Cuộc họp công bố kết quả kinh doanh Quý 4 FY2026 của 1-800-FLOWERS.COM (FLWS): Doanh thu sụt giảm, triển vọng FY2027

Thông tin trọng tâm

• Doanh thu quý 4 năm tài chính 2026 giảm 12,9% so với cùng kỳ năm ngoái xuống còn 293,1 triệu USD. Doanh thu cả năm giảm 10,8% xuống 1,5 tỷ USD do số lượng giao dịch giảm 17,6%, được bù đắp một phần nhờ giá trị đơn hàng trung bình tăng 5,5% và tăng trưởng mảng bán buôn.
• EBITDA điều chỉnh quý 4 ghi nhận mức lỗ 31,0 triệu USD, so với mức lỗ 24,2 triệu USD của cùng kỳ năm trước. EBITDA điều chỉnh cả năm giảm xuống 2,9 triệu USD từ mức 29,2 triệu USD.
• 1-800-FLOWERS.COM đã đạt mục tiêu tiết kiệm chi phí thường niên 50 triệu USD sớm hơn kế hoạch và xác định thêm các cơ hội tiết kiệm từ 15 triệu đến 20 triệu USD. Ban lãnh đạo dự kiến sẽ thực hiện các biện pháp này trong năm tài chính 2027, với toàn bộ lợi ích đạt được vào năm tài chính 2028.
• Cho năm tài chính 2027, ban lãnh đạo dự báo doanh thu sẽ giảm ở mức giữa một chữ số và EBITDA điều chỉnh đạt từ 10 triệu đến 15 triệu USD. Triển vọng này bao gồm khoảng 12 triệu USD chi phí thù lao biến đổi tăng thêm.
• Công ty đã sửa đổi hợp đồng tín dụng và đang đánh giá các phương án tài trợ nợ hoặc vốn cổ phần, thoái vốn tài sản không cốt lõi và các giao dịch cơ cấu vốn khác. Guggenheim Securities LLC đang tư vấn cho quá trình đánh giá này.
• Ban lãnh đạo cho biết việc cải thiện xu hướng doanh thu là ưu tiên hàng đầu, được hỗ trợ bởi các khoản đầu tư vào công nghệ tiếp thị, cá nhân hóa, giữ chân khách hàng và chuyển đổi số.

Dữ liệu tài chính chính

Kết quả hoạt động kinh doanh và vận hành

Công ty kết thúc năm tài chính 2026 với 7,5 triệu khách hàng và hơn 800.000 thành viên Passport. Khách hàng hiện tại đóng góp 77% doanh thu.

Khách hàng mua nhiều danh mục sản phẩm chiếm 12% tổng số khách hàng nhưng đóng góp 26% doanh thu. Thành viên Passport chiếm 9% cơ sở khách hàng và 19% doanh thu. Ban lãnh đạo có kế hoạch mở rộng chương trình Passport vượt ra ngoài chính sách giao hàng miễn phí nhằm cải thiện mức độ tương tác, tần suất mua hàng và giữ chân khách hàng, đồng thời giảm chi phí tái thu hút khách hàng.

Phân khúc Hoa & Quà tặng Tiêu dùng tiếp tục chịu áp lực, mặc dù ban lãnh đạo cho biết quỹ đạo của ngành hàng hoa đang cải thiện. Hiện tại, hơn 60% đơn hàng hoa được xử lý thông qua các cửa hàng hoa liên kết, phần còn lại được giao trực tiếp. Công ty không đặt ra tỷ lệ mục tiêu mà định hướng lựa chọn phương thức xử lý đơn hàng dựa trên nhu cầu của khách hàng và khả năng phục vụ của cửa hàng hoa địa phương.

Doanh thu BloomNet tăng 1,9%. Ban lãnh đạo cho biết sự cải thiện này một phần nhờ vào doanh số xử lý qua DoorDash, Instacart và Uber Eats, cũng như hoạt động kinh doanh dịp Ngày của Mẹ do các cửa hàng hoa thực hiện.

Doanh số bán hàng trên các sàn thương mại điện tử bên thứ ba như Amazon và DoorDash tăng trưởng ở mức hai chữ số và có lúc lên tới ba chữ số từ quy mô ban đầu còn nhỏ. Ban lãnh đạo cho biết doanh số này đạt biên lợi nhuận đóng góp tiếp thị dương và hầu như không gây ảnh hưởng tiêu cực đến các kênh kỹ thuật số tập trung vào quà tặng của công ty.

Các sáng kiến kỹ thuật số bao gồm việc thiết kế lại trang web Harry & David đang trong quá trình thử nghiệm A/B, với thiết kế ưu tiên thiết bị di động, điều hướng được cải tiến, xếp hạng sản phẩm động và tìm kiếm dựa trên AI. Công ty cũng đang hợp nhất các trang web độc lập có lưu lượng truy cập thấp thành các danh mục trên harryanddavid.com.

Dự báo của ban lãnh đạo

Cho năm tài chính 2027, ban lãnh đạo đưa ra triển vọng như sau:

• Doanh thu dự kiến sẽ giảm ở mức giữa một chữ số.
• EBITDA điều chỉnh dự kiến đạt từ 10 triệu đến 15 triệu USD.
• Triển vọng EBITDA bao gồm khoảng 12 triệu USD chi phí thù lao biến đổi tăng thêm so với năm tài chính 2026.
• Ban lãnh đạo dự kiến tốc độ giảm doanh thu sẽ giảm dần khi năm tài chính 2027 tiến triển, mặc dù sự cải thiện này dự kiến sẽ không diễn ra theo đường thẳng.
• Triển vọng doanh thu không bao gồm bất kỳ lợi ích tăng thêm nào từ các khoản đầu tư có thể được tài trợ thông qua huy động vốn hoặc tiềm năng thoái vốn.

