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The costs of these functions, other than those of the Customer Service Center, which are allocated directly to the above categories based upon usage, are included within corporate expenses as they are not directly allocable to a specific segment. The Company has established a NQDC Plan for certain members of senior management. Deferred compensation plan assets are invested in mutual funds held in a “rabbi trust,” which is restricted for payment to participants of the NQDC Plan. 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Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2023

 

or 

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ___

 

Commission File No. 0-26841

flws20231231_10qimg001.jpg

 

1-800-FLOWERS.COM, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware

11-3117311

(State of incorporation)

(I.R.S. Employer Identification No.)

Two Jericho Plaza, Suite 200, Jericho, NY 11753

(516) 237-6000

(Address of principal executive offices) (Zip code)

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading symbol(s)

Name of each exchange on which

registered

Class A common stock

FLWS

The Nasdaq Stock Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐         

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or such shorter period that the registrant was required to submit such files). Yes ☑   No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 

☐Large accelerated filer

☑Accelerated filer

☐Non-accelerated filer

☐Smaller reporting company

 

☐Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐  No ☑

 

The number of shares outstanding of each of the Registrant’s classes of common stock as of February 2, 2024:

 

Class A common stock: 37,428,934

Class B common stock: 27,068,221

 

 
Table of Contents

  

 

1-800-FLOWERS.COM, Inc.

FORM 10-Q

For the quarterly period ended December 31, 2023

TABLE OF CONTENTS

 

   

Page

Part I.

Financial Information

  

Item 1.

Condensed Consolidated Financial Statements

1
 

Condensed Consolidated Balance Sheets – December 31, 2023 (Unaudited) and July 2, 2023

1
 

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) – Three and Six Months Ended December 31, 2023 and January 1, 2023

2
 

Condensed Consolidated Statements of Stockholders' Equity (Unaudited) – Three and Six Months Ended December 31, 2023 and January 1, 2023

3
 

Condensed Consolidated Statements of Cash Flows (Unaudited) – Six Months Ended December 31, 2023 and January 1, 2023

5
 

Notes to Condensed Consolidated Financial Statements (Unaudited)

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

19

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

35

Item 4.

Controls and Procedures

35
     

Part II.

Other Information

36

Item 1.

Legal Proceedings

36

Item 1A.

Risk Factors

36

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

37

Item 3.

Defaults upon Senior Securities

37

Item 4.

Mine Safety Disclosures

37

Item 5.

Other Information

37

Item 6.

Exhibits

38
     

Signatures

 

 

 
Table of Contents
 

 

 

PART I. – FINANCIAL INFORMATION

 

ITEM 1. – CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

1-800-FLOWERS.COM, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except for share data)

 

  

December 31, 2023

  

July 2, 2023

 
  

(unaudited)

     

Assets

        

Current assets:

        

Cash and cash equivalents

 $312,017  $126,807 

Trade receivables, net

  46,578   20,419 

Inventories

  161,324   191,334 

Prepaid and other

  24,557   34,583 

Total current assets

  544,476   373,143 
         

Property, plant and equipment, net

  227,643   234,569 

Operating lease right-of-use assets

  117,825   124,715 

Goodwill

  153,577   153,376 

Other intangibles, net

  117,897   139,888 

Other assets

  30,292   25,739 

Total assets

 $1,191,710  $1,051,430 
         

Liabilities and Stockholders' Equity

        

Current liabilities:

        

Accounts payable

 $92,418  $52,588 

Accrued expenses

  224,084   141,914 

Current maturities of long-term debt

  10,000   10,000 

Current portion of long-term operating lease liabilities

  15,433   15,759 

Total current liabilities

  341,935   220,261 
         

Long-term debt, net

  181,749   186,391 

Long-term operating lease liabilities

  110,740   117,330 

Deferred tax liabilities, net

  25,026   31,134 

Other liabilities

  28,900   24,471 

Total liabilities

  688,350   579,587 
         

Commitments and contingencies (See Note 14)

          
         

Stockholders' equity:

        

Preferred stock, $0.01 par value, 10,000,000 shares authorized, none issued

  -   - 

Class A common stock, $0.01 par value, 200,000,000 shares authorized, 58,743,969 and 58,273,747 shares issued at December 31, 2023 and July 2, 2023, respectively

  588   583 

Class B common stock, $0.01 par value, 200,000,000 shares authorized, 32,348,221 shares issued at December 31, 2023 and July 2, 2023

  323   323 

Additional paid-in capital

  392,849   388,215 

Retained earnings

  302,748   271,083 

Accumulated other comprehensive loss

  (170)  (170)

Treasury stock, at cost, 21,089,336 and 20,565,875 Class A shares at December 31, 2023 and July 2, 2023, respectively and 5,280,000 Class B shares at December 31, 2023 and July 2, 2023

  (192,978)  (188,191)

Total stockholders’ equity

  503,360   471,843 

Total liabilities and stockholders’ equity

 $1,191,710  $1,051,430 

 

See accompanying Notes to Condensed Consolidated Financial Statements. 

 

1
Table of Contents
 

 

1-800-FLOWERS.COM, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(in thousands, except for per share data)

(unaudited)

 

  

Three Months Ended

  

Six Months Ended

 
  

December 31,

2023

  

January 1,

2023

  

December 31,

2023

  

January 1,

2023

 
                 

Net revenues

 $822,054  $897,877  $1,091,104  $1,201,481 

Cost of revenues

  466,357   530,111   633,479   732,257 

Gross profit

  355,697   367,766   457,625   469,224 

Operating expenses:

                

Marketing and sales

  188,557   194,466   271,075   283,605 

Technology and development

  14,822   14,952   30,126   29,692 

General and administrative

  27,154   28,908   55,643   55,153 

Depreciation and amortization

  14,152   14,315   27,346   27,009 

Intangible impairment

  19,762   -   19,762   - 

Total operating expenses

  264,447   252,641   403,952   395,459 

Operating income

  91,250   115,125   53,673   73,765 

Interest expense, net

  4,611   4,143   8,093   6,964 

Other (income) expense, net

  (2,736)  148   (2,262)  1,070 

Income before income taxes

  89,375   110,834   47,842   65,731 

Income tax expense

  26,468   28,304   16,177   16,893 

Net income and comprehensive net income

  62,907   82,530   31,665   48,838 
                 

Basic net income per common share

 $0.97  $1.28  $0.49  $0.76 
                 

Diluted net income per common share

 $0.97  $1.27  $0.49  $0.75 
                 

Weighted average shares used in the calculation of net income per common share:

                

Basic

  64,835   64,675   64,814   64,606 

Diluted

  65,177   64,835   65,155   64,820 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

 

2
Table of Contents
 

 

1-800-FLOWERS.COM, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders' Equity

(in thousands, except share data)

(unaudited)

 

  

Three Months Ended December 31, 2023 and January 1, 2023

 
  

Common Stock

  

Additional

  

 

  

Accumulated

Other

          

Total

 
  

Class A

  

Class B

  

Paid-in

  Retained  

Comprehensive

  

Treasury Stock

  

Stockholders’

 
  

Shares

  

Amount

  

Shares

  

Amount

  

Capital

  

Earnings

  

Loss

  

Shares

  

Amount

  

Equity

 
                                         

Balance at October 1, 2023

  58,309,547  $583   32,348,221  $323  $390,579  $239,841  $(170)  25,856,358  $(188,265) $442,891 

Net income

  -   -   -   -   -   62,907   -   -   -   62,907 

Stock-based compensation

  429,312   5   -   -   2,226   -   -   -   -   2,231 

Exercise of stock options

  5,110   -   -   -   44   -   -   -   -   44 

Acquisition of Class A treasury stock

  -   -   -   -   -   -   -   512,978   (4,713)  (4,713)

Balance at December 31, 2023

  58,743,969  $588   32,348,221  $323  $392,849  $302,748  $(170)  26,369,336  $(192,978) $503,360 
                                         

Balance at October 2, 2022

  57,706,389  $577   32,529,614  $325  $381,440  $282,093  $(211)  25,698,396  $(186,952) $477,272 

Net income

  -   -   -   -   -   82,530   -   -   -   82,530 

Stock-based compensation

  368,249   4   -   -   1,895   -   -   -   -   1,899 

Conversion – Class B into Class A

  181,393   2   (181,393)  (2)  -   -   -       -   - 

Acquisition of Class A treasury stock

  -   -   -   -   -   -   -   140,248   (1,175)  (1,175)

Balance at January 1, 2023

  58,256,031  $583   32,348,221  $323  $383,335  $364,623  $(211)  25,838,644  $(188,127) $560,526 

 

3
Table of Contents

 

1-800-FLOWERS.COM, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders' Equity

(in thousands, except share data)

(unaudited)

 

 

  

Six Months Ended December 31, 2023 and January 1, 2023

 
  

Common Stock

  

Additional

  

 

  

Accumulated

Other

          

Total

 
  

Class A

  

Class B

  

Paid-in

  Retained  

Comprehensive

  

Treasury Stock

  

Stockholders’

 
  

Shares

  

Amount

  

Shares

  

Amount

  

Capital

  

Earnings

  

Loss

  

Shares

  

Amount

  

Equity

 
                                         

Balance at July 2, 2023

  58,273,747  $583   32,348,221  $323  $388,215  $271,083  $(170)  25,845,875  $(188,191) $471,843 

Net income

  -   -   -   -   -   31,665   -   -   -   31,665 

Stock-based compensation

  465,112   5   -   -   4,590   -   -   -   -   4,595 

Exercise of stock options

  5,110   -   -   -   44   -   -   -   -   44 

Acquisition of Class A treasury stock

  -   -   -   -   -   -   -   523,461   (4,787)  (4,787)

Balance at December 31, 2023

  58,743,969  $588   32,348,221  $323  $392,849  $302,748  $(170)  26,369,336  $(192,978) $503,360 
                                         

Balance at July 3, 2022

  57,706,389  $577   32,529,614  $325  $379,885  $315,785  $(211)  25,698,396  $(186,952) $509,409 

Net income

  -   -   -   -   -   48,838   -   -   -   48,838 

Stock-based compensation

  368,249   4   -   -   3,450   -   -   -   -   3,454 

Conversion – Class B into Class A

  181,393   2   (181,393)  (2)  -   -   -       -   - 

Acquisition of Class A treasury stock

  -   -   -   -   -   -   -   140,248   (1,175)  (1,175)

Balance at January 1, 2023

  58,256,031  $583   32,348,221  $323  $383,335  $364,623  $(211)  25,838,644  $(188,127) $560,526 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

 

4
Table of Contents
 

 

1-800-FLOWERS.COM, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

  

Six Months Ended

 
  

December 31,

2023

  

January 1,

2023

 
         

Operating activities:

        

Net income

 $31,665  $48,838 

Adjustments to reconcile net income to net cash provided by operating activities:

        

Intangible impairment

  19,762   - 

Depreciation and amortization

  27,346   27,009 

Amortization of deferred financing costs

  361   671 

Deferred income taxes

  (6,108)  (846)

Bad debt expense

  225   2,407 

Stock-based compensation

  4,595   3,454 

Other non-cash items

  (385)  (470)

Changes in operating items:

        

Trade receivables

  (26,384)  (31,622)

Inventories

  29,808   46,506 

Prepaid and other

  6,640   7,550 

Accounts payable and accrued expenses

  125,404   89,050 

Other assets and liabilities

  (169)  1,113 

Net cash provided by operating activities

  212,760   193,660 
         

Investing activities:

        

Capital expenditures

  (17,807)  (23,849)

Net cash used in investing activities

  (17,807)  (23,849)
         

Financing activities:

        

Acquisition of treasury stock

  (4,787)  (1,175)

Proceeds from exercise of employee stock options

  44   - 

Proceeds from bank borrowings

  82,000   195,900 

Repayment of bank borrowings

  (87,000)  (205,900)

Debt issuance cost

  -   (383)

Net cash used in financing activities

  (9,743)  (11,558)
         

Net change in cash and cash equivalents

  185,210   158,253 

Cash and cash equivalents:

        

Beginning of period

  126,807   31,465 

End of period

 $312,017  $189,718 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

 

5
Table of Contents

 

1-800-FLOWERS.COM, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(unaudited)

 

 

 

Note 1 – Accounting Policies

 

Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements have been prepared by 1-800-FLOWERS.COM, Inc. and Subsidiaries (the “Company”) in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and six-month periods ended December 31, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2024. These financial statements should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended July 2, 2023, which provides a more complete understanding of our accounting policies, financial position, operating results and other matters.

 

The Company’s quarterly results may experience seasonal fluctuations. Due to the seasonal nature of the Company’s business, and its continued expansion into non-floral products, the Thanksgiving through Christmas holiday season, which falls within the Company’s second fiscal quarter, is expected to generate over 40% of the Company’s annual revenues, and all of its earnings. Due to the number of major floral gifting occasions, including Mother's Day, Valentine’s Day, Easter, and Administrative Professionals Week, revenues also have historically risen during the Company’s fiscal third and fourth quarters in comparison to its fiscal first quarter.

 

Use of Estimates

 

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

 

Revenue Recognition

 

Net revenue is measured based on the amount of consideration that we expect to receive, reduced by discounts and estimates for credits and returns (calculated based upon previous experience and management’s evaluation). Service and outbound shipping charged to customers are recognized at the time the related merchandise revenues are recognized and are included in net revenues. Inbound and outbound shipping and delivery costs are included in cost of revenues. Net revenues exclude sales and other similar taxes collected from customers.

 

A description of our principal revenue generating activities is as follows:

 

●

E-commerce revenues - consumer products sold through our online and telephonic channels. Revenue is recognized when control of the merchandise is transferred to the customer, which generally occurs upon shipment. Payment is typically due prior to the date of shipment.

●

Retail revenues - consumer products sold through our retail stores. Revenue is recognized when control of the goods is transferred to the customer, at the point of sale, at which time payment is received.

●

Wholesale revenues - products sold to our wholesale customers for subsequent resale. Revenue is recognized when control of the goods is transferred to the customer, in accordance with the terms of the applicable agreement. Payment terms are typically 30 days from the date control over the product is transferred to the customer.

●

BloomNet Services - membership fees as well as other service offerings to florists. Membership and other subscription-based fees are recognized monthly as earned. Services revenues related to orders sent through the floral network are variable, based on either the number of orders or the value of orders, and are recognized in the period in which the orders are delivered. The contracts within BloomNet Services are typically month-to-month and, as a result, no consideration allocation is necessary across multiple reporting periods. Payment is typically due less than 30 days from the date the services were performed. 

 

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Deferred Revenues

 

Deferred revenues are recorded when the Company has received consideration (i.e. advance payment) before satisfying its performance obligations. As such, customer orders are recorded as deferred revenue prior to shipment or rendering of product or services. Deferred revenues primarily relate to e-commerce orders placed, but not shipped, prior to the end of the fiscal period, as well as for subscription programs, including our various food, wine, and plant-of-the-month clubs and our Celebrations Passport® program.

 

Our total deferred revenue as of July 2, 2023 was $30.8 million (included in “Accrued expenses” on our consolidated balance sheets), of which $10.7 million and $26.8 million was recognized as revenue during the three and six months ended December 31, 2023. The deferred revenue balance as of December 31, 2023 was $39.9 million.  

 

Impairment Evaluation

 

The Company performs its annual assessment of goodwill and indefinite-lived intangible impairment during its fiscal fourth quarter, or more frequently if events occur or circumstances change such that it is more likely than not that an impairment  may exist. During the quarter ended December 31, 2023, as a result of a decline in the actual and projected revenue for the Company’s PersonalizationMall tradename (indefinite-lived intangible asset), as well as a higher discount rate resulting from the higher interest rate environment, the Company determined that an impairment assessment was required for this tradename. This assessment resulted in the Company recording a non-cash impairment charge of $19.8 million to reduce the recorded carrying value of the PersonalizationMall tradename.

 

The Company concluded that goodwill and other indefinite-lived intangible assets, excluding its PersonalizationMall tradename, did not require an impairment assessment. See Note 5 – Goodwill and Intangible Assets, Net for further information.

 

Recently Issued Accounting Pronouncements

 

In November 2023, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07 requires enhanced disclosures about significant segment expenses, includes enhanced interim disclosure requirements, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss, provides new segment disclosure requirements for entities with a single reportable segment, and contains other disclosure requirements. The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. ASU 2023-07 is to be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact of ASU 2023-07 on its consolidated financial statements and related disclosures.

 

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 requires the disclosure of additional information with respect to the reconciliation of the effective tax rate to the statutory rate for federal, state, and foreign income taxes and requires greater detail about significant reconciling items in the reconciliation. Additionally, the amendment requires disaggregated information pertaining to taxes paid, net of refunds received, for federal, state, and foreign income taxes. The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024, with early adoption permitted, and allows for either a prospective or retrospective approach on adoption. The Company is currently evaluating the impact of ASU 2023-09 on its consolidated financial statements and related disclosures.

 

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Note 2 – Net Income (Loss) Per Common Share

 

Basic net income per common share is computed by dividing the net income during the period by the weighted average number of common shares outstanding during the period. Diluted net income per common share reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock.

 

The following table sets forth the computation of basic and diluted net income per common share:

 

  

Three Months Ended

  

Six Months Ended

 
  

December 31,

2023

  

January 1,

2023

  

December 31,

2023

  

January 1,

2023

 
  

(in thousands, except per share data)

 

Numerator:

                

Net income

 $62,907  $82,530  $31,665  $48,838 
                 

Denominator:

                

Weighted average shares outstanding

  64,835   64,675   64,814   64,606 

Effect of dilutive stock options and unvested restricted stock awards

  342   160   341   214 
                 

Diluted weighted-average shares outstanding

  65,177   64,835   65,155   64,820 
                 

Net income per common share

                

Basic

 $0.97  $1.28  $0.49  $0.76 

Diluted

 $0.97  $1.27  $0.49  $0.75 

  
 

Note 3 – Acquisitions

 

Acquisition of Things Remembered

 

On January 10, 2023, the Company completed its acquisition of certain assets of the Things Remembered brand, a provider of personalized gifts, whose operations are integrated within the PersonalizationMall.com brand, in the Consumer Floral & Gifts segment. The Company used cash on hand to fund the $5.0 million purchase, which included the intellectual property, customer list, certain inventory, and equipment. The acquisition did not include Things Remembered retail stores. Things Remembered’s annual revenues from its e-commerce operations, based on its most recently available unaudited financial information was $30.4 million for the twelve months ended November 30, 2022.

 

The total consideration of $5.0 million was allocated to the identifiable assets acquired and liabilities assumed based on our estimates of their fair values on the acquisition date, including: goodwill of $1.9 million (deductible for income tax purposes), trademarks of $0.8 million (indefinite life), customer lists of $0.8 million (3-year life), inventory of $1.1 million, and equipment of $0.4 million. During the quarter ended December 31, 2023, the Company finalized its purchase price allocation, resulting in immaterial adjustments to the preliminary carrying value of the respective recorded assets and the residual amount that was allocated to goodwill.

 

Operating results of the Things Remembered business are reflected in the Company’s consolidated financial statements from the date of acquisition within the Consumer Floral & Gifts segment. Pro forma results of operations have not been presented, as the impact on the Company’s consolidated financial results was not material.

 

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Note 4 – Inventory, Net

 

The Company’s inventory, valued at the lower of cost or net realizable value, includes purchased and manufactured finished goods for sale, packaging supplies, crops, raw material ingredients for manufactured products and associated manufacturing labor, and is classified as follows:

 

  

December 31, 2023

  

July 2, 2023

 
  

(in thousands)

 

Finished goods

 $92,160  $92,582 

Work-in-process

  20,158   33,818 

Raw materials

  49,006   64,934 

Total inventory

 $161,324  $191,334 

  
 

Note 5 – Goodwill and Intangible Assets, Net

 

The following table presents goodwill by segment and the related change in the net carrying amount:

 

  

Consumer

Floral &

Gifts

  

BloomNet

  

Gourmet

Foods &

Gift
Baskets

  

Total

 
  

(in thousands)

 

Balance at July 2, 2023

 $153,376  $-  $-  $153,376 

Measurement period adjustment for Things Remembered Acquisition

  201   -   -   201 

Balance at December 31, 2023

 $153,577  $-  $-  $153,577 

 

The Company’s other intangible assets consist of the following:

 

       

December 31, 2023

  

July 2, 2023

 
  

Amortization

Period

  

Gross

Carrying

Amount

  

Accumulated
Amortization

  

Net

  

Gross

Carrying

Amount

  

Accumulated
Amortization

  

Net

 
  

(in years)

  

(in thousands)

 

Intangible assets with determinable lives

                             

Investment in licenses

 14-16  $7,420  $6,622  $798  $7,420  $6,569  $851 

Customer lists

 3-10   29,071   23,757   5,314   29,071   21,611   7,460 

Other

 5-14   2,946   2,634   312   2,946   2,604   342 

Total intangible assets with determinable lives

       39,437   33,013   6,424   39,437   30,784   8,653 

Trademarks with indefinite lives

       111,473   -   111,473   131,235   -   131,235 

Total identifiable intangible assets

      $150,910  $33,013  $117,897  $170,672  $30,784  $139,888 

 

Future estimated amortization expense is as follows: remainder of fiscal 2024 - $2.2 million, fiscal 2025 - $1.9 million, fiscal 2026 - $1.3 million, fiscal 2027 - $0.5 million, fiscal 2028 - $0.2 million and thereafter - $0.3 million.

 

The Company performs its annual assessment of goodwill and indefinite-lived intangible impairment during its fiscal fourth quarter, or more frequently if events occur or circumstances change such that it is more likely than not that an impairment  may exist.

 

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During the quarter ended December 31, 2023, as a result of a decline in the actual and projected revenue for the Company’s PersonalizationMall tradename (indefinite-lived intangible asset), as well as a higher discount rate resulting from the higher interest rate environment, the Company determined that an impairment assessment was required. The Company’s impairment test for the indefinite-lived intangible asset encompassed calculating a fair value of the indefinite-lived intangible asset and comparing that result to its carrying value. To determine fair value of the indefinite-lived intangible asset, the Company used an income approach, the relief-from-royalty method. This method assumes that, in lieu of ownership, a third party would be willing to pay a royalty in order to obtain the rights to use the comparable asset. Indefinite-lived intangible assets’ fair values require significant judgments in determining both the assets’ estimated cash flows as well as the appropriate discount and royalty rates applied to those cash flows to determine fair value. Based on the impairment assessment performed for the quarter ending December 31, 2023, the Company recorded a non-cash impairment charge of $19.8 million to reduce the recorded carrying value of the PersonalizationMall tradename to its estimated fair value. This impairment charge was recorded in the Company’s Consumer Floral & Gifts reporting unit.

 

The Company concluded that goodwill and other indefinite-lived intangible assets, excluding its PersonalizationMall tradename, did not require an impairment assessment.

  
 

Note 6 – Investments

 

Equity investments without a readily determinable fair value

 

Investments in non-marketable equity instruments of private companies, where the Company does not possess the ability to exercise significant influence, are accounted for at cost, less impairment (assessed qualitatively at each reporting period), adjusted for observable price changes from orderly transactions for identical or similar investments of the same issuer. These investments are included within “Other assets” in the Company’s consolidated balance sheets. The aggregate carrying amount of the Company’s equity investments without a readily determinable fair value was $2.6 million as of December 31, 2023 and July 2, 2023, respectively. 

 

Equity investments with a readily determinable fair value

 

The Company also holds certain trading securities associated with its Non-Qualified Deferred Compensation Plan (“NQDC Plan”). These investments are measured using quoted market prices at the reporting date and are included within the “Other assets” line item in the consolidated balance sheets (see Note 9 - Fair Value Measurements). 

