1-800-FLOWERS.COM, INC.
LETTER TO SHAREHOLDERS
Dear Fellow Shareholders,
As we reflect on Fiscal 2024 and look ahead to Fiscal 2025, our company has demonstrated remarkable
resilience and adaptability in the face of persistent macroeconomic challenges. While the topline
challenges we encountered lasted longer than initially anticipated, our focus on operational efficiency
and strategic investments has positioned us well for future growth and value creation.
It’s clear that the broader macroeconomic environment remained far more challenging than initially
anticipated, impacting our topline results. This prolonged period of high interest rates and persistent
inflation has had a significant impact on discretionary spending, especially amongst lower-income
households.
Our ability to adapt to these changing market conditions has been crucial. Over the past year, we have
executed on our strategic initiatives to broaden our product offerings, broaden our price points, and
enhance the overall customer experience. By introducing new and innovative products, we have
expanded our offerings to a wider range of our customers’ expressive needs. Our efforts to expand our
price points, both higher and lower, have made our products more accessible to a broader audience
while also capturing premium market segments. Additionally, we have implemented several customer-
centric improvements, ensuring that our customers receive unparalleled value and satisfaction.
Despite the topline pressures in Fiscal 2024, we demonstrated resilience, particularly in our gross
margin. Our gross margin increased 260 basis points in Fiscal 2024 to 40.1%. We have now recovered a
meaningful portion of our gross margin that had been eroded over the last few years due to supply
chain challenges and higher ocean freight, commodity, and labor costs. This recovery is a testament to
our diligent focus on cost management and operational efficiency, combined with favorable movements
in certain commodity costs.
By implementing strategic cost controls and optimizing operations, we reduced our year-over-year net
loss to $6 million and grew our year-over-year adjusted EBITDA to $93 million, underscoring our
commitment to financial health amidst a decline in revenues. Additionally, we generated $95 million of
net cash from operating activities, resulting in $56 million of free cash flow, during Fiscal 2024 and our
balance sheet remains pristine. We ended the fiscal year with $190 million in term debt and no
borrowings under our revolving credit facility.
Strategic Investments
Over the past year, our company made two acquisitions that further elevated our offerings. The first
was the acquisition of Card Isle®, an e-commerce greeting card company, that enhanced our print-on-
demand personalized greeting cards offering and enabled us to address a wider range of our customers’
expressive needs. And the second was the acquisition of Scharffen Berger Chocolate Maker, a producer
of high-end, extraordinary chocolates, that enhances and expands our chocolate offerings.
Looking ahead to Fiscal 2025, we remain optimistic about our prospects. Our gross margin recovery is
well underway, and we continue to prioritize operational efficiency. We are also strategically investing in
our business to improve our topline trends. These investments are aimed at enhancing our customer
experience and expanding our market presence.
Despite a challenging consumer discretionary spending environment, our strategic investments
differentiate us from competitors. We are focused on increasing customer frequency and retention by
positioning ourselves as the preferred destination for gifting needs. Our approach includes leveraging
our recent acquisitions and innovations to better serve our customer base by offering more gifting
options and broadening our price points.
Relationship Innovation Advancements
Our Relationship Innovation strategy is at the heart of our efforts to enhance the customer experience
and improve topline trends. We are continually refining our product offerings, pricing strategies, and
user interface to better meet the needs of our customers. This includes expanding our product portfolio
through both organic growth and acquisitions. For instance, the recent integration of Card Isle has
strengthened our greeting card category, allowing customers to send personalized cards seamlessly
through our platform.
In response to the bifurcation of trends in our customer base by income level, we have broadened our
pricing strategies. For price-sensitive customers, we introduced offerings like the Bouquet of the Month,
providing high value at an attractive price point. Conversely, we are enhancing our high-end product
bundles to cater to higher income customers, exemplified by our successful integration of Things
Remembered® and the recent acquisition of Scharffen Berger®.
Looking Forward
As we move into Fiscal 2025, our focus is on capitalizing on our investments and enhancing our
platform’s capabilities. We anticipate growth in our corporate gifting segment and expect our wholesale
revenue to benefit from strong holiday season orders. Our continued emphasis on last-mile delivery and
expanding our product assortment will further bolster our growth prospects.
