10-Q 1 flws20231231_10q.htm FORM 10-Q flws20231231_10q.htm
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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 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. 00010848692023-07-032023-12-31 xbrli:shares 0001084869us-gaap:CommonClassAMember2024-02-02 0001084869us-gaap:CommonClassBMember2024-02-02 thunderdome:item iso4217:USD 00010848692023-12-31 00010848692023-07-02 iso4217:USDxbrli:shares 0001084869us-gaap:CommonClassAMember2023-12-31 0001084869us-gaap:CommonClassAMember2023-07-02 0001084869us-gaap:CommonClassBMember2023-12-31 0001084869us-gaap:CommonClassBMember2023-07-02 00010848692023-10-022023-12-31 00010848692022-10-032023-01-01 00010848692022-07-042023-01-01 0001084869us-gaap:CommonClassAMemberus-gaap:CommonStockMember2023-10-01 0001084869us-gaap:CommonClassBMemberus-gaap:CommonStockMember2023-10-01 0001084869us-gaap:AdditionalPaidInCapitalMember2023-10-01 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Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2023

 

or 

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ___

 

Commission File No. 0-26841

flws20231231_10qimg001.jpg

 

1-800-FLOWERS.COM, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware

11-3117311

(State of incorporation)

(I.R.S. Employer Identification No.)

Two Jericho Plaza, Suite 200, Jericho, NY 11753

(516) 237-6000

(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

Class A common stock

FLWS

The Nasdaq Stock Market

 

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. Yes ☑ No ☐         

 

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). Yes ☑   No ☐

 

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

Accelerated filer

☐Non-accelerated filer

Smaller reporting company

 

Emerging growth company

 

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   No

 

The number of shares outstanding of each of the Registrant’s classes of common stock as of February 2, 2024:

 

Class A common stock: 37,428,934

Class B common stock: 27,068,221

 

  

 

1-800-FLOWERS.COM, Inc.

FORM 10-Q

For the quarterly period ended December 31, 2023

TABLE OF CONTENTS

 

   

Page

Part I.

Financial Information

 

Item 1.

Condensed Consolidated Financial Statements

1

 

Condensed Consolidated Balance Sheets – December 31, 2023 (Unaudited) and July 2, 2023

1

 

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) – Three and Six Months Ended December 31, 2023 and January 1, 2023

2

 

Condensed Consolidated Statements of Stockholders' Equity (Unaudited) – Three and Six Months Ended December 31, 2023 and January 1, 2023

3

 

Condensed Consolidated Statements of Cash Flows (Unaudited) – Six Months Ended December 31, 2023 and January 1, 2023

5

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

19

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

35

Item 4.

Controls and Procedures

35

     

Part II.

Other Information

36

Item 1.

Legal Proceedings

36

Item 1A.

Risk Factors

36

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

37

Item 3.

Defaults upon Senior Securities

37

Item 4.

Mine Safety Disclosures

37

Item 5.

Other Information

37

Item 6.

Exhibits

38

     

Signatures

 

 

 

 

 

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)

 

  

December 31, 2023

  

July 2, 2023

 
  

(unaudited)

     

Assets

        

Current assets:

        

Cash and cash equivalents

 $312,017  $126,807 

Trade receivables, net

  46,578   20,419 

Inventories

  161,324   191,334 

Prepaid and other

  24,557   34,583 

Total current assets

  544,476   373,143 
         

Property, plant and equipment, net

  227,643   234,569 

Operating lease right-of-use assets

  117,825   124,715 

Goodwill

  153,577   153,376 

Other intangibles, net

  117,897   139,888 

Other assets

  30,292   25,739 

Total assets

 $1,191,710  $1,051,430 
         

Liabilities and Stockholders' Equity

        

Current liabilities:

        

Accounts payable

 $92,418  $52,588 

Accrued expenses

  224,084   141,914 

Current maturities of long-term debt

  10,000   10,000 

Current portion of long-term operating lease liabilities

  15,433   15,759 

Total current liabilities

  341,935   220,261 
         

Long-term debt, net

  181,749   186,391 

Long-term operating lease liabilities

  110,740   117,330 

Deferred tax liabilities, net

  25,026   31,134 

Other liabilities

  28,900   24,471 

Total liabilities

  688,350   579,587 
         

Commitments and contingencies (See Note 14)

          
         

Stockholders' equity:

        

Preferred stock, $0.01 par value, 10,000,000 shares authorized, none issued

  -   - 

Class A common stock, $0.01 par value, 200,000,000 shares authorized, 58,743,969 and 58,273,747 shares issued at December 31, 2023 and July 2, 2023, respectively

  588   583 

Class B common stock, $0.01 par value, 200,000,000 shares authorized, 32,348,221 shares issued at December 31, 2023 and July 2, 2023

  323   323 

Additional paid-in capital

  392,849   388,215 

Retained earnings

  302,748   271,083 

Accumulated other comprehensive loss

  (170)  (170)

Treasury stock, at cost, 21,089,336 and 20,565,875 Class A shares at December 31, 2023 and July 2, 2023, respectively and 5,280,000 Class B shares at December 31, 2023 and July 2, 2023

  (192,978)  (188,191)

Total stockholders’ equity

  503,360   471,843 

Total liabilities and stockholders’ equity

 $1,191,710  $1,051,430 

 

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

  

Six Months Ended

 
  

December 31,

2023

  

January 1,

2023

  

December 31,

2023

  

January 1,

2023

 
                 

Net revenues

 $822,054  $897,877  $1,091,104  $1,201,481 

Cost of revenues

  466,357   530,111   633,479   732,257 

Gross profit

  355,697   367,766   457,625   469,224 

Operating expenses:

                

Marketing and sales

  188,557   194,466   271,075   283,605 

Technology and development

  14,822   14,952   30,126   29,692 

General and administrative

  27,154   28,908   55,643   55,153 

Depreciation and amortization

  14,152   14,315   27,346   27,009 

Intangible impairment

  19,762   -   19,762   - 

Total operating expenses

  264,447   252,641   403,952   395,459 

Operating income

  91,250   115,125   53,673   73,765 

Interest expense, net

  4,611   4,143   8,093   6,964 

Other (income) expense, net

  (2,736)  148   (2,262)  1,070 

Income before income taxes

  89,375   110,834   47,842   65,731 

Income tax expense

  26,468   28,304   16,177   16,893 

Net income and comprehensive net income

  62,907   82,530   31,665   48,838 
                 

Basic net income per common share

 $0.97  $1.28  $0.49  $0.76 
                 

Diluted net income per common share

 $0.97  $1.27  $0.49  $0.75 
                 

Weighted average shares used in the calculation of net income per common share:

                

Basic

  64,835   64,675   64,814   64,606 

Diluted

  65,177   64,835   65,155   64,820 

 

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 December 31, 2023 and January 1, 2023

 
  

Common Stock

  

Additional

  

 

  

Accumulated

Other

          

Total

 
  

Class A

  

Class B

  

Paid-in

  Retained  

Comprehensive

  

Treasury Stock

  

Stockholders’

 
  

Shares

  

Amount

  

Shares

  

Amount

  

Capital

  

Earnings

  

Loss

  

Shares

  

Amount

  

Equity

 
                                         

Balance at October 1, 2023

  58,309,547  $583   32,348,221  $323  $390,579  $239,841  $(170)  25,856,358  $(188,265) $442,891 

Net income

  -   -   -   -   -   62,907   -   -   -   62,907 

Stock-based compensation

  429,312   5   -   -   2,226   -   -   -   -   2,231 

Exercise of stock options

  5,110   -   -   -   44   -   -   -   -   44 

Acquisition of Class A treasury stock

  -   -   -   -   -   -   -   512,978   (4,713)  (4,713)

Balance at December 31, 2023

  58,743,969  $588   32,348,221  $323  $392,849  $302,748  $(170)  26,369,336  $(192,978) $503,360 
                                         

Balance at October 2, 2022

  57,706,389  $577   32,529,614  $325  $381,440  $282,093  $(211)  25,698,396  $(186,952) $477,272 

Net income

  -   -   -   -   -   82,530   -   -   -   82,530 

Stock-based compensation

  368,249   4   -   -   1,895   -   -   -   -   1,899 

Conversion – Class B into Class A

  181,393   2   (181,393)  (2)  -   -   -       -   - 

Acquisition of Class A treasury stock

  -   -   -   -   -   -   -   140,248   (1,175)  (1,175)