  
 

Note 7 –Debt, Net

 

The Company’s current and long-term debt consists of the following:

 

  

December 31, 2023

  

July 2, 2023

 
  

(in thousands)

 

Revolver

 $-  $- 

Term Loans

  195,000   200,000 

Deferred financing costs

  (3,251)  (3,609)

Total debt

  191,749   196,391 

Less: current maturities of long-term debt

  10,000   10,000 

Long-term debt, net

 $181,749  $186,391 

 

On June 27, 2023, the Company, certain of its U.S. subsidiaries, the lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent entered into a Third Amended and Restated Credit Agreement (the “Third Amended Credit Agreement”). The Third Amended Credit Agreement amends and restates the Company’s Second Amended and Restated Credit Agreement, dated as of May 31, 2019 (as amended by the First Amendment, dated as of August 20, 2020, the Second Amendment, dated as of November 8, 2021, and the Third Amendment, dated as of August 29, 2022). The Third Amended Credit Agreement, among other modifications: (i) increases the amount of the outstanding term loan (“Term Loan”) from approximately $150 million to $200 million, (ii) decreases the amount of the commitments in respect of the revolving credit facility from $250 million to $225 million subject to a seasonal reduction to an aggregate amount of $125 million for the period from January 1 to August 1, (iii) extends the maturity date of the outstanding term loan and the revolving credit facilities by approximately 48 months to June 27, 2028, and (iv) increases the applicable interest rate margins for SOFR and base rate loans by 25 basis points.

 

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For each borrowing under the Third Amended Credit Agreement, the Company may elect that such borrowing bear interest at an annual rate equal to either: (1) a base rate plus an applicable margin varying based on the Company’s consolidated leverage ratio, where the base rate is the highest of (a) the prime rate, (b) the New York fed bank rate plus 0.5%, and (c) an adjusted SOFR rate plus an applicable margin varying based on the Company’s consolidated leverage ratio. The adjusted SOFR rate includes a credit spread adjustment of 0.1% for all interest periods.

 

The Third Amended Credit Agreement requires that while any borrowings or commitments are outstanding the Company comply with certain financial covenants and affirmative covenants as well as certain negative covenants that, subject to certain exceptions, limit the Company’s ability to, among other things, incur additional indebtedness, make certain investments and make certain restricted payments. The Company was in compliance with these covenants as of December 31, 2023. The Third Amended Credit Agreement is secured by substantially all of the assets of the Company.

 

The principal of the Term Loan is payable at a rate of $2.5 million for the first 8 quarterly installments beginning on September 29, 2023, increasing to a quarterly payment of $5.0 million, commencing on September 26, 2025, for the remaining 11 payments, with the remaining balance of $125.0 million due upon maturity on June 27, 2028.

 

Future principal term loan payments under the Third Amended Credit Agreement are as follows: $5.0 million – remainder of Fiscal 2024, $10.0 million – Fiscal 2025, $20.0 million – Fiscal 2026, $20.0 million – Fiscal 2027, and $140.0 million – Fiscal 2028.

  
 

Note 8 - Property, Plant and Equipment, Net

 

The Company’s property, plant and equipment consists of the following:

 

  

December 31, 2023

  

July 2, 2023

 
  

(in thousands)

 

Land

 $33,866  $33,866 

Orchards in production and land improvements

  20,604   20,401 

Building and building improvements

  68,510   67,647 

Leasehold improvements

  30,882   29,524 

Production equipment

  130,043   125,297 

Furniture and fixtures

  9,235   9,102 

Computer and telecommunication equipment

  43,041   41,859 

Software

  193,925   181,085 

Capital projects in progress

  14,644   18,205 

Property, plant and equipment, gross

  544,750   526,986 

Accumulated depreciation and amortization

  (317,107)  (292,417)

Property, plant and equipment, net

 $227,643  $234,569 

  
 

Note 9 - Fair Value Measurements

 

Cash and cash equivalents, trade and other receivables, prepaids, accounts payable and accrued expenses are reflected in the consolidated balance sheets at carrying value, which approximates fair value due to the short-term nature of these instruments. Although no trading market exists, the Company believes that the carrying amount of its debt approximates fair value due to its variable nature (these are level 2 investments). The Company’s investments in non-marketable equity instruments of private companies are carried at cost and are periodically assessed for other-than-temporary impairment when an event or circumstances indicate that an other-than-temporary decline in value may have occurred. The Company’s remaining financial assets and liabilities are measured and recorded at fair value (see table below). The Company’s non-financial assets, such as definite lived intangible assets and property, plant and equipment, are recorded at cost and are assessed for impairment when an event or circumstance indicates that an other-than-temporary decline in value may have occurred. Goodwill and indefinite lived intangibles are tested for impairment annually, or more frequently, if events occur or circumstances change such that it is more likely than not that an impairment may exist, as required under the accounting standards.

 

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Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability, in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants at the measurement date. The authoritative guidance for fair value measurements establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under the guidance are described below:

 

Level 1

Valuations based on quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.

Level 2

Valuations based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.

Level 3

Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

 

The following table presents by level, within the fair value hierarchy, financial assets and liabilities measured at fair value on a recurring basis:

 

  

Carrying

Value

  

Fair Value Measurements

Assets (Liabilities)

 
      

Level 1

  

Level 2

  

Level 3

 
  

(in thousands)

 

As of December 31, 2023:

                

Trading securities held in a “rabbi trust” (1)

 $27,183  $27,183  $-  $- 

Total assets (liabilities) at fair value

 $27,183  $27,183  $-  $- 
                 

As of July 2, 2023:

                

Trading securities held in a “rabbi trust” (1)

 $22,617  $22,617  $-  $- 

Total assets (liabilities) at fair value

 $22,617  $22,617  $-  $- 

 

 

(1)

The Company has established a NQDC Plan for certain members of senior management. Deferred compensation plan assets are invested in mutual funds held in a “rabbi trust,” which is restricted for payment to participants of the NQDC Plan. Trading securities held in a rabbi trust are measured using quoted market prices at the reporting date and are included in the “Other assets” line item, with the corresponding liability included in the “Other liabilities” line item in the consolidated balance sheets. 

  
 

Note 10 – Income Taxes

 

The Company computed the interim tax provision using an estimated annual effective rate, adjusted for discrete items. This estimate is used in providing for income taxes on a year-to-date basis and may change in subsequent interim periods. The Company’s effective tax rate for the three and six months ended December 31, 2023 was 29.6% and 33.8% respectively, compared to 25.5% and 25.7% in the same periods of the prior year. The Company’s effective tax rate for fiscal 2024 and fiscal 2023 differed from the U.S. federal statutory rate of 21.0% primarily due to state income taxes and non-deductible executive compensation, partially offset by tax credits and other items. Fiscal 2024 was further impacted by the impairment charge, which reduced the amount of income reflected in the Company’s estimated annual effective tax rate.

 

The Company files income tax returns in the U.S. federal jurisdiction, various state jurisdictions, and various foreign countries. The Company’s fiscal years 2020, 2021, and 2022 remain subject to U.S. federal examination. Due to ongoing state examinations and nonconformity with the U.S. federal statute of limitations for assessment, certain states remain open from fiscal 2016. The Company's foreign income tax filings from fiscal 2017 are open for examination by its respective foreign tax authorities, mainly Canada and Brazil.

 

The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. At December 31, 2023, the Company has an unrecognized tax benefit, including accrued interest and penalties, of approximately $1.6 million. The Company believes that $0.1 million of unrecognized tax positions will be resolved over the next twelve months. 

 

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Note 11 – Business Segments

 

The Company’s management reviews the results of its operations by the following three business segments:

 

•

Consumer Floral & Gifts,

•

BloomNet, and

•

Gourmet Foods & Gift Baskets

 

Segment performance is measured based on contribution margin, which includes only the direct controllable revenue and operating expenses of the segments. As such, management’s measure of profitability for these segments does not include the effect of corporate overhead (see (a) below), nor does it include depreciation and amortization, other (income) expense, net and income taxes, or stock-based compensation, which are included within corporate overhead. Assets and liabilities are reviewed at the consolidated level by management and not accounted for by segment.

 

  

Three Months Ended

  

Six Months Ended

 
  

December 31,

2023

  

January 1,

2023

  

December 31,

2023

  

January 1,

2023

 

 

 

(in thousands)

 
Net Revenues:                

Segment Net Revenues:

                

Consumer Floral & Gifts

 $254,835  $277,049  $397,029  $439,229 

BloomNet

  27,236   32,852   56,106   66,219 

Gourmet Foods & Gift Baskets

  539,963   588,431   638,072   696,659 

Corporate

  279   72   549   116 

Intercompany eliminations

  (259)  (527)  (652)  (742)

Total net revenues

 $822,054  $897,877  $1,091,104  $1,201,481 
                 

Operating Income:

                

Segment Contribution Margin:

                

Consumer Floral & Gifts

 $10,593  $27,886  $19,419  $38,696 

BloomNet

  9,088   9,348   18,475   18,865 

Gourmet Foods & Gift Baskets

  118,153   123,503   107,125   104,793 

Segment Contribution Margin Subtotal

  137,834   160,737   145,019   162,354 

Corporate (a)

  (32,432)  (31,297)  (64,000)  (61,580)

Depreciation and amortization

  (14,152)  (14,315)  (27,346)  (27,009)

Operating income

 $91,250  $115,125  $53,673  $73,765 

 

(a) Corporate expenses consist of the Company’s enterprise shared service cost centers, and include, among other items, Information Technology, Human Resources, Accounting and Finance, Legal, Executive and Customer Service Center functions, as well as Stock-based compensation. In order to leverage the Company’s infrastructure, these functions are operated under a centralized management platform, providing support services throughout the organization. The costs of these functions, other than those of the Customer Service Center, which are allocated directly to the above categories based upon usage, are included within corporate expenses as they are not directly allocable to a specific segment.

 

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The following tables represent a disaggregation of revenue from contracts with customers, by channel: 

 

  

Three Months Ended

 
  

Consumer Floral &
Gifts

  

BloomNet

  

Gourmet Foods &

Gift
Baskets

  

Corporate and

Eliminations

  

Consolidated

 
  

December 31, 2023

  

January 1, 2023

  

December 31, 2023

  

January 1, 2023

  

December 31, 2023

  

January 1, 2023

  

December 31, 2023

  

January 1, 2023

  

December 31, 2023

  

January 1, 2023

 

Net revenues

                                        

E-commerce

 $252,845  $275,081  $-  $-  $485,561  $515,329  $-  $-  $738,406  $790,410 

Other

  1,990   1,968   27,236   32,852   54,402   73,102   20   (455)  83,648   107,467 

Total net revenues

 $254,835  $277,049  $27,236  $32,852  $539,963  $588,431  $20  $(455) $822,054  $897,877 
                                         

Other revenues detail

                                     

Retail and other

  1,990   1,968   -   -   4,296   4,313   -   -   6,286   6,281 

Wholesale

  -   -   8,706   12,054   50,106   68,789   -   -   58,812   80,843 

BloomNet services

  -   -   18,530   20,798   -   -   -   -   18,530   20,798 

Corporate

  -   -   -   -   -   -   279   72   279   72 

Eliminations

  -   -   -   -   -   -   (259)  (527)  (259)  (527)

Total other revenues

 $1,990  $1,968  $27,236  $32,852  $54,402  $73,102  $20  $(455) $83,648  $107,467 

 

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Six Months Ended

 
  

Consumer Floral &
Gifts

  

BloomNet

  

Gourmet Foods &

Gift
Baskets

  

Corporate and

Eliminations

  

Consolidated

 
  

December 31, 2023

  

January 1, 2023

  

December 31, 2023

  

January 1, 2023

  

December 31, 2023

  

January 1, 2023

  

December 31, 2023

  

January 1, 2023

  

December 31, 2023

  

January 1, 2023

 

Net revenues

                                        

E-commerce

 $393,180  $435,463  $-  $-  $555,137  $593,869  $-  $-  $948,317  $1,029,332 

Other

  3,849   3,766   56,106   66,219   82,935   102,790   (103)  (626)  142,787   172,149 

Total net revenues

 $397,029  $439,229  $56,106  $66,219  $638,072  $696,659  $(103) $(626) $1,091,104  $1,201,481 
                                         

Other revenues detail

                                     

Retail and other

  3,849   3,766   -   -   6,230   6,221   -   -   10,079   9,987 

Wholesale

  -   -   20,503   25,675   76,705   96,569   -   -   97,208   122,244 

BloomNet services

  -   -   35,603   40,544   -   -   -   -   35,603   40,544 

Corporate

  -   -   -   -   -   -   549   116   549   116 

Eliminations

  -   -   -   -   -   -   (652)  (742)  (652)  (742)

Total other revenues

 $3,849  $3,766  $56,106  $66,219  $82,935  $102,790  $(103) $(626) $142,787  $172,149 

 

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Note 12 – Leases

 

The Company currently leases plants, warehouses, offices, store facilities, and equipment under various leases through fiscal 2036. Most lease agreements are of a long-term nature (over a year), although the Company does also enter into short-term leases, primarily for seasonal needs. Lease agreements may contain renewal options and rent escalation clauses and require the Company to pay real estate taxes, insurance, common area maintenance and operating expenses applicable to the leased properties. The Company accounts for its leases in accordance with ASC 842.

 

At contract inception, the Company determines whether a contract is, or contains, a lease by determining whether it conveys the right to control the use of the identified asset for a period of time, by assessing whether the Company has the right to obtain substantially all of the economic benefits from use of the identified asset and the right to direct the use of the identified asset.

 

At the lease commencement date, the Company determines if a lease should be classified as an operating or a finance lease (the Company currently has no finance leases) and recognizes a corresponding lease liability and a right-of-use asset on its Balance Sheet. The lease liability is initially and subsequently measured as the present value of the remaining fixed minimum rental payments (including base rent and fixed common area maintenance) using discount rates as of the commencement date. Variable payments (including most utilities, real estate taxes, insurance and variable common area maintenance) are expensed as incurred. Further, the Company elected a short-term lease exception policy, permitting it to not apply the recognition requirements of this standard to short-term leases (i.e. leases with terms of 12 months or less) and an accounting policy to account for lease and non-lease components as a single component for certain classes of assets. The right-of-use asset is initially and subsequently measured at the carrying amount of the lease liability adjusted for any prepaid or accrued lease payments, remaining balance of lease incentives received, unamortized initial direct costs, or impairment charges relating to the right-of-use asset. Right-of-use assets are assessed for impairment using the long-lived assets impairment guidance. The discount rate used to determine the present value of lease payments is the Company’s estimated collateralized incremental borrowing rate, based on the yield curve for the respective lease terms, as the Company generally cannot determine the interest rate implicit in the lease.

 

The Company recognizes expense for its operating leases on a straight-line basis over the lease term. As these leases expire, it can be expected that in the normal course of business they will be renewed or replaced. Renewal option periods are included in the measurement of lease liability, where the exercise is reasonably certain to occur. Key estimates and judgments in accounting for leases include how the Company determines: (1) lease payments, (2) lease term, and (3) the discount rate used in calculating the lease liability.

 

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Additional information related to our leases is as follows:

 

  

Three Months Ended

  

Six Months Ended

 
  

December

31, 2023

  

January

1, 2023

  

December

31, 2023

  

January

1, 2023

 
  

(in thousands)

 

Lease costs:

                

Operating lease costs

 $5,651  $5,606  $11,273  $10,953 

Variable lease costs

  7,568   6,603   14,082   12,454 

Short-term lease cost

  2,535   2,889   3,418   4,454 

Sublease income

  (246)  (241)  (497)  (484)

Total lease costs

 $15,508  $14,857  $28,276  $27,377 
                 

Cash paid for amounts included in measurement of operating lease liabilities

  $11,300  $9,851 

Right-of-use assets obtained in exchange for new operating lease liabilities

  $1,784  $10,521 

 

  

December 31,

2023

 
  

(in thousands)

 

Weighted-average remaining lease term - operating leases (in years)

  8.4 

Weighted-discount rate - operating leases

  4.1%

 

Maturities of lease liabilities in accordance with ASC 842 as of December 31, 2023 and reconciliation to balance sheet are as follows (in thousands):

 

Fiscal Year:

    

Remainder of 2024

 $9,507 

2025

  20,644 

2026

  18,714 

2027

  17,095 

2028

  16,179 

Thereafter

  68,402 

Total Future Minimum Lease Payments

  150,541 

Less: Imputed Remaining Interest

  24,368 

Total Operating Lease Liabilities

  126,173 

Less: Current portion of long-term operating lease liabilities

  15,433 

Long-term operating lease liabilities

 $110,740 

  
 

Note 13 - Accrued Expenses

 

Accrued expenses consisted of the following:

 

  

December 31, 2023

  

July 2, 2023

 
  

(in thousands)

 

Payroll and employee benefits

 $30,889  $33,927 

Deferred revenue

  39,928   30,811 

Accrued marketing expenses

  13,646   13,679 

Accrued florist payout

  17,981   13,437 

Accrued purchases

  44,546   18,351 

Accrued income taxes

  20,756   922 

Other

  56,338   30,787 

Accrued Expenses

 $224,084  $141,914 

 

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Note 14 – Commitments and Contingencies

 

Litigation

 

There are various claims, lawsuits, and pending actions against the Company and its subsidiaries incident to the operations of its businesses. It is the opinion of management, after consultation with counsel, that the final resolution of such claims, lawsuits and pending actions will not have a material adverse effect on the Company's consolidated financial position, results of operations or liquidity.

 

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

This “Management’s Discussion and Analysis of Financial Condition and Results of Operations” ("MD&A") is intended to provide an understanding of our financial condition, change in financial condition, cash flow, liquidity, and results of operations. The following MD&A discussion should be read in conjunction with the consolidated financial statements and notes to those statements that appear elsewhere in this Form 10-Q and in the Company’s Annual Report on Form 10-K, for the year ended July 2, 2023. The following discussion contains forward-looking statements that reflect the Company’s plans, estimates and beliefs. The Company’s actual results could differ materially from those discussed or referred to in the forward-looking statements. Factors that could cause or contribute to any differences include, but are not limited to, those discussed under the caption “Forward-Looking Information and Factors That May Affect Future Results,” under Part I, Item 1A, of the Company’s Annual Report on Form 10-K, for the year ended July 2, 2023 under the heading “Risk Factors” and Part II-Other Information, Item 1A in this Form 10-Q.

 

Business Overview

 

1-800-FLOWERS.COM, Inc. and its subsidiaries (collectively, the “Company”) is a leading provider of gifts designed to help inspire customers to give more, connect more, and build more and better relationships. The Company’s e-commerce business platform features an all-star family of brands, including: 1-800-Flowers.com®, 1-800-Baskets.com®, Cheryl’s Cookies®, Harry & David®, PersonalizationMall.com®, Shari’s Berries®, FruitBouquets.com®, Things Remembered®, Moose Munch®, The Popcorn Factory®, Wolferman’s Bakery®, Vital Choice®, and Simply Chocolate®. Through the Celebrations Passport® loyalty program, which provides members with free standard shipping and no service charge across our portfolio of brands, 1-800-FLOWERS.COM, Inc. strives to deepen relationships with customers. The Company also operates BloomNet®, an international floral and gift industry service provider offering a broad-range of products and services designed to help members grow their businesses profitably; Napco℠, a resource for floral gifts and seasonal décor; DesignPac Gifts, LLC, a manufacturer of gift baskets and towers; and Alice’s Table®, a lifestyle business offering fully digital floral, culinary and other experiences to guests across the country.

 

For additional information, see Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Overview” of our Annual Report on Form 10-K for the year ended July 2, 2023. 

 

Macro-economic Conditions

 

Overall, broader macro-economic conditions continue to impact our consumers as they continue to moderate their discretionary income. Consumers remain pressured by persistent inflation, higher interest rates, and the resumption of student loan repayments. Throughout the first half of fiscal 2024, we have seen that customer spending on “Everyday” gifting occasions has slowed, whereas spending for the major holidays has held up better. However, customers did remain more conservative regarding their holiday spending than originally anticipated.  In line with this, total consolidated revenues decreased 8.4% to $822.1 million and 9.2% to $1.09 billion during the three and six months ended December 31, 2023, respectively, compared with the same periods of the prior year. As we look ahead to the second half of fiscal 2024, we continue to expect our sales trends to improve albeit at a slower pace than initially anticipated.

 

The challenging macro-economic conditions that have affected our customers have also impacted our operating costs. During the second quarter of fiscal 2022, in-bound and out-bound shipping, commodity, labor and fuel costs began to surge, and escalated throughout the balance of the year and into fiscal 2023. During our second quarter and third quarter of fiscal 2023, while certain commodity prices remained near historical highs, we began to see a more stable labor market, and significant year-over-year reductions in ocean freight costs. As a result of these trends, combined with our strategic pricing initiatives, automation efforts, and other internal management initiatives, we started to see year-over-year improvement in gross margin commencing in the second quarter of fiscal 2023. These trends and initiatives continued into fiscal 2024 and we saw a significant improvement in year-over-year gross margin in the second quarter and first half of fiscal 2024. This improvement and a reduction of expenses helped to offset the aforementioned year-over-year decline in sales.

 

Intangible Impairment

 

During the quarter ended December 31, 2023, as a result of a decline in the actual and projected revenue for the Company’s PersonalizationMall tradename, as well as a higher discount rate resulting from the higher interest rate environment, the Company determined that an impairment assessment was required for this tradename. This assessment resulted in the Company recording a non-cash impairment charge of $19.8 million to reduce the recorded carrying value of the PersonalizationMall tradename. See Note 5 – Goodwill and Intangible Assets, Net for further information.

 

 

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Acquisition of Things Remembered

 

On January 10, 2023, the Company completed its acquisition of certain assets of the Things Remembered brand, a provider of personalized gifts, whose operations have been integrated within the PersonalizationMall.com brand, in the Consumer Floral & Gifts segment. The Company used cash on hand to fund the $5.0 million purchase, which included intellectual property, customer list, certain inventory, and equipment - see Note 3 –Acquisitions in Item 1. 

 

Amended and Restated Credit Agreement

 

On June 27, 2023, the Company entered into a Third Amended and Restated Credit Agreement to, among other modifications, (i) increase the amount of the outstanding term loan from approximately $150 million to $200 million, (ii) decrease the amount of the commitments in respect of the revolving credit facility from $250 million to $225 million subject to a seasonal reduction to an aggregate amount of $125 million for the period from January 1 to August 1, (iii) extend the maturity date of the outstanding term loan and the revolving credit facilities by approximately 48 months to June 27, 2028, and (iv) increase the applicable interest rate margins for SOFR and base rate loans by 25 basis points (See Note 7 - Debt, in Item 1, for details).

 

Company Guidance

 

The Company is updating its Fiscal 2024 guidance to reduce its revenue outlook for the full year, while maintaining its Adjusted EBITDA and Free Cash Flow expectations, as the improvement in gross profit margin and the company’s expense optimization efforts are expected to mitigate the softer than anticipated revenue improvement.

 

As a result, the Company now expects Fiscal 2024:

 

 

●

total revenues on a percentage basis to decline in a range of 7% to 9%, as compared with the prior year;

 

 

●

Adjusted EBITDA to be in a range of $95 million to $100 million; and

 

 

●

Free Cash Flow to be in a range of $60 million to $65 million.

 

Refer to "Definitions of non-GAAP Financial Measures" for reconciliation of non-GAAP results to applicable GAAP results.

 

Definitions of non-GAAP Financial Measures:

 

We sometimes use financial measures derived from consolidated financial information, but not presented in our financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Certain of these are considered "non-GAAP financial measures" under the U.S. Securities and Exchange Commission rules. See below for definitions and the reasons why we use these non-GAAP financial measures.  Where applicable, see the Segment Information and Results of Operations sections below for reconciliations of these non-GAAP measures to their most directly comparable GAAP financial measures. These non-GAAP financial measures are referred to as “non-GAAP” or “adjusted” below, as these terms are used interchangeably. Reconciliations for forward-looking figures would require unreasonable efforts at this time because of the uncertainty and variability of the nature and amount of certain components of various necessary GAAP components, including, for example, those related to compensation, tax items, amortization or others that may arise during the year, and the Company's management believes such reconciliations would be confusing or misleading to investors. For the same reasons, the Company is unable to address the probable significance of the unavailable information. The lack of such reconciling information should be considered when assessing the impact of such disclosures.

 

EBITDA and Adjusted EBITDA

 

We define EBITDA as net income (loss) before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted for the impact of stock-based compensation, Non-Qualified Deferred Compensation Plan (“NQDC Plan”) Investment appreciation/depreciation, and certain items affecting period-to-period comparability. See Segment Information for details on how EBITDA and Adjusted EBITDA were calculated for each period presented.

