What Happened?
Shares of e-commerce florist and gift retailer 1-800-FLOWERS (NASDAQ: FLWS) jumped 0.3% in the afternoon session after the stock continued to decline as the company's fourth-quarter earnings report revealed a wider-than-expected loss and shrinking profit margins.
Although revenue topped estimates, the company's profitability struggles took center stage. The non-GAAP loss per share was $0.69, significantly worse than the 51-cent loss analysts had anticipated. Furthermore, the adjusted EBITDA loss more than doubled compared to the same period last year. Sales declines were seen across key divisions, with the main floral and gift segment down nearly 9% and gourmet foods falling over 3%. The core of the issue was a significant 290 basis point drop in gross margin, a metric that reflects the profitability of its sales. This compression in margins highlights the financial challenges the company faces despite bringing in sales.
After the initial pop the shares cooled down to $4.97, down 2.5% from previous close.
Is now the time to buy 1-800-FLOWERS? Access our full analysis report here, it’s free.
What Is The Market Telling Us
1-800-FLOWERS’s shares are extremely volatile and have had 34 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 4 days ago when the stock dropped 4.1% on the news that the company reported a wider-than-expected loss for its second quarter, overshadowing a slight revenue beat.
The company posted an adjusted loss of $0.69 per share, which was significantly worse than the analyst consensus estimate of a $0.51 loss and a sharp decline from the $0.34 loss per share reported in the same quarter last year. Although quarterly revenue of $336.6 million came in slightly ahead of expectations, it still marked a 6.7% decrease compared to the prior year. Worsening profitability was a key concern for investors, as the company's operating margin shrank to negative 16.5% from negative 10.8% in the same quarter last year.
Additionally, free cash flow burn more than doubled to $36.1 million from $17.2 million a year ago, highlighting increased financial pressures.
1-800-FLOWERS is down 36.4% since the beginning of the year, and at $4.97 per share, it is trading 45.3% below its 52-week high of $9.09 from February 2025. Investors who bought $1,000 worth of 1-800-FLOWERS’s shares 5 years ago would now be looking at an investment worth $205.71.
Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.