Balance at January 1, 2023

  58,256,031  $583   32,348,221  $323  $383,335  $364,623  $(211)  25,838,644  $(188,127) $560,526 

 

 

1-800-FLOWERS.COM, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders' Equity

(in thousands, except share data)

(unaudited)

 

 

  

Six Months Ended December 31, 2023 and January 1, 2023

 
  

Common Stock

  

Additional

  

 

  

Accumulated

Other

          

Total

 
  

Class A

  

Class B

  

Paid-in

  Retained  

Comprehensive

  

Treasury Stock

  

Stockholders’

 
  

Shares

  

Amount

  

Shares

  

Amount

  

Capital

  

Earnings

  

Loss

  

Shares

  

Amount

  

Equity

 
                                         

Balance at July 2, 2023

  58,273,747  $583   32,348,221  $323  $388,215  $271,083  $(170)  25,845,875  $(188,191) $471,843 

Net income

  -   -   -   -   -   31,665   -   -   -   31,665 

Stock-based compensation

  465,112   5   -   -   4,590   -   -   -   -   4,595 

Exercise of stock options

  5,110   -   -   -   44   -   -   -   -   44 

Acquisition of Class A treasury stock

  -   -   -   -   -   -   -   523,461   (4,787)  (4,787)

Balance at December 31, 2023

  58,743,969  $588   32,348,221  $323  $392,849  $302,748  $(170)  26,369,336  $(192,978) $503,360 
                                         

Balance at July 3, 2022

  57,706,389  $577   32,529,614  $325  $379,885  $315,785  $(211)  25,698,396  $(186,952) $509,409 

Net income

  -   -   -   -   -   48,838   -   -   -   48,838 

Stock-based compensation

  368,249   4   -   -   3,450   -   -   -   -   3,454 

Conversion – Class B into Class A

  181,393   2   (181,393)  (2)  -   -   -       -   - 

Acquisition of Class A treasury stock

  -   -   -   -   -   -   -   140,248   (1,175)  (1,175)

Balance at January 1, 2023

  58,256,031  $583   32,348,221  $323  $383,335  $364,623  $(211)  25,838,644  $(188,127) $560,526 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

 

 

 

1-800-FLOWERS.COM, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

  

Six Months Ended

 
  

December 31,

2023

  

January 1,

2023

 
         

Operating activities:

        

Net income

 $31,665  $48,838 

Adjustments to reconcile net income to net cash provided by operating activities:

        

Intangible impairment

  19,762   - 

Depreciation and amortization

  27,346   27,009 

Amortization of deferred financing costs

  361   671 

Deferred income taxes

  (6,108)  (846)

Bad debt expense

  225   2,407 

Stock-based compensation

  4,595   3,454 

Other non-cash items

  (385)  (470)

Changes in operating items:

        

Trade receivables

  (26,384)  (31,622)

Inventories

  29,808   46,506 

Prepaid and other

  6,640   7,550 

Accounts payable and accrued expenses

  125,404   89,050 

Other assets and liabilities

  (169)  1,113 

Net cash provided by operating activities

  212,760   193,660 
         

Investing activities:

        

Capital expenditures

  (17,807)  (23,849)

Net cash used in investing activities

  (17,807)  (23,849)
         

Financing activities:

        

Acquisition of treasury stock

  (4,787)  (1,175)

Proceeds from exercise of employee stock options

  44   - 

Proceeds from bank borrowings

  82,000   195,900 

Repayment of bank borrowings

  (87,000)  (205,900)

Debt issuance cost

  -   (383)

Net cash used in financing activities

  (9,743)  (11,558)
         

Net change in cash and cash equivalents

  185,210   158,253 

Cash and cash equivalents:

        

Beginning of period

  126,807   31,465 

End of period

 $312,017  $189,718 

 

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 and six-month periods ended December 31, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2024. These financial statements should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended July 2, 2023, 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. 

 

6

 

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 July 2, 2023 was $30.8 million (included in “Accrued expenses” on our consolidated balance sheets), of which $10.7 million and $26.8 million was recognized as revenue during the three and six months ended December 31, 2023. The deferred revenue balance as of December 31, 2023 was $39.9 million.  

 

Impairment Evaluation

 

The Company performs its annual assessment of goodwill and indefinite-lived intangible impairment during its fiscal fourth quarter, or more frequently if events occur or circumstances change such that it is more likely than not that an impairment  may exist. During the quarter ended December 31, 2023, as a result of a decline in the actual and projected revenue for the Company’s PersonalizationMall tradename (indefinite-lived intangible asset), as well as a higher discount rate resulting from the higher interest rate environment, the Company determined that an impairment assessment was required for this tradename. This assessment resulted in the Company recording a non-cash impairment charge of $19.8 million to reduce the recorded carrying value of the PersonalizationMall tradename.

 

The Company concluded that goodwill and other indefinite-lived intangible assets, excluding its PersonalizationMall tradename, did not require an impairment assessment. See Note 5 – Goodwill and Intangible Assets, Net for further information.

 

Recently Issued Accounting Pronouncements

 

In November 2023, the Financial Accounting Standard 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.

 

7

  
 

Note 2 Net Income (Loss) Per Common Share

 

Basic net income per common share is computed by dividing the net income during the period by the weighted average number of common shares outstanding during the period. Diluted net income per common share reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock.

 

The following table sets forth the computation of basic and diluted net income per common share:

 

  

Three Months Ended

  

Six Months Ended

 
  

December 31,

2023

  

January 1,

2023

  

December 31,

2023

  

January 1,

2023

 
  

(in thousands, except per share data)

 

Numerator:

                

Net income

 $62,907  $82,530  $31,665  $48,838 
                 

Denominator:

                

Weighted average shares outstanding

  64,835   64,675   64,814   64,606 

Effect of dilutive stock options and unvested restricted stock awards

  342   160   341   214 
                 

Diluted weighted-average shares outstanding

  65,177   64,835   65,155   64,820 
                 

Net income per common share

                

Basic

 $0.97  $1.28  $0.49  $0.76 

Diluted

 $0.97  $1.27  $0.49  $0.75 

  

 

Note 3 Acquisitions

 

Acquisition of Things Remembered

 

On January 10, 2023, the Company completed its acquisition of certain assets of the Things Remembered brand, a provider of personalized gifts, whose operations are integrated within the PersonalizationMall.com brand, in the Consumer Floral & Gifts segment. The Company used cash on hand to fund the $5.0 million purchase, which included the intellectual property, customer list, certain inventory, and equipment. The acquisition did not include Things Remembered retail stores. Things Remembered’s annual revenues from its e-commerce operations, based on its most recently available unaudited financial information was $30.4 million for the twelve months ended November 30, 2022.

 

The total consideration of $5.0 million was allocated to the identifiable assets acquired and liabilities assumed based on our estimates of their fair values on the acquisition date, including: goodwill of $1.9 million (deductible for income tax purposes), trademarks of $0.8 million (indefinite life), customer lists of $0.8 million (3-year life), inventory of $1.1 million, and equipment of $0.4 million. During the quarter ended December 31, 2023, the Company finalized its purchase price allocation, resulting in immaterial adjustments to the preliminary carrying value of the respective recorded assets and the residual amount that was allocated to goodwill.

 

Operating results of the Things Remembered business are reflected in the Company’s consolidated financial statements from the date of acquisition within the Consumer Floral & Gifts segment. Pro forma results of operations have not been presented, as the impact on the Company’s consolidated financial results was not material.