Ban lãnh đạo dự kiến EBITDA năm tài chính 2027 sẽ hưởng lợi từ tác động đầy đủ của chương trình tiết kiệm chi phí thường niên 50 triệu USD và việc chấm dứt các chi phí tư vấn liên quan. Những lợi ích này sẽ bị bù đắp một phần bởi doanh thu thấp hơn, việc tái đầu tư vào tiếp thị, công nghệ tiếp thị và trải nghiệm khách hàng kỹ thuật số, cũng như chi phí thù lao biến đổi cao hơn.

Rủi ro và các yếu tố cần theo dõi

Doanh thu tiếp tục chịu áp lực khi người tiêu dùng vẫn thận trọng với chi tiêu không thiết yếu. Doanh số thấp hơn cũng đang tạo ra tác động đòn bẩy tiêu cực lên biên lợi nhuận gộp.

Biên lợi nhuận gộp chịu áp lực từ chi phí nguyên liệu thô và dự phòng hàng tồn kho. Giá ca cao tiếp tục là lực cản so với cùng kỳ năm ngoái, trong khi chi phí bơ, bột mì và trứng lỏng mang lại đôi chút hỗ trợ. Ban lãnh đạo cũng lưu ý rằng chi phí bột mì đã bắt đầu tăng và phụ phí nhiên liệu vận chuyển chiều đi có thể trở thành một lực cản.

Lợi ích từ việc hoàn thuế quan khoảng 7 triệu USD trong quý 4 dự kiến sẽ không lặp lại dựa trên các khoản hoàn thuế hiện đang đến hạn của công ty.

Nợ thuần đã tăng lên 128 triệu USD và công ty đang đánh giá các phương án bán tài sản cũng như huy động vốn để tăng cường thanh khoản và tài trợ cho quá trình chuyển đổi. Ban lãnh đạo nhấn mạnh rằng quá trình đánh giá đang ở giai đoạn đầu và có thể không dẫn đến bất kỳ giao dịch nào.

Tóm tắt phần Hỏi & Đáp với chuyên viên phân tích

Cầu nối EBITDA năm tài chính 2027: Ban lãnh đạo cho biết mức dịch chuyển từ 2,9 triệu USD EBITDA điều chỉnh của năm tài chính 2026 lên mục tiêu 10 triệu–15 triệu USD trong năm tài chính 2027 phản ánh lợi ích tiết kiệm thường niên 50 triệu USD và việc chấm dứt chi phí tư vấn. Các yếu tố bù đắp bao gồm mức giảm doanh thu dự kiến, việc tái đầu tư và khoảng 12 triệu USD chi phí thù lao biến đổi tăng thêm.

Thời điểm lễ Phục sinh: Việc dịch chuyển thời điểm kỳ nghỉ lễ đã làm giảm tăng trưởng mảng Thực phẩm Cao cấp & Giỏ quà tặng khoảng 2,5–3,5 điểm phần trăm và làm giảm tổng tăng trưởng doanh thu quý 4 khoảng 1,5 điểm phần trăm. Tác động này không ảnh hưởng đến kết quả cả năm.

Hiệu quả tiếp thị: Ban lãnh đạo cho biết chi phí thu hút khách hàng đã giảm và giá trị vòng đời khách hàng tăng trong năm tài chính 2026. Mô hình phân bổ đa điểm chạm trên các trang web của công ty dự kiến sẽ đi vào hoạt động vào tháng 10, trong khi chương trình khách hàng thân thiết đang được thiết kế lại để cải thiện việc phân khúc, giữ chân khách hàng và đo lường giá trị gia tăng.

Đánh giá cơ cấu vốn: Hạn mức tín dụng sửa đổi cung cấp thêm sự linh hoạt về các điều khoản cam kết và cho phép công ty giữ lại một phần tiền thu được từ việc bán tài sản tiềm năng để tái đầu tư. Ban lãnh đạo đang xem xét cả thương hiệu và tài sản hữu hình nhưng chưa xác định các ứng viên thoái vốn cụ thể.

Ngày của Mẹ và chiến lược mảng hoa: Ban lãnh đạo cho biết kết quả kinh doanh dịp Ngày của Mẹ phù hợp với kỳ vọng. Công ty đang áp dụng các bài học kinh nghiệm từ Ngày lễ Tình nhân và Ngày của Mẹ để điều chỉnh giá cả, danh mục sản phẩm và đề xuất giá trị đồng bộ giữa các sản phẩm được xử lý qua cửa hàng hoa và sản phẩm giao trực tiếp.

Toàn bộ biên bản cuộc họp công bố kết quả kinh doanh

Toàn văn cuộc gọi công bố kết quả kinh doanh

Phần trình bày của ban lãnh đạo

Operator

Thank you. Welcome to the 1-800-FLOWERS.COM, Inc. Fourth Quarter Fiscal Year 2026 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. [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.

Andy Milevoj

Good morning and welcome to our fiscal 2026 fourth quarter and year end earnings call. Joining us on today's call are Adolfo Villagomez, Chief Executive Officer, and James Landrock, 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, 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. Now, I'll turn the call over to Adolfo.