Since our inception, our mission has been clear: to help people connect with and celebrate the
important individuals in their lives, fostering deeper and more meaningful relationships. This
commitment has, in turn, strengthened our relationships with our customers. Embracing change and
innovation has always been at the core of our journey, allowing us to expand our offerings and improve
the customer experience, ensuring they find the perfect gift for their special occasion. We are dedicated
to building a true community by engaging with our customers across a wide range of communication
channels, providing them with the most comprehensive online gifting experience.
We are excited about the opportunities that lie ahead and remain committed to driving long-term value
for our shareholders. We appreciate your ongoing support as we work towards achieving our goals and
delivering enhanced value.
Sincerely,
Jim McCann
Chairman and Chief Executive Officer
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 2024
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-26841
1-800-FLOWERS.COM, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
11-3117311
(I.R.S. Employer Identification No.)
Two Jericho Plaza, Suite 200, Jericho, NY 11753
(Address of principal executive offices) (Zip code)
(516) 237-6000
(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
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15 (d) of the Act. Yes ☐ No ☒
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 (Section 232.405 of this chapter) during the preceding 12 months (or for 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control
over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the registered public accounting firm that prepared or issued
its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the
filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received
by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of the voting stock held by non-affiliates of the registrant, computed by reference to the closing price as of the last business day
of the registrant’s most recently completed second fiscal quarter, December 31, 2023, was approximately $277,351,000. The registrant has no non-voting
common stock.
37,152,140
(Number of shares of class A common stock outstanding as of August 30, 2024)
27,068,221
(Number of shares of class B common stock outstanding as of August 30, 2024)
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the Registrant’s Definitive Proxy Statement for the 2024 Annual Meeting of Stockholders (the Definitive Proxy Statement) are incorporated by
reference into Part III of this Report.
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1-800-FLOWERS.COM, INC.
FORM 10-K
For the fiscal year ended June 30, 2024
TABLE OF CONTENTS
Part I.
Item 1.
Business .....................................................................................................................................................
1
Item 1A. Risk Factors ...............................................................................................................................................
9
Item 1B. Unresolved Staff Comments ......................................................................................................................
18
Item 1C. Cybersecurity .............................................................................................................................................
18
Item 2.
Properties ...................................................................................................................................................
20
Item 3.
Legal Proceedings ......................................................................................................................................
20
Item 4.
Mine Safety Disclosures ............................................................................................................................
20
Part II.
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities .....................................................................................................................................
21
Item 6.
Reserved ....................................................................................................................................................
22
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations ....................
22
Item 7A. Quantitative and Qualitative Disclosures about Market Risk ....................................................................
38
Item 8.
Financial Statements and Supplementary Data ..........................................................................................
38
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ....................
39
Item 9A. Controls and Procedures ............................................................................................................................
39
Item 9B. Other Information ......................................................................................................................................
41
Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections ......................................................
41
Part III.
Item 10. Directors, Executive Officers and Corporate Governance .........................................................................
41
Item 11. Executive Compensation ...........................................................................................................................
41
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ..
41
Item 13. Certain Relationships and Related Transactions, and Director Independence ...........................................
41
Item 14. Principal Accounting Fees and Services ....................................................................................................
41
Part IV.
Item 15. Exhibits and Financial Statement Schedules .............................................................................................
42
Item 16. Form 10-K Summary .................................................................................................................................
43
Signatures ...................................................................................................................................................................
44
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1
PART I
Item 1.
BUSINESS
The Company
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 our 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®, Scharffen Berger®, and Simply Chocolate®. Through
the Celebrations Passport® loyalty program, which provides members with free standard shipping and no service charge on
eligible products across our portfolio of brands, the Company 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 its members grow their businesses profitably; Napco℠, a resource for floral gifts and seasonal
décor; DesignPac Gifts, LLC, a manufacturer of gift baskets and towers; Alice’s Table®, a lifestyle business offering fully
digital on demand floral, culinary and other experiences to guests across the country; and Card Isle®, an e-commerce greeting
card service.
Shares in 1-800-FLOWERS.COM, Inc. are traded on the NASDAQ Global Select Market, ticker symbol: FLWS.
References in this Annual Report on Form 10-K to “1-800-FLOWERS.COM” and the “Company” refer to 1-800-
FLOWERS.COM, Inc. and its subsidiaries. The Company’s principal offices are located at Two Jericho Plaza, Suite
200, Jericho, NY 11753 and its telephone number at that location is (516) 237-6000.
