1-800-FLOWERS.COM, Inc. Q3 FY2026 earnings call

• Focused on stabilizing business and building foundation for future growth. - Valentine's Day performance showed improved customer experience with strong gains in key service metrics. - Gourmet foods and gifts basket segment performed better than consumer floral and gifts segment due to Easter timing and marketing spend. - Launched new partnership with Instacart to expand presence on third-party marketplace. - Fully implemented AI-powered sorting and ranking on 1800flowers.com for customer-first approach. - Evolving floral business operation by coordinating florist-fulfilled orders and direct shipments. - Achieved $50 million cost savings target ahead of plan and starting to reinvest portion back into business for strategic priorities like marketing and customer experience. - Streamlined organization through function-driven operating model, reducing core headcount by ~20% since Jan 2025.

Consolidated revenue for the quarter decreased 11.6%. The gourmet foods and gift basket segment was essentially flat. The consumer floral and gift segment declined 18.7%. The BloomNet segment declined 5.9%. The gourmet foods and gift basket segment performed better than the consumer floral and gift segment, benefiting from an approximate 5% revenue lift from the timing of Easter and less impact from inefficient marketing spend. The consumer floral and gift segment was affected by Easter timing shift and heavier inefficient marketing spend a year ago. A non-cash goodwill and trade name and payment charge related to the consumer floral and gift segment and the personalization mall trade name impacted earnings. Contribution margin improved year over year reflecting stronger pricing discipline and improved marketing efficiency. Achieved $50 million in annualized run rate cost savings ahead of plan and targeting incremental 15 to 20 million in additional run rate cost savings over next fiscal year.

• Fiscal 2026 expected revenue decline of approximately 10% to 12% compared to prior year. - Adjusted EBITDA expected to be approximately break-even within range of plus or minus 2 million, including ~22 million of anticipated incentive compensation and consultant costs. - Marketing spend in fourth quarter as percent of sales expected to be approximately flat compared to prior year period. - Beginning to invest in building out MarTech stack in fourth quarter and continuing into next fiscal year. - Targeting incremental 15 to 20 million in additional run rate cost savings over next fiscal year.

Q: Share additional details on Valentine's Day customer experience metrics improved and learnings for Mother's Day.

A: Adolfo mentioned digital changes like AI-driven sorting and ranking improving conversion, learning about customer preferences, marketing shift from bottom to top/mid-funnel with success on platforms like TikTok and Instagram, assortment testing between florist-delivered and direct from warehouses, post-purchase experience improvement.

Q: About cost savings program, split of $50 million savings, impact of consultant costs and tariffs.

A: $50 million savings split equally between COGS and SG&A, consultant costs and tariffs offsetting some benefits, consultant costs to roll off in FY27.

Q: With marketing changes, impact from competitors and third-party platforms.

A: Flowers is competitive, competitors can buy clicks, company building brand through top/mid-funnel, third-party platforms like Amazon, Walmart, Etsy, DoorDash, Uber Eats are being used to reach customers, expecting sales outside own e-commerce sites to be double digits in three years.

Q: Key areas for improved EBITDA margins, impact of consultant costs, incentive comp, commodity costs.

A: Gross margin improved 10 basis points due to pricing discipline, better coordination, offset by tariffs and commodity costs, consultant costs and incentive comp are annualized, commodity inputs have some relief on some items but still have headwinds.

Q: Marketing spend as percent of sales, flat in June quarter and future direction.

A: Marketing spend as percent of sales flat in June quarter, in short term may need to invest in brand and top/mid-funnel, longer term expect improved efficiency, some savings will be redeployed in marketing, investments are tested and measured.