warehouse | Manufacturing, distribution, admin | 109,722 | leased | | Jericho, NY | Office | Headquarters | 92,700 | leased | | Westerville, OH | Office, plant, warehouse | Manufacturing, distribution, admin | 88,000 | owned | | Reno, NV | Warehouse | Distribution | 70,000 | leased | | Memphis, TN | Warehouse | Distribution | 70,000 | leased | | Philadelphia, PA | Fulfillment Center | Distribution | 31,000 | leased | | Jackson County, OR| Orchards | Farming | 41 acres | leased | | Jackson County, OR| Orchards | Farming | 1,819 acres | owned | | Jackson County, OR| Land | Fallow land | 1,356 acres | owned | | Josephine County, OR| Orchards | Farming | 91 acres | owned | | Josephine County, OR| Land | Fallow land | 88 acres | owned | Item 3. Legal Proceedings Legal proceedings information is detailed in Note 16 of Part IV, Item 15 of this report - Details regarding legal proceedings are provided in Note 16 in Part IV, Item 15[131] Item 4. Mine Safety Disclosures This item is not applicable to the company - Mine Safety Disclosures are not applicable to the Company[132] PART II Item 5. Common Equity Market and Stockholder Matters Class A common stock trades on NASDAQ, Class B is not public, with an active repurchase plan and no cash dividends - 1-800-FLOWERS.COM's Class A common stock trades on The NASDAQ Global Select Market under the ticker symbol 'FLWS', with no public trading market for Class B common stock[134] - Holders of Class A common stock have one vote per share, while Class B common stock holders have 10 votes per share, with Class B convertible to Class A[135] - As of August 29, 2025, there were approximately 172 stockholders of record for Class A common stock and 14 for Class B common stock[136] Stock Repurchases Under Program | Fiscal Year Ended | Total Repurchased (USD) | Shares Repurchased | | :---------------- | :---------------------- | :----------------- | | June 29, 2025 | $10.2 million | 1,274,559 | | June 30, 2024 | $10.4 million | 1,079,415 | | July 2, 2023 | $1.2 million | 147,479 | - As of June 29, 2025, $11.4 million remains authorized under the stock repurchase plan[137] - The Company has never declared or paid cash dividends on its common stock and does not anticipate doing so in the foreseeable future[141] Item 6. Reserved This item is reserved and contains no information Item 7. Management's Discussion and Analysis (MD&A) Fiscal 2025 saw decreased revenues, net loss, and significant impairment charges, with fiscal 2026 focusing on cost savings and growth Business Overview The company is a leading provider of gifts, aiming to inspire customer connections and relationships - The Company is a leading provider of gifts designed to help inspire customers to give more, connect more, and build more and better relationships[143] Business Segments The company operates in three segments: Consumer Floral & Gifts, Gourmet Foods & Gift Baskets, and BloomNet - The Company operates in three business segments: Consumer Floral & Gifts, Gourmet Foods & Gift Baskets, and BloomNet[144] - Consumer Floral & Gifts includes 1-800-Flowers.com, Personalization Mall, Things Remembered, FruitBouquets.com, Flowerama, and Alice's Table[144] - Gourmet Foods & Gift Baskets includes Harry & David, Wolferman's Bakery, Vital Choice, Moose Munch, Cheryl's Cookies, Mrs. Beasley's, The Popcorn Factory, DesignPac, 1-800-Baskets.com, Simply Chocolate, Shari's Berries, and Scharffen Berger[144] - BloomNet includes BloomNet, Napco, and Card Isle[144] Fiscal 2025 Performance Summary Fiscal 2025 was challenging, with net revenues decreasing 8.0% to $1,685.7 million, gross margins declining, and a net loss of $200.0 million - Net revenues decreased by $145.8 million, or 8.0%, to $1,685.7 million in fiscal 2025 compared to fiscal 2024, primarily due to slowing demand and a highly promotional consumer environment[146] - Gross margins declined to 38.7% in fiscal 2025, a 140-basis point decrease over fiscal 2024, mainly due to higher cost of merchandise and deleveraging of fixed costs[147] Fiscal 2025 Key Financials (in millions) | Metric | FY2025 | FY2024 | | :-------------- | :------ | :------ | | Net Revenues | $1,685.7| $1,831.4| | Net