Narrative Description of Business
The Origins of 1-800-FLOWERS.COM
The Company’s operations began in 1976 when James F. McCann, the Company’s founder and current Executive Chairman
of the Board of Directors and Chief Executive Officer, acquired a single retail florist in New York City, which he subsequently
expanded to a 14-store chain. Thereafter, the Company modified its business strategy to take advantage of the rapid
emergence of toll-free calling. The Company acquired the right to use the toll-free telephone number 1-800-FLOWERS,
adopted it as its corporate identity and began to aggressively build a national brand around it.
The Company’s Strategy
The Company’s objective is to be the leading authority on thoughtful gifting, to serve an expanding range of our customers’
celebratory needs, thereby helping our customers express themselves and connect with the important people in their lives.
The Company will continue to build on the trusted relationships with our customers by providing them with ease of access,
tasteful and appropriate gifts, and superior service. By engaging with our customers, we help to inspire more human
expression and connection – sentiments that are more important than ever in the current environment.
The Company generates more than $1.8 billion in revenue, operating in a total addressable market of ~ $130 billion, with
growing, market leading positions in Gourmet Food, Floral and Personalized Gifts.
The Company believes that 1-800-FLOWERS.COM® is one of the most recognized brands in the floral and gift industries.
The strength of its brand has enabled the Company to extend its product offerings beyond the floral category into
complementary products, which include gourmet popcorn, cookies and related baked and snack food products, premium
chocolate and confections, wine gifts, gourmet gift baskets, fruit bouquet arrangements, and gift-quality fruit baskets, dipped
berries, steaks, chops and prepared meals, as well as an extensive selection of personalized products. On October 27, 2021,
the Company acquired Vital Choice Seafood LLC (“Vital Choice”), a purveyor of wild-caught seafood and sustainably
farmed shellfish, pastured proteins, and organic foods. On December 31, 2021, the Company acquired Alice’s Table® to
supplement our product portfolio with lifestyle offerings, including fully digital on demand floral, culinary and other
experiences to guests across the country. On January 10, 2023, the Company completed its acquisition of certain assets of the
Things Remembered® brand, a complete online gifting and personalization destination renowned for its men’s and women’s
jewelry, drinkware, home décor, business gifts and awards, and wedding essentials, which was fully integrated into the
Personalization Mall® brand. On April 3, 2024, the Company completed its acquisition of Card Isle, an e-commerce greeting
card company, expanding the Company’s presence in the greeting card category across all brands. On July 1, 2024, the
Company acquired Scharffen Berger®, a manufacturer of giftable premium chocolate and specialty treats, expanding the
Company's product offerings in the Gourmet Foods & Gift Basket segment. This extended line of gift offerings helps our
customers with their celebratory occasions and will enable the Company to increase the purchase frequency and average
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order value for existing customers who have come to trust the 1-800-FLOWERS.COM brand, as well as continue to attract
new customers.
The Company’s consolidated customer database and multi-brand website is designed to dynamically engage our customers,
further enhancing the Company’s position as a leading, one-stop destination for our customers’ gifting and celebratory needs.
The Company is focused on deepening relationships with its customers through content and community and are focused on
inspiring our customers to give more and to build better and more meaningful relationships. We have a large customer file,
with increasing frequency from existing customers, including 1.1 million Celebrations Passport members who, along with
our multi-brand customers, represent our best customer cohorts in terms of frequency, retention and average spend, and thus
customer lifetime value. Celebrations Passport and multi-brand customers frequency is 2x to 3x other customers. Multi-brand
customers and Celebrations Passport members represent approximately 20% of customers and approximately 40% of
revenue.
As part of the Company’s continuing effort to serve the thoughtful gifting needs of our customers, and leverage its business
platform, the Company continues to execute its vision to build a “Celebratory Ecosystem”, including a collection of premium
gifting brands, and an increasing suite of products and services designed to help our customers deliver smiles to the important
people in their lives.
The platform that the Company has built allows it to expand rapidly into new product categories using a “marketplace”
concept, providing its customers with a wider selection of solutions to help them express, connect and celebrate for all
occasions and recipients – including themselves.
As such, the Company has transformed from a floral-based specialty retailer with multiple-brand add-ons into an e-commerce
platform built for growth. We have created a highly scalable platform that enables solid top and bottom-line growth over the
long term and expanding market-share positions. In addition, the Company has been successful in identifying, executing and
integrating accretive acquisitions supported by a strong balance sheet.