 

8

  
 

Note 4 Inventory, Net

 

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:

 

  

December 31, 2023

  

July 2, 2023

 
  

(in thousands)

 

Finished goods

 $92,160  $92,582 

Work-in-process

  20,158   33,818 

Raw materials

  49,006   64,934 

Total inventory

 $161,324  $191,334 

  

 

Note 5 Goodwill and Intangible Assets, Net

 

The following table presents goodwill by segment and the related change in the net carrying amount:

 

  

Consumer

Floral &

Gifts

  

BloomNet

  

Gourmet

Foods &

Gift
Baskets

  

Total

 
  

(in thousands)

 

Balance at July 2, 2023

 $153,376  $-  $-  $153,376 

Measurement period adjustment for Things Remembered Acquisition

  201   -   -   201 

Balance at December 31, 2023

 $153,577  $-  $-  $153,577 

 

The Company’s other intangible assets consist of the following:

 

       

December 31, 2023

  

July 2, 2023

 
  

Amortization

Period

  

Gross

Carrying

Amount

  

Accumulated
Amortization

  

Net

  

Gross

Carrying

Amount

  

Accumulated
Amortization

  

Net

 
  

(in years)

  

(in thousands)

 

Intangible assets with determinable lives

                             

Investment in licenses

 14-16  $7,420  $6,622  $798  $7,420  $6,569  $851 

Customer lists

 3-10   29,071   23,757   5,314   29,071   21,611   7,460 

Other

 5-14   2,946   2,634   312   2,946   2,604   342 

Total intangible assets with determinable lives

       39,437   33,013   6,424   39,437   30,784   8,653 

Trademarks with indefinite lives

       111,473   -   111,473   131,235   -   131,235 

Total identifiable intangible assets

      $150,910  $33,013  $117,897  $170,672  $30,784  $139,888 

 

Future estimated amortization expense is as follows: remainder of fiscal 2024 - $2.2 million, fiscal 2025 - $1.9 million, fiscal 2026 - $1.3 million, fiscal 2027 - $0.5 million, fiscal 2028 - $0.2 million and thereafter - $0.3 million.

 

The Company performs its annual assessment of goodwill and indefinite-lived intangible impairment during its fiscal fourth quarter, or more frequently if events occur or circumstances change such that it is more likely than not that an impairment  may exist.

 

9

 

During the quarter ended December 31, 2023, as a result of a decline in the actual and projected revenue for the Company’s PersonalizationMall tradename (indefinite-lived intangible asset), as well as a higher discount rate resulting from the higher interest rate environment, the Company determined that an impairment assessment was required. The Company’s impairment test for the indefinite-lived intangible asset encompassed calculating a fair value of the indefinite-lived intangible asset and comparing that result to its carrying value. To determine fair value of the indefinite-lived intangible asset, the Company used an income approach, the relief-from-royalty method. This method assumes that, in lieu of ownership, a third party would be willing to pay a royalty in order to obtain the rights to use the comparable asset. Indefinite-lived intangible assets’ fair values require significant judgments in determining both the assets’ estimated cash flows as well as the appropriate discount and royalty rates applied to those cash flows to determine fair value. Based on the impairment assessment performed for the quarter ending December 31, 2023, the Company recorded a non-cash impairment charge of $19.8 million to reduce the recorded carrying value of the PersonalizationMall tradename to its estimated fair value. This impairment charge was recorded in the Company’s Consumer Floral & Gifts reporting unit.

 

The Company concluded that goodwill and other indefinite-lived intangible assets, excluding its PersonalizationMall tradename, did not require an impairment assessment.

  

 

Note 6 Investments

 

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 equity investments without a readily determinable fair value was $2.6 million as of December 31, 2023 and July 2, 2023, respectively. 

 

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). 

  

 

Note 7 Debt, Net

 

The Company’s current and long-term debt consists of the following:

 

  

December 31, 2023

  

July 2, 2023

 
  

(in thousands)

 

Revolver

 $-  $- 

Term Loans

  195,000   200,000 

Deferred financing costs

  (3,251)  (3,609)

Total debt

  191,749   196,391 

Less: current maturities of long-term debt

  10,000   10,000 

Long-term debt, net

 $181,749  $186,391 

 

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 amends and restates 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) increases the amount of the outstanding term loan (“Term Loan”) from approximately $150 million to $200 million, (ii) decreases the amount of the commitments in respect of the revolving credit facility from $250 million to $225 million subject to a seasonal reduction to an aggregate amount of $125 million for the period from January 1 to August 1, (iii) extends the maturity date of the outstanding term loan and the revolving credit facilities by approximately 48 months to June 27, 2028, and (iv) increases the applicable interest rate margins for SOFR and base rate loans by 25 basis points.

 

10

 

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 0.5%, and (c) an adjusted SOFR rate plus an applicable margin varying based on the Company’s consolidated leverage ratio. The adjusted SOFR rate includes a credit spread adjustment of 0.1% for all interest periods.

 

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 December 31, 2023. 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 $2.5 million for the first 8 quarterly installments beginning on September 29, 2023, increasing to a quarterly payment of $5.0 million, commencing on September 26, 2025, for the remaining 11 payments, with the remaining balance of $125.0 million due upon maturity on June 27, 2028.

 

Future principal term loan payments under the Third Amended Credit Agreement are as follows: $5.0 million – remainder of Fiscal 2024, $10.0 million – Fiscal 2025, $20.0 million – Fiscal 2026, $20.0 million – Fiscal 2027, and $140.0 million – Fiscal 2028.

  

 

Note 8 - Property, Plant and Equipment, Net

 

The Company’s property, plant and equipment consists of the following:

 

  

December 31, 2023

  

July 2, 2023

 
  

(in thousands)

 

Land

 $33,866  $33,866 

Orchards in production and land improvements

  20,604   20,401 

Building and building improvements

  68,510   67,647 

Leasehold improvements

  30,882   29,524 

Production equipment

  130,043   125,297 

Furniture and fixtures

  9,235   9,102 

Computer and telecommunication equipment

  43,041   41,859 

Software

  193,925   181,085 

Capital projects in progress

  14,644   18,205 

Property, plant and equipment, gross

  544,750   526,986 

Accumulated depreciation and amortization

  (317,107)  (292,417)

Property, plant and equipment, net

 $227,643  $234,569 

  

 

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.

 

11

 

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

Value

  

Fair Value Measurements

Assets (Liabilities)

 
      

Level 1

  

Level 2

  

Level 3

 
  

(in thousands)

 

As of December 31, 2023:

                

Trading securities held in a “rabbi trust” (1)

 $27,183  $27,183  $-  $- 

Total assets (liabilities) at fair value

 $27,183  $27,183  $-  $- 
                 

As of July 2, 2023:

                

Trading securities held in a “rabbi trust” (1)

 $22,617  $22,617  $-  $- 

Total assets (liabilities) at fair value

 $22,617  $22,617  $-  $- 

 

 

(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 and six months ended December 31, 2023 was 29.6% and 33.8% respectively, compared to 25.5% and 25.7% in the same periods of the prior year. The Company’s effective tax rate for fiscal 2024 and fiscal 2023 differed from the U.S. federal statutory rate of 21.0% primarily due to state income taxes and non-deductible executive compensation, partially offset by tax credits and other items. Fiscal 2024 was further impacted by the impairment charge, which reduced the amount of income reflected in the Company’s estimated annual effective tax rate.

 

The Company files income tax returns in the U.S. federal jurisdiction, various state jurisdictions, and various foreign countries. The Company’s fiscal years 2020, 2021, and 2022 remain subject to U.S. federal examination. Due to ongoing state examinations and nonconformity with the U.S. federal statute of limitations for assessment, certain states remain open from fiscal 2016. The Company's foreign income tax filings from fiscal 2017 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 December 31, 2023, the Company has an unrecognized tax benefit, including accrued interest and penalties, of approximately $1.6 million. The Company believes that $0.1 million of unrecognized tax positions will be resolved over the next twelve months. 

 

12

  
 

Note 11 Business Segments

 

The Company’s management reviews the results of its operations by the following three 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

  

Six Months Ended

 
  

December 31,

2023

  

January 1,

2023

  

December 31,

2023

  

January 1,

2023

 

 

 

(in thousands)

 
Net Revenues:                

Segment Net Revenues:

                

Consumer Floral & Gifts

 $254,835  $277,049  $397,029  $439,229 

BloomNet

  27,236   32,852   56,106   66,219 

Gourmet Foods & Gift Baskets

  539,963   588,431   638,072   696,659 

Corporate

  279   72   549   116 

Intercompany eliminations

  (259)  (527)  (652)  (742)

Total net revenues

 $822,054  $897,877  $1,091,104  $1,201,481 
                 

Operating Income:

                

Segment Contribution Margin:

                

Consumer Floral & Gifts

 $10,593  $27,886  $19,419  $38,696 

BloomNet

  9,088   9,348   18,475   18,865 

Gourmet Foods & Gift Baskets

  118,153   123,503   107,125   104,793 

Segment Contribution Margin Subtotal

  137,834   160,737   145,019   162,354 

Corporate (a)

  (32,432)  (31,297)  (64,000)  (61,580)

Depreciation and amortization

  (14,152)  (14,315)  (27,346)  (27,009)

Operating income

 $91,250  $115,125  $53,673  $73,765 

 

(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, as well as Stock-based compensation. 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.