Loss | $(200.0)| $(6.1) | | Adjusted EBITDA | $29.2 | $93.1 | Goodwill and Intangible Asset Impairment The company recorded significant non-cash impairment charges in recent fiscal years, including $143.8 million in fiscal 2025 for Consumer Floral & Gifts - In fiscal 2025, a non-cash goodwill and intangible impairment charge of $143.8 million was recorded for the Consumer Floral & Gifts reporting unit, including $113.4 million for goodwill and $24.8 million for the Personalization Mall tradename[149] - In fiscal 2024, a non-cash impairment charge of $19.8 million was recorded for the Personalization Mall tradename due to declining revenue and a higher discount rate[150] - In fiscal 2023, a non-cash impairment charge of $64.6 million was recorded for the Gourmet Foods & Gift Baskets reporting unit, fully impairing goodwill ($62.3 million) and partially impairing certain tradenames ($2.3 million)[151] Acquisition of Scharffen Berger On July 1, 2024, the company acquired Scharffen Berger® for $3.3 million, expanding its gourmet chocolate offerings - On July 1, 2024, the Company acquired certain assets of Scharffen Berger®, a chocolate manufacturing company, for approximately $3.3 million in cash[152] - The acquisition expanded the Company's product offerings in the Gourmet Foods & Gift Baskets segment[152] - Scharffen Berger's annual revenues and results of operations were deemed immaterial to the Company's consolidated financial statements[152] Acquisition of Card Isle On April 3, 2024, the company acquired Card Isle for $3.6 million, expanding its e-commerce greeting card presence - On April 3, 2024, the Company acquired certain assets of Card Isle, an e-commerce greeting card company, for $3.6 million in cash[153] - The acquisition expanded the Company's presence in the greeting card category across all brands within the BloomNet segment[153] - Card Isle's annual revenues and results of operations were deemed immaterial to the Company's consolidated financial statements[153] Acquisition of Things Remembered On January 10, 2023, the company acquired Things Remembered® for $5.0 million, integrating personalized gifts into PersonalizationMall.com® - On January 10, 2023, the Company acquired certain assets of the Things Remembered® brand, a personalized gifts provider, for $5.0 million in cash[154] - The operations of Things Remembered have been integrated within the PersonalizationMall.com® brand in the Consumer Floral & Gifts segment[154] - Things Remembered's annual e-commerce revenues were $30.4 million for the twelve months ended November 30, 2022[154] Fiscal 2026 Strategic Priorities Fiscal 2026 focuses on transforming the company into a customer-centric, data-driven organization, driving cost savings, and expanding into new channels - Fiscal 2026 is a pivotal period focused on transforming the Company into a customer-centric, data-driven organization to support its multi-year Celebrations strategy and fuel future growth[155] - Strategic priorities include driving cost savings and organizational efficiency, building a customer-centric and data-driven organization, broadening reach into new channels, and strengthening the team[155] Non-GAAP Financial Measures The company uses non-GAAP measures like EBITDA, Adjusted EBITDA, Adjusted Net Income, and Free Cash Flow to provide supplemental insights into performance and liquidity - EBITDA is defined as net income (loss) before interest, taxes, depreciation, and amortization; Adjusted EBITDA further adjusts for stock-based compensation and other comparability items[158] - Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per common share are net income (loss) and EPS adjusted for certain items affecting period-to-period comparability[163] - Segment contribution margin is earnings before interest, taxes, depreciation, amortization, and corporate overhead allocation, with Adjusted segment contribution margin including further adjustments[166] - Free Cash Flow is defined as net cash provided by (used in) operating activities, less capital expenditures[171] Reconciliation of Net Loss to Adjusted EBITDA (non-GAAP) (in thousands) | Metric | FY2025 | FY2024 | | :-------------------------------------------------------- | :------------ | :------------ | | Net loss | $(199,993) | $(6,105) | | Add: Interest expense and other, net | 8,544 | 3,830 | | Add: Depreciation and amortization | 53,618 | 53,752 | | Add: Income tax expense (benefit) | (13,364) | 203 | | EBITDA | $(151,195)| $51,680 | | Add: Stock-based compensation | 11,891 | 10,688 | | Add: Compensation charge related to NQDC plan investment appreciation | 5,423 | 6,904 | | Add: System implementation costs | 13,401 | - | | Add: Goodwill and intangible impairment | 143,823 | 19,762 | | Add: Transaction costs | - | 269 | | Add: Restructuring cost/Severance | 5,823 | 2,564 | | Add: Litigation settlement | - | 1,200 | | Adjusted EBITDA | $29,166 | $93,067 | Reconciliation of Net Loss to Adjusted Net Income (Loss) (non-GAAP) (in thousands) | Metric | FY2025 | FY2024 | | :-------------------------------------------------------- | :------------ | :------------ | | Net loss | $(199,993) | $(6,105) | | Add: System implementation costs | 13,401 | — | | Add: Transaction costs | — | 269 | | Add: Restructuring cost/Severance | 5,823 | 2,564 | | Add: Litigation settlement | — | 1,200 | | Add: Goodwill and intangible impairment | 143,823 | 19,762 | | Deduct: Tax related adjustments | (15,572) | (6,079) | | Adjusted net income (loss) (non-GAAP) | $(52,518) | $11,611 | | Basic and diluted net loss per common share | $(3.13) | $(0.09) | | Basic and diluted adjusted net income (loss) per common share (non-GAAP) | $(0.82) | $0.18 | Results of Operations Fiscal 2025 saw an 8.0% decrease in net revenues, declining gross profit, increased technology expenses, and significant impairment charges, resulting in an income tax benefit Net Revenues (in thousands) | Category | FY2025 | % Change (YoY) | FY2024 | % Change (YoY) | FY2023 | | :--------------- | :------------ | :------------- | :------------ | :------------- | :------------ | | E-Commerce | $1,464,445 | -9.3% | $1,614,199 | -7.5% | $1,744,622 | | Other | $221,213 | 1.8% | $217,222 | -20.5% | $273,231 | | Total Net Revenues | $1,685,658| -8.0% | $1,831,421| -9.2% | $2,017,853| - E-commerce revenues decreased 9.3% in fiscal 2025 due to lower order volumes (-8.2%) and slightly lower average order value (-1.1%), reflecting macro-economic conditions and inefficient marketing[181] - Other revenues increased 1.8% in fiscal 2025, driven by higher wholesale volumes in Gourmet Foods & Gift Baskets, partially offset by lower BloomNet revenues[181] Gross Profit (in thousands) | Metric | FY2025 | % Change (YoY) | FY2024 | % Change (YoY) | FY2023 | | :--------------- | :------------ | :------------- | :------------ | :------------- | :------------ | | Gross profit | $652,272 | -11.2% | $734,753 | -3.0% | $757,526 | | Gross profit % | 38.7% | -1.4 ppt | 40.1% | +2.6 ppt | 37.5% | - Marketing and sales expense decreased 0.9% in fiscal 2025 but increased as a percentage of net revenues to 28.5% (from 26.5% in FY24) due to increased advertising costs[201][203] - Technology and development expense increased 3.4% in fiscal 2025 to $62.3 million, primarily due to higher development and consulting costs for technology platform enhancements[205][206] - General and administrative expense decreased 1.0% in fiscal 2025, mainly due to lower labor costs and changes in NQDC investments, partially offset by higher insurance costs[208][209] - Interest income decreased 49.4% in fiscal 2025 due to lower available cash balances and lower interest rates[215][216] - Interest expense decreased 10.8% in fiscal 2025 due to a lower outstanding term loan balance and lower interest rates[218][219] - The Company recorded an income tax benefit of $13.4 million in fiscal 2025, resulting in an effective tax rate of 6.3%, primarily due to a valuation allowance on deferred tax assets and non-deductible goodwill impairment charges[221] Liquidity and Capital Resources Liquidity decreased significantly in fiscal 2025, with negative free cash flow of $67.8 million and a substantial drop in cash and equivalents - Principal sources of liquidity are cash on hand, cash flows from operations, and borrowings available under the credit