1-800-FLOWERS.COM, Inc.

Consolidated revenue in the third quarter decreased 11.6%. Gross margin, excluding the impact of prior-year system issues, improved 10 basis points to 33.2%. Adjusted EBITDA loss was $31.2 million versus an adjusted EBITDA loss of $34.9 million in the prior-year period. Operating expenses, excluding specified items, declined $16.4 million to $144.3 million. Cash was $51 million at quarter end, net debt was $94.3 million, and inventory was $146 million. For fiscal 2026, management expects revenue to decline about 10% to 12% year over year and adjusted EBITDA to be approximately breakeven within plus or minus $2 million, including about $22 million of anticipated incentive compensation and consultant costs. Q4 marketing spend as a percent of sales is expected to be approximately flat versus the prior year period.

Adolfo Villagomez framed fiscal 2026 as a stabilization year and said the company is seeing early signs that structural changes are improving execution and customer experience. He emphasized Valentine’s Day as an important proof point, highlighting better service metrics, improved post-purchase experience and stronger performance from AI-driven sorting, marketplace expansion and assortment changes. His tone was cautiously optimistic: he repeatedly said there is still work to do, but the business is now beginning to show tangible evidence that the turnaround actions are working.

James Langrock focused on the financial bridge from cost savings to margin improvement. He said the company achieved the full $50 million annualized run-rate savings target ahead of plan and is now targeting another $15 million to $20 million of annualized savings next fiscal year, taking the total identified opportunity to roughly $65 million to $70 million. He also noted that Q3 gross margin improved 10 basis points to 33.2%, helped by cost reduction and pricing discipline, partly offset by tariffs, commodity costs and fixed-cost absorption. He said the $22 million of incentive compensation and consultant costs is embedded in fiscal 2026 expectations, with consultant costs of about $12 million to $13 million.

Analysts pressed on Valentine’s Day learnings, cost savings flow-through, competitive pressure, marketplaces and the impact of tariffs and commodities. Management said Valentine’s produced useful learnings on digital ranking, assortment, florist-fulfilled versus direct shipping, and customer service, and that some of those changes can be applied to Mother’s Day and later holidays. On costs, James said savings are split roughly evenly between COGS and SG&A, but reinvestment in marketing means the benefit will not flow through dollar-for-dollar to EBITDA. Management also said competitors are active, higher-income consumers are holding up better than lower-income customers, marketplaces like Amazon/Instacart/DoorDash are early but growing quickly, and tariff impacts should begin to anniversary in fiscal 2027.