 

The Company presents EBITDA and Adjusted EBITDA because it considers such information meaningful supplemental measures of its performance and believes such information is frequently used by the investment community in the evaluation of similarly situated companies. The Company uses EBITDA and Adjusted EBITDA as factors to determine the total amount of incentive compensation available to be awarded to executive officers and other employees. The Company's credit agreement uses EBITDA and Adjusted EBITDA to determine its interest rate and to measure compliance with certain covenants. EBITDA and Adjusted EBITDA are also used by the Company to evaluate and price potential acquisition candidates.

 

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EBITDA and Adjusted EBITDA have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP. Some of the limitations are: (a) EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, the Company's working capital needs; (b) EBITDA and Adjusted EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on the Company's debts; and (c) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future and EBITDA does not reflect any cash requirements for such capital expenditures. EBITDA should only be used on a supplemental basis combined with GAAP results when evaluating the Company's performance.

 

Segment contribution margin and adjusted segment contribution margin

 

We define segment contribution margin as earnings before interest, taxes, depreciation and amortization, before the allocation of corporate overhead expenses. Adjusted segment contribution margin is defined as contribution margin adjusted for certain items affecting period-to-period comparability. See Segment Information for details on how segment contribution margin was calculated for each period presented.

 

When viewed together with our GAAP results, we believe segment contribution margin and adjusted segment contribution margin provide management and users of the financial statements meaningful information about the performance of our business segments.

 

Segment contribution margin and adjusted segment contribution margin are used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures. The material limitation associated with the use of segment contribution margin and adjusted segment contribution margin is that they are an incomplete measure of profitability as they do not include all operating expenses or non-operating income and expenses. Management compensates for this limitation when using this measure by looking at other GAAP measures, such as operating income and net income. 

 

Adjusted net income (loss) and adjusted or comparable net income (loss) per common share

 

We define adjusted net income (loss) and adjusted or comparable net income (loss) per common share as net income (loss) and net income (loss) per common share adjusted for certain items affecting period-to-period comparability. See Segment Information below for details on how adjusted net income (loss) and adjusted or comparable net income (loss) per common share were calculated for each period presented.

 

We believe that adjusted net income (loss) and adjusted or comparable net income (loss) per common share are meaningful measures because they increase the comparability of period-to-period results.

 

Since these are not measures of performance calculated in accordance with GAAP, they should not be considered in isolation of, or as a substitute for, GAAP net income (loss) and net income (loss) per common share, as indicators of operating performance and they may not be comparable to similarly titled measures employed by other companies. 

 

Free Cash Flow

 

We define free cash flow as net cash provided by operating activities, less capital expenditures. The Company considers free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business after the purchases of fixed assets, which can then be used to, among other things, invest in the Company’s business, make strategic acquisitions, strengthen the balance sheet, and repurchase stock or retire debt. Free cash flow is a liquidity measure that is frequently used by the investment community in the evaluation of similarly situated companies.

 

Since free cash flow is not a measure of performance calculated in accordance with GAAP, it should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP. A limitation of the utility of free cash flow as a measure of financial performance is that it does not represent the total increase or decrease in the company's cash balance for the period.

 

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Segment Information

 

The following table presents the net revenues, gross profit and segment contribution margin from each of the Company’s business segments, as well as consolidated EBITDA, and Adjusted EBITDA.

 

   

Three Months Ended

  
   

December 31, 2023

    

Intangible Impairment

    

As Adjusted (non-GAAP) December 31, 2023

    

January 1, 2023

    

Things Remembered Transaction Costs

    

As Adjusted (non-GAAP) January 1, 2023

    

% Change

  

Net revenues:

                                                        

Consumer Floral & Gifts

   $ 254,835     $ -     $ 254,835     $ 277,049     $ -     $ 277,049       -8.0 %

BloomNet

     27,236               27,236       32,852               32,852       -17.1 %

Gourmet Foods & Gift Baskets

     539,963               539,963       588,431               588,431       -8.2 %

Corporate

     279               279       72               72       287.5 %

Intercompany eliminations

     (259 )             (259 )     (527 )             (527 )     50.9 %

Total net revenues

   $ 822,054     $ -     $ 822,054     $ 897,877     $ -     $ 897,877       -8.4 %
                                                         

Gross profit:

                                                        

Consumer Floral & Gifts

   $ 109,176             $ 109,176     $ 112,274             $ 112,274       -2.8 %
      42.8 %             42.8 %     40.5 %             40.5 %        
                                                         

BloomNet

     12,974               12,974       13,879               13,879       -6.5 %
      47.6 %             47.6 %     42.2 %             42.2 %        
                                                         

Gourmet Foods & Gift Baskets

     233,200               233,200       241,418               241,418       -3.4 %
      43.2 %             43.2 %     41.0 %             41.0 %        
                                                         

Corporate

     347               347       195               195       77.9 %
      124.4 %             124.4 %     270.8 %             270.8 %        
                                                         

Total gross profit

   $ 355,697     $ -     $ 355,697     $ 367,766     $ -     $ 367,766       -3.3 %
      43.3 %     -       43.3 %     41.0 %     -       41.0 %        
                                                         

EBITDA (non-GAAP):

                                                        

Segment Contribution Margin (non-GAAP) (a):

                                                       

Consumer Floral & Gifts

   $ 10,593     $ 19,762     $ 30,355     $ 27,886     $ -     $ 27,886       8.9 %

BloomNet

     9,088               9,088       9,348               9,348       -2.8 %

Gourmet Foods & Gift Baskets

     118,153               118,153       123,503               123,503       -4.3 %

Segment Contribution Margin Subtotal

     137,834       19,762       157,596       160,737       -       160,737       -2.0 %

Corporate (b)

     (32,432 )             (32,432 )     (31,297 )     243       (31,054 )     -4.4 %

EBITDA (non-GAAP)

     105,402       19,762       125,164       129,440       243       129,683       -3.5 %

Add: Stock-based compensation

     2,231               2,231       1,899               1,899       17.5 %

Add: Compensation charge related to NQDC Plan Investment Appreciation (Depreciation)

     2,682               2,682       (196 )             (196 )     1468.4 %

Adjusted EBITDA (non-GAAP)

   $ 110,315     $ 19,762     $ 130,077     $ 131,143     $ 243     $ 131,386       -1.0 %

 

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Six Months Ended

  
   

December 31, 2023

    

Intangible Impairment

    

As Adjusted (non-GAAP) December 31, 2023

    

January 1, 2023

    

Things Remembered Transaction Costs

    

As Adjusted (non-GAAP) January 1, 2023

    

% Change

  

Net revenues:

                                                        

Consumer Floral & Gifts

   $ 397,029     $ -     $ 397,029     $ 439,229     $ -     $ 439,229       -9.6 %

BloomNet

     56,106               56,106       66,219               66,219       -15.3 %

Gourmet Foods & Gift Baskets

     638,072               638,072       696,659               696,659       -8.4 %

Corporate

     549               549       116               116       373.3 %

Intercompany eliminations

     (652 )             (652 )     (742 )             (742 )     12.1 %

Total net revenues

   $ 1,091,104     $ -     $ 1,091,104     $ 1,201,481     $ -     $ 1,201,481       -9.2 %
                                                         

Gross profit:

                                                        

Consumer Floral & Gifts

   $ 165,498     $ -     $ 165,498     $ 174,193     $ -     $ 174,193       -5.0 %
      41.7 %             41.7 %     39.7 %             39.7 %        
                                                         

BloomNet

     27,472               27,472       28,366               28,366       -3.2 %
      49.0 %             49.0 %     42.8 %             42.8 %        
                                                         

Gourmet Foods & Gift Baskets

     264,107               264,107       266,531               266,531       -0.9 %
      41.4 %             41.4 %     38.3 %             38.3 %        
                                                         

Corporate

     548               548       134               134       309.0 %
      99.8 %             99.8 %     115.5 %             115.5 %        
                                                         

Total gross profit

   $ 457,625     $ -     $ 457,625     $ 469,224     $ -     $ 469,224       -2.5 %
      41.9 %     -       41.9 %     39.1 %     -       39.1 %        
                                                         

EBITDA (non-GAAP):

                                                        

Segment Contribution Margin (non-GAAP) (a):

                                                       

Consumer Floral & Gifts

   $ 19,419     $ 19,762     $ 39,181     $ 38,696     $ -     $ 38,696       1.3 %

BloomNet

     18,475               18,475       18,865               18,865       -2.1 %

Gourmet Foods & Gift Baskets

     107,125               107,125       104,793       -       104,793       2.2 %

Segment Contribution Margin Subtotal

     145,019       19,762       164,781       162,354       -       162,354       1.5 %

Corporate (b)

     (64,000 )             (64,000 )     (61,580 )     243       (61,337 )     -4.3 %

EBITDA (non-GAAP)

     81,019       19,762       100,781       100,774       243       101,017       -0.2 %

Add: Stock-based compensation

     4,595               4,595       3,454               3,454       33.0 %

Add: Compensation charge related to NQDC Plan Investment Appreciation (Depreciation)

     2,178               2,178       (1,102 )             (1,102 )     297.6 %

Adjusted EBITDA (non-GAAP)

   $ 87,792     $ 19,762     $ 107,554     $ 103,126     $ 243     $ 103,369       4.0 %

 

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Table of Contents

 

Reconciliation of net income to adjusted net income (non-GAAP):

  

Three Months Ended

    

Six Months Ended

  
   

December 31,

2023

    

January 1,

2023

    

December 31,

2023

    

January 1,

2023

  
                                 

Net income

   $ 62,907     $ 82,530     $ 31,665     $ 48,838  

Adjustments to reconcile net income to adjusted net income (non-GAAP)

                                

Add: Transaction costs

     -       243       -       243  

Add: Intangibles impairment

     19,762       -       19,762       -  

Deduct: Income tax effect on adjustments

     -       (63 )     -       (63 )

Adjusted net income (non-GAAP)

   $ 82,669     $ 82,710     $ 51,427     $ 49,018  
                                 

Basic and diluted net income per common share

                                

Basic

   $ 0.97     $ 1.28     $ 0.49     $ 0.76  

Diluted

   $ 0.97     $ 1.27     $ 0.49     $ 0.75  
                                 
                                 

Basic and diluted adjusted net income per common share (non-GAAP)

                                

Basic

   $ 1.28     $ 1.28     $ 0.79     $ 0.76  

Diluted

   $ 1.27     $ 1.28     $ 0.79     $ 0.76  
                                 

Weighted average shares used in the calculation of basic and diluted net income and adjusted net income per common share

                                

Basic

     64,835       64,675       64,814       64,606  

Diluted

     65,177       64,835       65,155       64,820  

 

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Table of Contents

 

Reconciliation of net income to Adjusted EBITDA (non-GAAP):

  

Three Months Ended

    

Six Months Ended

  
   

December 31,

2023

    

January 1,

2023

    

December 31,

2023

    

January 1,

2023

  
                                 

Net income

   $ 62,907     $ 82,530     $ 31,665     $ 48,838  

Add: Interest expense and other, net

     1,875       4,291       5,831       8,034  

Add: Depreciation and amortization

     14,152       14,315       27,346       27,009  

Add: Income tax expense

     26,468       28,304       16,177       16,893  

EBITDA

     105,402       129,440       81,019       100,774  

Add: Stock-based compensation

     2,231       1,899       4,595       3,454  

Add: Compensation charge related to NQDC plan investment Appreciation (Depreciation)

     2,682       (196 )     2,178       (1,102 )

Add: Intangible impairment

     19,762       -       19,762       -  

Add: Transaction costs

     -       243       -       243  

Adjusted EBITDA

   $ 130,077     $ 131,386     $ 107,554     $ 103,369  

 

(a) Segment performance is measured based on segment contribution margin or segment Adjusted EBITDA, reflecting only the direct controllable revenue and operating expenses of the segments, both of which are non-GAAP measurements. As such, management’s measure of profitability for these segments does not include the effect of corporate overhead, described above, depreciation and amortization, other income (net), and other items that we do not consider indicative of our core operating performance.

 

(b) Corporate expenses consist of the Company’s enterprise shared service cost centers, and include, among other items, Information Technology, Human Resources, Accounting and Finance, Legal, Executive and Customer Service Center functions, as well as Stock-based compensation. In order to leverage the Company’s infrastructure, these functions are operated under a centralized management platform, providing support services throughout the organization. The costs of these functions, other than those of the Customer Service Center, which are allocated directly to the above categories based upon usage, are included within corporate expenses as they are not directly allocable to a specific segment.

 

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Table of Contents

 

Results of Operations

 

Net revenues

 

   

Three Months Ended

    

Six Months Ended

  
   

December 31,

2023

    

January 1,

2023

    

%

Change

    

December 31,

2023

    

January 1,

2023

    

%

Change

  
   

(dollars in thousands)

          

Net revenues:

                                                

E-Commerce

   $ 738,406     $ 790,410       -6.6 %   $ 948,317     $ 1,029,332       -7.9 %

Other

     83,648       107,467       -22.2 %     142,787       172,149       -17.1 %

Total net revenues

   $ 822,054     $ 897,877       -8.4 %   $ 1,091,104     $ 1,201,481       -9.2 %

 

Net revenues consist primarily of the selling price of the merchandise, service or outbound shipping charges, less discounts, returns and credits.

 

Net revenues decreased 8.4% and 9.2% during the three and six months ended December 31, 2023, respectively, compared to the same periods of the prior year, due to lower order volume across all segments, reflecting a continuation of the trends that the Company had experienced throughout the prior fiscal year, as consumer discretionary income remains pressured and consumers continue to moderate their spending. Contributing to this decline was the prudent use of promotional offerings and advertising campaigns, which balance the long-term goals of the Company with strategies to improve gross margins and tightly control operating expenses during this challenging economic environment.

 

The Company acquired Things Remembered on January 10, 2023 and launched the brand on its e-commerce platform in April 2023. Things Remembered revenues were not significant during the three and six months ended December 31, 2023.

 

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Table of Contents

 

   

Three Months Ended

  
   

Consumer Floral & Gifts

    

BloomNet

    

Gourmet Foods & Gift Baskets

    

Corporate and Eliminations

    

Consolidated

  
   

December 31, 2023

    

January 1, 2023

    

% Change

    

December 31, 2023

    

January 1, 2023

    

% Change

    

December 31, 2023

    

January 1, 2023

    

% Change

    

December 31, 2023

    

January 1, 2023

    

December 31, 2023

    

January 1, 2023

    

% Change

  

Net revenues

                                                                                                          

E-commerce

   $ 252,845     $ 275,081       -8.1 %   $ -     $ -       - %   $ 485,561     $ 515,329       -5.8 %   $ -     $ -     $ 738,406     $ 790,410       -6.6 %

Other

     1,990       1,968       1.1 %     27,236       32,852       -17.1 %     54,402       73,102       -25.6 %     20       (455 )     83,648       107,467       -22.2 %

Total net revenues

   $ 254,835     $ 277,049       -8.0 %   $ 27,236     $ 32,852       -17.1 %   $ 539,963     $ 588,431       -8.2 %   $ 20     $ (455 )   $ 822,054     $ 897,877       -8.4 %
                                                                                                                 

Other revenues detail

                                                                                                          

Retail and other

     1,990       1,968       1.1 %     -       -       -       4,296       4,313       -0.4 %     -       -       6,286       6,281       0.1 %

Wholesale

     -       -       -       8,706       12,054       -27.8 %     50,106       68,789       -27.2 %     -       -       58,812       80,843       -27.3 %

BloomNet services

     -       -       -       18,530       20,798       -10.9 %     -       -       -       -       -       18,530       20,798       -10.9 %

Corporate

     -       -       -       -       -       -       -       -       -       279       72       279       72       287.5 %

Eliminations

     -       -       -       -       -       -       -       -       -       (259 )     (527 )     (259 )     (527 )     50.9 %

Total other revenues

   $ 1,990       1,968       1.1 %   $ 27,236     $ 32,852       -17.1 %   $ 54,402     $ 73,102       -25.6 %   $ 20     $ (455 )   $ 83,648     $ 107,467       -22.2 %

 

   

Six Months Ended

  
   

Consumer Floral & Gifts

    

BloomNet

    

Gourmet Foods & Gift Baskets

    

Corporate and Eliminations

    

Consolidated

  
   

December 31, 2023

    

January 1, 2023

    

% Change

    

December 31, 2023

    

January 1, 2023

    

% Change

    

December 31, 2023

    

January 1, 2023

    

% Change

    

December 31, 2023

    

January 1, 2023

    

December 31, 2023

    

January 1, 2023

    

% Change

  

Net revenues

                                                                                                          

E-commerce

   $ 393,180     $ 435,463       -9.7 %   $ -     $ -       - %   $ 555,137     $ 593,869       -6.5 %   $ -     $ -     $ 948,317     $ 1,029,332       -7.9 %

Other

     3,849       3,766       2.2 %     56,106       66,219       -15.3 %     82,935       102,790       -19.3 %     (103 )     (626 )     142,787       172,149       -17.1 %

Total net revenues

   $ 397,029     $ 439,229       -9.6 %   $ 56,106     $ 66,219       -15.3 %   $ 638,072     $ 696,659       -8.4 %   $ (103 )   $ (626 )   $ 1,091,104     $ 1,201,481       -9.2 %
                                                                                                                 

Other revenues detail

                                                                                                          

Retail and other

     3,849       3,766       2.2 %     -       -       -       6,230       6,221       0.1 %     -       -       10,079       9,987       0.9 %

Wholesale

     -       -       -       20,503       25,675       -20.1 %     76,705       96,569       -20.6 %     -       -       97,208       122,244       -20.5 %

BloomNet services

     -       -       -       35,603       40,544       -12.2 %     -       -       -       -       -       35,603       40,544       -12.2 %

Corporate

     -       -       -       -       -       -       -       -       -       549       116       549       116       373.3 %

Eliminations

     -       -       -       -       -       -       -       -       -       (652 )     (742 )     (652 )     (742 )     12.1 %

Total other revenues

   $ 3,849       3,766       2.2 %   $ 56,106     $ 66,219       -15.3 %   $ 82,935     $ 102,790       -19.3 %   $ (103 )   $ (626 )   $ 142,787     $ 172,149       -17.1 %

 

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Table of Contents

 

Revenue by sales channel:

 

E-commerce revenues (combined online and telephonic) decreased 6.6% and 7.9% during the three and six months ended December 31, 2023, respectively, compared to the same periods of the prior year, primarily due to the decline in demand across all our segments, as a result of the macro-economic conditions noted above, which have negatively impacted consumer discretionary spending, combined with planned reductions in advertising spend.

 

During the three and six months ended December 31, 2023, the Company fulfilled approximately 7.9 million and 10.5 million orders through its e-commerce sales channel (online and telephonic sales), a decrease of 9.0% and 10.8%, respectively, compared to the same periods of the prior year. During the three and six months ended December 31, 2023, average order value increased 2.7% and 3.4%, to $93.14 and $90.06, respectively, as a result of product mix into higher price point items, including bundles, and customer mix with more affluent consumers buying at a higher rate than less affluent.

 

Other revenues are comprised of the Company’s BloomNet segment, as well as the wholesale and retail channels of its Consumer Floral & Gifts and Gourmet Foods & Gift Baskets segments.

 

Other revenues during the three and six months ended December 31, 2023, decreased 22.2% and 17.1%, respectively, compared to the same periods of the prior year, due to lower wholesale volumes within the Gourmet Foods & Gift Baskets segment, as well as lower BloomNet revenues due to lower shop-to-shop volumes, as well as wholesale volumes.

 

Revenue by segment:

 

Consumer Floral & Gifts – this segment, which includes the operations of the 1-800-Flowers.com, PersonalizationMall, and Alice’s Table brands, and the Things Remembered brand, subsequent to its acquisition on January 10, 2023, derives revenue from the sale of consumer floral products and gifts through its e-commerce sales channels (telephonic and online sales), retail stores, and royalties from its franchise operations. 

 

Net revenues within this segment decreased 8.0% and 9.6% during the three and six months ended December 31, 2023, respectively, compared to the same periods of the prior year, due to the continued economic pressure, which was combined with planned reductions in advertising spend, as the brands focused their efforts on improving gross margin and operating spend efficiency, in the face of softening demand.

 

During the three and six months ended December 31, 2023, Consumer Floral & Gifts orders through its e-commerce sales channel (online and telephonic sales) decreased 10.4% and 12.3%, respectively, compared to the same periods of the prior year, however this was partially offset by an increase in average order value of 2.6% and 3.0%, respectively, as a result of product mix into higher price point items, including bundles, and customer mix with more affluent consumers buying at a higher rate than less affluent.

 

BloomNet - revenues in this segment are derived from membership fees, as well as product and service offerings.

 

Net revenues decreased 17.1% and 15.3% during the three and six months ended December 31, 2023, respectively, compared to the same periods of the prior year. The net revenue decline was due to soft wholesale product revenues, as well as lower services revenues, attributable to a decline in order volume processed through the network.

 

Gourmet Foods & Gift Baskets – this segment includes the operations of Harry & David, Wolferman’s, Cheryl’s Cookies, The Popcorn Factory, 1-800-Baskets/DesignPac, Shari’s Berries, and Vital Choice. Revenue is derived from the sale of gourmet fruits, cookies, baked gifts, premium chocolates and confections, gourmet popcorn, gift baskets, dipped berries, prime steaks, chops, and fish, through the Company’s e-commerce sales channels (telephonic and online sales) and company-owned and operated retail stores under the Harry & David and Cheryl’s brand names, as well as wholesale operations.

 

Net revenues within this segment decreased 8.2% and 8.4% during the three and six months ended December 31, 2023, respectively, compared to the same periods of the prior year, as a result of lower e-commerce and wholesale revenues, primarily due to macro-economic weakness, combined with planned reductions in advertising spend, as the brands focused their efforts on improving gross margin and operating spend efficiency in the face of softening demand.

 

During the three and six months ended December 31, 2023, Gourmet Foods & Gift Baskets orders through its e-commerce sales channel (online and telephonic sales) decreased 7.9% and 9.3%, respectively, compared to the same periods of the prior year, however this was partially offset by an increase in average order value of 2.3% and 3.1%, respectively, as a result of product mix into higher price point items, including bundles, and customer mix with more affluent consumers buying at a higher rate than less affluent.

 

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Table of Contents

 

Gross profit

 

   

Three Months Ended

    

Six Months Ended

  
   

December 31,

2023

    

January 1,

2023

    

%

Change

    

December 31,

2023

    

January 1,

2023

    

%

Change

  
   

(dollars in thousands)

  
                                                 

Gross profit

   $ 355,697     $ 367,766       -3.3 %   $ 457,625     $ 469,224       -2.5 %

Gross profit %

     43.3 %     41.0 %             41.9 %     39.1 %        

 

Gross profit consists of net revenues less cost of revenues, which is comprised primarily of florist fulfillment costs (fees paid directly to florists), the cost of floral and non-floral merchandise sold from inventory or through third parties, and associated costs, including inbound and outbound shipping charges. Additionally, cost of revenues includes labor and facility costs related to direct-to-consumer and wholesale production operations, as well as payments made to sending florists related to order volume referred through the Company’s BloomNet network. 

 

Gross profit decreased 3.3% and 2.5% during the three and six months ended December 31, 2023, respectively, compared to the same periods of the prior year, primarily due to lower revenues as noted above, partially offset by a favorable gross profit percentage.

 

Gross profit percentage increased 230 and 280 basis points during the three and six months ended December 31, 2023, respectively, compared to the same periods of the prior year, driven by lower freight costs, a decline in certain commodity costs, reduced labor costs, and better inventory management.

 

Gross profit by segment follows:

 

Consumer Floral & Gifts segment - Gross profit decreased by 2.8% and 5.0% during the three and six months ended December 31, 2023, respectively, due to the impact of the lower revenues noted above, partially offset by favorable gross profit percentage attributable to lower freight costs and reduced labor costs. 

 

BloomNet segment - Gross profit decreased by 6.5% and 3.2% during the three and six months ended December 31, 2023, respectively, compared to the same periods of the prior year, due to decrease in revenues noted above, partially offset by improved gross profit percentage. Gross profit percentage increased in comparison to the prior year primarily due to lower freight costs and product mix.