agreement[223] Working Capital and Cash (in millions) | Metric | June 29, 2025 | June 30, 2024 | | :----------------- | :------------ | :------------ | | Working Capital | $61.3 | $157.9 | | Cash & Equivalents | $46.5 | $159.4 | - Net cash used for operating activities was $26.4 million for fiscal 2025, primarily due to uses of cash for working capital (decreases in accounts payable/accrued expenses, increases in trade receivables/prepaid assets)[228] - Net cash used in investing activities was $44.5 million, attributable to capital expenditures for technology/automation and the acquisition of Scharffen Berger[228] - Net cash used in financing activities was $42.1 million, primarily for net repayment of bank borrowings ($30.0 million, including a $25.0 million voluntary prepayment) and treasury stock acquisition ($10.2 million)[229] - Free cash flow was negative $67.8 million for fiscal 2025, a decrease of $124.2 million from positive $56.4 million in fiscal 2024, driven by lower cash flows from operations[230] - The Company expects to borrow under its revolving credit facility to fund pre-holiday manufacturing and inventory purchases during fiscal 2026 Q1, with repayment expected before the end of Q2[226] Critical Accounting Policies and Estimates Critical accounting policies relate to goodwill and other intangible assets, requiring significant judgment in fair value estimates and impairment assessments - Critical accounting policies and estimates relate to goodwill and other intangible assets, requiring significant management judgment and assumptions[234] - Goodwill is subject to annual impairment assessment at the reporting unit level, using qualitative or quantitative tests (income and market approaches) that involve estimates for revenues, margins, growth rates, and discount rates[235][236][239] - Indefinite-lived intangible assets (tradenames, trademarks) are tested for impairment at least annually, using the relief-from-royalty method, which requires judgments on estimated cash flows, perpetual growth rates, and royalty/discount rates[244] - In fiscal 2025, a non-cash goodwill impairment charge of $119.0 million was recorded for the Consumer Floral & Gifts reporting unit, and a $24.8 million impairment charge for the Personalization Mall tradename, indicating a risk of future impairments[240][245] Recently Issued Accounting Pronouncements The company refers to Note 2 in Part IV, Item 15 for details regarding the impact of recently issued accounting standards - Details regarding the impact of recently issued accounting standards on consolidated financial statements are provided in Note 2 in Part IV, Item 15[247] Item 7A. Market Risk Disclosures The company faces market risk from interest rate changes affecting cash investments and variable-rate long-term debt - The Company is exposed to market risk from interest rate changes, primarily related to its investment of available cash balances and its long-term debt[248] - Borrowings under the Company's credit facilities bear variable interest rates, exposing it to changes in interest rates[248] - A 50 basis point increase in current interest rates would have increased the Company's interest expense by approximately $1.0 million during the fiscal year ended June 29, 2025[248] Item 8. Financial Statements and Supplementary Data Annual financial statements are included in Part IV, Item 15 of this Annual Report on Form 10-K - Annual Financial Statements are located in Part IV, Item 15 of this Annual Report on Form 10-K[249] Item 9. Changes in and Disagreements with Accountants This item is not applicable to the company - This item is not applicable[250] Item 9A. Controls and Procedures Management and auditors concluded disclosure controls and internal control over financial reporting were effective as of June 29, 2025 Evaluation of Disclosure Controls and Procedures The company's management, including the CEO and CFO, concluded that its disclosure controls and procedures were effective as of June 29, 2025 - The Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of June 29, 2025[251] Management's Report on Internal Control Over Financial Reporting Management concluded