A summary of the Company’s significant brands and/or businesses follows:
CONSUMER FLORAL & GIFTS SEGMENT
Direct-to-consumer, multi-channel provider of fresh flowers, plants, fruit and gift basket
products, balloons, candles, keepsake gifts, jewelry and plush stuffed animals.
Direct-to-consumer, multi-channel provider of artistically carved fresh fruit arrangements.
Franchisor and operator of retail flower shops, acquired in August 2011.
Direct-to-consumer provider of fresh flowers, plants, fruits and gift baskets.
E-commerce provider of personalized gifts and keepsakes, acquired in August 2020.
E-commerce provider of personalized gifts and keepsakes, which operations are integrated
within the PersonalizationMall.com brand, acquired in January 2023.
Provider of lifestyle offerings, including fully digital on demand floral, culinary and other
experiences to guests across the country, acquired in December 2021.
BLOOMNET SEGMENT
Provider of products and services to the professional florist.
Wholesale merchandiser and marketer of floral industry and related products, acquired in July
2008.
Provider of digital and physical greeting cards to sister brands, as well as independent florist
and other wholesale customers, acquired in April 2024.
3
GOURMET FOODS & GIFT BASKETS SEGMENT
Multi-channel specialty retailer and producer of premium gift quality fruit, gourmet food
products and other gifts marketed under the Harry & David® and Cushman’s® brands,
acquired in September 2014.
Manufacturer and retailer of indulgent bakery gifts, including super-thick English muffins,
toppings, and desserts, acquired in September 2014 in conjunction with the purchase of Harry
& David.
Multi-channel retailer and manufacturer of small batch gourmet buttery caramel and
chocolate covered popcorn, acquired in September 2014 in conjunction with the purchase of
Harry & David.
E-commerce provider of wild-caught seafood and sustainably farmed shellfish, pastured
proteins, organic foods, and marine-sourced nutritional supplements, acquired in October
2021.
Manufacturer of giftable premium popcorn and specialty treats, acquired in May 2002.
Multichannel retailer and baker of premium cookies, baked gifts, and related products,
acquired in March 2005, including Mrs. Beasley’s®, a baker of cakes, muffins and gourmet
gift baskets, acquired in March 2011.
E-commerce retailer of gift baskets and towers.
Designer, assembler and distributor of wholesale gift baskets, gourmet food towers and gift
sets, acquired in April 2008.
E-commerce retailer of artisan chocolates and confections.
E-commerce retailer of dipped berries and other specialty treats, acquired in August 2019.
Manufacturer of giftable premium chocolate and specialty treats, acquired in July 2024.
Although the Company’s family of brands maintain their own sense of identity, the Company has taken a holistic approach
towards operating its brand portfolio. A key feature of this approach is that the Company proactively shares best practices
across its functional areas, through centralized operational centers of excellence focused on identifying initiatives designed
to enhance top and bottom-line growth opportunities.
4
The Company’s Products and Service Offerings
The Company offers a wide range of products including fresh-cut flowers, floral and fruit arrangements and plants, gifts,
greeting cards, personalized products, dipped berries, popcorn, gourmet foods and gift baskets, cookies, chocolates, candy,
wine, and gift-quality fruit. In order to maximize sales opportunities, products are not exclusive to certain brands and may be
sold across business categories. The Company’s differentiated and value-added product offerings create the opportunity to
have a relationship with customers who purchase items not only for gift-giving occasions but also for everyday consumption.
The Company’s product development team works closely with its production team to select and design its floral, gourmet
foods and gift baskets, as well as other gift-related products that accommodate our customers’ needs to celebrate a special
occasion or convey a sentiment. As part of this continuing effort, the Company intends to continue to develop differentiated
products and signature collections that customers have embraced and come to expect.
The Company’s net revenues from international sources were not material during fiscal years 2024, 2023 and 2022.