Adolfo Villagomez

Thanks, Andy, and good morning, everyone. This morning, I would like to discuss some of the announcements we made earlier today. Reflect on the progress we made during fiscal 2026 and share how we are entering the next phase of our transformation in fiscal 2027. As we announced this morning, we'll reach an agreement with our banking partners to amend our credit facility, providing us with additional financial flexibility. The amended credit agreement provides us with greater flexibility to retain a portion of potential assets sale proceeds and reinvest them in the business. It also better positions the Company to pursue a successful capital raising process.

Any additional capital would enable us to fund the investments required to improve customer acquisition, engagement, retention, and ultimately return the Company to sustainable growth. This agreement gives us the flexibility to continue executing while we evaluate those capital raising alternatives. James will discuss this in more detail. When we began this journey a little more than a year ago, priorities were clear. We needed to strengthen the foundation of the business, improve the customer experience, simplify how we operate, and build the capabilities necessary to return the Company to sustainable profitable growth. As I reflect on fiscal 2026, I am proud of what our team has accomplished. Together, we made meaningful changes across the organization that have strengthened our capabilities and positioned us to become a more customer-first, data-driven company.

While there is still important work ahead, I believe we are exiting fiscal 2026, as a stronger company than when we entered the year. Throughout fiscal 2026, we strengthened our leadership team, simplified our organization, began to modernize our digital and marketing capabilities, improved operational efficiency, and increasingly put the customer at the center of everything we do. One of the most significant changes we have made is how we operate internally. As part of our transition to a function-based organization, we have created clearer ownership and accountability across the customer journey. Historically, our marketing organization was responsible for a broad range of activities, including customer acquisition and retention, promotional discounts and cadence that vary by marketing channel, and other elements of the customer experience. Today, those responsibilities are more clearly defined across our marketing, merchandising, and digital experience teams, with each team accountable for a specific part of the customer journey. Marketing is focused on attracting new customers and retaining and engaging our existing customers.

Our merchandising team is responsible for the value proposition we put in front of those customers, including assortment, pricing, delivery fees, product availability, promotional activity, trade-off opportunities, and new product development. And our digital experience team is responsible for the experience customers have once they arrive on our websites, with a particular focus on improving the shopping experience and increasing conversion. We recently promoted one of our leaders into a new role that serves as the store manager for each of our digital platforms. This newly created team is responsible for looking at our websites through the eyes of the customer and identifying ways to make the shopping experience easier, more relevant, and more effective while improving conversion leading to sales growth. This is an important change in how we run the Company. Rather than relying primarily on one team per brand to influence multiple parts of the customer journey, we now have specialized teams with clear responsibilities and accountability across our digital properties. We're also seeing how our teams can work together to better serve the customer.

A good example is our floral assortment. Historically, even within the floral brand, we have separate merchandising teams for our florist fulfilled and direct ship businesses. And they largely operated independently, leading to confusing and sometimes competing value propositions within the same landing page. Today, they are working as one team to align our assortment and make more of our most popular products available through both fulfillment methods, with clearly differentiated value propositions for our customers. This gives customers more choice, clarifies our value proposition, expands our coverage in markets where florist availability may be limited, and creates a more consistent experience regardless of how the product is fulfilled. It is a good example of how breaking down silos and working together around the customer can improve the overall customer experience. This is what is happening underneath our transformation.

We are creating clear accountability across each step of the customer journey, while bringing those teams together around a common objective, serving the customer better while improving business performance. Let me share a few other examples of the progress we are making. First, we launched our redesigned Harry & David website, which is currently in A-B testing. The new site features a mobile-first design, improved navigation, dynamic product ranking, and AI power search. All designed to make it easier for customers to discover products while improving conversion. We also simplified our digital ecosystem by transitioning some of our low-traffic, standalone websites into categories within harryanddavid.com. This allows us to leverage our larger flagship platforms, introduce customers to a broader assortment, and operate more efficiently.

Second, we are modernizing our marketing capabilities. With clear responsibility for customer acquisition and retention, our marketing team is increasingly focused on reaching the right customers, strengthening engagement, and improving the productivity of our marketing investments. We are supporting that effort with investments in our marketing technology platform and a broader, full-funnel approach. Finally, we continue simplifying the business and improving efficiency. We achieved our original two-year cost savings target within the first year, providing us greater flexibility to reinvest a meaningful portion of those savings into marketing, technology, digital capabilities, and the customer experience. As I reflect on fiscal 2026, I see it as a year in which we fundamentally changed how we run the Company. We strengthened our leadership team, simplified the business, began modernizing our customer experience and marketing capabilities, and established clear accountability across the customer journey.

Looking ahead, we remain focused on putting these capabilities to work to improve business performance and position the Company for sustainable, profitable growth. As we move into fiscal 2027, our operational focus shifts to four priorities that we believe will translate our strategy into stronger business performance over time. First, we must accelerate the recovery of our revenue trends. We recognize that our revenue trends remain challenged, and improving those trends is our highest priority. As consumers remain selective in their discretionary spending, it is increasingly important that we give them more reasons to engage with our brands. Whether we are expanding everyday occasions at Harry & David, broadening our assortment, strengthening our loyalty strategy, or delivering more personalized customer experiences, our focus is on building a more durable revenue base over time. As these initiatives continue to mature, we believe they will help increase purchase frequency, strengthen customer relationships, and support improving revenue trends over time.