 

13

 

The following tables represent a disaggregation of revenue from contracts with customers, by channel: 

 

  

Three Months Ended

 
  

Consumer Floral &
Gifts

  

BloomNet

  

Gourmet Foods &

Gift
Baskets

  

Corporate and

Eliminations

  

Consolidated

 
  

December 31, 2023

  

January 1, 2023

  

December 31, 2023

  

January 1, 2023

  

December 31, 2023

  

January 1, 2023

  

December 31, 2023

  

January 1, 2023

  

December 31, 2023

  

January 1, 2023

 

Net revenues

                                        

E-commerce

 $252,845  $275,081  $-  $-  $485,561  $515,329  $-  $-  $738,406  $790,410 

Other

  1,990   1,968   27,236   32,852   54,402   73,102   20   (455)  83,648   107,467 

Total net revenues

 $254,835  $277,049  $27,236  $32,852  $539,963  $588,431  $20  $(455) $822,054  $897,877 
                                         

Other revenues detail

                                     

Retail and other

  1,990   1,968   -   -   4,296   4,313   -   -   6,286   6,281 

Wholesale

  -   -   8,706   12,054   50,106   68,789   -   -   58,812   80,843 

BloomNet services

  -   -   18,530   20,798   -   -   -   -   18,530   20,798 

Corporate

  -   -   -   -   -   -   279   72   279   72 

Eliminations

  -   -   -   -   -   -   (259)  (527)  (259)  (527)

Total other revenues

 $1,990  $1,968  $27,236  $32,852  $54,402  $73,102  $20  $(455) $83,648  $107,467 

 

14

 
  

Six Months Ended

 
  

Consumer Floral &
Gifts

  

BloomNet

  

Gourmet Foods &

Gift
Baskets

  

Corporate and

Eliminations

  

Consolidated

 
  

December 31, 2023

  

January 1, 2023

  

December 31, 2023

  

January 1, 2023

  

December 31, 2023

  

January 1, 2023

  

December 31, 2023

  

January 1, 2023

  

December 31, 2023

  

January 1, 2023

 

Net revenues

                                        

E-commerce

 $393,180  $435,463  $-  $-  $555,137  $593,869  $-  $-  $948,317  $1,029,332 

Other

  3,849   3,766   56,106   66,219   82,935   102,790   (103)  (626)  142,787   172,149 

Total net revenues

 $397,029  $439,229  $56,106  $66,219  $638,072  $696,659  $(103) $(626) $1,091,104  $1,201,481 
                                         

Other revenues detail

                                     

Retail and other

  3,849   3,766   -   -   6,230   6,221   -   -   10,079   9,987 

Wholesale

  -   -   20,503   25,675   76,705   96,569   -   -   97,208   122,244 

BloomNet services

  -   -   35,603   40,544   -   -   -   -   35,603   40,544 

Corporate

  -   -   -   -   -   -   549   116   549   116 

Eliminations

  -   -   -   -   -   -   (652)  (742)  (652)  (742)

Total other revenues

 $3,849  $3,766  $56,106  $66,219  $82,935  $102,790  $(103) $(626) $142,787  $172,149 

 

15

  
 

Note 12 Leases

 

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 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.

 

16

 

Additional information related to our leases is as follows:

 

  

Three Months Ended

  

Six Months Ended

 
  

December

31, 2023

  

January

1, 2023

  

December

31, 2023

  

January

1, 2023

 
  

(in thousands)

 

Lease costs:

                

Operating lease costs

 $5,651  $5,606  $11,273  $10,953 

Variable lease costs

  7,568   6,603   14,082   12,454 

Short-term lease cost

  2,535   2,889   3,418   4,454 

Sublease income

  (246)  (241)  (497)  (484)

Total lease costs

 $15,508  $14,857  $28,276  $27,377 
                 

Cash paid for amounts included in measurement of operating lease liabilities

  $11,300  $9,851 

Right-of-use assets obtained in exchange for new operating lease liabilities

  $1,784  $10,521 

 

  

December 31,

2023

 
  

(in thousands)

 

Weighted-average remaining lease term - operating leases (in years)

  8.4 

Weighted-discount rate - operating leases

  4.1%

 

Maturities of lease liabilities in accordance with ASC 842 as of December 31, 2023 and reconciliation to balance sheet are as follows (in thousands):

 

Fiscal Year:

    

Remainder of 2024

 $9,507 

2025

  20,644 

2026

  18,714 

2027

  17,095 

2028

  16,179 

Thereafter

  68,402 

Total Future Minimum Lease Payments

  150,541 

Less: Imputed Remaining Interest

  24,368 

Total Operating Lease Liabilities

  126,173 

Less: Current portion of long-term operating lease liabilities

  15,433 

Long-term operating lease liabilities

 $110,740 

  

 

Note 13 - Accrued Expenses

 

Accrued expenses consisted of the following:

 

  

December 31, 2023

  

July 2, 2023

 
  

(in thousands)

 

Payroll and employee benefits

 $30,889  $33,927 

Deferred revenue

  39,928   30,811 

Accrued marketing expenses

  13,646   13,679 

Accrued florist payout

  17,981   13,437 

Accrued purchases

  44,546   18,351 

Accrued income taxes

  20,756   922 

Other

  56,338   30,787 

Accrued Expenses

 $224,084  $141,914 

 

17

  
 

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.

 

18

  
 

ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

This Managements 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 Companys Annual Report on Form 10-K, for the year ended July 2, 2023. The following discussion contains forward-looking statements that reflect the Companys plans, estimates and beliefs. The Companys 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 Companys Annual Report on Form 10-K, for the year ended July 2, 2023 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 an 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®, and Simply Chocolate®. Through the Celebrations Passport® loyalty program, which provides members with free standard shipping and no service charge across our portfolio of brands, 1-800-FLOWERS.COM, Inc. 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 members grow their businesses profitably; Napco℠, a resource for floral gifts and seasonal décor; DesignPac Gifts, LLC, a manufacturer of gift baskets and towers; and Alice’s Table®, a lifestyle business offering fully digital floral, culinary and other experiences to guests across the country.

 

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 year ended July 2, 2023

 

Macro-economic Conditions

 

Overall, broader macro-economic conditions continue to impact our consumers as they continue to moderate their discretionary income. Consumers remain pressured by persistent inflation, higher interest rates, and the resumption of student loan repayments. Throughout the first half of fiscal 2024, we have seen that customer spending on “Everyday” gifting occasions has slowed, whereas spending for the major holidays has held up better. However, customers did remain more conservative regarding their holiday spending than originally anticipated.  In line with this, total consolidated revenues decreased 8.4% to $822.1 million and 9.2% to $1.09 billion during the three and six months ended December 31, 2023, respectively, compared with the same periods of the prior year. As we look ahead to the second half of fiscal 2024, we continue to expect our sales trends to improve albeit at a slower pace than initially anticipated.

 

The challenging macro-economic conditions that have affected our customers have also impacted our operating costs. During the second quarter of fiscal 2022, in-bound and out-bound shipping, commodity, labor and fuel costs began to surge, and escalated throughout the balance of the year and into fiscal 2023. During our second quarter and third quarter of fiscal 2023, while certain commodity prices remained near historical highs, we began to see a more stable labor market, and significant year-over-year reductions in ocean freight costs. As a result of these trends, combined with our strategic pricing initiatives, automation efforts, and other internal management initiatives, we started to see year-over-year improvement in gross margin commencing in the second quarter of fiscal 2023. These trends and initiatives continued into fiscal 2024 and we saw a significant improvement in year-over-year gross margin in the second quarter and first half of fiscal 2024. This improvement and a reduction of expenses helped to offset the aforementioned year-over-year decline in sales.