Flowers, Plants, and Personalized Gifts. The Company’s flagship 1-800-Flowers.com brand offers fresh-cut flowers and
floral and fruit arrangements for all occasions and holidays, available for same-day delivery. The Company provides its
customers with a curated choice of florist designed products, including traditional floral and gift offerings, and the Company’s
line of fruit arrangements, under the Fruit Bouquets brand, and flowers delivered fresh from the farm. The Company also
offers a wide variety of popular plants to brighten the home and/or office, and accent gardens and landscapes. With the
acquisition of Alice’s Table, the Company also provides lifestyle offerings, including fully digital on demand floral, culinary
and other experiences to guests across the country. In addition, through its PersonalizationMall brand, the Company offers a
wide assortment of products using sublimation, embroidery, digital printing, engraving, and sandblasting to provide a unique,
personalized experience to our customers. The Company expanded its offering of personalized products with the acquisition
of the Things Remembered brand, a complete online gifting and personalization destination renowned for its men’s and
women’s jewelry, drinkware, home décor, business gifts and awards, and wedding essentials.
Gourmet Foods & Gift Baskets. Harry & David is a vertically integrated, multi-channel specialty retailer and producer of
branded premium gift-quality fruit, food products, land and sea-based proteins, and gifts marketed under the Harry & David,
Wolferman’s Bakery, Vital Choice, Cushman’s, Moose Munch and Scharffen Berger brands. The Company manufactures
premium cookies and baked gift items under the Cheryl’s Cookies and Mrs. Beasley’s brands, which are delivered in beautiful
and innovative gift boxes and containers, providing customers with a variety of assortments from which to choose. The
Popcorn Factory brand pops premium popcorn and specialty snack products. The 1-800-BASKETS.COM brand features a
collection of gourmet gift baskets and related products confected by DesignPac, as well as through third parties. Simply
Chocolate offers artisan chocolates and confections. Many of the Company’s gourmet products are packaged in seasonal,
occasion specific or decorative tins, fitting the “giftable” requirement of individual customers, while also adding the capability
to customize the tins with corporate logos and other personalized features for the Company’s corporate customers’ gifting
needs. On July 1, 2024, the Company completed its acquisition of Scharffen Berger, a manufacturer of giftable premium
chocolate and specialty treats.
BloomNet®. The Company’s BloomNet business provides its members with products and services, including: (i) settlement
processing, consisting of the settlement of orders between referring florists (including the 1-800-Flowers.com brand) and
fulfilling florists, (ii) advertising, in the form of member directories, including the industry’s first on-line directory, (iii) access
services, by which BloomNet florists are able to refer and fulfill orders, using Bloomlink®, the Company’s proprietary
Internet-based system, (iv) other products and services, including web hosting, marketing, designer education and point of
sale systems, and (v) wholesale products, which consist of branded and non-branded floral supplies, enabling member florists
to reduce their costs through 1-800-Flowers.com purchasing leverage, while also ensuring that member florists will be able
to fulfill 1-800-Flowers.com brand orders based on recipe specifications. While maintaining industry-high quality standards
for its 1-800-Flowers.com brand customers, the Company offers florists a compelling value proposition, offering products
and services that its florists need to grow their business and to enhance profitability. On April 3, 2024, the Company
completed its acquisition of Card Isle, an e-commerce greeting card service, expanding the Company’s presence in the
greeting card category across its brand portfolio.
Marketing and Promotion
The Company’s marketing and promotional strategy is designed to strengthen the 1-800-FLOWERS.COM brands, engage
with its customers, increase customer acquisition, build customer loyalty, encourage repeat purchases and drive long-term
growth. The Company’s goal is to create a celebratory ecosystem that makes its brands synonymous with thoughtful gifting
and to help our customers “send smiles” every day. To do this, the Company intends to invest in its brands and acquire new
customers through the use of selective on and off-line media, direct marketing, public relations, social media and strategic
relationships, while cost-effectively capitalizing on the Company’s large and loyal customer base. The Company’s focus is
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to create marketing messaging that is more relevant to the customer, to engage with our customers in a two-way dialog and
to focus on the customer experience. It plans to improve customer purchase frequency via product exposure through its multi-
brand portal, and Celebrations Passport® loyalty program, as well as continually investing and innovating how and where it
engages with its customers.
With strong appeal and a recognizable brand, 1-800-FLOWERS.COM, Inc. continues to find new and innovative ways to
connect with its community of customers, inspiring them to give more, connect more, and build more and better relationships.