Second, we will continue to modernize the customer experience. Our objective is simple: Make it easier for customers to discover products, find the right gift, and shop seamlessly across our portfolio. With clear accountability within our digital experience team, we will continue optimizing the customer journey to improve conversion and make the experience more intuitive from the moment a customer arrives on one of our sites through checkout. We will also look for opportunities to encourage customers to shop across more categories to increase average order value and create a more engaging shopping experience. Third, we will increase marketing productivity and make targeted investments to build our brands. Over the past year, we began building a modern marketing organization. With marketing increasingly focused on customer acquisition and retention, we expect to make smarter investment decisions, improve personalization, broaden our full-funnel marketing investments, and more efficiently connect customers with the breadth of our portfolio.

Finally, our team will execute with discipline. We will continue to simplify the business, improve operational efficiency, and allocate capital toward the opportunities we believe offer the greatest long-term returns. We will also leverage the systems and processes we are modernizing to improve productivity and create a simpler, more efficient operating model. We will remain disciplined in how we invest while continuing to strengthen the capabilities that support sustainable profitable growth. Across all four priorities, our objective is to translate investments we have made into better business outcomes. We will not measure success by any single quarter, but by sustained progress across these areas and our ability to translate that progress into improving revenue trends and profitable growth over time. When I joined the Company a little more than a year ago, we knew we needed to strengthen the foundation of the business.

We now have a stronger leadership team, better capabilities, deeper customer insights and a more agile organization. As we enter fiscal 2027, we will continue building those capabilities, but our focus is increasingly on putting them to work and demonstrating what we can deliver. With that, let me turn the call over to James. Thanks, Adolfo, and good morning, everyone.

James Langrock

This morning I will provide some additional perspective on the actions we have taken to enhance our financial flexibility and our evaluation of capital raising options to optimize our capital structure. Then I'll review our fiscal year 2026, fourth quarter, and full year financial results; our balance sheet and liquidity position; and conclude with our fiscal 2027 outlook. As Adolfo mentioned, we amended our credit agreement to extend our existing covenant relief period and provide greater flexibility in the use of proceeds from potential asset sales, including the ability to retain a portion of those proceeds to invest in strategic initiatives to support our transformation. We appreciate the continued support of our banking partners as we execute our transformation and position the business for future growth. We are also evaluating the potential sale of non-strategic assets, along with a range of other capital-raising options intended to optimize our capital structure and provide additional capital to support investments and our transformation and drive future growth. These potential options may include one or more public or private debt or equity financing, potential divestitures of non-strategic assets, or other capital structure transactions. We have retained Guggenheim Securities LLC as our financial advisor in connection with this evaluation. There can be no assurance that the evaluation will result in any transaction or outcome, or if one or more of the transactions ensue, what the terms of any such transaction might be.

The Company is in the early stages of the evaluation and will not comment further during the process. Taken together, these actions are intended to strengthen our financial position and provide greater flexibility to invest in the strategic initiatives we believe can improve the performance of the business and drive sustainable, profitable growth over time. Fiscal 2026 was about strengthening the foundation of our business and positioning the Company for improved financial performance. Throughout the year, we prioritized revenue contribution margin over simply pursuing top-line growth. We streamlined the organization, achieved our cost savings objectives ahead of schedule, and deliberately reinvested a portion of those savings into initiatives designed to strengthen the business over the long term. As we review our financial results, it's important to keep that context in mind. Fiscal 2026 was a year of transition, and our results reflect both the progress we have made and the investments we are making to improve business performance over time.

As we move into fiscal 2027, our financial priorities are focused on maintaining appropriate liquidity, managing the balance sheet with discipline, and deploying capital toward the initiatives we believe offer the greatest opportunity to improve the performance of the business and create long-term shareholder value. With that perspective, let's review our financial results. Consolidated fourth quarter revenue declined 12.9% to $293.1 million. This included a 13.4% decline in our consumer floral and gift segment, a 15.4% decline in our gourmet foods and gift basket segment, which was affected by the timing of Easter, and a 1.9% increase in our BloomNet segment. For the full fiscal year, consolidated revenue declined 10.8% to $1.5 billion. Transactions declined 17.6%, partially offset by a 5.5% increase in AOV and growth in our wholesale business. At the end of fiscal 2026, we had 7.5 million customers, over 800,000 Passport members, and 77% of our revenue came from existing customers.

Multi-category customers and Passport loyalty members continue to represent our best performing customers. We recognized the strong affinity of these customers. During fiscal '26, multi-category customers represented 12% of our customers and 26% of our revenues, while Passport loyalty members represented 9% of our customer base and 19% of our revenues. Today, Passport is primarily centered around providing members with free shipping. Going forward, we see an opportunity to broaden the role of our loyalty program to deepen customer engagement, increase purchase frequency, and reduce the cost of reacquiring existing customers. This is consistent with our broader marketing strategy to build stronger relationships with our customers and reduce reacquisition costs. As Adolfo discussed, accelerating the recovery of revenue trends is our highest priority. We are evolving toward a more full-funnel marketing approach to reach new audiences while modernizing the customer experience to improve conversion and purchase frequency. Combined with greater personalized marketing and more year-round purchasing occasions, these initiatives are designed to strengthen customer acquisition and retention and support a more durable revenue base over time.