 

Intangible Impairment

 

During the quarter ended December 31, 2023, as a result of a decline in the actual and projected revenue for the Company’s PersonalizationMall tradename, as well as a higher discount rate resulting from the higher interest rate environment, the Company determined that an impairment assessment was required for this tradename. This assessment resulted in the Company recording a non-cash impairment charge of $19.8 million to reduce the recorded carrying value of the PersonalizationMall tradename. See Note 5 – Goodwill and Intangible Assets, Net for further information.

 

 

 

Acquisition of Things Remembered

 

On January 10, 2023, the Company completed its acquisition of certain assets of the Things Remembered brand, a provider of personalized gifts, whose operations have been integrated within the PersonalizationMall.com brand, in the Consumer Floral & Gifts segment. The Company used cash on hand to fund the $5.0 million purchase, which included intellectual property, customer list, certain inventory, and equipment - see Note 3 Acquisitions in Item 1

 

Amended and Restated Credit Agreement

 

On June 27, 2023, the Company entered into a Third Amended and Restated Credit Agreement to, among other modifications, (i) increase the amount of the outstanding term loan from approximately $150 million to $200 million, (ii) decrease the amount of the commitments in respect of the revolving credit facility from $250 million to $225 million subject to a seasonal reduction to an aggregate amount of $125 million for the period from January 1 to August 1, (iii) extend the maturity date of the outstanding term loan and the revolving credit facilities by approximately 48 months to June 27, 2028, and (iv) increase the applicable interest rate margins for SOFR and base rate loans by 25 basis points (See Note 7 - Debt, in Item 1, for details).

 

Company Guidance

 

The Company is updating its Fiscal 2024 guidance to reduce its revenue outlook for the full year, while maintaining its Adjusted EBITDA and Free Cash Flow expectations, as the improvement in gross profit margin and the company’s expense optimization efforts are expected to mitigate the softer than anticipated revenue improvement.

 

As a result, the Company now expects Fiscal 2024:

 

 

total revenues on a percentage basis to decline in a range of 7% to 9%, as compared with the prior year;

 

 

Adjusted EBITDA to be in a range of $95 million to $100 million; and

 

 

Free Cash Flow to be in a range of $60 million to $65 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.  Where applicable, see the Segment Information and Results of Operations sections below for reconciliations of these non-GAAP measures to their most directly comparable GAAP financial measures. These non-GAAP financial measures are referred to as “non-GAAP” or “adjusted” 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 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. See Segment Information for details on how EBITDA and Adjusted EBITDA were calculated for each period presented.

 

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 should only be used on a supplemental basis combined with GAAP results when evaluating the Company's performance.

 

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. See Segment Information for details on how segment contribution margin was calculated for each period presented.

 

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. 

 

Adjusted net income (loss) and adjusted or comparable net income (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. See Segment Information below for details on how adjusted net income (loss) and adjusted or comparable net income (loss) per common share were calculated for each period presented.

 

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. 

 

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.

 

 

Segment Information

 

The following table presents the net revenues, gross profit and segment contribution margin from each of the Company’s business segments, as well as consolidated EBITDA, and Adjusted EBITDA.

 

   

Three Months Ended

 
   

December 31, 2023

   

Intangible Impairment

   

As Adjusted (non-GAAP) December 31, 2023

   

January 1, 2023

   

Things Remembered Transaction Costs

   

As Adjusted (non-GAAP) January 1, 2023

   

% Change

 

Net revenues:

                                                       

Consumer Floral & Gifts

  $ 254,835     $ -     $ 254,835     $ 277,049     $ -     $ 277,049       -8.0 %

BloomNet

    27,236               27,236       32,852               32,852       -17.1 %

Gourmet Foods & Gift Baskets

    539,963               539,963       588,431               588,431       -8.2 %

Corporate

    279               279       72               72       287.5 %

Intercompany eliminations

    (259 )             (259 )     (527 )             (527 )     50.9 %

Total net revenues

  $ 822,054     $ -     $ 822,054     $ 897,877     $ -     $ 897,877       -8.4 %
                                                         

Gross profit:

                                                       

Consumer Floral & Gifts

  $ 109,176             $ 109,176     $ 112,274             $ 112,274       -2.8 %
      42.8 %             42.8 %     40.5 %             40.5 %        
                                                         

BloomNet

    12,974               12,974       13,879               13,879       -6.5 %
      47.6 %             47.6 %     42.2 %             42.2 %        
                                                         

Gourmet Foods & Gift Baskets

    233,200               233,200       241,418               241,418       -3.4 %
      43.2 %             43.2 %     41.0 %             41.0 %        
                                                         

Corporate

    347               347       195               195       77.9 %
      124.4 %             124.4 %     270.8 %             270.8 %        
                                                         

Total gross profit

  $ 355,697     $ -     $ 355,697     $ 367,766     $ -     $ 367,766       -3.3 %
      43.3 %     -       43.3 %     41.0 %     -       41.0 %        
                                                         

EBITDA (non-GAAP):

                                                       

Segment Contribution Margin (non-GAAP) (a):

                                                       

Consumer Floral & Gifts

  $ 10,593     $ 19,762     $ 30,355     $ 27,886     $ -     $ 27,886       8.9 %

BloomNet

    9,088               9,088       9,348               9,348       -2.8 %

Gourmet Foods & Gift Baskets

    118,153               118,153       123,503               123,503       -4.3 %

Segment Contribution Margin Subtotal

    137,834       19,762       157,596       160,737       -       160,737       -2.0 %

Corporate (b)

    (32,432 )             (32,432 )     (31,297 )     243       (31,054 )     -4.4 %

EBITDA (non-GAAP)

    105,402       19,762       125,164       129,440       243       129,683       -3.5 %

Add: Stock-based compensation

    2,231               2,231       1,899               1,899       17.5 %

Add: Compensation charge related to NQDC Plan Investment Appreciation (Depreciation)

    2,682               2,682       (196 )             (196 )     1468.4 %

Adjusted EBITDA (non-GAAP)

  $ 110,315     $ 19,762     $ 130,077     $ 131,143     $ 243     $ 131,386       -1.0 %

 

 

   

Six Months Ended

 
   

December 31, 2023

   

Intangible Impairment

   

As Adjusted (non-GAAP) December 31, 2023

   

January 1, 2023

   

Things Remembered Transaction Costs

   

As Adjusted (non-GAAP) January 1, 2023

   

% Change

 

Net revenues:

                                                       

Consumer Floral & Gifts

  $ 397,029     $ -     $ 397,029     $ 439,229     $ -     $ 439,229       -9.6 %

BloomNet

    56,106               56,106       66,219               66,219       -15.3 %

Gourmet Foods & Gift Baskets

    638,072               638,072       696,659               696,659       -8.4 %

Corporate

    549               549       116               116       373.3 %

Intercompany eliminations

    (652 )             (652 )     (742 )             (742 )     12.1 %

Total net revenues

  $ 1,091,104     $ -     $ 1,091,104     $ 1,201,481     $ -     $ 1,201,481       -9.2 %
                                                         

Gross profit:

                                                       

Consumer Floral & Gifts

  $ 165,498     $ -     $ 165,498     $ 174,193     $ -     $ 174,193       -5.0 %
      41.7 %             41.7 %     39.7 %             39.7 %        
                                                         

BloomNet

    27,472               27,472       28,366               28,366       -3.2 %
      49.0 %             49.0 %     42.8 %             42.8 %        
                                                         

Gourmet Foods & Gift Baskets

    264,107               264,107       266,531               266,531       -0.9 %
      41.4 %             41.4 %     38.3 %             38.3 %        
                                                         

Corporate

    548               548       134               134       309.0 %
      99.8 %             99.8 %     115.5 %             115.5 %        
                                                         

Total gross profit

  $ 457,625     $ -     $ 457,625     $ 469,224     $ -     $ 469,224       -2.5 %
      41.9 %     -       41.9 %     39.1 %     -       39.1 %        
                                                         

EBITDA (non-GAAP):

                                                       

Segment Contribution Margin (non-GAAP) (a):

                                                       

Consumer Floral & Gifts

  $ 19,419     $ 19,762     $ 39,181     $ 38,696     $ -     $ 38,696       1.3 %

BloomNet

    18,475               18,475       18,865               18,865       -2.1 %

Gourmet Foods & Gift Baskets

    107,125               107,125       104,793       -       104,793       2.2 %

Segment Contribution Margin Subtotal

    145,019       19,762       164,781       162,354       -       162,354       1.5 %