 

Gourmet Foods & Gift Baskets segment – Gross profit decreased by 3.4% and 0.9% during the three and six months ended December 31, 2023, respectively, compared to the same periods of the prior year due to the revenue decrease noted above, partially offset by improved gross profit percentage. The increased gross profit percentage was attributable to lower freight costs, a decline in certain commodity prices, reduced labor costs, and better inventory management.

 

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Table of Contents

 

Marketing and sales expense

 

   

Three Months Ended

    

Six Months Ended

  
   

December 31,

2023

    

January 1,

2023

    

%

Change

    

December 31,

2023

    

January 1,

2023

    

%

Change

  
   

(dollars in thousands)

  
                                                 

Marketing and sales

   $ 188,557     $ 194,466       -3.0 %   $ 271,075     $ 283,605       -4.4 %

Percentage of net revenues

     22.9 %     21.7 %             24.8 %     23.6 %        

 

Marketing and sales expense consists primarily of advertising and promotional expenditures, catalog costs, online portal and search costs, retail store and fulfillment operations (other than costs included in cost of revenues) and customer service center expenses, as well as the operating expenses of the Company’s departments engaged in marketing, selling and merchandising activities. 

 

Marketing and sales expense decreased 3.0% and 4.4% during the three and six months ended December 31, 2023, respectively, compared to the same periods of the prior year, due to variable components associated with lower revenues, combined with planned reductions in advertising spend focused on driving profitable volume during a period when discretionary purchases are under pressure.

 

Technology and development expense 

 

   

Three Months Ended

    

Six Months Ended

  
   

December 31,

2023

    

January 1,

2023

    

%

Change

    

December 31,

2023

    

January 1,

2023

    

%

Change

  
   

(dollars in thousands)

  
                                                 

Technology and development

   $ 14,822     $ 14,952       -0.9 %   $ 30,126     $ 29,692       1.5 %

Percentage of net revenues

     1.8 %     1.7 %             2.8 %     2.5 %        

 

Technology and development expense consists primarily of payroll and operating expenses of the Company’s information technology group, costs associated with its websites, including hosting, design, content development and maintenance and support costs related to the Company’s order entry, customer service, fulfillment, and database systems.

 

Technology and development expense decreased by 0.9% during the three months ended December 31, 2023, compared to the same period of the prior year, primarily due to reduced labor and consulting costs. Technology and development expense increased 1.5% during the six months ended December 31, 2023 compared to the same period of the prior year, primarily due to higher maintenance and support costs for the Company’s technology platform enhancements, partially offset by reduced labor and consulting costs.

 

General and administrative expense

 

   

Three Months Ended

    

Six Months Ended

  
   

December 31,

2023

    

January 1,

2023

    

%

Change

    

December 31,

2023

    

January 1,

2023

    

%

Change

  
   

(dollars in thousands)

  
                                                 

General and administrative

   $ 27,154     $ 28,908       -6.1 %   $ 55,643     $ 55,153       0.9 %

Percentage of net revenues

     3.3 %     3.2 %             5.1 %     4.6 %        

 

General and administrative expense consists of payroll and other expenses in support of the Company’s executive, finance and accounting, legal, human resources and other administrative functions, as well as professional fees and other general corporate expenses.

 

General and administrative expenses decreased 6.1% during the three months ended December 31, 2023, compared to the same period of the prior year, primarily due to lower labor and insurance costs and bad debt expense, offset in part by changes in the value of the Company’s NQDC plan investments (offset in Other Income below). General and administrative expenses increased 0.9% during the six months ended December 31, 2023 compared to the same period of the prior year, due to increases in labor costs driven by changes in the value of the Company’s NQDC plan investments (offset in Other Income below), partially offset by favorable bad debt expense and lower insurance and professional fees.

 

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Table of Contents

 

Depreciation and amortization expense

 

   

Three Months Ended

    

Six Months Ended

  
   

December 31,

2023

    

January 1,

2023

    

%

Change

    

December 31,

2023

    

January 1,

2023

    

%

Change

  
   

(dollars in thousands)

  
                                                 

Depreciation and amortization

   $ 14,152     $ 14,315       -1.1 %   $ 27,346     $ 27,009       1.2 %

Percentage of net revenues

     1.7 %     1.6 %             2.5 %     2.2 %        

 

Depreciation and amortization expense decreased 1.1% during the three months ended December 31, 2023, compared to the same period of the prior year, due to the timing of certain assets becoming fully depreciated, offset in part by distribution facility automation projects and IT related ecommerce/platform enhancements. Depreciation and amortization expense increased 1.2% during the six months ended December 31, 2023 compared to the same period of the prior year, due to distribution facility automation projects and IT related ecommerce/platform enhancements.

 

Intangible impairment

 

   

Three Months Ended

    

Six Months Ended

  
   

December 31,

2023

    

January 1,

2023

    

%

Change

    

December 31,

2023

    

January 1,

2023

    

%

Change

  
   

(dollars in thousands)

  
                                                 

Intangible impairment

   $ 19,762     $ -       - %   $ 19,762     $ -       - %

 

During the three and six months ended December 31, 2023, the Company recorded a non-cash impairment charge of $19.8 million related to its PersonalizationMall trademark, due to a decline in the actual and projected revenue, combined with a higher discount rate resulting from the higher interest rate environment. See Note 5 – Goodwill and Intangible Assets, Net for further information.

 

 

Interest expense, net

 

   

Three Months Ended

    

Six Months Ended

  
   

December 31,

2023

    

January 1,

2023

    

% Change

    

December 31,

2023

    

January 1,

2023

    

% Change

  
   

(dollars in thousands)

  
                                                 

Interest expense, net

   $ 4,611     $ 4,143       11.3 %   $ 8,093     $ 6,964       16.2 %

 

Interest expense, net consists primarily of interest expense and amortization of deferred financing costs attributable to the Company’s credit facility (See Note 7 - Debt, in Item 1. for details), net of income earned on the Company’s available cash balances.

 

Interest expense, net increased 11.3% and 16.2% during the three and six months ended December 31, 2023, respectively, compared to the same periods of the prior year, primarily due to higher interest rates, partially offset by favorable interest earned on available cash balances.

 

Other expense (income), net

 

   

Three Months Ended

    

Six Months Ended

  
   

December 31,

2023

    

January 1,

2023

    

%

Change

    

December 31,

2023

    

January 1,

2023

    

%

Change

  
   

(dollars in thousands)

  
                                                 

Other (income) expense, net

   $ (2,736 )   $ 148       1,948.6 %   $ (2,262 )   $ 1,070       311.4 %

 

Other expense consists primarily of investment losses (gains) on the Company’s NQDC Plan Investments.

 

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Table of Contents

 

Income Taxes

 

The Company recorded income tax expense of $26.5 million and $16.2 million during the three and six months ended December 31, 2023, respectively, compared to an income tax expense of $28.3 million and $16.9 million, during the three and six months ended January 1, 2023, respectively. The Company’s effective tax rate for the three and six months ended December 31, 2023, was 29.6% and 33.8%, respectively, compared to 25.5% and 25.7% in the same periods of the prior year. The Company’s effective tax rate for fiscal 2023 and 2024 differed from the U.S. federal statutory rate of 21.0% primarily due to state income taxes and non-deductible executive compensation, partially offset by tax credits and other items. Fiscal 2024, was further impacted by the impairment charge, which reduced the amount of income reflected in the Company’s estimated annual effective tax rate.

 

Liquidity and Capital Resources

 

Liquidity and borrowings

 

The Company's principal sources of liquidity are cash on hand, cash flows generated from operations, and borrowings available under the Company’s credit agreement (see Note 7 - Debt in Item 1 for details). At December 31, 2023, the Company had working capital of $202.5 million, including cash and cash equivalents of $312.0 million, compared to working capital of $152.9 million, including cash and cash equivalents of $126.8 million, at July 2, 2023. 

 

Due to the seasonal nature of the Company’s business, and its continued expansion into non-floral products, the Thanksgiving through Christmas holiday season, which falls within the Company’s second fiscal quarter, is expected to generate over 40% of the Company’s annual revenues, and all of its earnings. Due to the number of major floral gifting occasions, including Mother’s Day, Valentine’s Day, Easter, and Administrative Professionals Week, revenues also have historically risen during the Company’s fiscal third and fourth quarters in comparison to its fiscal first quarter.

 

During the first two quarters of fiscal 2024, the Company borrowed under its revolving credit agreement in order to fund pre-holiday manufacturing and inventory procurement requirements, with borrowings peaking at $82.0 million in November 2023. Cash generated from operations during the Christmas holiday shopping season enabled the Company to repay the borrowings under the Revolver in December 2023. Based on current projected cash flows, the Company believes that available cash balances will be sufficient to provide for the Company’s operating needs through the remainder of fiscal 2024, at which time the Company would again expect to borrow against its Revolver to fund pre-holiday manufacturing and inventory purchases. The Company had no amounts outstanding under its Revolver as of December 31, 2023.

 

While we believe that our sources of funding will be sufficient to meet our anticipated operating cash needs for at least the next twelve months, any projections of future cash needs and cash flows are subject to substantial uncertainty. We continually evaluate, and will, from time to time, consider the acquisition of, or investment in, complementary businesses, products, services, capital infrastructure, and technologies, which might affect our liquidity requirements or cause us to require additional financing.

 

Cash Flows

 

Net cash provided by operating activities of $212.8 million, for the six months ended December 31, 2023, was primarily attributable to the Company’s net income during the period, adjusted by non-cash charges related to the intangible impairment, depreciation and amortization, stock-based compensation and changes in deferred income taxes, combined with seasonal changes in net working capital, including increases in accounts payable and accrued expenses and trade receivables and a decrease in inventories.

 

Net cash used in investing activities of $17.8 million, for the six months ended December 31, 2023, was attributable to capital expenditures primarily related to the Company's technology and automation initiatives.

 

Net cash used in financing activities of $9.7 million, for the six months ended December 31, 2023, related primarily to net repayment of bank borrowings under the Company’s working capital line of credit and the repurchase of common stock.

 

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Table of Contents

 

Stock Repurchase Program

 

See Item 2 in Part II below for details.

 

Contractual Obligations

 

At December 31, 2023, the Company’s contractual obligations consist of:

 

●

Long-term debt obligations - payments due under the Company's credit agreement (see Note 7 - Debt in Item 1 for details and payments due by period).

●

Operating lease obligations – payments due under the Company’s operating leases (see Note 12 - Leases in Item 1 for details and payments due by period for the long-term operating leases).

●

Purchase commitments - consisting primarily of inventory and IT related equipment purchase orders and license agreements made in the ordinary course of business – see below for the contractual payments due by period.

 

   

Payments due by period

  
   

(in thousands)

  
   

Remaining

Fiscal

2024

    

Fiscal

2025

    

Fiscal

2026

    

Fiscal

2027

    

Fiscal

2028

    

Thereafter

    

Total

  

Purchase commitments

   $ 73,067     $ 15,773     $ 3,749     $ 775     $ -     $ -     $ 93,364  

 

Critical Accounting Estimates

 

As disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended July 2, 2023, the discussion and analysis of the Company’s financial condition and results of operations are based upon the consolidated financial statements, which have been prepared in conformity with U.S. generally accepted accounting principles. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. Management bases its estimates and assumptions on historical experience and on various other factors that are believed to be reasonable under the circumstances, and management evaluates its estimates and assumptions on an ongoing basis. Actual results may differ from these estimates under different assumptions or conditions. The Company’s most critical accounting policies relate to goodwill, other intangible assets and income taxes. There have been no significant changes to the assumptions and estimates related to the Company’s critical accounting policies since July 2, 2023.

 

Recently Issued Accounting Pronouncements 

 

See Note 1 - Accounting Policies in Item 1 for details regarding the impact of accounting standards that were recently issued on our consolidated financial statements.

 

33
Table of Contents

 

Forward Looking Information and Factors that May Affect Future Results

 

Our disclosure and analysis in this report contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent the Company’s current expectations or beliefs concerning future events and can generally be identified by the use of statements that include words such as “estimate,” “expects,” “project,” “believe,” “anticipate,” “intend,” “plan,” “foresee,” “forecast,” “likely,” “will,” “goal,” “target” or similar words or phrases. These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of the Company’s control that could cause actual results to differ materially from the results expressed or implied in the forward-looking statements, including:

 

●

the Company’s ability:

 

 

o

to achieve revenue and profitability;
 

o

to leverage its operating platform and reduce operating expenses;
 

o

to manage the seasonality of its business;
 

o

to cost effectively acquire and retain customers;
 

o 

to successfully integrate acquired businesses and assets;
 

o 

to reduce working capital requirements and capital expenditures;
 

o 

to mitigate the impact of supply chain cost and capacity constraints;
 

o

to compete against existing and new competitors;
 

o

to manage expenses associated with sales and marketing and necessary general and administrative and technology investments; and
 

o 

to address the effects of changes in accounting policies, practices, or assumptions, including changes that could potentially require future impairment charges;

 

●

the outcome of contingencies, including legal proceedings in the normal course of business; and

●

general consumer sentiment and economic conditions that may affect, among other things, the levels of discretionary customer purchases of the Company’s products and the costs of shipping and labor.

 

We cannot guarantee that any forward-looking statement will be realized, although we believe we have been prudent in our plans and assumptions. Achievement of future results is subject to risks, uncertainties, and inaccurate assumptions. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could vary materially from past results and those anticipated, estimated, or projected. Investors should bear this in mind as they consider forward-looking statements.

 

We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our Forms 10-Q, 8-K and 10-K reports to the Securities and Exchange Commission. Our Annual Report on Form 10-K for the fiscal year ended July 2, 2023 listed various important factors that could cause actual results to differ materially from expected and historic results. We note these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995. Readers can find them in Part I, Item 1A, of that filing under the heading “Cautionary Statements Under the Private Securities Litigation Reform Act of 1995”. We incorporate that section of that Form 10-K in this filing and investors should refer to it. In addition, please refer to any additional risk factors in Part II, Item 1A in this Form 10-Q.

 

34
Table of Contents

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

The Company is exposed to market risk from the effect of interest rate changes.

 

Interest Rate Risk

 

The Company’s exposure to market risk for changes in interest rates relates primarily to the Company’s investment of available cash balances and its long-term debt. The Company generally invests its cash and cash equivalents in investment grade corporate and U.S. government securities. Borrowings under the Company’s credit facility bear interest at a variable rate, plus an applicable margin, and therefore expose the Company to market risk for changes in interest rates. The effect of a 50 basis point increase in current interest rates on the Company’s interest expense would be approximately $0.3 and $0.6 million during the three and six months ended December 31, 2023, respectively.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures 

 

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as of December 31, 2023. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have each concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2023.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting identified in connection with the Company’s evaluation required by Rules 13a-15(d) or 15d-15(d) of the Securities Exchange Act of 1934 during the quarter ended December 31, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 

 

Limitations on Effectiveness of Controls and Procedures

 

Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives, as specified above. Our management recognizes that any control system, no matter how well designed and operated, is based upon certain judgments and assumptions and cannot provide absolute assurance that its objectives will be met.

 

35
Table of Contents

 

PART II. – OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

Litigation

 

There are various claims, lawsuits, and pending actions against the Company and its subsidiaries incident to the operations of its businesses. It is the opinion of management, after consultation with counsel, that the final resolution of such claims, lawsuits and pending actions will not have a material adverse effect on the Company's consolidated financial position, results of operations or liquidity. 

 

ITEM 1A. RISK FACTORS

 

There were no material changes to the Company’s risk factors as discussed in Part 1, Item 1A-Risk Factors in the Company’s Annual Report on Form 10-K for the year ended July 2, 2023.

 

36
Table of Contents

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

The Company has a stock repurchase plan through which purchases can be made from time to time in the open market and through privately negotiated transactions, subject to general market conditions. The repurchase program is financed utilizing available cash. On April 22, 2021, the Company’s Board of Directors authorized an increase to its stock repurchase plan of up to $40.0 million. In addition, on February 3, 2022, the Company’s Board of Directors authorized an increase to its stock repurchase plan of up to $40.0 million. As of December 31, 2023, $27.2 million remained authorized under the plan.

 

The following table sets forth, for the months indicated, the Company’s purchase of common stock during the first six months of fiscal 2024, which includes the period July 3, 2023 through December 31, 2023:

 

Period

  

Total

Number of

Shares

Purchased

    

Average

Price

Paid Per

Share (1)

    

Total

Number of

Shares

Purchased

as Part of

Publicly

Announced

Plans or

Programs

    

Dollar

Value of

Shares

that May

Yet Be

Purchased

Under the

Plans or

Programs

  
   

(in thousands, except average price paid per share)

          
                                 

07/03/23 – 07/30/23

    

-

    

$

-

      

-

    

$

31,965

  

07/31/23 – 08/27/23

    

-

    

$

-

      

-

    

$

31,965

  

08/28/23 – 10/01/23

    

10,483

    

$

7.08

      

10,483

    

$

31,890

  

10/02/23 – 10/29/23

    

-

    

$

-

      

-

    

$

31,890

  

10/30/23 – 11/26/23

    

272,978

    

$

8.56

      

272,978

    

$

29,549

  

11/27/23 – 12/31/23

    

240,000

    

$

9.85

      

240,000

    

$

27,178

  

Total

    

523,461

    

$

9.12

      

523,461

          

 

(1)

Average price per share excludes commissions and other transaction fees.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

Not applicable.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable. 

 

 

ITEM 5. OTHER INFORMATION

 

None.

 

37
Table of Contents
  
 

ITEM 6. EXHIBITS

 

10.1 Consulting Agreement, dated as of December 20, 2023, between 1-800-FLOWERS.COM, Inc., and Hanft Ideas LLC and Adam Hanft. * ^
10.2 Appointment Letter from 1-800-FLOWERS.COM, Inc. to Christopher G. McCann, dated December 31, 2023 (incorporated by reference to Current Report on Form 8-K filed on January 2, 2024, Exhibit 99.1). ^

31.1

Certification of the principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *

31.2

Certification of the principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *

32.1

Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *

101.INS

Inline XBRL Instance Document

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Document

101.PRE

Inline XBRL Taxonomy Definition Presentation Document

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

 

* Filed herewith.

^ Management contracts or compensatory plans or arrangements.

 

38
Table of Contents

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

1-800-FLOWERS.COM, Inc. 

(Registrant)
 

Date: February 8, 2024     

/s/ James F. McCann      

James F. McCann
Executive Chairman and Chief Executive Officer
(Principal Executive Officer)  
   

Date: February 8, 2024     

/s/ William E. Shea      
William E. Shea
Senior Vice President, Treasurer and
Chief Financial Officer (Principal
Financial and Accounting Officer)

 

39

Exhibit 10.1

 

CONSULTING AGREEMENT

 

THIS CONSULTING AGREEMENT (the “Agreement”) by and between 1-800-FLOWERS.COM, Inc., a corporation with an address of Two Jericho Plaza, Suite 200, Jericho, New York 115753 (the “Company”), and Hanft Ideas LLC, a company controlled by Adam Hanft with an address of 50 Astor Lane, Sands Point, NY 11050 (together with Mr. Hanft, “Consultant”, and, together with Mr. Hanft and the Company, the “Parties” and, each, a “Party”) is made and entered into as of December 20, 2023 (the “Effective Date”).

 

WHEREAS, Adam Hanft currently serves as a non-employee member of the Company’s Board of Directors (the “Board”);

 

WHEREAS, the Company wishes to engage Consultant as an independent contractor to perform services outside the scope of Mr. Hanft’s responsibilities in his capacity as a member of the Board;

 

NOW THEREFORE, in consideration of the mutual promises and other good and valuable consideration set forth in the Agreement, the receipt of which are hereby acknowledged, the Parties agree as follows:

 

1.    Services. During the term of the Agreement (the “Term”), Consultant shall provide to the Company the consulting services described in Exhibit A attached hereto (the “Services”), subject to the terms and conditions set forth herein. Consultant shall, in Consultant’s sole discretion, determine the means, manner and method of performing the Services, and will devote such time, attention and skill hereunder as is necessary to render the Services. The Company shall provide Consultant with such access to its premises, information and/or data as the Company determines, in its sole discretion, is necessary for the performance of the Services. Mr. Hanft’s Board service is separate from the Services and not subject to the Agreement.

 

2.    Term. The Term shall commence on the Effective Date and continue for a period of twelve (12) months, unless earlier terminated in accordance with Section 15 below.

 

3.    Fees. It is expressly understood and agreed that Consultant’s fees shall be as set forth in Exhibit A and such fees shall constitute the total consideration for everything furnished, provided, or done by Consultant in connection with the Agreement, including, without limitation, all Services rendered by Consultant, and any and all Work Product (as defined in Section 5 herein). Such fees shall be in addition to such compensation as Mr. Hanft may be entitled to receive as a member of the Board.

 

4.    Independent Contractor. It is expressly understood and agreed that Consultant is an independent contractor for the Services provided pursuant to the Agreement and Consultant is not an employee of the Company and/or any of its Affiliates (as defined in Section 6 herein). Nothing in the Agreement shall create or be construed to create any employee, partnership, joint venture or agency relationship between the Company and Consultant and Consultant shall not be considered, whether under the provisions of the Agreement or otherwise, as having the status of an employee of the Company and/or any of its Affiliates for any purpose whatsoever. In its capacity as independent contractor pursuant to the Agreement, Consultant agrees (i) to be solely responsible for the filing and payment of all income, payroll, Social Security, and/or other federal, state, or local taxes, unemployment insurance, disability insurance and/or workers’ compensation insurance required by federal, state or local law, (ii) that all payments received by Consultant from the Company will not be subject to tax withholding by the Company, and (iii) that Consultant is not covered by any health insurance, dental insurance, disability insurance, unemployment insurance, worker’s compensation, stock option, life insurance, pension, profit sharing and/or other employee benefit plan provided by or on behalf of the Company, and that Consultant has no right to nor will Consultant seek benefits or any form of payment from or through the Company under any such plans; provided that, Consultant shall be entitled to continue to be covered by the Company’s compensation and/or benefit plans, policies and programs for which Mr. Hanft may be eligible in his capacity as a member of the Board. The Parties further recognize that Consultant is responsible for determining the means and methods of the performance of all services undertaken by Consultant under the terms of the Agreement, has the exclusive right to direct and control the financial aspects of Consultant’s business operations, including the ability to earn a profit or suffer a financial loss under the Agreement.

 

PRIVATE AND CONFIDENTIAL

 
 
 

 

5.    Work Product. Consultant agrees that all of the results, proceeds, and deliverables of the Services, shall be owned, throughout the world, exclusively by the Company, including all copyright, trade secret, trademark, service mark, patent and all other intellectual property rights (collectively, “Intellectual Property Rights”) thereto. Consultant further agrees that all other writings, technology, inventions, discoveries, machines, formulae, improvements, software designs, computer programs, strategies, specific computer-related know-how, data, artwork, layouts, photographs, presentation files, videos, images, processes, techniques, methods, ideas, concepts, research proposals, original works of authorship, and materials, and all other work product of any nature whatsoever, that are created, prepared, produced, authored, edited, modified, conceived, or reduced to practice in the course of performing the Services, and the results thereof (collectively referred to as “Work Product”) shall be deemed as “work for hire,” of which the Company shall be deemed the author to the extent such works qualify as such in accordance with applicable law and intellectual property rights, including, but not limited to, copyright, patent, trade secret, and trademark rights, therein automatically and immediately vest in the Company. If for any reason, any Work Product may not qualify as “work for hire,” Consultant irrevocably assigns to the Company, for no additional consideration, all of Consultant’s right, title, and interest throughout the world in and to such Work Product, including the right to sue for past, present, and future infringement, misappropriation, or dilution thereof. To the extent any copyrights are assigned hereunder, Consultant hereby irrevocably waives in favor of the Company, to the extent permitted by applicable law, any and all claims Consultant may now or hereafter have in any jurisdiction to all rights of paternity or attribution, integrity, disclosure, and withdrawal and any other rights that may be known as “moral rights” in relation to all Work Product to which the assigned copyrights apply. Consultant agrees that the Company shall own all Intellectual Property Rights worldwide, with respect to any Work Product discovered, created or developed under the Agreement without regard to the origin of the Work Product and warrants and represents that Consultant has not licensed or assigned the Work Product to any other person or party and that Consultant has lawful right and authority to enter into the Agreement. Upon the reasonable request of the Company, during and after the Term, Consultant shall promptly take such further actions, including execution and delivery of all appropriate instruments of conveyance, and provide such further cooperation, as may be necessary to assist the Company to apply for, prosecute, register, maintain, perfect, record or enforce its rights in any Work Product and all intellectual property rights therein. In the event the Company is unable, after reasonable effort, to obtain Consultant’s signature on any such documents, Consultant hereby irrevocably designates and appoints the Company as Consultant’s agent and attorney-in-fact, to act for and on Consultant’s behalf solely to execute and file any such application or other document and do all other lawfully permitted acts to further the prosecution and issuance of patents, copyrights, or other intellectual property protection related to the Work Product with the same legal force and effect as if Consultant had executed them. Consultant agrees that this power of attorney is coupled with an interest therein.