Turning to gross margin, fourth quarter adjusted gross margin was 34.7% compared with 35.5% in the prior year period. Gross margin continued to reflect the impact of sales deleveraging, commodity costs and inventory reserves offset in part by our cost reduction and operational efficiency initiatives, with an approximately $7 million benefit related to tariff refunds. For the full fiscal year, adjusted gross margin was 38% compared with 39.1% last year. Turning to operating expenses, excluding non-recurring charges and the impact of the Company's non-qualified deferred compensation plan in both periods, fourth quarter operating expenses decreased $8.9 million as compared with the prior year to $150.8 million. As we discussed throughout the year, our cost savings came from two primary areas: improving the efficiency of our marketing investments and operating. We achieved our $50 million run rate savings target ahead of plan and have identified an additional $15 to $20 million of opportunities across both cost of goods sold and operating expenses. We expect to execute against these additional opportunities during fiscal 2027 with the full benefit expected in fiscal 2028. As a result of these factors, our fourth quarter adjusted EBITDA loss was $31 million, compared with a loss of $24.2 million in the prior year period.

For the full fiscal year, adjusted EBITDA was $2.9 million, compared with $29.2 million in the prior year. Turning to our balance sheet, at fiscal year end, net debt was $128 million compared with $114 million a year ago. Cash totaled $11 million, while inventory ended the year at $153 million, compared with $177 million last year. In terms of our debt, we had $139 million in term debt and no borrowings under our revolving credit facility, as compared with $160 million in term debt a year ago. A continued focus on disciplined working capital management also contributed to a $55 million improvement in free cash flow compared with the prior year. As we discussed on today's call, fiscal 2027 represents the next phase of our transformation. We will continue to build new capabilities while leveraging the investments we have already made.

We plan to reinvest a significant portion of our cost savings back into the business in areas where we believe can drive long-term value. These include marketing, marketing technology, improving the digital customer experience, and increased personalized marketing. We will be very disciplined in how we allocate this capital using a test and learn approach to measure the results and prioritize the investments that demonstrate the greatest potential returns. We expect these investments to improve marketing productivity and the customer experience while supporting customer acquisition and retention. Benefits will take time to build, but we believe they will lead to better business performance and create long-term value. As a result, for fiscal 2027, we expect revenue to decline in the mid-single-digit range. Our revenue outlook does not assume any incremental benefit from investments that may be funded through the capital raising activities or potential divestitures discussed today.

We expect adjusted EBITDA to be in the range of $10 to $15 million, which includes approximately $12 million of additional variable compensation expense compared with fiscal 2026. With that, we will open the call for Q&A. Operator, please provide instructions for those interested in asking a question.

Operator

We will now begin the question and answer session. To ask a question, you may press star then 1 on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question today comes from Michael Kupinski with Noble Capital Markets. Please go ahead.

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Michael Kupinski

Thank you. Good morning. A couple of questions. Let's start with the guide. You are guiding $10 to $15 million in adjusted EBITDA for '27. I was wondering if you can just kind of give us a bridge to that number, particularly, I think there are consulting fees that roll off, but I just wondered if those might be continuing into fiscal '27. Maybe you can walk us through cost savings, gross margin improvement, marketing efficiencies, you know, relative to the guide that you're providing.

James Langrock

Good morning, Michael. How are you doing? This is James. So, you know, I, the way I'd bridge it is, you know, if you start at the $2.9 million of, you know, reported adjusted EBITDA as your starting point, you know, we expect to benefit, you know, from approximately $50 million of our run rate cost savings in fiscal 2027 and, you know, the consultant costs were done with the consultant cost, so we're getting the full benefit of the $50 million in 2027. However, those savings, you know, being partially offset by the expected mid-single-digit revenue decline, so that flows through from a gross margin perspective. We're going to continue to make investments in, you know, marketing, our MarTech stack, and digital customer service experience. So some of those savings we're going to use to reinvest back into the business. And then we have approximately $12 million of incremental variable compensation compared to last year. So that's how you get from the $2.9 to the $10.5 million.

So, you know, the cost savings are providing us with the capacity, you know, to continue to invest in the initiatives that we believe will improve the business performance and support our growth. So that's where we're coming up. So the $2.9 with those puts and takes gets you to the $10 to $15 million of EBITDA, Michael.

Michael Kupinski

Okay, great. Um, and then of course, Gourmet Foods obviously, you know, had an Easter shift there. And I was just wondering if you can give us some thoughts about what the Easter shift in terms of revenues might have been, and then maybe discuss a little bit about the gross margin decline, you know, how temporary that was and how much of that was affected by Easter, but then also how much of that might have been affected by tariffs, commodities, shipping, and that sort of thing.

James Langrock

So the, uh, you know, the reported for the gourmet food and gift basket, we reported, you know, 15.4% decline. So the Easter shift had about a 2.5 to 3.5 percentage point impact on that, and you about a, you know, 1.5% impact on the overall revenue for the quarter. Obviously, Michael, there's no impact on a full year basis. Obviously, it's just a shift between quarters. And I think you had another on the commodities, sure. Yes. And then go ahead. I'm sorry. No. Yes. On the commodities. Yes.

So, on the commodities, kind of, you know, we're seeing the trends generally consistent with what we discussed last quarter, Michael. Cocoa remains, you know, year-over-year, you know, a headwind for us. You know, although the market pricing has moderated from the peak levels, you know, we did see some benefit in, you know, butter, flour, and our liquid eggs. Of course, they're down slightly year-over-year. But we are starting to see, you know, the cost of flour is starting to tick up a little bit as well. And then, you know, the big one that we keep an eye on is on our outbound shipping, the impact of the fuel surcharge. So right now, that impact hasn't been that material to date because, you know, as you know, our Q1 is, you know, our lowest volume quarter.

