1-800-FLOWERS.COM (FLWS) investor relations material

Executive summary

• Revenue for fiscal Q2 2026 was $702.2 million, down 9.5% year-over-year, reflecting a strategic shift to improve marketing effectiveness and profitability, with operational performance and system stability improving during the holiday season.

• Net income rose to $70.6 million ($1.10 per diluted share), up 9.6% year-over-year, while adjusted net income was $76.7 million ($1.20 per share), both supported by cost-optimization and organizational streamlining.

• Adjusted EBITDA for Q2 was $98.1 million, down from $116.3 million in the prior-year period, as efficiency initiatives and reduced marketing spend offset lower sales.

• Organizational restructuring to a function-based model increased efficiency, reduced costs, and improved collaboration, with leadership strengthened by new hires and a focus on technology and AI.

• Pop-up retail tests underperformed, leading to a shift toward exploring permanent retail concepts.

Financial highlights

• Net revenues for Q2 2026 were $702.2 million, down 9.5% year-over-year; six-month revenues were $917.4 million, down 9.8%.

• Gross margin declined 120 basis points to 42.1%, mainly due to lower sales, higher tariffs, and commodity costs.

• Adjusted EBITDA was $98.1 million, down 15.6% year-over-year; six-month adjusted EBITDA was $65.2 million, down 26.2%.

• Free cash flow for the six months was $156.6 million, up from $128.3 million in the prior year period.

• Cash and cash equivalents at quarter-end were $193.3 million, with $148.9 million in inventory.

Outlook and guidance

• Revenue for the second half of fiscal 2026 is expected to decline in the low double-digit range year-over-year.

• Adjusted EBITDA for the second half is projected to decline slightly, but to increase on a normalized basis excluding $12 million in incentive and consultant costs.

• Ongoing cost optimization and organizational streamlining are expected to offset top-line pressure.

• Management expects available cash balances to be sufficient for operating needs through the remainder of fiscal 2026.

• Valentine's Day falls on a Saturday, historically a less favorable day for sales.