 

6.    Company Materials. As between Consultant and the Company, the Company is, and will remain, the sole and exclusive owner of all right, title, and interest in and to any documents, specifications, data, know-how, methodologies, software, and other materials provided or made available to Consultant by the Company (“Company Materials”), including all Intellectual Property Rights therein. Consultant has no right or license to use, publish, reproduce, prepare derivative works based upon, distribute, perform, or display any Company Materials except during the Term to the extent necessary to perform Consultant’s obligations under the Agreement. All other rights in and to the Company Materials are expressly reserved by the Company. Consultant has no right or license to use the Company’s or any of its Affiliates’ trademarks, service marks, trade names, logos, symbols, or brand names, unless such right or license is expressly granted by Company in a written amendment, or separate written agreement, signed by the Parties. For purposes of the Agreement, the term “Affiliate” shall mean any person or entity directly or indirectly controlling, controlled by, or under common control with, a Party.

 

PRIVATE AND CONFIDENTIAL

 

2
 

 

7.    Confidentiality. Consultant hereby recognizes and acknowledges that, during the course of or in connection with Consultant’s performance of the Services or other services in connection with the Agreement, the Company may provide access to or disclose to Consultant certain Confidential Information, as defined herein. For purposes of the Agreement, the term “Confidential Information” shall mean any information, communication or data, in any form, including, but not limited to, oral, written, graphic or electromagnetic forms, models or samples that the Company and/or any of its Affiliates desires to protect against unrestricted disclosure, access, or use, including, without limitation, the term and conditions of the Agreement, business information, network infrastructure, technology environment, floral designs and/or recipes, financial data, pricing, marketing data, plans or strategies, trade secrets, operations of the Company, its Affiliates, or their suppliers or customers, and that which is designated as proprietary or confidential. All such Confidential Information shall remain the sole property of the Company, and its confidentiality shall be maintained and protected by Consultant with the same degree of care as Consultant uses for Consultant’s own confidential and proprietary information (but in no event less than a reasonable degree of care) and Consultant shall not use the Confidential Information for any purpose other than for performance of the Services, and shall not disclose such Confidential Information to any third party, except to persons or entities on a “need to know” basis as required to perform the Services (and provided that, prior to disclosure to such persons or entities, Consultant ensures that such persons or entities are subject to confidentiality, non-disclosure and non-use obligations concerning the Confidential Information, which are at least as restrictive as the terms hereof). Any Confidential Information that Consultant develops in connection with the Services, including, but not limited to, any Work Product, shall be subject to the terms and conditions of this provision. The restrictions on the use, access, or disclosure of any Confidential Information shall not apply to information that is “Confidential Information” within the meaning hereof (i) after it has become generally available to the public without breach of the Agreement by Consultant, or (ii) which the Company authorizes in writing may be disclosed.

 

8.    Protected Rights. Consultant understands that nothing contained in the Agreement limits Consultant’s ability to file a charge or complaint with the U.S. Securities and Exchange Commission, or any other federal, state, or local governmental regulatory or law enforcement agency (“Government Agencies”). Consultant further understands that nothing in the Agreement limits Consultant’s ability to communicate with any Government Agencies or otherwise participate in or fully cooperate with any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to or approval from the Company. Consultant can provide confidential information to Government Agencies without risk of being held liable by the Company for liquidated damages or other financial penalties. The Agreement also does not limit Consultant’s right to receive an award for information provided to any Government Agencies. Furthermore, notwithstanding any provision of the Agreement, pursuant to the Defense of Trade Secrets Act of 2016, (a) Consultant will not be held criminally liable under any federal or state trade secret law for any disclosure of a trade secret that (i) is made in confidence to a federal, state or local government official, either directly or indirectly, or to any attorney and solely for the purpose of reporting or investigating a suspected violation of law, or (ii) is made in a complaint or other document that is filed under seal in a lawsuit or other proceeding, and (b) if Consultant files a lawsuit for retaliation for reporting a suspected violation of law, Consultant may disclose the Company’s trade secrets to Consultant’s attorney and use the trade secret information in a court proceeding if it files any document containing the trade secret under seal and does not disclose the trade secret, except pursuant to court order.

 

PRIVATE AND CONFIDENTIAL

 

3
 

 

9.    Representations and Warranties. Consultant represents and warrants as follows: (i) Consultant has the right to enter into the Agreement, to grant the rights granted herein, and to perform fully all of Consultant’s obligations in the Agreement; (ii) Consultant’s execution of the Agreement and performance of the Services will not result in a breach or constitute a default under any agreements to which Consultant is a party or by which Consultant is bound; (iii) Consultant is highly skilled and experienced in the performance of the Services and possesses the expertise needed to provide the Services and the Company is relying upon such; (iv) Consultant shall perform the Services in a professional and workmanlike manner in accordance with generally recognized industry standards for similar services and in compliance with all laws, rules and regulations of governmental authorities having jurisdiction; (v) Consultant shall devote sufficient resources to ensure that the Services are performed in a timely and reliable manner; (vi) the Company will receive good and valid title to all Work Product, free and clear of all encumbrances and liens of any kind; and (vii) all Work Product produced and delivered hereunder will not, to the best of Consultant’s knowledge, directly or indirectly infringe upon any patent, copyright, trade secret, intellectual property, or other proprietary, property or privacy right of any third party.

 

10.    Compliance with Rules and Regulations. Consultant acknowledges that Consultant is (i) aware that the United States securities laws may prohibit any person who has material nonpublic information about a company from purchasing or selling securities of such company, or from communicating such information to any other person under circumstances in which it is reasonably foreseeable that such a person is likely to purchase or sell such securities, and (ii) familiar with the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder to the extent they relate to the matters referred to in this Section 10. In addition to the confidentiality requirements set forth in Section 7 above, Consultant agrees that Consultant shall not use or cause any third party to use, and that Consultant shall use reasonable efforts to assure that none of Consultant’s Affiliates or representatives shall use or cause any third party to use, any Confidential Information in contravention of the United States securities laws, including the Exchange Act or any rules and regulations promulgated thereunder. Consultant further agrees to comply with all applicable federal and state laws, including, but not limited to, the Foreign Corrupt Practices Act of 1977.

 

11.    Limitation of Liability. Except for claims under Sections 7, 9, 10 and/or 12 of the Agreement, in no event shall either Party be liable to the other Party for any special, incidental, consequential, indirect, or punitive damages (including, but not limited to, lost profits and lost opportunities), arising out of or relating to the Agreement, regardless of whether such liability is based on breach of contract, tort, strict liability, warranties, failure of essential purpose, loss of goodwill or otherwise, and even if advised of the possibility of such damages.

 

12.    Consultant Indemnification. Consultant shall defend, indemnify and hold harmless the Company, its Affiliates, and their respective directors, officers, employees, agents, parents and affiliates, and assigns from and against any and all claims, actions, suits, damages, losses, deficiencies, liabilities, obligations, commitments, costs or expenses of any kind or nature whatsoever (including reasonable attorney’s fees and expenses incurred in investigating and defending against the same and interest) arising out of or in connection with (i) bodily injury, death of any person, or damage to real or tangible personal property resulting from Consultant’s acts or omissions in the performance of the Services, (ii) any breach by Consultant of any of the terms of the Agreement, (iii) Consultant’s obligations under the Agreement, (iv) any negligence, willful misconduct, act or omission of Consultant in connection with the provision of Services, (v) any claim of infringement or other violation regarding the Work Product (including, without limitation, any alleged infringement of any Intellectual Property Rights), and (vi) any notice, claim, or determination by any federal, state, or local government or their agencies, including, without limitation, the Internal Revenue Service, Worker’s Compensation, Department of Labor (or other similar state department) that seeks to levy any tax or other financial obligation on the Company based on, or in any way relating to, the Company’s classification of Consultant as an independent contractor. The Company may satisfy such indemnity (in whole or in part) by way of deduction from any payment due to Consultant.

 

PRIVATE AND CONFIDENTIAL

 

4
 

 

13.    Notice. Any notice to be given hereunder shall be in writing and sent by overnight courier or United States registered or certified mail, to the address of the receiving Party indicated above, or at such other address as may hereafter be furnished in writing by either Party hereto to the other. Consultant shall also send a copy of any notice sent to the Company to 1-800-FLOWERS.COM, Inc., Two Jericho Plaza, Suite 200, Jericho, New York 115753, Attn: General Counsel.

 

14.    Other Business Activities. Consultant understands and agrees that Consultant’s Services are non-exclusive, and the Company reserves the right, in its sole discretion, to retain the services of other persons or entities that may be the same or similar to the Services. Consultant further understands and agrees that nothing in the Agreement shall be deemed to obligate Consultant to perform the Services for any specific days or times and that Consultant is free to choose the days and times Consultant will be available to provide the Services; provided, however, that Consultant agrees to use best efforts to complete the Services in accordance with any estimated completion date set forth in Exhibit A or as otherwise agreed to by the Parties.

 

15.    Termination. Either Party may terminate the Agreement upon not less than ninety (90) days’ prior written notice. In the event of termination pursuant to this provision, the Company shall pay Consultant on a pro rata basis any fees then due and payable for the period completed up to and including the date of termination. The ability of either Party to terminate the Agreement shall in no way be interpreted as an at-will employment provision and shall not otherwise affect Consultant’s status as an independent contractor under the Agreement. Upon expiration or termination of the Agreement, Consultant shall immediately return to the Company (i) all Company Materials, including, but not limited to, all hardware, software, tools, equipment, or other materials, such as notes, memoranda, reports, and documents, provided by the Company to, and for use by, Consultant, (ii) all Confidential Information, in any form or medium, together with all copies thereof, and any tangible documents and materials containing, reflecting, incorporating, or based on Confidential Information, (iii) all deliverables (whether complete or incomplete) that resulted from or were provided in connection with the Services (“Deliverables”), and (iv) all Work Product. Upon Company’s written request, Consultant shall verify in writing that all materials, Company Materials, Confidential Information, Deliverables, and Work Product have been returned and that no additional copies of such materials, Company Materials, Confidential Information, Deliverables, and Work Product, have been made. Expiration or termination of the Agreement will not affect any rights or obligations that are to survive the expiration or termination of the Agreement.

 

16.    Personal Services/Assignment. The Agreement is a personal services agreement and Consultant represents and warrants to the Company that Adam Hanft will personally perform the Services. Neither Party may assign any rights or delegate or subcontract any obligations under the Agreement without the prior written consent of the other Party, except that such consent shall not be required in connection with the Company’s transfer or assignment to an acquirer of all or substantially all of the Company’s capital stock, assets, or equity interests. Subject to the limits on assignment stated above, the Agreement will inure to the benefit of, be binding on and be enforceable against each of the Parties and their respective successors and assigns.

 

17.    Waiver. No failure or delay by either Party to exercise, and no course of dealing with respect to, any right of any such party regarding an obligation of the other Party, shall operate as a waiver thereof, unless agreed to in writing by both Parties. Any single or partial waiver by either Party of any obligation of the other Party under the Agreement shall constitute a waiver of such obligation only as specified in such waiver and shall not constitute a waiver of any other obligation.

 

PRIVATE AND CONFIDENTIAL

 

5
 

 

18.    Choice of Law/Venue and Waiver of Jury. The Agreement shall be interpreted, governed, construed, and enforced in accordance with the laws of the State of New York without regard to its conflicts of law provisions and the Parties hereby consent and submit to the exclusive jurisdiction and venue of the Supreme Court of the State of New York, Nassau County and the United States District Court, Eastern District of New York for any dispute arising out of, under, or related to the Agreement. EACH PARTY SPECIFICALLY WAIVES TRIAL BY JURY.

 

19.    Survival. Sections 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 15, 16, 17, 18, this Section 19, 21 and 22 of the Agreement are deemed to survive its termination or expiration.

 

20.    Security Compliance. During the term of the Agreement, Consultant shall fully comply with all of the Company’s data privacy and security rules, regulations, policies, guidelines, and procedures of which the Company makes Consultant aware.

 

21.    Entire Agreement. The Agreement, including Exhibit A hereto, constitutes the sole, entire and existing agreement between the Parties, and supersedes all prior discussions, representations, agreements or understandings, whether oral or written, expressed or implied, between the Parties. The Agreement may only be amended or modified in a writing signed by both Parties. If any provision of the Agreement shall be held by a court of competent jurisdiction to be illegal, invalid or unenforceable, the remaining provisions shall remain in full force and effect.

 

22.    Attorneys’ Fees. The prevailing Party in any action or proceeding to enforce the terms of the Agreement or any rights or obligations hereunder shall be entitled to receive as part of a judgment its reasonable attorneys’ fees, costs and expenses incurred in that action or proceeding.

 

23.    Counterparts. The Agreement may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitute but one instrument. A signature made on a faxed or electronically mailed copy of the Agreement or a signature transmitted by fax or electronic mail, or which is made electronically, shall, for all purposes, be deemed an original and in full force and effect.

 

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;

SIGNATURE PAGE FOLLOWS]

 

 

 

 

 

 

 

 

PRIVATE AND CONFIDENTIAL

 

6
 

 

IN WITNESS WHEREOF, the Parties have executed the Agreement as of the Effective Date.

 

 

  1-800-FLOWERS.COM, INC.  
       
       
  By: /s/ James F. McCann  
    Name: James F. McCann  
    Title: Chairman and CEO  
       
       
  Date: Dec. 21, 2023  
       
       
       
  HANFT IDEAS LLC  
       
       
  By: /s/ Adam Hanft  
    Name: Adam Hanft  
    Title: CEO  
       
       
  Date: Dec. 20, 2023  
       
       
       
  ADAM HANFT  
       
       
  Signed: /s/ Adam Hanft  
       
     
  Date: Dec. 20, 2023  

 

PRIVATE AND CONFIDENTIAL

 

7
 

 

EXHIBIT A

 

Description of Services

 

Consultant shall provide advice and assistance with respect to the following:

 

 

(i)

designing the “rails” process for coordinating the Company’s marketing activities;

 

 

(ii)

assisting with the development of the Company’s “content leading” messaging;

 

 

(iii)

tuning the creative elements of the Company’s messaging copy, headlines, photography, etc.; and/or

 

 

(iv)

 other marketing and creative requests as may be reasonably requested by the Company.

 

The Chief Executive Officer of the Company or his designee shall provide oversight and guidance to Consultant with respect to the Services.

 

Fees and Payment

 

Consultant shall be paid fees at an annual rate of One Hundred Thousand and 00/100 Dollars ($100,000.00), paid in equal quarterly installments. The initial installment shall be paid within five (5) business days of the Effective Date and each subsequent installment shall be paid in arrears within five (5) business days of the subsequent three (3) quarterly anniversaries of the Effective Date.

 

PRIVATE AND CONFIDENTIAL

 

 

 

 

Exhibit 31.1

 

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

(RULE 13a-14 (a))

 

 

I, James F. McCann, certify that:

 

 

(1)

I have reviewed this quarterly report on Form 10-Q of 1-800-FLOWERS.COM, Inc.;

 

 

(2)

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

 

(3)

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

 

(4)

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

 

(a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

 

(b)

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

 

(c)

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

 

(d)

disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

 

 

(5)

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

 

(a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

 

(b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

Date: February 8, 2024   

/s/ James F. McCann
 

James F. McCann
 

Executive Chairman and Chief Executive Officer
   

 

 

 

Exhibit 31.2

 

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

(RULE 13a-14(a))

 

 

I, William E. Shea, certify that:

 

 

(1)

I have reviewed this quarterly report on Form 10-Q of 1-800-FLOWERS.COM, Inc.;

 

 

(2)

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

 

(3)

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

 

(4)

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

 

(a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

 

(b)

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

 

(c)

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

 

(d)

disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

 

 

(5)

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

 

(a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

 

(b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

Date: February 8, 2024     

/s/ William E. Shea
 

William E. Shea
 

Senior Vice President, Treasurer and
 

Chief Financial Officer

 

 

 

Exhibit 32.1

 

CERTIFICATIONS PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

 

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of 1-800-FLOWERS.COM, Inc. (the “Company”) hereby certifies, to the best of such officer's knowledge, that:

 

(1) the Quarterly Report on Form 10-Q of the Company for the quarter ended December 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

 

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

Dated: February 8, 2024     

/s/ James F. McCann
 

James F. McCann

Executive Chairman and Chief Executive Officer
   

Dated: February 8, 2024     

/s/ William E. Shea
 

William E. Shea

Senior Vice President, Treasurer

and Chief Financial Officer

 

These certifications are furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such certifications will not be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates them by reference.

 

 

 
v3.24.0.1
Document And Entity Information - shares
 6 Months Ended
Dec. 31, 2023
Feb. 02, 2024
Document Information [Line Items]    
Entity Central Index Key 0001084869  
Entity Registrant Name 1 800 FLOWERS COM INC  
Amendment Flag false  
Current Fiscal Year End Date --06-30  
Document Fiscal Period Focus Q2  
Document Fiscal Year Focus 2024  
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Dec. 31, 2023  
Document Transition Report false  
Entity File Number 0-26841  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 11-3117311  
Entity Address, Address Line One Two Jericho Plaza, Suite 200  
Entity Address, City or Town Jericho  
Entity Address, State or Province NY  
Entity Address, Postal Zip Code 11753  
City Area Code 516  
Local Phone Number 237-6000  
Title of 12(b) Security Class A common stock  
Trading Symbol FLWS  
Security Exchange Name NASDAQ  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Common Class B [Member]    
Document Information [Line Items]    
Entity Common Stock, Shares Outstanding   27,068,221
Common Class A [Member]    
Document Information [Line Items]    
Entity Common Stock, Shares Outstanding   37,428,934
v3.24.0.1
Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($)
$ in Thousands
Dec. 31, 2023
Jul. 02, 2023
Current assets:    
Cash and cash equivalents $ 312,017 $ 126,807
Trade receivables, net 46,578 20,419
Inventories 161,324 191,334
Prepaid and other 24,557 34,583
Total current assets 544,476 373,143
Property, plant and equipment, net 227,643 234,569
Operating lease right-of-use assets 117,825 124,715
Goodwill 153,577 153,376
Other intangibles, net 117,897 139,888
Other assets 30,292 25,739
Total assets 1,191,710 1,051,430
Current liabilities:    
Accounts payable 92,418 52,588
Accrued expenses 224,084 141,914
Current maturities of long-term debt 10,000 10,000
Current portion of long-term operating lease liabilities 15,433 15,759
Total current liabilities 341,935 220,261
Long-term debt, net 181,749 186,391
Long-term operating lease liabilities 110,740 117,330
Deferred tax liabilities, net 25,026 31,134
Other liabilities 28,900 24,471
Total liabilities 688,350 579,587
Commitments and contingencies (See Note 14)
Stockholders' equity:    
Preferred stock, $0.01 par value, 10,000,000 shares authorized, none issued 0 0
Additional paid-in capital 392,849 388,215
Retained earnings 302,748 271,083
Accumulated other comprehensive loss (170) (170)
Treasury stock, at cost, 21,089,336 and 20,565,875 Class A shares at December 31, 2023 and July 2, 2023, respectively and 5,280,000 Class B shares at December 31, 2023 and July 2, 2023 (192,978) (188,191)
Total stockholders’ equity 503,360 471,843
Total liabilities and stockholders’ equity 1,191,710 1,051,430
Common Class A [Member]    
Stockholders' equity:    
Common stock 588 583
Common Class B [Member]    
Stockholders' equity:    
Common stock $ 323 $ 323
v3.24.0.1
Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares
Dec. 31, 2023
Jul. 02, 2023
Preferred stock, par value (in dollars per share) $ 0.01 $ 0.01
Preferred stock, authorized (in shares) 10,000,000 10,000,000
Preferred stock, issued (in shares) 0 0
Common Class A [Member]    
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, authorized (in shares) 200,000,000 200,000,000
Common stock, issued (in shares) 58,743,969 58,273,747
Treasury stock, shares (in shares) 21,089,336 20,565,875
Common Class B [Member]    
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, authorized (in shares) 200,000,000 200,000,000
Common stock, issued (in shares) 32,348,221 32,348,221
Treasury stock, shares (in shares) 5,280,000 5,280,000
v3.24.0.1
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($)
shares in Thousands, $ in Thousands
 3 Months Ended 6 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Dec. 31, 2023
Jan. 01, 2023
Net revenues $ 822,054 $ 897,877 $ 1,091,104 $ 1,201,481
Cost of revenues 466,357 530,111 633,479 732,257
Gross profit 355,697 367,766 457,625 469,224
Operating expenses:        
Marketing and sales 188,557 194,466 271,075 283,605
Technology and development 14,822 14,952 30,126 29,692
General and administrative 27,154 28,908 55,643 55,153
Depreciation and amortization 14,152 14,315 27,346 27,009
Intangible impairment 19,762 0 19,762 0
Total operating expenses 264,447 252,641 403,952 395,459
Operating income 91,250 115,125 53,673 73,765
Interest expense, net 4,611 4,143 8,093 6,964
Other (income) expense, net (2,736) 148 (2,262) 1,070
Income before income taxes 89,375 110,834 47,842 65,731
Income tax expense 26,468 28,304 16,177 16,893
Net income and comprehensive net income $ 62,907 $ 82,530 $ 31,665 $ 48,838
Basic net income per common share (in dollars per share) $ 0.97 $ 1.28 $ 0.49 $ 0.76
Diluted net income per common share (in dollars per share) $ 0.97 $ 1.27 $ 0.49 $ 0.75
Weighted average shares used in the calculation of net income per common share:        
Basic (in shares) 64,835 64,675 64,814 64,606
Diluted (in shares) 65,177 64,835 65,155 64,820
v3.24.0.1
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($)
$ in Thousands
Common Stock [Member]
Common Class A [Member]
Common Stock [Member]
Common Class B [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
AOCI Attributable to Parent [Member]
Treasury Stock, Common [Member]
Total
Balance (in shares) at Jul. 03, 2022 57,706,389 32,529,614       25,698,396  
Balance at Jul. 03, 2022 $ 577 $ 325 $ 379,885 $ 315,785 $ (211) $ (186,952) $ 509,409
Net income $ 0 $ 0 0 48,838 0 $ 0 48,838
Stock-based compensation (in shares) 368,249 0       0  
Stock-based compensation $ 4 $ 0 3,450 0 0 $ 0 3,454
Acquisition of Class A treasury stock (in shares) 0 0       140,248  
Acquisition of Class A treasury stock $ 0 $ 0 0 0 0 $ (1,175) (1,175)
Net income $ 0 $ 0 0 48,838 0 $ 0 48,838
Conversion – Class B into Class A (in shares) 181,393            
Conversion – Class B into Class A $ 2            
Conversion – Class B into Class A (in shares)   (181,393)          
Conversion – Class B into Class A   $ (2)          
Balance (in shares) at Jan. 01, 2023 58,256,031 32,348,221       25,838,644  
Balance at Jan. 01, 2023 $ 583 $ 323 383,335 364,623 (211) $ (188,127) 560,526
Balance (in shares) at Oct. 02, 2022 57,706,389 32,529,614       25,698,396  
Balance at Oct. 02, 2022 $ 577 $ 325 381,440 282,093 (211) $ (186,952) 477,272
Net income $ 0 $ 0 0 82,530 0 $ 0 82,530
Stock-based compensation (in shares) 368,249 0       0  
Stock-based compensation $ 4 $ 0 1,895 0 0 $ 0 1,899
Acquisition of Class A treasury stock (in shares) 0 0       140,248  
Acquisition of Class A treasury stock $ 0 $ 0 0 0 0 $ (1,175) (1,175)
Net income $ 0 $ 0 0 82,530 0 $ 0 82,530
Conversion – Class B into Class A (in shares) 181,393            
Conversion – Class B into Class A $ 2            
Conversion – Class B into Class A (in shares)   (181,393)          
Conversion – Class B into Class A   $ (2)          
Balance (in shares) at Jan. 01, 2023 58,256,031 32,348,221       25,838,644  
Balance at Jan. 01, 2023 $ 583 $ 323 383,335 364,623 (211) $ (188,127) 560,526
Balance (in shares) at Jul. 02, 2023 58,273,747 32,348,221       25,845,875  
Balance at Jul. 02, 2023 $ 583 $ 323 388,215 271,083 (170) $ (188,191) 471,843
Net income $ 0 $ 0 0 31,665 0 $ 0 31,665
Stock-based compensation (in shares) 465,112 0       0  
Stock-based compensation $ 5 $ 0 4,590 0 0 $ 0 4,595
Exercise of stock options (in shares) 5,110 0       0  
Exercise of stock options $ 0 $ 0 44 0 0 $ 0 44
Acquisition of Class A treasury stock (in shares) 0 0       523,461  
Acquisition of Class A treasury stock $ 0 $ 0 0 0 0 $ (4,787) (4,787)
Net income $ 0 $ 0 0 31,665 0 $ 0 31,665
Balance (in shares) at Dec. 31, 2023 58,743,969 32,348,221       26,369,336  
Balance at Dec. 31, 2023 $ 588 $ 323 392,849 302,748 (170) $ (192,978) 503,360
Balance (in shares) at Oct. 01, 2023 58,309,547 32,348,221       25,856,358  
Balance at Oct. 01, 2023 $ 583 $ 323 390,579 239,841 (170) $ (188,265) 442,891
Net income $ 0 $ 0 0 62,907 0 $ 0 62,907
Stock-based compensation (in shares) 429,312 0       0  
Stock-based compensation $ 5 $ 0 2,226 0 0 $ 0 2,231
Exercise of stock options (in shares) 5,110 0       0  
Exercise of stock options $ 0 $ 0 44 0 0 $ 0 44
Acquisition of Class A treasury stock (in shares) 0 0       512,978  
Acquisition of Class A treasury stock $ 0 $ 0 0 0 0 $ (4,713) (4,713)
Net income $ 0 $ 0 0 62,907 0 $ 0 62,907
Balance (in shares) at Dec. 31, 2023 58,743,969 32,348,221       26,369,336  
Balance at Dec. 31, 2023 $ 588 $ 323 $ 392,849 $ 302,748 $ (170) $ (192,978) $ 503,360
v3.24.0.1
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Thousands
 6 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Operating activities:    
Net income $ 31,665 $ 48,838
Adjustments to reconcile net income to net cash provided by operating activities:    
Intangible impairment 19,762 0
Depreciation and amortization 27,346 27,009
Amortization of deferred financing costs 361 671
Deferred income taxes (6,108) (846)
Bad debt expense 225 2,407
Stock-based compensation 4,595 3,454
Other non-cash items (385) (470)
Changes in operating items:    
Trade receivables (26,384) (31,622)
Inventories 29,808 46,506
Prepaid and other 6,640 7,550
Accounts payable and accrued expenses 125,404 89,050
Other assets and liabilities (169) 1,113
Net cash provided by operating activities 212,760 193,660
Investing activities:    
Capital expenditures (17,807) (23,849)
Net cash used in investing activities (17,807) (23,849)
Financing activities:    
Acquisition of treasury stock (4,787) (1,175)
Proceeds from exercise of employee stock options 44 0
Proceeds from bank borrowings 82,000 195,900
Repayment of bank borrowings (87,000) (205,900)
Debt issuance cost 0 (383)
Net cash used in financing activities (9,743) (11,558)
Net change in cash and cash equivalents 185,210 158,253
Cash and cash equivalents:    
Beginning of period 126,807 31,465
End of period $ 312,017 $ 189,718
v3.24.0.1
Note 1 - Accounting Policies
 6 Months Ended
Dec. 31, 2023
Notes to Financial Statements  
Organization, Consolidation, Basis of Presentation, Business Description and Accounting Policies [Text Block]