We're monitoring that situation closely, you know, with the gas prices and the diesel prices where they are. So that one is really kind of a headwind that we're dealing with right now, Michael.

Michael Kupinski

Okay, got you. And then I just want to chat just a little bit about the credit facility in terms of, you know, how should investors primarily view this, um, the amendment, you know, obviously providing additional operating flexibility for you during this transformation. But we're just wondering, is that the reason, or is there also the prospect here that you're there's a prospect here that there's a change in your expectations for liquidity or operating performance of the Company.

James Langrock

I think, Michael, the way we announced today, I think you need to look at the announcement we made today together. You know, it's around the bank amendment, the potential asset sales, and the capital raise evaluation. They're all kind of interconnected. Our broader effort to strengthen the Company's financial position as well as support the execution of our transformation, right? So we believe we have the right strategy. FY 2026 was the year we set the foundation. So, you know, so, you know, the bank amendment, the potential sale of assets and the capital raising evaluation really are intended to strengthen our financial position and provide flexibility to invest in strategic initiatives that will improve the business performance. You know, so what the bank amendment does for us, Michael, is it provides flexibility to invest in additional covenant flexibility and greater flexibility, you know, we can deploy a portion of any potential asset sales that helps us, you know, invest in the, you know, you know, back into the business up for the growth initiatives. You know, when you look at the non-strategic asset sales, you know, we're looking at it as a way to help simplify the business, at the same time of monetizing assets that, you know, not essential to the long-term strategy, but it will generate additional liquidity.

And then kind of combining that, you know, with the capital raise evaluation that will help us determine whether, you know, this incremental capital could further enhance our ability to execute the transformation and support future growth. And as we mentioned on the call, we retained Guggenheim Securities as our advisor to help us evaluate the range of capital, you know, raising and the capital structural alternatives that may be available to the Company. So it's more of a, you know, we need to, you know, we're looking from a liquidity standpoint, a capital structure to help us fund the, you know, fund the growth initiatives that we have out there.

Michael Kupinski

If I could just squeeze one more in, obviously you now have some third party distribution. I was wondering if you have early results on your relationships with Amazon, DoorDash, and so forth. I was wondering if you could just give us an update there and how those relationships are working for you.

Adolfo Villagomez

Sure, Michael. Good morning. This is Adolfo. Those are going really well. Growing double, sometimes triple digits from a very small base is, and they are marketing contribution margin positive. So we are very excited about where that is going. I think our marketplace team is doing a great job of managing these external marketplaces and customers shopping in those sites are actually liking our products. They are liking our value proposition, so that is expected to continue to grow. Again, it's from a small base, but I think everything is very positive in that area.

Michael Kupinski

And there's no evidence of cannibalization from your own digital channels?

Adolfo Villagomez

I mean, we try to make sure that's the key question. We have found very little cannibalization. It's a different – this is the way to think about it, Michael. Even if it is the same individual, the mindset of the transaction is very different. Places like Amazon, Walmart, etcetera, are designed to buy for you. As you know, our main customer objective, it's a gift to somebody else. And our websites are positioned for that. I we believe we have a premier gifting platform. And that occasion actually makes the cannibalization minimal to non-existent.

Michael Kupinski

Got you. Thank you so much. Sure.

Operator

The next question comes from Anthony Lebiedzinski with Sidoti and Company. Please go ahead.

Anthony Lebiedzinski

Good morning. Thank you for taking the questions. So, I was just curious, as far as your Mother's Day performance, how did the holiday perform versus your expectations? And you know, just going back to your last conference call, we talked about some of the learnings from Valentine's Day, whether those were successful. And then as you get into the holiday season, kind of, how are you looking to perhaps shift your marketing messaging and other initiatives? Yes.

Adolfo Villagomez

Sure, Michael. Good morning. This is Adolfo. Those are going really well. Growing double, sometimes triple digits from a very small base is, and they are marketing contribution margin positive. So we are very excited about where that is going. I think our marketplace team is doing a great job of managing these external marketplaces and customers shopping in those sites are actually liking our products. They are liking our value proposition, so that is expected to continue to grow. Again, it's from a small base, but I think everything is very positive in that area.

Adolfo Villagomez

I mean, we try to make sure that's the key question. We have found very little cannibalization. It's a different – this is the way to think about it, Michael. Even if it is the same individual, the mindset of the transaction is very different. Places like Amazon, Walmart, etcetera, are designed to buy for you. As you know, our main customer objective, it's a gift to somebody else. And our websites are positioned for that. I we believe we have a premier gifting platform. And that occasion actually makes the cannibalization minimal to non-existent.

Adolfo Villagomez

Sure, Anthony. I'm probably going to give you a longer answer than you were hoping for, Anthony, but this is a journey. And again, the key message I want you to hear from me is: It's a trajectory that we are trying to improve on how we go back to growing revenues. So if you go back to Valentine's Day, that was a major shift in the strategy. It used to be that we would favor our direct shipping business. That would lead to significant discounts when we had excess inventory. And for the first time ever in Valentine's Day, we changed that to try to see, again, what the customer wanted, not what we wanted to sell.

We learn a lot. We applied some of those learnings in Mother's Day. It feels like enough timing between one event versus the other, but if you account for the purchase order timing, the communications to florists, etcetera, there's only so many things you can actually change. The trajectory of Mother's Day was aligned with our expectations, and it also provided significant learnings that we are implementing as we speak. I mentioned during the prepared remarks these minor things, which is super important, of aligning the value proposition between the two channels, florists and direct ship. It literally used to be that you would go into our website, and by the way, we're still fixing all of that, but I mean, we know what we are doing and we're executing, that you would find two identical, well, for an uneducated person, you would see two almost identical flower bouquets, think of two dozen roses, and the price gap would be 20%. And you would go like, why is the price gap so much? And you could drive yourself crazy. And the answer was, well, one is direct ship, the other is coming from the florist.