that the company's internal control over financial reporting was effective as of June 29, 2025, based on the COSO framework - Management is responsible for establishing and maintaining adequate internal control over financial reporting, designed to provide reasonable assurance regarding reliability[252] - Based on an assessment using the COSO (2013) framework, management concluded that the Company's internal control over financial reporting was effective as of June 29, 2025[255] Changes in Internal Control Over Financial Reporting No material changes in internal control over financial reporting occurred during the three months ended June 29, 2025 - No material change in internal control over financial reporting occurred during the three months ended June 29, 2025[258] Report of Independent Registered Public Accounting Firm BDO USA, P.C. issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of June 29, 2025 - BDO USA, P.C. audited and expressed an unqualified opinion on the effectiveness of 1-800-FLOWERS.COM, Inc.'s internal control over financial reporting as of June 29, 2025[259] - The audit was conducted in accordance with PCAOB standards, obtaining reasonable assurance about whether effective internal control over financial reporting was maintained[262] Item 9B. Other Information No directors or executive officers adopted or terminated Rule 10b5-1 trading arrangements during the quarter ended June 29, 2025 - No directors or executive officers adopted or terminated a 'Rule 10b5-1 trading arrangement' or a 'non-rule 10b5-1 trading arrangement' during the three months ended June 29, 2025[265] Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections This item is not applicable to the company - This item is not applicable[266] PART III Item 10. Directors, Executive Officers and Corporate Governance Information on directors, executive officers, and corporate governance is incorporated by reference from the 2025 Proxy Statement - Information regarding directors, executive officers, audit committee, and Section 16(a) beneficial ownership reporting compliance is incorporated by reference from the 2025 Annual Meeting of Stockholders Proxy Statement[268] - The Company maintains a Code of Business Conduct and Ethics, applicable to all directors, officers, and employees, available on its investor relations website[269] Item 11. Executive Compensation Executive compensation information is incorporated by reference from the 2025 Annual Meeting of Stockholders Proxy Statement - Information regarding executive compensation is incorporated by reference from the Company's Definitive Proxy Statement for the 2025 Annual Meeting of Stockholders[270] Item 12. Security Ownership and Stockholder Matters Security ownership and stockholder matters information is incorporated by reference from the 2025 Proxy Statement - Information regarding security ownership of certain beneficial owners and management and related stockholder matters is incorporated by reference from the Company's Definitive Proxy Statement for the 2025 Annual Meeting of Stockholders[271] Item 13. Certain Relationships and Related Transactions, and Director Independence Related transactions and director independence information is incorporated by reference from the 2025 Proxy Statement - Information regarding certain relationships and related transactions, and director independence, is incorporated by reference from the Company's Definitive Proxy Statement for the 2025 Annual Meeting of Stockholders[272] Item 14. Principal Accounting Fees and Services Principal accounting fees and services information is incorporated by reference from the 2025 Proxy Statement - Information regarding principal accounting fees and services is incorporated by reference from the Company's Definitive Proxy Statement for the 2025 Annual Meeting of Stockholders[273] PART IV Item 15. Exhibits and Financial Statement Schedules This section indexes consolidated financial statements, auditor's report, Schedule II, and an extensive list of exhibits - This section includes the Index to Consolidated Financial Statements, comprising the Report of Independent Registered Public Accounting