Corporate (b)

    (64,000 )             (64,000 )     (61,580 )     243       (61,337 )     -4.3 %

EBITDA (non-GAAP)

    81,019       19,762       100,781       100,774       243       101,017       -0.2 %

Add: Stock-based compensation

    4,595               4,595       3,454               3,454       33.0 %

Add: Compensation charge related to NQDC Plan Investment Appreciation (Depreciation)

    2,178               2,178       (1,102 )             (1,102 )     297.6 %

Adjusted EBITDA (non-GAAP)

  $ 87,792     $ 19,762     $ 107,554     $ 103,126     $ 243     $ 103,369       4.0 %

 

 

Reconciliation of net income to adjusted net income (non-GAAP):

 

Three Months Ended

   

Six Months Ended

 
   

December 31,

2023

   

January 1,

2023

   

December 31,

2023

   

January 1,

2023

 
                                 

Net income

  $ 62,907     $ 82,530     $ 31,665     $ 48,838  

Adjustments to reconcile net income to adjusted net income (non-GAAP)

                               

Add: Transaction costs

    -       243       -       243  

Add: Intangibles impairment

    19,762       -       19,762       -  

Deduct: Income tax effect on adjustments

    -       (63 )     -       (63 )

Adjusted net income (non-GAAP)

  $ 82,669     $ 82,710     $ 51,427     $ 49,018  
                                 

Basic and diluted net income per common share

                               

Basic

  $ 0.97     $ 1.28     $ 0.49     $ 0.76  

Diluted

  $ 0.97     $ 1.27     $ 0.49     $ 0.75  
                                 
                                 

Basic and diluted adjusted net income per common share (non-GAAP)

                               

Basic

  $ 1.28     $ 1.28     $ 0.79     $ 0.76  

Diluted

  $ 1.27     $ 1.28     $ 0.79     $ 0.76  
                                 

Weighted average shares used in the calculation of basic and diluted net income and adjusted net income per common share

                               

Basic

    64,835       64,675       64,814       64,606  

Diluted

    65,177       64,835       65,155       64,820  

 

 

Reconciliation of net income to Adjusted EBITDA (non-GAAP):

 

Three Months Ended

   

Six Months Ended

 
   

December 31,

2023

   

January 1,

2023

   

December 31,

2023

   

January 1,

2023

 
                                 

Net income

  $ 62,907     $ 82,530     $ 31,665     $ 48,838  

Add: Interest expense and other, net

    1,875       4,291       5,831       8,034  

Add: Depreciation and amortization

    14,152       14,315       27,346       27,009  

Add: Income tax expense

    26,468       28,304       16,177       16,893  

EBITDA

    105,402       129,440       81,019       100,774  

Add: Stock-based compensation

    2,231       1,899       4,595       3,454  

Add: Compensation charge related to NQDC plan investment Appreciation (Depreciation)

    2,682       (196 )     2,178       (1,102 )

Add: Intangible impairment

    19,762       -       19,762       -  

Add: Transaction costs

    -       243       -       243  

Adjusted EBITDA

  $ 130,077     $ 131,386     $ 107,554     $ 103,369  

 

(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, as well as Stock-based compensation. 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.

 

 

Results of Operations

 

Net revenues

 

   

Three Months Ended

   

Six Months Ended

 
   

December 31,

2023

   

January 1,

2023

   

%

Change

   

December 31,

2023

   

January 1,

2023

   

%

Change

 
   

(dollars in thousands)

         

Net revenues:

                                               

E-Commerce

  $ 738,406     $ 790,410       -6.6 %   $ 948,317     $ 1,029,332       -7.9 %

Other

    83,648       107,467       -22.2 %     142,787       172,149       -17.1 %

Total net revenues

  $ 822,054     $ 897,877       -8.4 %   $ 1,091,104     $ 1,201,481       -9.2 %

 

Net revenues consist primarily of the selling price of the merchandise, service or outbound shipping charges, less discounts, returns and credits.

 

Net revenues decreased 8.4% and 9.2% during the three and six months ended December 31, 2023, respectively, compared to the same periods of the prior year, due to lower order volume across all 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. Contributing to this decline was the prudent use of promotional offerings and advertising campaigns, which balance the long-term goals of the Company with strategies to improve gross margins and tightly control operating expenses during this challenging economic environment.

 

The Company acquired Things Remembered on January 10, 2023 and launched the brand on its e-commerce platform in April 2023. Things Remembered revenues were not significant during the three and six months ended December 31, 2023.

 

 

   

Three Months Ended

 
   

Consumer Floral & Gifts

   

BloomNet

   

Gourmet Foods & Gift Baskets

   

Corporate and Eliminations

   

Consolidated

 
   

December 31, 2023

   

January 1, 2023

   

% Change

   

December 31, 2023

   

January 1, 2023

   

% Change

   

December 31, 2023

   

January 1, 2023

   

% Change

   

December 31, 2023

   

January 1, 2023

   

December 31, 2023

   

January 1, 2023

   

% Change

 

Net revenues

                                                                                                         

E-commerce

  $ 252,845     $ 275,081       -8.1 %   $ -     $ -       - %   $ 485,561     $ 515,329       -5.8 %   $ -     $ -     $ 738,406     $ 790,410       -6.6 %

Other

    1,990       1,968       1.1 %     27,236       32,852       -17.1 %     54,402       73,102       -25.6 %     20       (455 )     83,648       107,467       -22.2 %

Total net revenues

  $ 254,835     $ 277,049       -8.0 %   $ 27,236     $ 32,852       -17.1 %   $ 539,963     $ 588,431       -8.2 %   $ 20     $ (455 )   $ 822,054     $ 897,877       -8.4 %
                                                                                                                 

Other revenues detail

                                                                                                         

Retail and other

    1,990       1,968       1.1 %     -       -       -       4,296       4,313       -0.4 %     -       -       6,286       6,281       0.1 %

Wholesale

    -       -       -       8,706       12,054       -27.8 %     50,106       68,789       -27.2 %     -       -       58,812       80,843       -27.3 %

BloomNet services

    -       -       -       18,530       20,798       -10.9 %     -       -       -       -       -       18,530       20,798       -10.9 %

Corporate

    -       -       -       -       -       -       -       -       -       279       72       279       72       287.5 %

Eliminations

    -       -       -       -       -       -       -       -       -       (259 )     (527 )     (259 )     (527 )     50.9 %

Total other revenues

  $ 1,990       1,968       1.1 %   $ 27,236     $ 32,852       -17.1 %   $ 54,402     $ 73,102       -25.6 %   $ 20     $ (455 )   $ 83,648     $ 107,467       -22.2 %

 

   

Six Months Ended

 
   

Consumer Floral & Gifts

   

BloomNet

   

Gourmet Foods & Gift Baskets

   

Corporate and Eliminations

   

Consolidated

 
   

December 31, 2023

   

January 1, 2023

   

% Change

   

December 31, 2023

   

January 1, 2023

   

% Change

   

December 31, 2023

   

January 1, 2023

   

% Change

   

December 31, 2023

   

January 1, 2023

   

December 31, 2023

   

January 1, 2023

   

% Change

 

Net revenues

                                                                                                         

E-commerce

  $ 393,180     $ 435,463       -9.7 %   $ -     $ -       - %   $ 555,137     $ 593,869       -6.5 %   $ -     $ -     $ 948,317     $ 1,029,332       -7.9 %

Other

    3,849       3,766       2.2 %     56,106       66,219       -15.3 %     82,935       102,790       -19.3 %     (103 )     (626 )     142,787       172,149       -17.1 %

Total net revenues

  $ 397,029     $ 439,229       -9.6 %   $ 56,106     $ 66,219       -15.3 %   $ 638,072     $ 696,659       -8.4 %   $ (103 )   $ (626 )   $ 1,091,104     $ 1,201,481       -9.2 %
                                                                                                                 

Other revenues detail

                                                                                                         

Retail and other

    3,849       3,766       2.2 %     -       -       -       6,230       6,221       0.1 %     -       -       10,079       9,987       0.9 %

Wholesale

    -       -       -       20,503       25,675       -20.1 %     76,705       96,569       -20.6 %     -       -       97,208       122,244       -20.5 %

BloomNet services

    -       -       -       35,603       40,544       -12.2 %     -       -       -       -       -       35,603       40,544       -12.2 %

Corporate

    -       -       -       -       -       -       -       -       -       549       116       549       116       373.3 %

Eliminations

    -       -       -       -       -       -       -       -       -       (652 )     (742 )     (652 )     (742 )     12.1 %

Total other revenues

  $ 3,849       3,766       2.2 %   $ 56,106     $ 66,219       -15.3 %   $ 82,935     $ 102,790       -19.3 %   $ (103 )   $ (626 )   $ 142,787     $ 172,149       -17.1 %

 

 

Revenue by sales channel:

 

E-commerce revenues (combined online and telephonic) decreased 6.6% and 7.9% during the three and six months ended December 31, 2023, respectively, compared to the same periods of the prior year, primarily due to the decline in demand across all our segments, as a result of the macro-economic conditions noted above, which have negatively impacted consumer discretionary spending, combined with planned reductions in advertising spend.