We learned, we tested, said, hey, what if you have the same SKU for both channels? And we tested that on Mother's Day, and we. So all of these little learnings were sequentially applying to improve the trajectory of the business. And again, those are being applied. And on 1-800-Flowers.com, the trajectory of the business is improving significantly. There are weeks in which it's positive sales of that category. So it's moving in the right direction. But there are also the other moving parts, which is, okay, one thing is to sell flowers, but that website was selling flowers, chocolate-covered strawberries, it was selling a lot of many different things, because we manually, we put in those products in front of the customer. And yes, they were buying them, but nobody was measuring incrementality.

Now we're measuring incrementality, we are measuring conversion, and you may be surprised to hear this, but when people go to 1-800-Flowers.com, they want to buy a flower bouquet. So we are now with AI ranking because that's what the customer wants to see, that's what we are showing and that's what we are selling. So the category as flowers it's already growing most days, more weeks but you are compensating for declining sales in the other categories. So all of this to tell you, we are very optimistic about the that we are making, the measurement of incrementality, and when it works, we roll out. Now, you have to keep in mind, we have multiple websites. So every change doesn't impact the $1.5 billion in sales. It just impacts that website. And just as we are talking about flowers, I mentioned, hey, we also have Harry and David.

For Harry and David, the priority right now is Q2, is Christmas, so we have different tests, different things going on, and as I mentioned, that's why we are testing the new platform on an A-B basis at this point. So, positive about the trajectory, satisfied with the results in Mother's Day, and we are learning a lot, and those learnings will allow us to change the trajectory of the business over time.

Anthony Lebiedzinski

That's very helpful context. So, just to follow up quickly on that on the just the consumer floral business. So, as you talk about the florist fulfilled and direct fulfillment, what's the mix nowadays between those two and is there an optimal number there that you think would make sense for you guys going forward?

James Langrock

So, Anthony, this is James. So, right now, the mix is plus 60% is florists fulfilled. The remaining is direct and the florist-refilled percentage has been increasing for all the reasons that Adolfo was mentioning. So there is an optimal mix, but it's really more around getting the product and the right product to our customers through the best fulfillment channel.

Adolfo Villagomez

I mean, and we don't have a target in mind of the optimal mix. The way I think about it is: We want to provide customer choice. If you are a customer living in Manhattan, we have plenty of florists that can provide the bouquets you're looking for. So I don't want to sell you direct products in there because certainly our florist delivery business, it's probably the best experience we can provide. But my favorite example with the team is, if you are a customer that is trying to send a gift to Big Sky, Montana, there isn't a florist in Big Sky, Montana, so you need to actually ship direct and what we are trying to do is to improve that value proposition, align it with our florist delivery business to get to an optimal, an optimal mix driven by what the customer wants.

Anthony Lebiedzinski

Got you. Okay. And then just switching gears, you know, BloomNet was a bright spot here with sales increasing slightly. I know it's a, you know, lowest revenue segment, but what's going on there? And do you think you can sustain modest growth in BloomNet?

James Langrock

So, Anthony, as you mentioned, it's about a $500,000 increase year over year. One of the main drivers is what we call the local marketplace or the apps. That's the sales that are being processed through DoorDash, Instacart, and Uber Eats, so that was one of the main drivers. And then there was some, you know, we had a, you know, from a florist with Phil, we had a pretty decent Mother's Day on that front, as Adolfo mentioned. So we got a little uplift there as well. So, and we are excited about the local, we call it local marketplace or the local apps, you know, as a, you know, something that will continue to grow. Yes.

Adolfo Villagomez

On that, Anthony, I regularly think about BloomNet as a leading indicator into where we are heading. We just discussed two things: how our flowers category is growing, that we are favoring florist-delivered business because that's what the customer wants. And those two things by themselves impact in a positive way our BloomNet revenues. The other thing we discussed was the third-party marketplace, which, as James explained, that's also growing nicely. So if you combine those factors, BloomNet is getting the benefit of those, and that's why you see the positive trajectory in there.

Anthony Lebiedzinski

Got you. Okay. And if I could just squeeze one more in. Tariff refunds, so you talked about $7 million in a quarter. Do you expect to get any additional tariff refunds in fiscal '27 perhaps?

James Langrock

No, at this point, Anthony, we believe we've got all the refunds that are due us at the moment.

Anthony Lebiedzinski

Understood. Well, thank you very much and best of luck. Thank you.

Operator

The next question comes from Linda Bolton-Weiser with Water Tower Research. Please go ahead.

Unknown Speaker

Yes, hi, thank you. I was wondering if you could comment, Adolfo, on your efforts to improve marketing spending productivity. Is there any metrics you can share with us that would help us understand better the progress you've made other than spending as a percentage of revenue? So maybe something like CAC, if your customer acquisition cost has gone down or up, and is there any other metrics that could help us see, you know, the progress that you're making there?

Adolfo Villagomez

Yes Linda, I don't have hard numbers for you. But let me explain what we are trying to do and what we are seeing. If you step back for a moment, 2026 was, this is the core problem we were trying to solve. We were trying to drive revenues, hoping that the customer acquisition cost would be offset by customer lifetime value. However, so we, our marketing machine would get the customer. I mean, I think we mentioned somewhere in there that about 70-plus percent of our sales come from repeat customers. But the problem we were having is we were paying a customer acquisition cost to get a lot of those customers.

