Financial Data and Key Metrics Changes - Consolidated revenue for Q1 2026 decreased by 11.1%, with a 14.6% decline in the consumer floral and gift segment and an 8.6% decline in the gourmet foods and gift baskets segment [16][17] - Adjusted EBITDA loss for Q1 was $32.9 million compared to a loss of $27.9 million in the prior year period, marking the first year-over-year improvement in adjusted EBITDA trends over the past seven quarters [15][17] - Gross margin decreased by 240 basis points to 35.7% compared to 38.1% in the prior year, primarily due to sales deleveraging and higher tariffs [16][17] Business Line Data and Key Metrics Changes - Consumer floral and gift segment saw a revenue decline of 14.6%, while the gourmet foods and gift baskets segment experienced an 8.6% decline [16] - BloomNet segment revenues were essentially flat compared to the prior year [16] Market Data and Key Metrics Changes - The company is now selling products through third-party marketplaces including Amazon and Walmart.com, which is expected to increase accessibility and sales [10][46] - The wholesale business is anticipated to see strong sales growth year-over-year for the holiday season, despite a shift in order timing from Q1 to Q2 [30][31] Company Strategy and Development Direction - The company is focused on four strategic initiatives: strengthening customer focus, enhancing talent and accountability, achieving cost savings and organizational efficiency, and expanding reach beyond e-commerce [7][10] - A shift towards prioritizing marketing contribution margin has been implemented to optimize marketing spend and drive profitable growth [8][14] - The company is testing a paid traffic consolidation strategy to improve productivity and maximize return on investment [9] Management's Comments on Operating Environment and Future Outlook - Management views fiscal 2026 as a year of stabilization, with early signs of positive momentum from strategic changes [6][14] - The company acknowledges challenges but is optimistic about the benefits from recent changes and the potential for sustainable financial performance [15][16] - Management is committed to maintaining stability and delivering a seamless customer experience during the critical holiday period [12][13] Other Important Information - The company has identified an additional $50 million in cost savings over the next two years, with half expected to be realized in fiscal 2026 [18][39] - Net debt at the end of the quarter was $259.3 million, with a cash balance of $7.7 million and inventory at $269.8 million [18] Q&A Session Summary Question: Are you still dealing with price surcharges on gas prices? - Management indicated that fuel surcharges have moderated but have not gone away [22] Question: Have you included changes in products and price points? - The merchandising organization continuously reviews assortment and pricing strategies [23] Question: What is the competitive environment in the consumer floral space? - There are more competitors emerging, increasing marketing costs due to competition for search terms [27] Question: How is the holiday season looking? - Strong wholesale sales are anticipated for the holiday season, with a shift in timing impacting Q1 results [30][31] Question: Can you quantify the revenue impact of the shift between quarters? - The revenue impact was estimated to be several million dollars, around $3 million to $4 million [38] Question: What is the timing of the $50 million in gross savings? - Half of the savings are expected in fiscal 2026 and the other half in fiscal 2027 [39] Question: What happened to the tax expense this quarter? - A valuation allowance was set up for deferred tax assets due to three years of cumulative losses [44] Question: How is the move into Amazon and Walmart.com performing? - Early results are positive, with incremental sales growth and learning from best practices on those platforms [46] Question: What is the impact of increased commodity costs? - Commodity costs had a mixed impact, with some commodities up year-over-year but not significantly affecting Q1 results [48] Question: How would potential tariffs on Colombian flowers impact the business? - Such tariffs would significantly impact the U.S. floral industry, leading to higher prices across the ecosystem [52][53] Question: What is the strategy for pop-up shops this holiday season? - The pop-up shops aim to drive sales and brand awareness while testing a physical retail concept for future expansion [58]