 

During the three and six months ended December 31, 2023, the Company fulfilled approximately 7.9 million and 10.5 million orders through its e-commerce sales channel (online and telephonic sales), a decrease of 9.0% and 10.8%, respectively, compared to the same periods of the prior year. During the three and six months ended December 31, 2023, average order value increased 2.7% and 3.4%, to $93.14 and $90.06, respectively, as a result of product mix into higher price point items, including bundles, and customer mix with more affluent consumers buying at a higher rate than less affluent.

 

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 and six months ended December 31, 2023, decreased 22.2% and 17.1%, respectively, compared to the same periods of the prior year, due to lower wholesale volumes within the Gourmet Foods & Gift Baskets segment, 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, and Alice’s Table brands, and the Things Remembered brand, subsequent to its acquisition on January 10, 2023, 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 8.0% and 9.6% during the three and six months ended December 31, 2023, respectively, compared to the same periods of the prior year, due to the continued economic pressure, which was combined with planned reductions in advertising spend, as the brands focused their efforts on improving gross margin and operating spend efficiency, in the face of softening demand.

 

During the three and six months ended December 31, 2023, Consumer Floral & Gifts orders through its e-commerce sales channel (online and telephonic sales) decreased 10.4% and 12.3%, respectively, compared to the same periods of the prior year, however this was partially offset by an increase in average order value of 2.6% and 3.0%, respectively, as a result of product mix into higher price point items, including bundles, and customer mix with more affluent consumers buying at a higher rate than less affluent.

 

BloomNet - revenues in this segment are derived from membership fees, as well as product and service offerings.

 

Net revenues decreased 17.1% and 15.3% during the three and six months ended December 31, 2023, respectively, compared to the same periods 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, and Vital Choice. 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 brand names, as well as wholesale operations.

 

Net revenues within this segment decreased 8.2% and 8.4% during the three and six months ended December 31, 2023, respectively, compared to the same periods of the prior year, as a result of lower e-commerce and wholesale revenues, primarily due to macro-economic weakness, combined with planned reductions in advertising spend, as the brands focused their efforts on improving gross margin and operating spend efficiency in the face of softening demand.

 

During the three and six months ended December 31, 2023, Gourmet Foods & Gift Baskets orders through its e-commerce sales channel (online and telephonic sales) decreased 7.9% and 9.3%, respectively, compared to the same periods of the prior year, however this was partially offset by an increase in average order value of 2.3% and 3.1%, respectively, as a result of product mix into higher price point items, including bundles, and customer mix with more affluent consumers buying at a higher rate than less affluent.

 

 

Gross profit

 

   

Three Months Ended

   

Six Months Ended

 
   

December 31,

2023

   

January 1,

2023

   

%

Change

   

December 31,

2023

   

January 1,

2023

   

%

Change

 
   

(dollars in thousands)

 
                                                 

Gross profit

  $ 355,697     $ 367,766       -3.3 %   $ 457,625     $ 469,224       -2.5 %

Gross profit %

    43.3 %     41.0 %             41.9 %     39.1 %        

 

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 3.3% and 2.5% during the three and six months ended December 31, 2023, respectively, compared to the same periods of the prior year, primarily due to lower revenues as noted above, partially offset by a favorable gross profit percentage.

 

Gross profit percentage increased 230 and 280 basis points during the three and six months ended December 31, 2023, respectively, compared to the same periods of the prior year, driven by lower freight costs, a decline in certain commodity costs, reduced labor costs, and better inventory management.

 

Gross profit by segment follows:

 

Consumer Floral & Gifts segment - Gross profit decreased by 2.8% and 5.0% during the three and six months ended December 31, 2023, respectively, due to the impact of the lower revenues noted above, partially offset by favorable gross profit percentage attributable to lower freight costs and reduced labor costs. 

 

BloomNet segment - Gross profit decreased by 6.5% and 3.2% during the three and six months ended December 31, 2023, respectively, compared to the same periods of the prior year, due to decrease in revenues noted above, partially offset by improved gross profit percentage. Gross profit percentage increased in comparison to the prior year primarily due to lower freight costs and product mix.

 

Gourmet Foods & Gift Baskets segment – Gross profit decreased by 3.4% and 0.9% during the three and six months ended December 31, 2023, respectively, compared to the same periods of the prior year due to the revenue decrease noted above, partially offset by improved gross profit percentage. The increased gross profit percentage was attributable to lower freight costs, a decline in certain commodity prices, reduced labor costs, and better inventory management.

 

 

Marketing and sales expense

 

   

Three Months Ended

   

Six Months Ended

 
   

December 31,

2023

   

January 1,

2023

   

%

Change

   

December 31,

2023

   

January 1,

2023

   

%

Change

 
   

(dollars in thousands)

 
                                                 

Marketing and sales

  $ 188,557     $ 194,466       -3.0 %   $ 271,075     $ 283,605       -4.4 %

Percentage of net revenues

    22.9 %     21.7 %             24.8 %     23.6 %        

 

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 3.0% and 4.4% during the three and six months ended December 31, 2023, respectively, compared to the same periods of the prior year, due to variable components associated with lower revenues, combined with planned reductions in advertising spend focused on driving profitable volume during a period when discretionary purchases are under pressure.

 

Technology and development expense 

 

   

Three Months Ended

   

Six Months Ended

 
   

December 31,

2023

   

January 1,

2023

   

%

Change

   

December 31,

2023

   

January 1,

2023

   

%

Change

 
   

(dollars in thousands)

 
                                                 

Technology and development

  $ 14,822     $ 14,952       -0.9 %   $ 30,126     $ 29,692       1.5 %

Percentage of net revenues

    1.8 %     1.7 %             2.8 %     2.5 %        

 

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 decreased by 0.9% during the three months ended December 31, 2023, compared to the same period of the prior year, primarily due to reduced labor and consulting costs. Technology and development expense increased 1.5% during the six months ended December 31, 2023 compared to the same period of the prior year, primarily due to higher maintenance and support costs for the Company’s technology platform enhancements, partially offset by reduced labor and consulting costs.

 

General and administrative expense

 

   

Three Months Ended

   

Six Months Ended

 
   

December 31,

2023

   

January 1,

2023

   

%

Change

   

December 31,

2023

   

January 1,

2023

   

%

Change

 
   

(dollars in thousands)

 
                                                 

General and administrative

  $ 27,154     $ 28,908       -6.1 %   $ 55,643     $ 55,153       0.9 %

Percentage of net revenues

    3.3 %     3.2 %             5.1 %     4.6 %        

 

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 decreased 6.1% during the three months ended December 31, 2023, compared to the same period of the prior year, primarily due to lower labor and insurance costs and bad debt expense, offset in part by changes in the value of the Company’s NQDC plan investments (offset in Other Income below). General and administrative expenses increased 0.9% during the six months ended December 31, 2023 compared to the same period of the prior year, due to increases in labor costs driven by changes in the value of the Company’s NQDC plan investments (offset in Other Income below), partially offset by favorable bad debt expense and lower insurance and professional fees.