So our marketing investment wasn't measuring incrementality and wasn't really driving customer lifetime value. So, we didn't have the capacity to measure multi-touch attribution, we were only measuring last-touch attribution, which would lead you to believe that buying clicks from Google was the most effective investment you were making. But if you were to measure that using incrementality, you would realize that it was minimal incrementality. So step #1, and this is what we did in 2020, we implemented and we have talked about marketing contribution margin, which was, hey, guys, if it is not contribution margin positive for the transaction including the marketing acquisition cost, don't spend the money. We know we probably left in there some transactions that we may have wanted to have, but we just didn't have the capability to measure what was good and what was bad. And again, the very basic approach we were using for measurement wasn't the right way of measuring customer acquisition cost and customer lifetime value. So we literally just put the brakes, saved a lot of money in the process. I think if you were to look at 2026 in total, marketing contribution margin was positive in most quarters in most months, just because we were spending more money than we should have spent. Now, as part of that process now, so I mean, let me just stop right there.

So in 2026, yes, our customer acquisition costs declined, and yes, our customer lifetime value increased. For the basis of the business, a $1.5, $1.6 billion business, we need to go back to revenue growth for the operational efficiencies to kick in. So as we were doing that and cutting costs, we have been investing in capabilities. I'm not going to declare victory that we have everything, but as we speak, literally every week, we are releasing and implementing new tools, new capabilities within marketing in the different websites that are allowing us to prepare for the upcoming events which are where the majority of our revenues come. I'll give you an example. For the first time ever, we are going to have marketing measurement, multi-touch attribution across all of our websites. That's becoming live in October. We are changing our loyalty program. Our loyalty program was a one-size-fits-all that basically just focused, okay, if you are going to buy multiple orders from us, I'll give you free delivery. That was the only value proposition.

What we are doing right now is we are redesigning that. We're going to bring a wallet to truly measure retention and incrementality and segment our customers. We're finding out our B2B customers are very different from our consumers. Yes, we were offering them the same value proposition. So we are changing those things. We're modernizing our media team. We are doing a lot of things with the idea to get back to a productive, okay, here's the customer acquisition cost we can have. By the way, that varies by wealth. It is not the same, so we need to measure that by website, and then determine how much can we spend to truly deliver a positive customer lifetime value based on conversion, retention, etcetera, etcetera, etcetera.

So Linda, we are moving in the right direction. Now the challenge in 2027 is just to demonstrate that those capabilities actually will allow us to deliver revenue growth. And as I mentioned, the reason we're not saying, hey, it's positive in 2027, it's because this is sequential and you will see the trajectory. The trajectory improving, so as the year goes by, this trajectory should continue to improve as we bring the new capabilities into each of our different websites to increase our acquisition, retention, and repeatability of customers.

Unknown Speaker

That's helpful. Thank you. And it sort of leads into my next question, which is the cadence of sales performance in FY27. You kind of indicated this would improve as the year goes on. So would we expect sales decline to be biggest in the first part of the fiscal year and then to improve as you go on? And do you think by the fourth quarter of fiscal '27, do you think the top line can be flat or even slightly up year over year?

James Langrock

So, Linda, this is James. We, you know, as you mentioned, we expect the rate of revenue decline to moderate as we progress throughout 2027. As Adolfo mentioned, as these initiatives begin to gain traction. And again, we don't expect these improvements to be linear from quarter to quarter. And we're not giving specific quarterly guidance, but we do anticipate that we'll see improvement on the top line, you know, throughout the year.

Adolfo Villagomez

Yes, but the key thing here, Linda, is we do expect the revenue trajectory to improve.

Unknown Speaker

Okay, great. And then my final question has to do with your discussion about, I guess, potential divestitures. Are you talking more about like brand sales or hard assets like facilities? And then my second question has to do with on the brand. Are you able to give us some sense as to whether there are any brands that are unprofitable like on a standalone basis? Like is that possible for you to measure and convey in terms of the profitability, particularly of each brand individually? Thanks.

James Langrock

So, Linda, so, you know, we're obviously evaluating, you know, potentials of divestitures, you know, to help, you know, simplify the business, you know, and optimize the capital structure. You know, really focused on non-strategic assets where ownership may not be necessary to support our long-term strategy, including situations where we might be able to work with third-party partners and operate with more focus in a capital-efficient model. We're not really commenting right now on the specific divestitures, but we are obviously looking at everything, both from brands as well as hard assets. Thank you very much. I appreciate it. Thank you. Thank you.

Operator

This concludes our question and answer session. I would like to turn the conference back over for any closing remarks.

Adolfo Villagomez

Thank you, everyone, for joining us today and for your continued support. As we close, I want to reinforce a few key points. Fiscal 2026 was an important year for our Company. We strengthened our leadership team, simplified how we operate, began to modernize our customer experience and marketing capabilities, and created clearer ownership and accountability across the customer journey. While there is still important work ahead, we believe we have built a stronger foundation for the business. As we enter fiscal 2027, our focus is increasingly on putting these capabilities to work and translating them into better business performance. Improving our revenue trends remains our highest priority, supported by our efforts to modernize the customer experience, increase marketing productivity, and execute with discipline.

I am confident in the team we have in place and the opportunities ahead of us. Thank you again for joining us today.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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