In 2023, the Company was featured in the Wall Street Journal's Economics Of series, which showcased its family of brands
and offerings to a national audience. The Company has also expanded its presence on both local and national platforms, with
multiple inclusions on Good Morning America, the Today Show, Telemundo - Hoy Dia!, and more. A commitment to
corporate citizenship and social responsibility remains at the core of the Company, earning recognition and awards for its
corporate citizenship efforts, including partnerships with organizations such as Smile Farms, which provides job opportunities
for adults with developmental disabilities. In addition, collaboration with the Point Foundation to support the LGBTQ+
community helped the Company earn a high score on the 2023 Corporate Equality Index by the Human Rights Campaign. In
2024, 1-800-FLOWERS.COM, Inc. was named among America's Most Trustworthy Companies by Newsweek, reflecting its
dedication to its customers and communities.
Technology Infrastructure
The Company believes it has been and continues to be a leader in implementing new technologies to give its customers the
best possible shopping experience, whether online or over the telephone. Orders are transmitted directly from the Company’s
secure websites, or with the assistance of a gift advisor, into our internally developed transaction processing system, which
captures the required customer and recipient information. The system then routes the order to the appropriate distribution
center or, for florist fulfilled or drop-shipped items, selects a florist or vendor to fulfill the customer’s order and electronically
refers the necessary information using BloomLink, the Company’s proprietary Internet-based system. The Company’s gift
advisors have electronic access to this system, enabling them to assist in order fulfillment and subsequently track other
customer and/or order information.
Fulfillment and Manufacturing Operations
The Company’s customers primarily place their orders either online or over the telephone. The Company’s hybrid fulfillment
system, which enables the Company to offer same-day, next-day and any-day delivery, combines the use of BloomNet
(comprised of independent florists operating retail flower shops and franchise florist shops) with Company distribution
centers and vendors who ship directly to the Company’s customers. While providing a significant competitive advantage in
terms of delivery options, the Company’s fulfillment system also has the added benefit of reducing the Company’s capital
investments in inventory and infrastructure. The Company’s products are backed by a 100% smile guarantee, and the
Company’s business is not dependent on any single third-party supplier.
Fulfillment and manufacturing of products is as follows:
Flowers, Plants, and Personalized Gifts. A majority of the Company’s floral orders are fulfilled by one of the Company’s
BloomNet members, allowing the Company to deliver its floral and fruit bouquet products on a same-day or next-day basis
to ensure freshness and to meet its customers’ need for immediate gifting. In addition to these florist-designed products, the
Company also offers fresh cut floral arrangements in a wide assortment of combinations, themes and designer bouquets and
collections through its direct ship program, fresh from the farm. Also, the Company offers a broad selection of personalized
gifts and keepsakes that are manufactured utilizing same-day/next-day capabilities, and distributed from its Bolingbrook, IL
facility.
Gourmet Foods & Gift Baskets. The Company offers a wide array of premium brand signature baked products, chocolate,
confections, gift baskets, gourmet popcorn, dipped berries, giftable fruit towers and baskets, and related products through its
Gourmet Foods & Gift Baskets’ brands. The Company’s Cheryl’s cookies and baked gifts are manufactured primarily in its
baking facility in Westerville, Ohio, while The Popcorn Factory and Moose Munch premium snack products are popped in
Medford, Oregon and Lake Forest, Illinois. Harry & David products are grown and manufactured primarily from its facilities
in Medford, Oregon, supplemented by specialty products that are sourced across the U.S. and the world. Scharffen Berger
products are manufactured in Ashland, Oregon. Gift basket confection and fulfillment for both wholesale and 1-800-
Baskets.com is handled by DesignPac, located in Melrose Park, Illinois. Our products are distributed from a combination of
Company-owned and leased distribution facilities across the country, which are shared by our brands in order to reduce both
transit time to customer and overall logistics costs. Dipped berries and other specialty treats for our Shari’s Berries brand are
manufactured and fulfilled through our network of drop ship vendors.
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Sources and Availability of Raw Materials
The Company’s raw materials consist of ingredients for manufactured products (including various commodities such as sugar,
flour, cocoa, eggs, fruit and flowers), packaging supplies, and other supplies used in the manufacturing and transportation
processes (such as fuel, natural gas and derivative products). Except for certain crops which are grown in our Harry & David
orchards, raw materials used by the Company are purchased from third parties, some of whom are single-source suppliers.
