1-800-FLOWERS.COM, Inc. Q1 FY2026 earnings call

Strategic Initiatives - Focused on 4 key areas: strengthening customer focus, enhancing talent and accountability, achieving cost savings and organizational efficiency, and expanding reach beyond e-commerce. ### Customer Focus - Shifted to marketing contribution margin, tested paid traffic consolidation by redirecting visitors from lower traffic websites to main platforms. Expanded into third-party marketplaces (Amazon, walmart.com) and opened holiday pop-up shops to test physical retail concepts. ### Talent - Hired Melanie Babcock as Chief Marketing and Growth Officer to lead marketing evolution, build customer-centric growth strategies, and modernize digital experience. ### Cost Savings - Collaborating with external consultants, $17 million in annualized cost reductions implemented. Anticipate $50 million in incremental cost savings over next 2 years, with half expected in fiscal 2026 and half in fiscal 2027.

Consolidated revenue for the first quarter decreased by 11.1%. The Consumer Floral and Gift segment saw a 14.6% decline in revenue, the Gourmet Foods and Gift Baskets segment had an 8.6% decline, and the BloomNet segment was essentially flat with the prior year period.

- View fiscal 2026 as a year of stabilization, focused on building long-term sustainable growth. ### - Underlying profitability showing positive trend when adjusting for timing-related items. ### - Will remain disciplined in marketing investments while becoming more effective. ### - $50 million cost savings expected to be half in fiscal 2026 and half in fiscal 2027, with actions already started.

- Impact of tariffs, including higher tariffs affecting gross margin. ### - Potential tariffs on Colombian flowers would significantly impact the floral industry. ### - Timing of implementation for some cost savings initiatives, like supply chain and procurement, taking longer.

Q: Good morning, and welcome to the 1-800-FLOWERS.COM Fiscal 2026 First Quarter Earnings Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Andy Milevoj, Senior Vice President, Investor Relations. Please go ahead.

A: Good morning, and welcome to our fiscal 2026 first quarter earnings call. Joining us on today's call are Adolfo Villagomez, Chief Executive Officer; and James Langrock, Chief Financial Officer. Before we begin, I'd like to remind you that some of the statements we make on today's call are covered by the safe harbor disclaimer contained in our press release and public documents. During this call, we will make forward-looking statements with predictions, projections and other statements about future events. These statements are based on current expectations and assumptions that are subject to risks and uncertainties and including those contained in our press release and public filings with the Securities and Exchange Commission. The company disclaims any obligation to update any of the forward-looking statements that may be made or discussed during this call. Additionally, we will discuss certain supplemental financial measures that were not prepared in accordance with GAAP. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures can be found in the tables of our earnings release. And now I'll turn the call over to Adolfo.

Q: Michael Kupinski with NOBLE Capital Markets asks about gas price surcharges.

A: James Langrock says fuel surcharge is always part of FedEx charges, moderated but not gone.

Q: Anthony Lebiedzinski with Sidoti & Company asks about wholesale revenue impact.

A: James Langrock says it was several million dollars, $3 million to $4 million.

Q: Anthony Lebiedzinski asks about $50 million in gross savings timing.

A: James Langrock says half in fiscal '26, half in fiscal '27, started implementing actions, but hard to quantify net savings now.

Q: Anthony Lebiedzinski asks about tax expense.

A: James Langrock says due to 3 years of cumulative losses, valuation allowance set up for deferred tax assets, so small tax expense instead of benefit.

Q: Anthony Lebiedzinski asks about Amazon/walmart sales.

A: Adolfo Villagomez says early days, going well, learning best practices, early traction with top sellers on those sites.

Q: Douglas Lane with Water Tower Research asks about tariffs on Colombia.

A: James Langrock says Colombia represents 60-70% of fresh flowers, tariffs would impact industry, hard to workaround. Adolfo Villagomez adds everyone would try to shift sourcing but would put price pressure on industry.

Q: Douglas Lane asks about pop-up stores.

A: Adolfo Villagomez says 9 locations this season, testing physical retail concept to roll out multiple stores long term.

Q: Douglas Lane asks about rebranding.

A: Adolfo Villagomez says external marketing and brand consultant hired to determine best approach for customer resonance.