Note 1 – Accounting Policies

 

Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements have been prepared by 1-800-FLOWERS.COM, Inc. and Subsidiaries (the “Company”) in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and six-month periods ended December 31, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2024. These financial statements should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended July 2, 2023, which provides a more complete understanding of our accounting policies, financial position, operating results and other matters.

 

The Company’s quarterly results may experience seasonal fluctuations. Due to the seasonal nature of the Company’s business, and its continued expansion into non-floral products, the Thanksgiving through Christmas holiday season, which falls within the Company’s second fiscal quarter, is expected to generate over 40% of the Company’s annual revenues, and all of its earnings. Due to the number of major floral gifting occasions, including Mother's Day, Valentine’s Day, Easter, and Administrative Professionals Week, revenues also have historically risen during the Company’s fiscal third and fourth quarters in comparison to its fiscal first quarter.

 

Use of Estimates

 

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

 

Revenue Recognition

 

Net revenue is measured based on the amount of consideration that we expect to receive, reduced by discounts and estimates for credits and returns (calculated based upon previous experience and management’s evaluation). Service and outbound shipping charged to customers are recognized at the time the related merchandise revenues are recognized and are included in net revenues. Inbound and outbound shipping and delivery costs are included in cost of revenues. Net revenues exclude sales and other similar taxes collected from customers.

 

A description of our principal revenue generating activities is as follows:

 

●

E-commerce revenues - consumer products sold through our online and telephonic channels. Revenue is recognized when control of the merchandise is transferred to the customer, which generally occurs upon shipment. Payment is typically due prior to the date of shipment.

●

Retail revenues - consumer products sold through our retail stores. Revenue is recognized when control of the goods is transferred to the customer, at the point of sale, at which time payment is received.

●

Wholesale revenues - products sold to our wholesale customers for subsequent resale. Revenue is recognized when control of the goods is transferred to the customer, in accordance with the terms of the applicable agreement. Payment terms are typically 30 days from the date control over the product is transferred to the customer.

●

BloomNet Services - membership fees as well as other service offerings to florists. Membership and other subscription-based fees are recognized monthly as earned. Services revenues related to orders sent through the floral network are variable, based on either the number of orders or the value of orders, and are recognized in the period in which the orders are delivered. The contracts within BloomNet Services are typically month-to-month and, as a result, no consideration allocation is necessary across multiple reporting periods. Payment is typically due less than 30 days from the date the services were performed. 

 

Deferred Revenues

 

Deferred revenues are recorded when the Company has received consideration (i.e. advance payment) before satisfying its performance obligations. As such, customer orders are recorded as deferred revenue prior to shipment or rendering of product or services. Deferred revenues primarily relate to e-commerce orders placed, but not shipped, prior to the end of the fiscal period, as well as for subscription programs, including our various food, wine, and plant-of-the-month clubs and our Celebrations Passport® program.

 

Our total deferred revenue as of July 2, 2023 was $30.8 million (included in “Accrued expenses” on our consolidated balance sheets), of which $10.7 million and $26.8 million was recognized as revenue during the three and six months ended December 31, 2023. The deferred revenue balance as of December 31, 2023 was $39.9 million.  

 

Impairment Evaluation

 

The Company performs its annual assessment of goodwill and indefinite-lived intangible impairment during its fiscal fourth quarter, or more frequently if events occur or circumstances change such that it is more likely than not that an impairment  may exist. During the quarter ended December 31, 2023, as a result of a decline in the actual and projected revenue for the Company’s PersonalizationMall tradename (indefinite-lived intangible asset), as well as a higher discount rate resulting from the higher interest rate environment, the Company determined that an impairment assessment was required for this tradename. This assessment resulted in the Company recording a non-cash impairment charge of $19.8 million to reduce the recorded carrying value of the PersonalizationMall tradename.

 

The Company concluded that goodwill and other indefinite-lived intangible assets, excluding its PersonalizationMall tradename, did not require an impairment assessment. See Note 5 – Goodwill and Intangible Assets, Net for further information.

 

Recently Issued Accounting Pronouncements

 

In November 2023, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07 requires enhanced disclosures about significant segment expenses, includes enhanced interim disclosure requirements, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss, provides new segment disclosure requirements for entities with a single reportable segment, and contains other disclosure requirements. The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. ASU 2023-07 is to be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact of ASU 2023-07 on its consolidated financial statements and related disclosures.

 

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 requires the disclosure of additional information with respect to the reconciliation of the effective tax rate to the statutory rate for federal, state, and foreign income taxes and requires greater detail about significant reconciling items in the reconciliation. Additionally, the amendment requires disaggregated information pertaining to taxes paid, net of refunds received, for federal, state, and foreign income taxes. The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024, with early adoption permitted, and allows for either a prospective or retrospective approach on adoption. The Company is currently evaluating the impact of ASU 2023-09 on its consolidated financial statements and related disclosures.

 
v3.24.0.1
Note 2 - Net Income (Loss) Per Common Share
 6 Months Ended
Dec. 31, 2023
Notes to Financial Statements  
Earnings Per Share [Text Block]

Note 2 – Net Income (Loss) Per Common Share

 

Basic net income per common share is computed by dividing the net income during the period by the weighted average number of common shares outstanding during the period. Diluted net income per common share reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock.

 

The following table sets forth the computation of basic and diluted net income per common share:

 

  

Three Months Ended

  

Six Months Ended

 
  

December 31,

2023

  

January 1,

2023

  

December 31,

2023

  

January 1,

2023

 
  

(in thousands, except per share data)

 

Numerator:

                

Net income

 $62,907  $82,530  $31,665  $48,838 
                 

Denominator:

                

Weighted average shares outstanding

  64,835   64,675   64,814   64,606 

Effect of dilutive stock options and unvested restricted stock awards

  342   160   341   214 
                 

Diluted weighted-average shares outstanding

  65,177   64,835   65,155   64,820 
                 

Net income per common share

                

Basic

 $0.97  $1.28  $0.49  $0.76 

Diluted

 $0.97  $1.27  $0.49  $0.75 

  
v3.24.0.1
Note 3 - Acquisitions
 6 Months Ended
Dec. 31, 2023
Notes to Financial Statements  
Mergers, Acquisitions and Dispositions Disclosures [Text Block]

Note 3 – Acquisitions

 

Acquisition of Things Remembered

 

On January 10, 2023, the Company completed its acquisition of certain assets of the Things Remembered brand, a provider of personalized gifts, whose operations are integrated within the PersonalizationMall.com brand, in the Consumer Floral & Gifts segment. The Company used cash on hand to fund the $5.0 million purchase, which included the intellectual property, customer list, certain inventory, and equipment. The acquisition did not include Things Remembered retail stores. Things Remembered’s annual revenues from its e-commerce operations, based on its most recently available unaudited financial information was $30.4 million for the twelve months ended November 30, 2022.

 

The total consideration of $5.0 million was allocated to the identifiable assets acquired and liabilities assumed based on our estimates of their fair values on the acquisition date, including: goodwill of $1.9 million (deductible for income tax purposes), trademarks of $0.8 million (indefinite life), customer lists of $0.8 million (3-year life), inventory of $1.1 million, and equipment of $0.4 million. During the quarter ended December 31, 2023, the Company finalized its purchase price allocation, resulting in immaterial adjustments to the preliminary carrying value of the respective recorded assets and the residual amount that was allocated to goodwill.

 

Operating results of the Things Remembered business are reflected in the Company’s consolidated financial statements from the date of acquisition within the Consumer Floral & Gifts segment. Pro forma results of operations have not been presented, as the impact on the Company’s consolidated financial results was not material.

 
v3.24.0.1
Note 4 - Inventory, Net
 6 Months Ended
Dec. 31, 2023
Notes to Financial Statements  
Inventory Disclosure [Text Block]

Note 4 – Inventory, Net

 

The Company’s inventory, valued at the lower of cost or net realizable value, includes purchased and manufactured finished goods for sale, packaging supplies, crops, raw material ingredients for manufactured products and associated manufacturing labor, and is classified as follows:

 

  

December 31, 2023

  

July 2, 2023

 
  

(in thousands)

 

Finished goods

 $92,160  $92,582 

Work-in-process

  20,158   33,818 

Raw materials

  49,006   64,934 

Total inventory

 $161,324  $191,334 

  
v3.24.0.1
Note 5 - Goodwill and Intangible Assets, Net
 6 Months Ended
Dec. 31, 2023
Notes to Financial Statements  
Goodwill and Intangible Assets Disclosure [Text Block]

Note 5 – Goodwill and Intangible Assets, Net

 

The following table presents goodwill by segment and the related change in the net carrying amount:

 

  

Consumer

Floral &

Gifts

  

BloomNet

  

Gourmet

Foods &

Gift
Baskets

  

Total

 
  

(in thousands)

 

Balance at July 2, 2023

 $153,376  $-  $-  $153,376 

Measurement period adjustment for Things Remembered Acquisition

  201   -   -   201 

Balance at December 31, 2023

 $153,577  $-  $-  $153,577 

 

The Company’s other intangible assets consist of the following:

 

       

December 31, 2023

  

July 2, 2023

 
  

Amortization

Period

  

Gross

Carrying

Amount

  

Accumulated
Amortization

  

Net

  

Gross

Carrying

Amount

  

Accumulated
Amortization

  

Net

 
  

(in years)

  

(in thousands)

 

Intangible assets with determinable lives

                             

Investment in licenses

 14-16  $7,420  $6,622  $798  $7,420  $6,569  $851 

Customer lists

 3-10   29,071   23,757   5,314   29,071   21,611   7,460 

Other

 5-14   2,946   2,634   312   2,946   2,604   342 

Total intangible assets with determinable lives

       39,437   33,013   6,424   39,437   30,784   8,653 

Trademarks with indefinite lives

       111,473   -   111,473   131,235   -   131,235 

Total identifiable intangible assets

      $150,910  $33,013  $117,897  $170,672  $30,784  $139,888 

 

Future estimated amortization expense is as follows: remainder of fiscal 2024 - $2.2 million, fiscal 2025 - $1.9 million, fiscal 2026 - $1.3 million, fiscal 2027 - $0.5 million, fiscal 2028 - $0.2 million and thereafter - $0.3 million.

 

The Company performs its annual assessment of goodwill and indefinite-lived intangible impairment during its fiscal fourth quarter, or more frequently if events occur or circumstances change such that it is more likely than not that an impairment  may exist.

 

During the quarter ended December 31, 2023, as a result of a decline in the actual and projected revenue for the Company’s PersonalizationMall tradename (indefinite-lived intangible asset), as well as a higher discount rate resulting from the higher interest rate environment, the Company determined that an impairment assessment was required. The Company’s impairment test for the indefinite-lived intangible asset encompassed calculating a fair value of the indefinite-lived intangible asset and comparing that result to its carrying value. To determine fair value of the indefinite-lived intangible asset, the Company used an income approach, the relief-from-royalty method. This method assumes that, in lieu of ownership, a third party would be willing to pay a royalty in order to obtain the rights to use the comparable asset. Indefinite-lived intangible assets’ fair values require significant judgments in determining both the assets’ estimated cash flows as well as the appropriate discount and royalty rates applied to those cash flows to determine fair value. Based on the impairment assessment performed for the quarter ending December 31, 2023, the Company recorded a non-cash impairment charge of $19.8 million to reduce the recorded carrying value of the PersonalizationMall tradename to its estimated fair value. This impairment charge was recorded in the Company’s Consumer Floral & Gifts reporting unit.

 

The Company concluded that goodwill and other indefinite-lived intangible assets, excluding its PersonalizationMall tradename, did not require an impairment assessment.

  
v3.24.0.1
Note 6 - Investments
 6 Months Ended
Dec. 31, 2023
Notes to Financial Statements  
Equity Method Investments and Joint Ventures Disclosure [Text Block]

Note 6 – Investments

 

Equity investments without a readily determinable fair value

 

Investments in non-marketable equity instruments of private companies, where the Company does not possess the ability to exercise significant influence, are accounted for at cost, less impairment (assessed qualitatively at each reporting period), adjusted for observable price changes from orderly transactions for identical or similar investments of the same issuer. These investments are included within “Other assets” in the Company’s consolidated balance sheets. The aggregate carrying amount of the Company’s equity investments without a readily determinable fair value was $2.6 million as of December 31, 2023 and July 2, 2023, respectively. 

 

Equity investments with a readily determinable fair value

 

The Company also holds certain trading securities associated with its Non-Qualified Deferred Compensation Plan (“NQDC Plan”). These investments are measured using quoted market prices at the reporting date and are included within the “Other assets” line item in the consolidated balance sheets (see Note 9 - Fair Value Measurements). 

  
v3.24.0.1
Note 7 - Debt, Net
 6 Months Ended
Dec. 31, 2023
Notes to Financial Statements  
Debt Disclosure [Text Block]

Note 7 –Debt, Net

 

The Company’s current and long-term debt consists of the following:

 

  

December 31, 2023

  

July 2, 2023

 
  

(in thousands)

 

Revolver

 $-  $- 

Term Loans

  195,000   200,000 

Deferred financing costs

  (3,251)  (3,609)

Total debt

  191,749   196,391 

Less: current maturities of long-term debt

  10,000   10,000 

Long-term debt, net

 $181,749  $186,391 

 

On June 27, 2023, the Company, certain of its U.S. subsidiaries, the lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent entered into a Third Amended and Restated Credit Agreement (the “Third Amended Credit Agreement”). The Third Amended Credit Agreement amends and restates the Company’s Second Amended and Restated Credit Agreement, dated as of May 31, 2019 (as amended by the First Amendment, dated as of August 20, 2020, the Second Amendment, dated as of November 8, 2021, and the Third Amendment, dated as of August 29, 2022). The Third Amended Credit Agreement, among other modifications: (i) increases the amount of the outstanding term loan (“Term Loan”) from approximately $150 million to $200 million, (ii) decreases the amount of the commitments in respect of the revolving credit facility from $250 million to $225 million subject to a seasonal reduction to an aggregate amount of $125 million for the period from January 1 to August 1, (iii) extends the maturity date of the outstanding term loan and the revolving credit facilities by approximately 48 months to June 27, 2028, and (iv) increases the applicable interest rate margins for SOFR and base rate loans by 25 basis points.

 

For each borrowing under the Third Amended Credit Agreement, the Company may elect that such borrowing bear interest at an annual rate equal to either: (1) a base rate plus an applicable margin varying based on the Company’s consolidated leverage ratio, where the base rate is the highest of (a) the prime rate, (b) the New York fed bank rate plus 0.5%, and (c) an adjusted SOFR rate plus an applicable margin varying based on the Company’s consolidated leverage ratio. The adjusted SOFR rate includes a credit spread adjustment of 0.1% for all interest periods.

 

The Third Amended Credit Agreement requires that while any borrowings or commitments are outstanding the Company comply with certain financial covenants and affirmative covenants as well as certain negative covenants that, subject to certain exceptions, limit the Company’s ability to, among other things, incur additional indebtedness, make certain investments and make certain restricted payments. The Company was in compliance with these covenants as of December 31, 2023. The Third Amended Credit Agreement is secured by substantially all of the assets of the Company.

 

The principal of the Term Loan is payable at a rate of $2.5 million for the first 8 quarterly installments beginning on September 29, 2023, increasing to a quarterly payment of $5.0 million, commencing on September 26, 2025, for the remaining 11 payments, with the remaining balance of $125.0 million due upon maturity on June 27, 2028.

 

Future principal term loan payments under the Third Amended Credit Agreement are as follows: $5.0 million – remainder of Fiscal 2024, $10.0 million – Fiscal 2025, $20.0 million – Fiscal 2026, $20.0 million – Fiscal 2027, and $140.0 million – Fiscal 2028.

  
v3.24.0.1
Note 8 - Property, Plant and Equipment, Net
 6 Months Ended
Dec. 31, 2023
Notes to Financial Statements  
Property, Plant and Equipment Disclosure [Text Block]

Note 8 - Property, Plant and Equipment, Net

 

The Company’s property, plant and equipment consists of the following:

 

  

December 31, 2023

  

July 2, 2023

 
  

(in thousands)

 

Land

 $33,866  $33,866 

Orchards in production and land improvements

  20,604   20,401 

Building and building improvements

  68,510   67,647 

Leasehold improvements

  30,882   29,524 

Production equipment

  130,043   125,297 

Furniture and fixtures

  9,235   9,102 

Computer and telecommunication equipment

  43,041   41,859 

Software

  193,925   181,085 

Capital projects in progress

  14,644   18,205 

Property, plant and equipment, gross

  544,750   526,986 

Accumulated depreciation and amortization

  (317,107)  (292,417)

Property, plant and equipment, net

 $227,643  $234,569 

  
v3.24.0.1
Note 9 - Fair Value Measurements
 6 Months Ended
Dec. 31, 2023
Notes to Financial Statements  
Fair Value Disclosures [Text Block]

Note 9 - Fair Value Measurements

 

Cash and cash equivalents, trade and other receivables, prepaids, accounts payable and accrued expenses are reflected in the consolidated balance sheets at carrying value, which approximates fair value due to the short-term nature of these instruments. Although no trading market exists, the Company believes that the carrying amount of its debt approximates fair value due to its variable nature (these are level 2 investments). The Company’s investments in non-marketable equity instruments of private companies are carried at cost and are periodically assessed for other-than-temporary impairment when an event or circumstances indicate that an other-than-temporary decline in value may have occurred. The Company’s remaining financial assets and liabilities are measured and recorded at fair value (see table below). The Company’s non-financial assets, such as definite lived intangible assets and property, plant and equipment, are recorded at cost and are assessed for impairment when an event or circumstance indicates that an other-than-temporary decline in value may have occurred. Goodwill and indefinite lived intangibles are tested for impairment annually, or more frequently, if events occur or circumstances change such that it is more likely than not that an impairment may exist, as required under the accounting standards.

 

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability, in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants at the measurement date. The authoritative guidance for fair value measurements establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under the guidance are described below:

 

Level 1

Valuations based on quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.

Level 2

Valuations based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.

Level 3

Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

 

The following table presents by level, within the fair value hierarchy, financial assets and liabilities measured at fair value on a recurring basis:

 

  

Carrying

Value

  

Fair Value Measurements

Assets (Liabilities)

 
      

Level 1

  

Level 2

  

Level 3

 
  

(in thousands)

 

As of December 31, 2023:

                

Trading securities held in a “rabbi trust” (1)

 $27,183  $27,183  $-  $- 

Total assets (liabilities) at fair value

 $27,183  $27,183  $-  $- 
                 

As of July 2, 2023:

                

Trading securities held in a “rabbi trust” (1)

 $22,617  $22,617  $-  $- 

Total assets (liabilities) at fair value

 $22,617  $22,617  $-  $- 

 

 

(1)

The Company has established a NQDC Plan for certain members of senior management. Deferred compensation plan assets are invested in mutual funds held in a “rabbi trust,” which is restricted for payment to participants of the NQDC Plan. Trading securities held in a rabbi trust are measured using quoted market prices at the reporting date and are included in the “Other assets” line item, with the corresponding liability included in the “Other liabilities” line item in the consolidated balance sheets. 

  
v3.24.0.1
Note 10 - Income Taxes
 6 Months Ended
Dec. 31, 2023
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

Note 10 – Income Taxes

 

The Company computed the interim tax provision using an estimated annual effective rate, adjusted for discrete items. This estimate is used in providing for income taxes on a year-to-date basis and may change in subsequent interim periods. The Company’s effective tax rate for the three and six months ended December 31, 2023 was 29.6% and 33.8% respectively, compared to 25.5% and 25.7% in the same periods of the prior year. The Company’s effective tax rate for fiscal 2024 and fiscal 2023 differed from the U.S. federal statutory rate of 21.0% primarily due to state income taxes and non-deductible executive compensation, partially offset by tax credits and other items. Fiscal 2024 was further impacted by the impairment charge, which reduced the amount of income reflected in the Company’s estimated annual effective tax rate.