The prices we pay, and the availability of these materials and other commodities are subject to fluctuation. When prices for
these items change, we may or may not pass the change to our customers. We utilize a global supply chain that includes both
U.S. and international suppliers. Our suppliers are subject to standards of conduct, including requirements that they comply
with local labor laws, local worker safety laws and other applicable laws. Our ability to acquire from our suppliers the
assortment and volume we need to meet customer demand, to receive those materials timely through our supply chain and to
produce, manufacture and distribute those products determines, in part, our ability to grow the business, and the appeal of
our merchandise assortment we offer to our customers.
Seasonality
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, historically generated 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 rise during the Company’s fiscal third and fourth quarters in comparison
to its fiscal first quarter. During fiscal 2024, our fiscal second quarter revenues represented approximately 45% of annual
revenues, while our first, third and fourth quarters generated 14%, 21%, and 20% of annual revenues, respectively.
In preparation for the Company’s second quarter holiday season, the Company significantly increases its inventories. This
seasonal build has traditionally been financed by cash flows from operations, supplemented by a bank line of credit, which
peaks in November. The Company has historically repaid all revolving bank lines of credit with cash generated from
operations, prior to the end of the Company’s fiscal second quarter.
Competition
The popularity and convenience of e-commerce shopping has continued to give rise to established businesses on the Internet.
In addition to selling their products over the Internet, many of these retailers sell their products through a combination of
channels by maintaining a website, a toll-free phone number and physical locations. Additionally, several of these merchants
offer an expanding variety of products and some are attracting an increasing number of customers. Certain mass merchants
have expanded their offerings to include competing products and may continue to do so in the future. These businesses, as
well as other potential competitors, may be able to:
●
undertake more extensive marketing campaigns for their brands and services;
●
adopt more aggressive pricing policies; and
●
make more attractive offers to potential employees, distributors and retailers.
In addition, the Company faces intense competition in each of its individual product categories. In the floral industry, there
are various providers of floral products, none of which is dominant in the industry. The Company’s competitors include:
●
retail floral shops, some of which maintain toll-free telephone numbers, websites, and mobile applications;
●
online floral retailers and social media platform retailers, as well as retailers offering substitute gift products;
●
catalog companies that offer floral products;
●
floral telemarketers and wire services; and
●
supermarkets, mass merchants and specialty retailers with floral departments.
Similarly, the plant, gift basket and gourmet foods categories are highly competitive. Each of these categories encompasses
a wide range of products, is highly fragmented and is served by a large number of companies, none of which is dominant.
Products in these categories may be purchased from a number of outlets, including mass merchants, telemarketers, retail
specialty shops, online retailers and mail-order catalogs.
7
The Company believes the strength of its brands, product selection, customer relationships, technology infrastructure and
fulfillment capabilities position it to compete effectively against its current and potential competitors in each of its product
categories. However, increased competition could result in:
●
price reductions, decreased revenues and lower profit margins;
●
loss of market share; and
●
increased marketing expenditures.
These and other competitive factors may adversely impact the Company’s business and results of operations.
Government Regulation and Legal Uncertainties
The Internet continues to evolve and there are laws and regulations directly applicable to e-commerce. Legislatures are also
considering an increasing number of laws and regulations pertaining to the Internet, including laws and regulations
addressing:
●
user privacy;
●
pricing;
●
content;
●
connectivity;
●
intellectual property;
●
distribution;
●
taxation and tariffs;
●
liabilities;
●
antitrust; and
●
characteristics and quality of products and services.
Further, the growth and development of the market for online services may prompt more stringent consumer protection laws
that may impose additional burdens on those companies conducting business online. The adoption of any additional laws or
regulations may impair the growth of the Internet or commercial online services. This could decrease the demand for the
Company’s services and increase its cost of doing business. Moreover, the applicability to the Internet of existing laws
regarding issues like property ownership, taxes, libel and personal privacy is uncertain. Any new legislation or regulation that
has an adverse impact on the Internet or the application of existing laws and regulations to the Internet could have a material
adverse effect on the Company’s business, financial condition and results of operations.
States or foreign countries might attempt to regulate the Company’s business or levy additional sales or other taxes relating
to its activities. Because the Company’s products and services are available over the Internet anywhere in the world, multiple
jurisdictions may claim that the Company is required to do business as a foreign corporation in one or more of those
jurisdictions. Failure to qualify as a foreign corporation in a jurisdiction where the Company is required to do so could subject
it to taxes and penalties. States or foreign governments may charge the Company with violations of local laws.