Firm, Consolidated Balance Sheets, Statements of Operations, Stockholders' Equity, and Cash Flows, along with Notes[275] - Schedule II - Valuation and Qualifying Accounts is also included[276] - An Index to Exhibits lists various documents, including equity purchase agreements, corporate governance documents, credit agreements, and employment/compensation plans[277][278][279] Item 16. Form 10-K Summary This item is not applicable to the company - This item is not applicable[281] Signatures The Annual Report on Form 10-K was signed on September 5, 2025, by the CEO and other principal officers and directors - The Annual Report was signed on September 5, 2025, by Adolfo Villagomez (Chief Executive Officer), James Langrock (Senior Vice President, Treasurer and Chief Financial Officer), Priscilla Kasenchak (Senior Vice President, Finance and Chief Accounting Officer), James F. McCann (Executive Chairman), Christopher G. McCann (Director), and other Directors[285][286] Report of Independent Registered Public Accounting Firm (Financial Statements) BDO USA, P.C. issued an unqualified opinion on consolidated financial statements, with critical audit matters on tradename and goodwill valuation - BDO USA, P.C. issued an unqualified opinion on the consolidated financial statements of 1-800-FLOWERS.COM, Inc. for the periods ended June 29, 2025, and June 30, 2024, confirming fair presentation in conformity with U.S. GAAP[288] - Critical audit matters included the valuation of the indefinite-lived intangible asset – Personalization Mall Tradename, specifically the perpetual growth rate, discount rate, and royalty rate[294][296] - Another critical audit matter was the valuation of goodwill related to the Consumer Floral & Gifts Reporting Unit, focusing on the forecasted revenues, perpetual growth rate, and discount rate[298][299] Consolidated Balance Sheets Total assets decreased to $772.6 million from $1,032.6 million, driven by reduced cash and goodwill impairment, impacting equity Consolidated Balance Sheet Summary (in thousands) | Metric | June 29, 2025 | June 30, 2024 | | :-------------------------- | :------------ | :------------ | | Assets: | | | | Cash and cash equivalents | $46,502 | $159,437 | | Total current assets | $282,727 | $385,732 | | Goodwill | $37,625 | $156,537 | | Trademarks with indefinite lives | $86,673 | $111,473 | | Total assets | $772,617 | $1,032,648| | Liabilities: | | | | Total current liabilities | $221,386 | $227,819 | | Long-term debt, net | $134,764 | $177,113 | | Total liabilities | $504,335 | $566,306 | | Stockholders' Equity: | | | | Total stockholders' equity | $268,282 | $466,342 | - Goodwill decreased significantly from $156.5 million in FY2024 to $37.6 million in FY2025, reflecting impairment charges[303] - Cash and cash equivalents decreased by $112.9 million from $159.4 million in FY2024 to $46.5 million in FY2025[303] Consolidated Statements of Operations and Comprehensive Income (Loss) Fiscal 2025 saw a $199.99 million net loss, an 8.0% revenue decrease to $1,685.66 million, and significant impairment charges Consolidated Statements of Operations Summary (in thousands, except per share data) | Metric | FY2025 | FY2024 | FY2023 | | :------------------------------------ | :------------ | :------------ | :------------ | | Net revenues | $1,685,658 | $1,831,421 | $2,017,853 | | Gross profit | $652,272 | $734,753 | $757,526 | | Total operating expenses | $857,085 | $736,825 | $792,537 | | Operating loss | $(204,813) | $(2,072) | $(35,011) | | Loss before income taxes | $(213,357) | $(5,902) | $(46,762) | | Income tax (benefit) expense | $(13,364) | $203 | $(2,060) | | Net loss | $(199,993)| $(6,105) | $(44,702) | | Basic net loss per common share | $(3.13) | $(0.09) | $(0.69) | | Diluted net loss per common share | $(3.13) | $(0.09) | $(0.69) | - Goodwill impairment in FY2025 was $119.02 million, and intangible impairment was $24.80 million, significantly contributing to the operating loss[306] Consolidated Statements of Stockholders' Equity Total stockholders' equity decreased to $268.28 million from $466.34 million, driven by net loss and treasury stock acquisitions Consolidated