 

The Company files income tax returns in the U.S. federal jurisdiction, various state jurisdictions, and various foreign countries. The Company’s fiscal years 2020, 2021, and 2022 remain subject to U.S. federal examination. Due to ongoing state examinations and nonconformity with the U.S. federal statute of limitations for assessment, certain states remain open from fiscal 2016. The Company's foreign income tax filings from fiscal 2017 are open for examination by its respective foreign tax authorities, mainly Canada and Brazil.

 

The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. At December 31, 2023, the Company has an unrecognized tax benefit, including accrued interest and penalties, of approximately $1.6 million. The Company believes that $0.1 million of unrecognized tax positions will be resolved over the next twelve months. 

 
v3.24.0.1
Note 11 - Business Segments
 6 Months Ended
Dec. 31, 2023
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]

Note 11 – Business Segments

 

The Company’s management reviews the results of its operations by the following three business segments:

 

•

Consumer Floral & Gifts,

•

BloomNet, and

•

Gourmet Foods & Gift Baskets

 

Segment performance is measured based on contribution margin, which includes only the direct controllable revenue and operating expenses of the segments. As such, management’s measure of profitability for these segments does not include the effect of corporate overhead (see (a) below), nor does it include depreciation and amortization, other (income) expense, net and income taxes, or stock-based compensation, which are included within corporate overhead. Assets and liabilities are reviewed at the consolidated level by management and not accounted for by segment.

 

  

Three Months Ended

  

Six Months Ended

 
  

December 31,

2023

  

January 1,

2023

  

December 31,

2023

  

January 1,

2023

 

 

 

(in thousands)

 
Net Revenues:                

Segment Net Revenues:

                

Consumer Floral & Gifts

 $254,835  $277,049  $397,029  $439,229 

BloomNet

  27,236   32,852   56,106   66,219 

Gourmet Foods & Gift Baskets

  539,963   588,431   638,072   696,659 

Corporate

  279   72   549   116 

Intercompany eliminations

  (259)  (527)  (652)  (742)

Total net revenues

 $822,054  $897,877  $1,091,104  $1,201,481 
                 

Operating Income:

                

Segment Contribution Margin:

                

Consumer Floral & Gifts

 $10,593  $27,886  $19,419  $38,696 

BloomNet

  9,088   9,348   18,475   18,865 

Gourmet Foods & Gift Baskets

  118,153   123,503   107,125   104,793 

Segment Contribution Margin Subtotal

  137,834   160,737   145,019   162,354 

Corporate (a)

  (32,432)  (31,297)  (64,000)  (61,580)

Depreciation and amortization

  (14,152)  (14,315)  (27,346)  (27,009)

Operating income

 $91,250  $115,125  $53,673  $73,765 

 

(a) Corporate expenses consist of the Company’s enterprise shared service cost centers, and include, among other items, Information Technology, Human Resources, Accounting and Finance, Legal, Executive and Customer Service Center functions, as well as Stock-based compensation. In order to leverage the Company’s infrastructure, these functions are operated under a centralized management platform, providing support services throughout the organization. The costs of these functions, other than those of the Customer Service Center, which are allocated directly to the above categories based upon usage, are included within corporate expenses as they are not directly allocable to a specific segment.

 

The following tables represent a disaggregation of revenue from contracts with customers, by channel: 

 

  

Three Months Ended

 
  

Consumer Floral &
Gifts

  

BloomNet

  

Gourmet Foods &

Gift
Baskets

  

Corporate and

Eliminations

  

Consolidated

 
  

December 31, 2023

  

January 1, 2023

  

December 31, 2023

  

January 1, 2023

  

December 31, 2023

  

January 1, 2023

  

December 31, 2023

  

January 1, 2023

  

December 31, 2023

  

January 1, 2023

 

Net revenues

                                        

E-commerce

 $252,845  $275,081  $-  $-  $485,561  $515,329  $-  $-  $738,406  $790,410 

Other

  1,990   1,968   27,236   32,852   54,402   73,102   20   (455)  83,648   107,467 

Total net revenues

 $254,835  $277,049  $27,236  $32,852  $539,963  $588,431  $20  $(455) $822,054  $897,877 
                                         

Other revenues detail

                                     

Retail and other

  1,990   1,968   -   -   4,296   4,313   -   -   6,286   6,281 

Wholesale

  -   -   8,706   12,054   50,106   68,789   -   -   58,812   80,843 

BloomNet services

  -   -   18,530   20,798   -   -   -   -   18,530   20,798 

Corporate

  -   -   -   -   -   -   279   72   279   72 

Eliminations

  -   -   -   -   -   -   (259)  (527)  (259)  (527)

Total other revenues

 $1,990  $1,968  $27,236  $32,852  $54,402  $73,102  $20  $(455) $83,648  $107,467 

 

  

Six Months Ended

 
  

Consumer Floral &
Gifts

  

BloomNet

  

Gourmet Foods &

Gift
Baskets

  

Corporate and

Eliminations

  

Consolidated

 
  

December 31, 2023

  

January 1, 2023

  

December 31, 2023

  

January 1, 2023

  

December 31, 2023

  

January 1, 2023

  

December 31, 2023

  

January 1, 2023

  

December 31, 2023

  

January 1, 2023

 

Net revenues

                                        

E-commerce

 $393,180  $435,463  $-  $-  $555,137  $593,869  $-  $-  $948,317  $1,029,332 

Other

  3,849   3,766   56,106   66,219   82,935   102,790   (103)  (626)  142,787   172,149 

Total net revenues

 $397,029  $439,229  $56,106  $66,219  $638,072  $696,659  $(103) $(626) $1,091,104  $1,201,481 
                                         

Other revenues detail

                                     

Retail and other

  3,849   3,766   -   -   6,230   6,221   -   -   10,079   9,987 

Wholesale

  -   -   20,503   25,675   76,705   96,569   -   -   97,208   122,244 

BloomNet services

  -   -   35,603   40,544   -   -   -   -   35,603   40,544 

Corporate

  -   -   -   -   -   -   549   116   549   116 

Eliminations

  -   -   -   -   -   -   (652)  (742)  (652)  (742)

Total other revenues

 $3,849  $3,766  $56,106  $66,219  $82,935  $102,790  $(103) $(626) $142,787  $172,149 

 
v3.24.0.1
Note 12 - Leases
 6 Months Ended
Dec. 31, 2023
Notes to Financial Statements  
Lessee, Operating Leases [Text Block]

Note 12 – Leases

 

The Company currently leases plants, warehouses, offices, store facilities, and equipment under various leases through fiscal 2036. Most lease agreements are of a long-term nature (over a year), although the Company does also enter into short-term leases, primarily for seasonal needs. Lease agreements may contain renewal options and rent escalation clauses and require the Company to pay real estate taxes, insurance, common area maintenance and operating expenses applicable to the leased properties. The Company accounts for its leases in accordance with ASC 842.

 

At contract inception, the Company determines whether a contract is, or contains, a lease by determining whether it conveys the right to control the use of the identified asset for a period of time, by assessing whether the Company has the right to obtain substantially all of the economic benefits from use of the identified asset and the right to direct the use of the identified asset.

 

At the lease commencement date, the Company determines if a lease should be classified as an operating or a finance lease (the Company currently has no finance leases) and recognizes a corresponding lease liability and a right-of-use asset on its Balance Sheet. The lease liability is initially and subsequently measured as the present value of the remaining fixed minimum rental payments (including base rent and fixed common area maintenance) using discount rates as of the commencement date. Variable payments (including most utilities, real estate taxes, insurance and variable common area maintenance) are expensed as incurred. Further, the Company elected a short-term lease exception policy, permitting it to not apply the recognition requirements of this standard to short-term leases (i.e. leases with terms of 12 months or less) and an accounting policy to account for lease and non-lease components as a single component for certain classes of assets. The right-of-use asset is initially and subsequently measured at the carrying amount of the lease liability adjusted for any prepaid or accrued lease payments, remaining balance of lease incentives received, unamortized initial direct costs, or impairment charges relating to the right-of-use asset. Right-of-use assets are assessed for impairment using the long-lived assets impairment guidance. The discount rate used to determine the present value of lease payments is the Company’s estimated collateralized incremental borrowing rate, based on the yield curve for the respective lease terms, as the Company generally cannot determine the interest rate implicit in the lease.

 

The Company recognizes expense for its operating leases on a straight-line basis over the lease term. As these leases expire, it can be expected that in the normal course of business they will be renewed or replaced. Renewal option periods are included in the measurement of lease liability, where the exercise is reasonably certain to occur. Key estimates and judgments in accounting for leases include how the Company determines: (1) lease payments, (2) lease term, and (3) the discount rate used in calculating the lease liability.

 

Additional information related to our leases is as follows:

 

  

Three Months Ended

  

Six Months Ended

 
  

December

31, 2023

  

January

1, 2023

  

December

31, 2023

  

January

1, 2023

 
  

(in thousands)

 

Lease costs:

                

Operating lease costs

 $5,651  $5,606  $11,273  $10,953 

Variable lease costs

  7,568   6,603   14,082   12,454 

Short-term lease cost

  2,535   2,889   3,418   4,454 

Sublease income

  (246)  (241)  (497)  (484)

Total lease costs

 $15,508  $14,857  $28,276  $27,377 
                 

Cash paid for amounts included in measurement of operating lease liabilities

  $11,300  $9,851 

Right-of-use assets obtained in exchange for new operating lease liabilities

  $1,784  $10,521 

 

  

December 31,

2023

 
  

(in thousands)

 

Weighted-average remaining lease term - operating leases (in years)

  8.4 

Weighted-discount rate - operating leases

  4.1%

 

Maturities of lease liabilities in accordance with ASC 842 as of December 31, 2023 and reconciliation to balance sheet are as follows (in thousands):

 

Fiscal Year:

    

Remainder of 2024

 $9,507 

2025

  20,644 

2026

  18,714 

2027

  17,095 

2028

  16,179 

Thereafter

  68,402 

Total Future Minimum Lease Payments

  150,541 

Less: Imputed Remaining Interest

  24,368 

Total Operating Lease Liabilities

  126,173 

Less: Current portion of long-term operating lease liabilities

  15,433 

Long-term operating lease liabilities

 $110,740 

  
v3.24.0.1
Note 13 - Accrued Expenses
 6 Months Ended
Dec. 31, 2023
Notes to Financial Statements  
Accounts Payable, Accrued Liabilities, and Other Liabilities Disclosure, Current [Text Block]

Note 13 - Accrued Expenses

 

Accrued expenses consisted of the following:

 

  

December 31, 2023

  

July 2, 2023

 
  

(in thousands)

 

Payroll and employee benefits

 $30,889  $33,927 

Deferred revenue

  39,928   30,811 

Accrued marketing expenses

  13,646   13,679 

Accrued florist payout

  17,981   13,437 

Accrued purchases

  44,546   18,351 

Accrued income taxes

  20,756   922 

Other

  56,338   30,787 

Accrued Expenses

 $224,084  $141,914 

 
v3.24.0.1
Note 14 - Commitments and Contingencies
 6 Months Ended
Dec. 31, 2023
Notes to Financial Statements  
Commitments and Contingencies Disclosure [Text Block]

Note 14 – Commitments and Contingencies

 

Litigation

 

There are various claims, lawsuits, and pending actions against the Company and its subsidiaries incident to the operations of its businesses. It is the opinion of management, after consultation with counsel, that the final resolution of such claims, lawsuits and pending actions will not have a material adverse effect on the Company's consolidated financial position, results of operations or liquidity.

 
v3.24.0.1
Insider Trading Arrangements
 6 Months Ended
Dec. 31, 2023
Insider Trading Arr Line Items  
Material Terms of Trading Arrangement [Text Block]

ITEM 5. OTHER INFORMATION

 

None.

 
Rule 10b5-1 Arrangement Adopted [Flag] false
Rule 10b5-1 Arrangement Terminated [Flag] false
Non-Rule 10b5-1 Arrangement Terminated [Flag] false
Non-Rule 10b5-1 Arrangement Adopted [Flag] false
v3.24.0.1
Significant Accounting Policies (Policies)
 6 Months Ended
Dec. 31, 2023
Accounting Policies [Abstract]  
Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements have been prepared by 1-800-FLOWERS.COM, Inc. and Subsidiaries (the “Company”) in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and six-month periods ended December 31, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2024. These financial statements should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended July 2, 2023, which provides a more complete understanding of our accounting policies, financial position, operating results and other matters.

 

The Company’s quarterly results may experience seasonal fluctuations. Due to the seasonal nature of the Company’s business, and its continued expansion into non-floral products, the Thanksgiving through Christmas holiday season, which falls within the Company’s second fiscal quarter, is expected to generate over 40% of the Company’s annual revenues, and all of its earnings. Due to the number of major floral gifting occasions, including Mother's Day, Valentine’s Day, Easter, and Administrative Professionals Week, revenues also have historically risen during the Company’s fiscal third and fourth quarters in comparison to its fiscal first quarter.
Use of Estimates, Policy [Policy Text Block]

Use of Estimates

 

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Revenue from Contract with Customer [Policy Text Block]

Revenue Recognition

 

Net revenue is measured based on the amount of consideration that we expect to receive, reduced by discounts and estimates for credits and returns (calculated based upon previous experience and management’s evaluation). Service and outbound shipping charged to customers are recognized at the time the related merchandise revenues are recognized and are included in net revenues. Inbound and outbound shipping and delivery costs are included in cost of revenues. Net revenues exclude sales and other similar taxes collected from customers.

 

A description of our principal revenue generating activities is as follows:

 

●

E-commerce revenues - consumer products sold through our online and telephonic channels. Revenue is recognized when control of the merchandise is transferred to the customer, which generally occurs upon shipment. Payment is typically due prior to the date of shipment.

●

Retail revenues - consumer products sold through our retail stores. Revenue is recognized when control of the goods is transferred to the customer, at the point of sale, at which time payment is received.

●

Wholesale revenues - products sold to our wholesale customers for subsequent resale. Revenue is recognized when control of the goods is transferred to the customer, in accordance with the terms of the applicable agreement. Payment terms are typically 30 days from the date control over the product is transferred to the customer.

●

BloomNet Services - membership fees as well as other service offerings to florists. Membership and other subscription-based fees are recognized monthly as earned. Services revenues related to orders sent through the floral network are variable, based on either the number of orders or the value of orders, and are recognized in the period in which the orders are delivered. The contracts within BloomNet Services are typically month-to-month and, as a result, no consideration allocation is necessary across multiple reporting periods. Payment is typically due less than 30 days from the date the services were performed. 

 

Deferred Revenues

 

Deferred revenues are recorded when the Company has received consideration (i.e. advance payment) before satisfying its performance obligations. As such, customer orders are recorded as deferred revenue prior to shipment or rendering of product or services. Deferred revenues primarily relate to e-commerce orders placed, but not shipped, prior to the end of the fiscal period, as well as for subscription programs, including our various food, wine, and plant-of-the-month clubs and our Celebrations Passport® program.

 

Our total deferred revenue as of July 2, 2023 was $30.8 million (included in “Accrued expenses” on our consolidated balance sheets), of which $10.7 million and $26.8 million was recognized as revenue during the three and six months ended December 31, 2023. The deferred revenue balance as of December 31, 2023 was $39.9 million.  
Impairment or Disposal of Long-Lived Assets, Including Intangible Assets, Policy [Policy Text Block]

Impairment Evaluation

 

The Company performs its annual assessment of goodwill and indefinite-lived intangible impairment during its fiscal fourth quarter, or more frequently if events occur or circumstances change such that it is more likely than not that an impairment  may exist. During the quarter ended December 31, 2023, as a result of a decline in the actual and projected revenue for the Company’s PersonalizationMall tradename (indefinite-lived intangible asset), as well as a higher discount rate resulting from the higher interest rate environment, the Company determined that an impairment assessment was required for this tradename. This assessment resulted in the Company recording a non-cash impairment charge of $19.8 million to reduce the recorded carrying value of the PersonalizationMall tradename.

 

The Company concluded that goodwill and other indefinite-lived intangible assets, excluding its PersonalizationMall tradename, did not require an impairment assessment. See Note 5 – Goodwill and Intangible Assets, Net for further information.
New Accounting Pronouncements, Policy [Policy Text Block]

Recently Issued Accounting Pronouncements

 

In November 2023, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07 requires enhanced disclosures about significant segment expenses, includes enhanced interim disclosure requirements, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss, provides new segment disclosure requirements for entities with a single reportable segment, and contains other disclosure requirements. The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. ASU 2023-07 is to be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact of ASU 2023-07 on its consolidated financial statements and related disclosures.

 

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 requires the disclosure of additional information with respect to the reconciliation of the effective tax rate to the statutory rate for federal, state, and foreign income taxes and requires greater detail about significant reconciling items in the reconciliation. Additionally, the amendment requires disaggregated information pertaining to taxes paid, net of refunds received, for federal, state, and foreign income taxes. The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024, with early adoption permitted, and allows for either a prospective or retrospective approach on adoption. The Company is currently evaluating the impact of ASU 2023-09 on its consolidated financial statements and related disclosures.
v3.24.0.1
Note 2 - Net Income (Loss) Per Common Share (Tables)
 6 Months Ended
Dec. 31, 2023
Notes Tables  
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]
  

Three Months Ended

  

Six Months Ended

 
  

December 31,

2023

  

January 1,

2023

  

December 31,

2023

  

January 1,

2023

 
  

(in thousands, except per share data)

 

Numerator:

                

Net income

 $62,907  $82,530  $31,665  $48,838 
                 

Denominator:

                

Weighted average shares outstanding

  64,835   64,675   64,814   64,606 

Effect of dilutive stock options and unvested restricted stock awards

  342   160   341   214 
                 

Diluted weighted-average shares outstanding

  65,177   64,835   65,155   64,820 
                 

Net income per common share

                

Basic

 $0.97  $1.28  $0.49  $0.76 

Diluted

 $0.97  $1.27  $0.49  $0.75 
v3.24.0.1
Note 4 - Inventory, Net (Tables)
 6 Months Ended
Dec. 31, 2023
Notes Tables  
Schedule of Inventory, Current [Table Text Block]
  

December 31, 2023

  

July 2, 2023

 
  

(in thousands)

 

Finished goods

 $92,160  $92,582 

Work-in-process

  20,158   33,818 

Raw materials

  49,006   64,934 

Total inventory

 $161,324  $191,334 
v3.24.0.1
Note 5 - Goodwill and Intangible Assets, Net (Tables)
 6 Months Ended
Dec. 31, 2023
Notes Tables  
Schedule of Goodwill [Table Text Block]
  

Consumer

Floral &

Gifts

  

BloomNet

  

Gourmet

Foods &

Gift
Baskets

  

Total

 
  

(in thousands)

 

Balance at July 2, 2023

 $153,376  $-  $-  $153,376 

Measurement period adjustment for Things Remembered Acquisition

  201   -   -   201 

Balance at December 31, 2023

 $153,577  $-  $-  $153,577 
Schedule of Finite-Lived and Indefinite-Lived Intangible Assets by Major Class [Table Text Block]
       

December 31, 2023

  

July 2, 2023

 
  

Amortization

Period

  

Gross

Carrying

Amount

  

Accumulated
Amortization

  

Net

  

Gross

Carrying

Amount

  

Accumulated
Amortization

  

Net

 
  

(in years)

  

(in thousands)

 

Intangible assets with determinable lives

                             

Investment in licenses

 14-16  $7,420  $6,622  $798  $7,420  $6,569  $851 

Customer lists

 3-10   29,071   23,757   5,314   29,071   21,611   7,460 

Other

 5-14   2,946   2,634   312   2,946   2,604   342 

Total intangible assets with determinable lives

       39,437   33,013   6,424   39,437   30,784   8,653 

Trademarks with indefinite lives

       111,473   -   111,473   131,235   -   131,235 

Total identifiable intangible assets

      $150,910  $33,013  $117,897  $170,672  $30,784  $139,888 
v3.24.0.1
Note 7 - Debt, Net (Tables)
 6 Months Ended
Dec. 31, 2023
Notes Tables  
Schedule of Debt [Table Text Block]
  

December 31, 2023

  

July 2, 2023

 
  

(in thousands)

 

Revolver

 $-  $- 

Term Loans

  195,000   200,000 

Deferred financing costs

  (3,251)  (3,609)

Total debt

  191,749   196,391 

Less: current maturities of long-term debt

  10,000   10,000 

Long-term debt, net

 $181,749  $186,391 
v3.24.0.1
Note 8 - Property, Plant and Equipment, Net (Tables)
 6 Months Ended
Dec. 31, 2023
Notes Tables  
Property, Plant and Equipment [Table Text Block]
  

December 31, 2023

  

July 2, 2023

 
  

(in thousands)

 

Land

 $33,866  $33,866 

Orchards in production and land improvements

  20,604   20,401 

Building and building improvements

  68,510   67,647 

Leasehold improvements

  30,882   29,524 

Production equipment

  130,043   125,297 

Furniture and fixtures

  9,235   9,102 

Computer and telecommunication equipment

  43,041   41,859 

Software

  193,925   181,085 

Capital projects in progress

  14,644   18,205 

Property, plant and equipment, gross

  544,750   526,986 

Accumulated depreciation and amortization

  (317,107)  (292,417)

Property, plant and equipment, net

 $227,643  $234,569 
v3.24.0.1
Note 9 - Fair Value Measurements (Tables)
 6 Months Ended
Dec. 31, 2023
Notes Tables  
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]
  

Carrying

Value

  

Fair Value Measurements

Assets (Liabilities)

 
      

Level 1

  

Level 2

  

Level 3

 
  

(in thousands)

 

As of December 31, 2023:

                

Trading securities held in a “rabbi trust” (1)

 $27,183  $27,183  $-  $- 

Total assets (liabilities) at fair value

 $27,183  $27,183  $-  $- 
                 

As of July 2, 2023:

                

Trading securities held in a “rabbi trust” (1)

 $22,617  $22,617  $-  $- 

Total assets (liabilities) at fair value

 $22,617  $22,617  $-  $- 
v3.24.0.1
Note 11 - Business Segments (Tables)
 6 Months Ended
Dec. 31, 2023
Notes Tables  
Schedule of Segment Reporting Information, by Segment [Table Text Block]
  

Three Months Ended

  

Six Months Ended

 
  

December 31,

2023

  

January 1,

2023

  

December 31,

2023

  

January 1,

2023

 

 

 

(in thousands)

 
Net Revenues:                

Segment Net Revenues:

                

Consumer Floral & Gifts

 $254,835  $277,049  $397,029  $439,229 

BloomNet

  27,236   32,852   56,106   66,219 

Gourmet Foods & Gift Baskets

  539,963   588,431   638,072   696,659 

Corporate

  279   72   549   116 

Intercompany eliminations

  (259)  (527)  (652)  (742)

Total net revenues

 $822,054  $897,877  $1,091,104  $1,201,481 
                 

Operating Income:

                

Segment Contribution Margin:

                

Consumer Floral & Gifts

 $10,593  $27,886  $19,419  $38,696 

BloomNet

  9,088   9,348   18,475   18,865 

Gourmet Foods & Gift Baskets

  118,153   123,503   107,125   104,793 

Segment Contribution Margin Subtotal

  137,834   160,737   145,019   162,354 

Corporate (a)

  (32,432)  (31,297)  (64,000)  (61,580)

Depreciation and amortization

  (14,152)  (14,315)  (27,346)  (27,009)

Operating income

 $91,250  $115,125  $53,673  $73,765 
Disaggregation of Revenue [Table Text Block]
  

Three Months Ended

 
  

Consumer Floral &
Gifts

  

BloomNet

  

Gourmet Foods &

Gift
Baskets

  

Corporate and

Eliminations

  

Consolidated

 
  

December 31, 2023

  

January 1, 2023

  

December 31, 2023

  

January 1, 2023

  

December 31, 2023

  

January 1, 2023

  

December 31, 2023

  

January 1, 2023

  

December 31, 2023

  

January 1, 2023

 

Net revenues

                                        

E-commerce

 $252,845  $275,081  $-  $-  $485,561  $515,329  $-  $-  $738,406  $790,410 

Other

  1,990   1,968   27,236   32,852   54,402   73,102   20   (455)  83,648   107,467 

Total net revenues

 $254,835  $277,049  $27,236  $32,852  $539,963  $588,431  $20  $(455) $822,054  $897,877 
                                         

Other revenues detail

                                     

