1800FLOWERSCOM (FLWS) reported a challenging QQ1 2025 with a 10% year-over-year revenue decline to $242.1 million and a continued negative bottom line. The quarter featured meaningful secular and seasonal headwinds, including pressure on e-commerce orders and a shift of approximately $3 million of wholesale orders from Q1 into Q2, which partially explains the sequential revenue drop. Despite the topline softness, management highlighted improvements in gross margins (38.1%) driven by inventory optimization and ongoing Work Smarter initiatives, as well as efficiency gains from AI-enabled customer care and a back-end order management system. The company reiterated its guidance for FY25: flat to down mid-single digits revenue, Adjusted EBITDA of $85–$95 million, and free cash flow of $45–$55 million, signaling a plan to improve profitability and cash generation as the holiday season unfolds.
Segment results were mixed: Gourmet Foods & Gift Baskets declined 14.4% (partly due to timing of wholesale orders shifting to Q2 and a new OMS), with a margin expansion of roughly 50 bps to 32%; Consumer Floral & Gifts fell 4.9% but delivered a 39.9% gross margin (up 30 bps) and positive segment contribution of $4.9 million; BloomNet declined 20.1% as a partner transition lapped in H2, with a 50% gross margin but lower contribution due to deleveraging. The balance sheet shows total debt of $351.0 million and net debt of $342.6 million, with cash and cash equivalents of $8.4 million at period-end. Working capital consumed cash through a large negative change in operating working capital (-$158.5 million) and elevated inventory of $275.3 million, contributing to negative free cash flow of approximately $189.3 million for the quarter. Management emphasized continued investment in marketing and product breadth to support holiday demand and expects wholesale orders to contribute about $20 million higher than the prior year in Q2. The stock remains exposed to macro shifts in consumer spending, media costs, and input inflation/commodities, even as cocoa and other commodity hedges partially mitigate cost pressures. Overall, FLWS is positioned to weather near-term softness via price-point diversification, same-day expansion, and enhanced fulfillment capabilities, with a longer-term path to profitability and cash flow normalization as the year progresses.