Stockholders' Equity Summary (in thousands) | Metric | June 29, 2025 | June 30, 2024 | July 2, 2023 | | :------------------------------------ | :------------ | :------------ | :------------ | | Balance at beginning of period | $466,342 | $471,843 | $509,409 | | Net loss | $(199,993) | $(6,105) | $(44,702) | | Stock-based compensation | $11,891 | $10,688 | $8,334 | | Acquisition of Class A treasury stock | $(10,226) | $(10,456) | $(1,239) | | Balance at end of period | $268,282 | $466,342 | $471,843 | - The significant decrease in total stockholders' equity in FY2025 was primarily due to the net loss of $199.99 million[308] Consolidated Statements of Cash Flows Fiscal 2025 saw $26.36 million net cash used in operations, $44.46 million in investing, and $42.11 million in financing activities Consolidated Statements of Cash Flows Summary (in thousands) | Activity | FY2025 | FY2024 | FY2023 | | :-------------------------------------- | :------------ | :------------ | :------------ | | Net cash (used in) provided by operating activities | $(26,363) | $94,999 | $115,351 | | Net cash used in investing activities | $(44,463) | $(42,304) | $(50,829) | | Net cash (used in) provided by financing activities | $(42,109) | $(20,065) | $30,820 | | Net change in cash and cash equivalents | $(112,935) | $32,630 | $95,342 | | Cash and cash equivalents, end of year | $46,502 | $159,437 | $126,807 | - Net cash used in operating activities in FY2025 was primarily due to the net loss and uses of cash for working capital purposes, including decreases in accounts payable and accrued expenses[311] - Capital expenditures amounted to $41.46 million in FY2025, contributing to cash used in investing activities[311] - Repayment of bank borrowings totaled $140.0 million in FY2025, including a $25.0 million voluntary prepayment on the term loan[311] Notes to Consolidated Financial Statements Notes detail accounting policies, financial performance, acquisitions, assets, liabilities, equity, and recent accounting pronouncements Note 1. Description of Business 1-800-FLOWERS.COM, Inc. is a leading gift provider through its e-commerce platform, featuring diverse brands and BloomNet® services - The Company is a leading provider of gifts, operating an e-commerce platform with brands such as 1-800-Flowers.com®, Harry & David®, and PersonalizationMall.com®[315] - It also operates BloomNet®, an international floral and gift industry service provider, and the Celebrations Passport® loyalty program[315] Note 2. Significant Accounting Policies This note outlines the company's significant accounting policies, including fiscal year, estimates, asset valuation, revenue recognition, and recently adopted accounting pronouncements - The Company's fiscal year is a 52- or 53-week period ending on the Sunday nearest to June 30, with fiscal years 2025, 2024, and 2023 each consisting of 52 weeks[317] - Goodwill and other intangible assets are subject to annual impairment assessments, with fair value estimations involving significant management estimates and assumptions[323][334] - Revenue is recognized when control of merchandise or services is transferred to the customer, reduced by discounts, returns, and credits, across e-commerce, retail, wholesale, and BloomNet services[346][347][351] - The Company adopted ASU 2023-07, Segment Reporting, in the fourth quarter of fiscal 2025, requiring enhanced disclosures about significant segment expenses[361] - The Company is evaluating the impact of ASU 2023-09 (Income Tax Disclosures) and ASU 2024-03 (Expense Disaggregation Disclosures), effective for fiscal years beginning after December 15, 2024, and December 15, 2026, respectively[362][363] Note 3. Net Loss Per Common Share For fiscal years 2025, 2024, and 2023, the company reported net losses, resulting in anti-dilutive common stock equivalents excluded from diluted EPS Net Loss Per Common Share (in thousands, except per share data) | Metric | FY2025 | FY2024 | FY2023 | | :------------------------------------ | :------------ | :------------ | :------------ | | Net loss | $(199,993) | $(6,105) | $(44,702) | | Weighted average shares outstanding | 63,807 | 64,586 | 64,688 | | Basic