Retail and other

  1,990   1,968   -   -   4,296   4,313   -   -   6,286   6,281 

Wholesale

  -   -   8,706   12,054   50,106   68,789   -   -   58,812   80,843 

BloomNet services

  -   -   18,530   20,798   -   -   -   -   18,530   20,798 

Corporate

  -   -   -   -   -   -   279   72   279   72 

Eliminations

  -   -   -   -   -   -   (259)  (527)  (259)  (527)

Total other revenues

 $1,990  $1,968  $27,236  $32,852  $54,402  $73,102  $20  $(455) $83,648  $107,467 
  

Six Months Ended

 
  

Consumer Floral &
Gifts

  

BloomNet

  

Gourmet Foods &

Gift
Baskets

  

Corporate and

Eliminations

  

Consolidated

 
  

December 31, 2023

  

January 1, 2023

  

December 31, 2023

  

January 1, 2023

  

December 31, 2023

  

January 1, 2023

  

December 31, 2023

  

January 1, 2023

  

December 31, 2023

  

January 1, 2023

 

Net revenues

                                        

E-commerce

 $393,180  $435,463  $-  $-  $555,137  $593,869  $-  $-  $948,317  $1,029,332 

Other

  3,849   3,766   56,106   66,219   82,935   102,790   (103)  (626)  142,787   172,149 

Total net revenues

 $397,029  $439,229  $56,106  $66,219  $638,072  $696,659  $(103) $(626) $1,091,104  $1,201,481 
                                         

Other revenues detail

                                     

Retail and other

  3,849   3,766   -   -   6,230   6,221   -   -   10,079   9,987 

Wholesale

  -   -   20,503   25,675   76,705   96,569   -   -   97,208   122,244 

BloomNet services

  -   -   35,603   40,544   -   -   -   -   35,603   40,544 

Corporate

  -   -   -   -   -   -   549   116   549   116 

Eliminations

  -   -   -   -   -   -   (652)  (742)  (652)  (742)

Total other revenues

 $3,849  $3,766  $56,106  $66,219  $82,935  $102,790  $(103) $(626) $142,787  $172,149 
v3.24.0.1
Note 12 - Leases (Tables)
 6 Months Ended
Dec. 31, 2023
Notes Tables  
Lease, Cost [Table Text Block]
  

Three Months Ended

  

Six Months Ended

 
  

December

31, 2023

  

January

1, 2023

  

December

31, 2023

  

January

1, 2023

 
  

(in thousands)

 

Lease costs:

                

Operating lease costs

 $5,651  $5,606  $11,273  $10,953 

Variable lease costs

  7,568   6,603   14,082   12,454 

Short-term lease cost

  2,535   2,889   3,418   4,454 

Sublease income

  (246)  (241)  (497)  (484)

Total lease costs

 $15,508  $14,857  $28,276  $27,377 
                 

Cash paid for amounts included in measurement of operating lease liabilities

  $11,300  $9,851 

Right-of-use assets obtained in exchange for new operating lease liabilities

  $1,784  $10,521 
  

December 31,

2023

 
  

(in thousands)

 

Weighted-average remaining lease term - operating leases (in years)

  8.4 

Weighted-discount rate - operating leases

  4.1%
Lessee, Operating Lease, Liability, to be Paid, Maturity [Table Text Block]

Fiscal Year:

    

Remainder of 2024

 $9,507 

2025

  20,644 

2026

  18,714 

2027

  17,095 

2028

  16,179 

Thereafter

  68,402 

Total Future Minimum Lease Payments

  150,541 

Less: Imputed Remaining Interest

  24,368 

Total Operating Lease Liabilities

  126,173 

Less: Current portion of long-term operating lease liabilities

  15,433 

Long-term operating lease liabilities

 $110,740 
v3.24.0.1
Note 13 - Accrued Expenses (Tables)
 6 Months Ended
Dec. 31, 2023
Notes Tables  
Schedule of Accrued Liabilities [Table Text Block]
  

December 31, 2023

  

July 2, 2023

 
  

(in thousands)

 

Payroll and employee benefits

 $30,889  $33,927 

Deferred revenue

  39,928   30,811 

Accrued marketing expenses

  13,646   13,679 

Accrued florist payout

  17,981   13,437 

Accrued purchases

  44,546   18,351 

Accrued income taxes

  20,756   922 

Other

  56,338   30,787 

Accrued Expenses

 $224,084  $141,914 
v3.24.0.1
Note 1 - Accounting Policies (Details Textual) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Dec. 31, 2023
Jan. 01, 2023
Jul. 02, 2023
Contract with Customer, Liability, Current $ 39,900   $ 39,900   $ 30,800
Contract with Customer, Liability, Revenue Recognized 10,700   26,800    
Goodwill and Intangible Asset Impairment $ 19,762 $ 0 $ 19,762 $ 0  
v3.24.0.1
Note 2 - Net Income (Loss) Per Common Share - Basic and Diluted Net Income Per Common Share (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
 3 Months Ended 6 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Dec. 31, 2023
Jan. 01, 2023
Net income $ 62,907 $ 82,530 $ 31,665 $ 48,838
Basic (in shares) 64,835 64,675 64,814 64,606
Effect of dilutive stock options and unvested restricted stock awards (in shares) 342 160 341 214
Diluted weighted-average shares outstanding (in shares) 65,177 64,835 65,155 64,820
Basic net income per common share (in dollars per share) $ 0.97 $ 1.28 $ 0.49 $ 0.76
Diluted net income per common share (in dollars per share) $ 0.97 $ 1.27 $ 0.49 $ 0.75
v3.24.0.1
Note 3 - Acquisitions (Details Textual) - USD ($)
$ in Thousands
 12 Months Ended
Jan. 10, 2023
Nov. 30, 2022
Dec. 31, 2023
Jul. 02, 2023
Goodwill     $ 153,577 $ 153,376
Things Remembered Brand [Member]        
Revenue from Contract with Customer, Including Assessed Tax   $ 30,400    
Things Remembered Brand [Member]        
Business Combination, Consideration Transferred $ 5,000      
Goodwill 1,900      
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Inventory 1,100      
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Equipment 400      
Things Remembered Brand [Member] | Customer Lists [Member]        
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles $ 800      
Finite-Lived Intangible Asset, Useful Life (Year) 3 years      
Things Remembered Brand [Member] | Trademarks [Member]        
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Indefinite-Lived Intangible Assets $ 800      
v3.24.0.1
Note 4 - Inventory, Net - Summary of Inventory (Details) - USD ($)
$ in Thousands
Dec. 31, 2023
Jul. 02, 2023
Finished goods $ 92,160 $ 92,582
Work-in-process 20,158 33,818
Raw materials 49,006 64,934
Total inventory $ 161,324 $ 191,334
v3.24.0.1
Note 5 - Goodwill and Intangible Assets, Net (Details Textual) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Dec. 31, 2023
Jan. 01, 2023
Finite-Lived Intangible Asset, Expected Amortization, Remainder of Fiscal Year $ 2,200   $ 2,200  
Finite-Lived Intangible Asset, Expected Amortization, Year One 1,900   1,900  
Finite-Lived Intangible Asset, Expected Amortization, Year Two 1,300   1,300  
Finite-Lived Intangible Asset, Expected Amortization, Year Three 500   500  
Finite-Lived Intangible Asset, Expected Amortization, Year Four 200   200  
Finite-Lived Intangible Asset, Expected Amortization, Year Five 300   300  
Goodwill and Intangible Asset Impairment $ 19,762 $ 0 $ 19,762 $ 0
v3.24.0.1
Note 5 - Goodwill and Intangible Assets, Net - Goodwill by Segment (Details)
$ in Thousands
 6 Months Ended
Dec. 31, 2023
USD ($)
Balance $ 153,376
Measurement period adjustment for Things Remembered Acquisition 201
Balance 153,577
Consumer Floral [Member]  
Balance 153,376
Measurement period adjustment for Things Remembered Acquisition 201
Balance 153,577
BloomNet Wire Service [Member]  
Balance 0
Measurement period adjustment for Things Remembered Acquisition 0
Balance 0
Gourmet Foods and Gift Baskets [Member]  
Balance 0
Measurement period adjustment for Things Remembered Acquisition 0
Balance $ 0
v3.24.0.1
Note 5 - Goodwill and Intangible Assets, Net - Other Intangible Assets (Details) - USD ($)
$ in Thousands
Dec. 31, 2023
Jul. 02, 2023
Intangible assets with determinable lives, gross $ 39,437 $ 39,437
Accumulated amortization 33,013 30,784
Intangible assets with determinable lives, net 6,424 8,653
Trademarks with indefinite lives, gross 111,473 131,235
Total identifiable intangible assets, gross 150,910 170,672
Other intangibles, net 117,897 139,888
Licensing Agreements [Member]    
Intangible assets with determinable lives, gross 7,420 7,420
Accumulated amortization 6,622 6,569
Intangible assets with determinable lives, net $ 798 851
Licensing Agreements [Member] | Minimum [Member]    
Finite-lived intangible asset, useful life (Year) 14 years  
Licensing Agreements [Member] | Maximum [Member]    
Finite-lived intangible asset, useful life (Year) 16 years  
Customer Lists [Member]    
Intangible assets with determinable lives, gross $ 29,071 29,071
Accumulated amortization 23,757 21,611
Intangible assets with determinable lives, net $ 5,314 7,460
Customer Lists [Member] | Minimum [Member]    
Finite-lived intangible asset, useful life (Year) 3 years  
Customer Lists [Member] | Maximum [Member]    
Finite-lived intangible asset, useful life (Year) 10 years  
Other Intangible Assets [Member]    
Intangible assets with determinable lives, gross $ 2,946 2,946
Accumulated amortization 2,634 2,604
Intangible assets with determinable lives, net $ 312 $ 342
Other Intangible Assets [Member] | Minimum [Member]    
Finite-lived intangible asset, useful life (Year) 5 years  
Other Intangible Assets [Member] | Maximum [Member]    
Finite-lived intangible asset, useful life (Year) 14 years  
v3.24.0.1
Note 6 - Investments (Details Textual) - USD ($)
$ in Millions
Dec. 31, 2023
Jul. 02, 2023
Equity Securities without Readily Determinable Fair Value, Amount $ 2.6 $ 2.6
v3.24.0.1
Note 7 - Debt, Net (Details Textual) - USD ($)
$ in Millions
 7 Months Ended
Jun. 27, 2023
Aug. 01, 2023
Dec. 31, 2023
Jun. 26, 2023
The 2020 Credit Agreement [Member] | Revolving Credit Facility [Member]        
Line of Credit Facility, Maximum Borrowing Capacity $ 225.0     $ 250.0
Line of Credit Facility, Maximum Borrowing Capacity During Seasonal Reduction   $ 125.0    
The 2020 Credit Agreement [Member] | Revolving Credit Facility [Member] | Base Rate [Member]        
Debt Instrument, Basis Spread on Variable Rate, Increase (Decrease) 0.25%      
The New Term Loan [Member] | The 2020 Credit Agreement [Member]        
Debt Instrument, Face Amount $ 200.0     $ 150.0
Long-Term Debt, Maturity, First 8 Payments, Quarterly     $ 2.5  
Long-Term Debt, Maturity, Subsequent 11 Payments, Quarterly     5.0  
Long-Term Debt, Maturity, Due on Maturity Date     125.0  
Long-Term Debt, Maturity, Remainder of Fiscal Year     5.0  
Long-Term Debt, Maturity, Year One     10.0  
Long-Term Debt, Maturity, Year Two     20.0  
Long-Term Debt, Maturity, Year Three     20.0  
Long-Term Debt, Maturity, Year Four     $ 140.0  
Line of Credit and Term Loan [Member] | Fed Funds Effective Rate Overnight Index Swap Rate [Member]        
Debt Instrument, Base Rate, Basis Spread on Variable Rate 0.50%      
Line of Credit and Term Loan [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member]        
Debt Instrument, Base Rate, Basis Spread on Variable Rate 0.10%      
v3.24.0.1
Note 7 - Debt, Net - Summary of Current and Long-term Debt (Details) - USD ($)
$ in Thousands
Dec. 31, 2023
Jul. 02, 2023
Deferred financing costs $ (3,251) $ (3,609)
Debt instrument, carrying amount 191,749 196,391
Less: current maturities of long-term debt 10,000 10,000
Long-term debt, net 181,749 186,391
Line of Credit [Member]    
Revolver 0 0
Term Loan [Member]    
Term Loans $ 195,000 $ 200,000
v3.24.0.1
Note 8 - Property, Plant and Equipment, Net - Summary of Property, Plant and Equipment (Details) - USD ($)
$ in Thousands
Dec. 31, 2023
Jul. 02, 2023
Property, plant, and equipment, gross $ 544,750 $ 526,986
Accumulated depreciation and amortization (317,107) (292,417)
Property, plant and equipment, net 227,643 234,569
Land [Member]    
Property, plant, and equipment, gross 33,866 33,866
Orchards in Production and Land Improvements [Member]    
Property, plant, and equipment, gross 20,604 20,401
Building and Building Improvements [Member]    
Property, plant, and equipment, gross 68,510 67,647
Leasehold Improvements [Member]    
Property, plant, and equipment, gross 30,882 29,524
Equipment [Member]    
Property, plant, and equipment, gross 130,043 125,297
Furniture and Fixtures [Member]    
Property, plant, and equipment, gross 9,235 9,102
Computer and Telecommunication Equipment [Member]    
Property, plant, and equipment, gross 43,041 41,859
Software and Software Development Costs [Member]    
Property, plant, and equipment, gross 193,925 181,085
Capital Projects in Progress [Member]    
Property, plant, and equipment, gross $ 14,644 $ 18,205
v3.24.0.1
Note 9 - Fair Value Measurements - Assets and Liabilities Measured at Fair Value (Details) - USD ($)
$ in Thousands
Dec. 31, 2023
Jul. 02, 2023
Trading securities held in a “rabbi trust” [1] $ 27,183 $ 22,617
Total assets (liabilities) at fair value 27,183 22,617
Fair Value, Inputs, Level 1 [Member]    
Trading securities held in a “rabbi trust” [1] 27,183 22,617
Total assets (liabilities) at fair value 27,183 22,617
Fair Value, Inputs, Level 2 [Member]    
Trading securities held in a “rabbi trust” [1] 0 0
Total assets (liabilities) at fair value 0 0
Fair Value, Inputs, Level 3 [Member]    
Trading securities held in a “rabbi trust” [1] 0 0
Total assets (liabilities) at fair value $ 0 $ 0
[1] The Company has established a NQDC Plan for certain members of senior management. Deferred compensation plan assets are invested in mutual funds held in a “rabbi trust,” which is restricted for payment to participants of the NQDC Plan. Trading securities held in a rabbi trust are measured using quoted market prices at the reporting date and are included in the “Other assets” line item, with the corresponding liability included in the “Other liabilities” line item in the consolidated balance sheets.
v3.24.0.1
Note 10 - Income Taxes (Details Textual) - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Dec. 31, 2023
Jan. 01, 2023
Effective Income Tax Rate Reconciliation, Percent 29.60% 25.50% 33.80% 25.70%
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent 21.00% 21.00% 21.00% 21.00%
Unrecognized Tax Benefits $ 1.6   $ 1.6  
Significant Change in Unrecognized Tax Benefits is Reasonably Possible, Amount of Unrecorded Benefit $ 0.1   $ 0.1  
Domestic Tax Authority [Member]        
Open Tax Year     2020 2021 2022  
State and Local Jurisdiction [Member]        
Open Tax Year     2016 2017 2018 2019 2020 2021 2022  
Foreign Tax Authority [Member]        
Open Tax Year     2017 2018 2019 2020 2021 2022  
v3.24.0.1
Note 11 - Business Segments (Details Textual)
 6 Months Ended
Dec. 31, 2023
Number of Reportable Segments 3
v3.24.0.1
Note 11 - Business Segments - Segment Performance (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Dec. 31, 2023
Jan. 01, 2023
Net revenues $ 822,054 $ 897,877 $ 1,091,104 $ 1,201,481
Depreciation and amortization (14,152) (14,315) (27,346) (27,009)
Operating income 91,250 115,125 53,673 73,765
Operating Segments [Member]        
Contribution margin 137,834 160,737 145,019 162,354
Corporate, Non-Segment [Member]        
Net revenues 279 72 549 116
Corporate (a) [1] (32,432) (31,297) (64,000) (61,580)
Intersegment Eliminations [Member]        
Net revenues (259) (527) (652) (742)
Consumer Floral and Gifts [Member] | Operating Segments [Member]        
Net revenues 254,835 277,049 397,029 439,229
BloomNet [Member] | Operating Segments [Member]        
Net revenues 27,236 32,852 56,106 66,219
Gourmet Foods and Gift Baskets [Member] | Operating Segments [Member]        
Net revenues 539,963 588,431 638,072 696,659
Contribution margin 118,153 123,503 107,125 104,793
Consumer Floral [Member] | Operating Segments [Member]        
Net revenues 254,835 277,049 397,029 439,229
Contribution margin 10,593 27,886 19,419 38,696
BloomNet Wire Service [Member] | Operating Segments [Member]        
Net revenues 27,236 32,852 56,106 66,219
Contribution margin $ 9,088 $ 9,348 $ 18,475 $ 18,865
[1] Corporate expenses consist of the Company’s enterprise shared service cost centers, and include, among other items, Information Technology, Human Resources, Accounting and Finance, Legal, Executive and Customer Service Center functions, as well as Stock-based compensation. In order to leverage the Company’s infrastructure, these functions are operated under a centralized management platform, providing support services throughout the organization. The costs of these functions, other than those of the Customer Service Center, which are allocated directly to the above categories based upon usage, are included within corporate expenses as they are not directly allocable to a specific segment.
v3.24.0.1
Note 11 - Business Segments - Disaggregation of Revenue From Contracts With Customers (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Dec. 31, 2023
Jan. 01, 2023
Net revenues $ 822,054 $ 897,877 $ 1,091,104 $ 1,201,481
E-commerce [Member]        
Net revenues 738,406 790,410 948,317 1,029,332
Product and Service, Other [Member]        
Net revenues 83,648 107,467 142,787 172,149
Product and Service, Other [Member] | Retail and Other [Member]        
Net revenues 6,286 6,281 10,079 9,987
Product and Service, Other [Member] | Wholesale [Member]        
Net revenues 58,812 80,843 97,208 122,244
Product and Service, Other [Member] | Bloomnet Services [Member]        
Net revenues 18,530 20,798 35,603 40,544
Segment Reconciling Items [Member]        
Net revenues 20 (455) (103) (626)
Segment Reconciling Items [Member] | E-commerce [Member]        
Net revenues 0 0 0 0
Segment Reconciling Items [Member] | Product and Service, Other [Member]        
Net revenues 20 (455) (103) (626)
Consolidation, Eliminations [Member] | Product and Service, Other [Member]        
Net revenues (259) (527) (652) (742)
Consolidation, Eliminations [Member] | Product and Service, Other [Member] | Retail and Other [Member]        
Net revenues 0 0 0 0
Consolidation, Eliminations [Member] | Product and Service, Other [Member] | Wholesale [Member]        
Net revenues 0 0 0 0
Consolidation, Eliminations [Member] | Product and Service, Other [Member] | Bloomnet Services [Member]        
Net revenues 0 0 0 0
Corporate, Non-Segment [Member]        
Net revenues 279 72 549 116
Corporate, Non-Segment [Member] | Product and Service, Other [Member]        
Net revenues 279 72 549 116
Consumer Floral [Member] | Operating Segments [Member]        
Net revenues 254,835 277,049 397,029 439,229
Consumer Floral [Member] | Operating Segments [Member] | E-commerce [Member]        
Net revenues 252,845 275,081 393,180 435,463
Consumer Floral [Member] | Operating Segments [Member] | Product and Service, Other [Member]        
Net revenues 1,990 1,968 3,849 3,766
Consumer Floral [Member] | Operating Segments [Member] | Product and Service, Other [Member] | Retail and Other [Member]        
Net revenues 1,990 1,968 3,849 3,766
Consumer Floral [Member] | Operating Segments [Member] | Product and Service, Other [Member] | Wholesale [Member]        
Net revenues 0 0 0 0
Consumer Floral [Member] | Operating Segments [Member] | Product and Service, Other [Member] | Bloomnet Services [Member]        
Net revenues 0 0 0 0
BloomNet Wire Service [Member] | Operating Segments [Member]        
Net revenues 27,236 32,852 56,106 66,219
BloomNet Wire Service [Member] | Operating Segments [Member] | E-commerce [Member]        
Net revenues 0 0 0 0
BloomNet Wire Service [Member] | Operating Segments [Member] | Product and Service, Other [Member]        
Net revenues 27,236 32,852 56,106 66,219
BloomNet Wire Service [Member] | Operating Segments [Member] | Product and Service, Other [Member] | Retail and Other [Member]        
Net revenues 0 0 0 0
BloomNet Wire Service [Member] | Operating Segments [Member] | Product and Service, Other [Member] | Wholesale [Member]        
Net revenues 8,706 12,054 20,503 25,675
BloomNet Wire Service [Member] | Operating Segments [Member] | Product and Service, Other [Member] | Bloomnet Services [Member]        
Net revenues 18,530 20,798 35,603 40,544
Gourmet Foods and Gift Baskets [Member] | Operating Segments [Member]        
Net revenues 539,963 588,431 638,072 696,659
Gourmet Foods and Gift Baskets [Member] | Operating Segments [Member] | E-commerce [Member]        
Net revenues 485,561 515,329 555,137 593,869
Gourmet Foods and Gift Baskets [Member] | Operating Segments [Member] | Product and Service, Other [Member]        
Net revenues 54,402 73,102 82,935 102,790
Gourmet Foods and Gift Baskets [Member] | Operating Segments [Member] | Product and Service, Other [Member] | Retail and Other [Member]        
Net revenues 4,296 4,313 6,230 6,221
Gourmet Foods and Gift Baskets [Member] | Operating Segments [Member] | Product and Service, Other [Member] | Wholesale [Member]        
Net revenues 50,106 68,789 76,705 96,569
Gourmet Foods and Gift Baskets [Member] | Operating Segments [Member] | Product and Service, Other [Member] | Bloomnet Services [Member]        
Net revenues $ 0 $ 0 $ 0 $ 0
v3.24.0.1
Note 12 - Leases - Lease Costs (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Dec. 31, 2023
Jan. 01, 2023
Operating lease costs $ 5,651 $ 5,606 $ 11,273 $ 10,953
Variable lease costs 7,568 6,603 14,082 12,454
Short-term lease cost 2,535 2,889 3,418 4,454
Sublease income (246) (241) (497) (484)
Total lease costs $ 15,508 $ 14,857 28,276 27,377
Cash paid for amounts included in measurement of operating lease liabilities     11,300 9,851
Right-of-use assets obtained in exchange for new operating lease liabilities     $ 1,784 $ 10,521
Weighted-average remaining lease term - operating leases (in years) (Year) 8 years 4 months 24 days   8 years 4 months 24 days  
Weighted-discount rate - operating leases 4.10%   4.10%  
v3.24.0.1
Note 12 - Leases - Maturities of Lease Liabilities (Details) - USD ($)
$ in Thousands
Dec. 31, 2023
Jul. 02, 2023
Remainder of 2024 $ 9,507  
2025 20,644  
2026 18,714  
2027 17,095  
2028 16,179  
Thereafter 68,402  
Total Future Minimum Lease Payments 150,541  
Less: Imputed Remaining Interest 24,368  
Total Operating Lease Liabilities 126,173  
Less: Current portion of long-term operating lease liabilities 15,433 $ 15,759
Long-term operating lease liabilities $ 110,740 $ 117,330
v3.24.0.1
Note 13 - Accrued Expenses - Accrued Expenses (Details) - USD ($)
$ in Thousands
Dec. 31, 2023
Jul. 02, 2023
Payroll and employee benefits $ 30,889 $ 33,927
Deferred revenue 39,928 30,811
Accrued marketing expenses 13,646 13,679
Accrued florist payout 17,981 13,437
Accrued purchases 44,546 18,351
Accrued income taxes 20,756 922
Other 56,338 30,787
Accrued Expenses $ 224,084 $ 141,914
1 800 Flowers Com (NASDAQ:FLWS)
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