 

 

Depreciation and amortization expense

 

   

Three Months Ended

   

Six Months Ended

 
   

December 31,

2023

   

January 1,

2023

   

%

Change

   

December 31,

2023

   

January 1,

2023

   

%

Change

 
   

(dollars in thousands)

 
                                                 

Depreciation and amortization

  $ 14,152     $ 14,315       -1.1 %   $ 27,346     $ 27,009       1.2 %

Percentage of net revenues

    1.7 %     1.6 %             2.5 %     2.2 %        

 

Depreciation and amortization expense decreased 1.1% during the three months ended December 31, 2023, compared to the same period of the prior year, due to the timing of certain assets becoming fully depreciated, offset in part by distribution facility automation projects and IT related ecommerce/platform enhancements. Depreciation and amortization expense increased 1.2% during the six months ended December 31, 2023 compared to the same period of the prior year, due to distribution facility automation projects and IT related ecommerce/platform enhancements.

 

Intangible impairment

 

   

Three Months Ended

   

Six Months Ended

 
   

December 31,

2023

   

January 1,

2023

   

%

Change

   

December 31,

2023

   

January 1,

2023

   

%

Change

 
   

(dollars in thousands)

 
                                                 

Intangible impairment

  $ 19,762     $ -       - %   $ 19,762     $ -       - %

 

During the three and six months ended December 31, 2023, the Company recorded a non-cash impairment charge of $19.8 million related to its PersonalizationMall trademark, due to a decline in the actual and projected revenue, combined with a higher discount rate resulting from the higher interest rate environment. See Note 5 – Goodwill and Intangible Assets, Net for further information.

 

 

Interest expense, net

 

   

Three Months Ended

   

Six Months Ended

 
   

December 31,

2023

   

January 1,

2023

   

% Change

   

December 31,

2023

   

January 1,

2023

   

% Change

 
   

(dollars in thousands)

 
                                                 

Interest expense, net

  $ 4,611     $ 4,143       11.3 %   $ 8,093     $ 6,964       16.2 %

 

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, in Item 1. for details), net of income earned on the Company’s available cash balances.

 

Interest expense, net increased 11.3% and 16.2% during the three and six months ended December 31, 2023, respectively, compared to the same periods of the prior year, primarily due to higher interest rates, partially offset by favorable interest earned on available cash balances.

 

Other expense (income), net

 

   

Three Months Ended

   

Six Months Ended

 
   

December 31,

2023

   

January 1,

2023

   

%

Change

   

December 31,

2023

   

January 1,

2023

   

%

Change

 
   

(dollars in thousands)

 
                                                 

Other (income) expense, net

  $ (2,736 )   $ 148       1,948.6 %   $ (2,262 )   $ 1,070       311.4 %

 

Other expense consists primarily of investment losses (gains) on the Company’s NQDC Plan Investments.

 

 

Income Taxes

 

The Company recorded income tax expense of $26.5 million and $16.2 million during the three and six months ended December 31, 2023, respectively, compared to an income tax expense of $28.3 million and $16.9 million, during the three and six months ended January 1, 2023, respectively. The Company’s effective tax rate for the three and six months ended December 31, 2023, was 29.6% and 33.8%, respectively, compared to 25.5% and 25.7% in the same periods of the prior year. The Company’s effective tax rate for fiscal 2023 and 2024 differed from the U.S. federal statutory rate of 21.0% primarily due to state income taxes and non-deductible executive compensation, partially offset by tax credits and other items. Fiscal 2024, was further impacted by the impairment charge, which reduced the amount of income reflected in the Company’s estimated annual effective tax rate.

 

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 in Item 1 for details). At December 31, 2023, the Company had working capital of $202.5 million, including cash and cash equivalents of $312.0 million, compared to working capital of $152.9 million, including cash and cash equivalents of $126.8 million, at July 2, 2023. 

 

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.

 

During the first two quarters of fiscal 2024, the Company borrowed under its revolving credit agreement in order to fund pre-holiday manufacturing and inventory procurement requirements, with borrowings peaking at $82.0 million in November 2023. Cash generated from operations during the Christmas holiday shopping season enabled the Company to repay the borrowings under the Revolver in December 2023. Based on current projected cash flows, the Company believes that available cash balances will be sufficient to provide for the Company’s operating needs through the remainder of fiscal 2024, at which time the Company would again expect to borrow against its Revolver to fund pre-holiday manufacturing and inventory purchases. The Company had no amounts outstanding under its Revolver as of December 31, 2023.

 

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 provided by operating activities of $212.8 million, for the six months ended December 31, 2023, was primarily attributable to the Company’s net income during the period, adjusted by non-cash charges related to the intangible impairment, depreciation and amortization, stock-based compensation and changes in deferred income taxes, combined with seasonal changes in net working capital, including increases in accounts payable and accrued expenses and trade receivables and a decrease in inventories.

 

Net cash used in investing activities of $17.8 million, for the six months ended December 31, 2023, was attributable to capital expenditures primarily related to the Company's technology and automation initiatives.

 

Net cash used in financing activities of $9.7 million, for the six months ended December 31, 2023, related primarily to net repayment of bank borrowings under the Company’s working capital line of credit and the repurchase of common stock.

 

 

Stock Repurchase Program

 

See Item 2 in Part II below for details.

 

Contractual Obligations

 

At December 31, 2023, the Company’s contractual obligations consist of:

 

Long-term debt obligations - payments due under the Company's credit agreement (see Note 7 - Debt 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

2024

   

Fiscal

2025

   

Fiscal

2026

   

Fiscal

2027

   

Fiscal

2028

   

Thereafter

   

Total

 

Purchase commitments

  $ 73,067     $ 15,773     $ 3,749     $ 775     $ -     $ -     $ 93,364  

 

Critical Accounting Estimates

 

As disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended July 2, 2023, 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 July 2, 2023.

 

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,” “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;

 

to successfully integrate acquired businesses and assets;

 

to reduce working capital requirements and capital expenditures;

 

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; and

 

to address the effects of changes in accounting policies, practices, or assumptions, including changes that could potentially require future impairment charges;

 

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 July 2, 2023 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 $0.3 and $0.6 million during the three and six months ended December 31, 2023, respectively.

 

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 December 31, 2023. 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 December 31, 2023.

 

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 December 31, 2023, 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.

 

 

PART II. OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

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 1A. RISK FACTORS

 

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 year ended July 2, 2023.

 

 

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 December 31, 2023, $27.2 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 six months of fiscal 2024, which includes the period July 3, 2023 through December 31, 2023:

 

Period

 

Total

Number of

Shares

Purchased

   

Average

Price

Paid Per

Share (1)

   

Total

Number of

Shares

Purchased

as Part of

Publicly

Announced

Plans or

Programs

   

Dollar

Value of

Shares

that May

Yet Be

Purchased

Under the

Plans or

Programs

 
   

(in thousands, except average price paid per share)

         
                                 

07/03/23 – 07/30/23

   

-

   

$

-

     

-

   

$

31,965

 

07/31/23 – 08/27/23

   

-

   

$

-

     

-

   

$

31,965

 

08/28/23 – 10/01/23

   

10,483

   

$

7.08

     

10,483

   

$

31,890

 

10/02/23 – 10/29/23

   

-

   

$

-

     

-

   

$

31,890

 

10/30/23 – 11/26/23

   

272,978

   

$

8.56

     

272,978

   

$

29,549

 

11/27/23 – 12/31/23

   

240,000

   

$

9.85

     

240,000

   

$

27,178

 

Total

   

523,461

   

$

9.12

     

523,461

         

 

(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. 

 

 

ITEM 5. OTHER INFORMATION

 

None.

 

37

  
 

ITEM 6. EXHIBITS

 

10.1 Consulting Agreement, dated as of December 20, 2023, between 1-800-FLOWERS.COM, Inc., and Hanft Ideas LLC and Adam Hanft. * ^
10.2 Appointment Letter from 1-800-FLOWERS.COM, Inc. to Christopher G. McCann, dated December 31, 2023 (incorporated by reference to Current Report on Form 8-K filed on January 2, 2024, Exhibit 99.1). ^

31.1

Certification of the principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *

31.2

Certification of the principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *

32.1

Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *

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.

^ Management contracts or compensatory plans or arrangements.

 

 

SIGNATURES

 

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: February 8, 2024     

/s/ James F. McCann      

James F. McCann
Executive Chairman and Chief Executive Officer
(Principal Executive Officer)  

   

Date: February 8, 2024     

/s/ William E. Shea      
William E. Shea
Senior Vice President, Treasurer and
Chief Financial Officer (Principal
Financial and Accounting Officer)

 

39