net loss per common share | $(3.13) | $(0.09) | $(0.69) | | Diluted net loss per common share | $(3.13) | $(0.09) | $(0.69) | - Due to net losses, common stock equivalents (stock options and unvested restricted stock awards) were excluded from diluted net loss per share calculations as their inclusion would be anti-dilutive[364] Note 4. Acquisitions The company completed several acquisitions, including Scharffen Berger® ($3.3 million), Card Isle ($3.6 million), and Things Remembered® ($5.0 million), expanding product offerings - On July 1, 2024, the Company acquired certain assets of Scharffen Berger®, a chocolate manufacturer, for $3.3 million, expanding the Gourmet Foods & Gift Baskets segment[365][366] - On April 3, 2024, the Company acquired certain assets of Card Isle, an e-commerce greeting card company, for $3.6 million, expanding its greeting card category within the BloomNet segment[368][369] - On January 10, 2023, the Company acquired certain assets of the Things Remembered® brand for $5.0 million, integrating personalized gifts into the PersonalizationMall.com® brand[371][372] - Scharffen Berger and Card Isle acquisitions were deemed immaterial to consolidated financial statements, while Things Remembered's e-commerce revenues were $30.4 million for the twelve months prior to acquisition[367][370][371][373] Note 5. Inventory As of June 29, 2025, total inventory was $177.13 million, valued at the lower of cost or net realizable value using a standard costing methodology Inventory Composition (in thousands) | Category | June 29, 2025 | June 30, 2024 | | :-------------- | :------------ | :------------ | | Finished goods | $99,703 | $94,590 | | Work-in-process | $19,256 | $25,849 | | Raw materials | $58,168 | $56,152 | | Total inventory | $177,127 | $176,591 | - Inventories are valued at the lower of cost or net realizable value, using a standard costing methodology that approximates cost on a first-in, first-out basis[320] Note 6. Property, Plant and Equipment, Net Net property, plant and equipment totaled $215.60 million as of June 29, 2025, with depreciation expense of $51.6 million for fiscal 2025 Property, Plant and Equipment, Net (in thousands) | Category | June 29, 2025 | June 30, 2024 | | :-------------------------------------- | :------------ | :------------ | | Land | $33,811 | $33,827 | | Orchards in production and land improvements | $21,539 | $20,604 | | Building and building improvements | $70,479 | $69,089 | | Leasehold improvements | $31,866 | $31,289 | | Production equipment | $135,213 | $131,664 | | Furniture and fixtures | $9,517 | $9,325 | | Computer and telecommunication equipment | $41,378 | $42,159 | | Software | $208,960 | $176,160 | | Capital projects in progress | $13,313 | $23,172 | | Property, plant and equipment, gross | $566,076 | $537,289 | | Accumulated depreciation and amortization | $(350,480) | $(313,500) | | Property, plant and equipment, net | $215,596 | $223,789 | - Depreciation expense for the years ended June 29, 2025, June 30, 2024, and July 2, 2023, was $51.6 million, $49.3 million, and $49.5 million, respectively[376] Note 7. Goodwill and Other Intangibles, Net Goodwill decreased significantly to $37.63 million due to a $119.02 million impairment charge, with total identifiable intangibles at $89.36 million Goodwill by Segment (in thousands) | Segment | June 29, 2025 | June 30, 2024 | | :-------------------------- | :------------ | :------------ | | Consumer Floral & Gifts | $34,554 | $153,577 | | BloomNet | $2,960 | $2,960 | | Gourmet Foods & Gift Baskets| $111 | $0 | | Total Goodwill | $37,625 | $156,537 | - In fiscal 2025, a non-cash goodwill impairment charge of $119.02 million was recorded for the Consumer Floral & Gifts reporting unit[377] Other Intangible Assets, Net (in thousands) | Category | June 29, 2025 | June 30, 2024 | | :-------------------------------------- | :------------ | :------------ | | Intangible assets with determinable lives | $2,691 | $4,743 | | Trademarks with indefinite lives | $86,673 | $111,473 | | Total identifiable intangible assets| $89,364 | $116,216 | - A non-cash impairment charge of $24.8 million was recorded for the Perso