Intellectual Property
The Company regards its service marks, trademarks, trade secrets, domain names and similar intellectual property as critical
to its success. The Company has applied for or received trademark and/or service mark registration for, among others, “1-
800-FLOWERS.COM”,
“1-800-FLOWERS”,
“1-800-Baskets.com”,
“FruitBouquets.com”,
“BloomNet”,
"Card
Isle", “GreatFood.com”, “The Popcorn Factory”, “Cheryl’s Cookies”, “Mrs. Beasley’s”, “Celebrations Passport”,
“Flowerama”, “DesignPac”, “Harry & David”, “Wolferman’s Bakery”, “Moose Munch”, Cushman’s”, “Simply Chocolate”,
“Personalization Universe”, “PersonalizationMall”, “Things Remembered”, “Shari’s Berries”, "Scharffen Berger",
“SmartGift”, “Vital Choice” and “Alice’s Table”. The Company also has rights to numerous domain names, including:
www.1800flowers.com,
www.cardisle.com,
www.800flowers.com,
www.1800baskets.com,
www.flowers.com,
www.personalizationuniverse.com,
www.personalizationmall.com,
www.thingsremembered.com,
www.plants.com,
www.florists.com,
www.greatfoods.com,
www.cheryls.com,
www.celebrations.com,
www.flowerama.com,
www.designpac.com,
www.simplychocolate.com,
www.mybloomnet.net,
www.napcoimports.com,
www.thepopcornfactory.com,
www.harryanddavid.com,
www.wolfermans.com,
www.vitalchoice.com,
www.alicestable.com, www.berries.com, www.sharisberries.com, www.scharffenberger.com, and www.smartgift.com. In
addition, the Company owns a number of international trademarks and/or service marks. The Company has also developed
transaction processing and operating systems as well as marketing data, and customer and recipient information databases.
8
The Company relies on trademark, unfair competition and copyright law, trade secret protection and contracts such as
confidentiality and license agreements with its employees, customers, vendors and others to protect its proprietary rights.
Despite the Company’s precautions, it may be possible for competitors to obtain and/or use the Company’s proprietary
information without authorization or to develop technologies similar to the Company’s and independently create a similarly
functioning infrastructure. Furthermore, the protection of proprietary rights in Internet-related industries is uncertain and still
evolving. The laws of some foreign countries do not protect proprietary rights to the same extent as do the laws of the United
States. The Company’s means of protecting its proprietary rights in the United States or abroad may not be adequate.
Third parties have in the past infringed or misappropriated the Company’s intellectual property or similar proprietary rights.
The Company believes infringements and misappropriations will continue to occur in the future. The Company intends to
guard against infringement and misappropriation. However, the Company cannot guarantee it will be able to enforce its rights
and enjoin the alleged infringers from their use of confusingly similar trademarks, service marks, telephone numbers and
domain names.
In addition, third parties may assert infringement claims against the Company. The Company cannot be certain that its
technologies or its products and services do not infringe valid patents, trademarks, copyrights or other proprietary rights held
by third parties. The Company may be subject to legal proceedings and claims from time to time relating to its intellectual
property and the intellectual property of others in the ordinary course of its business. Intellectual property litigation is
expensive and time-consuming and could divert management resources away from running the Company’s business.
Human Capital
Employees. We focus on attracting, developing and retaining skilled, diverse talent, including recruiting from among the
universities across the markets in which we compete and are generally able to select top talent. We focus on developing our
employees by providing a variety of job experiences, training programs and skill development opportunities. As of June 30,
2024, the Company had approximately 4,000 full and part-time employees, all located in the United States. During peak
periods, the Company substantially increases the number of customer service, manufacturing, and fulfillment personnel. The
Company’s employees are not represented under collective bargaining agreements and the Company considers its relations
with its employees to be good. Our employees are a key source of our competitive advantage and their actions, guided by our
Code of Ethics, are critical to the long-term success of our business.
Workforce Diversity. As a company, we are committed to building an inclusive and equitable culture that embraces and
celebrates our associates’ diverse backgrounds and unique life experiences.
Compensation and Benefits. The Company aims to attract and retain a talented workforce by offering competitive
compensation and benefits, strong career development and a respectful and inclusive culture that provides equal opportunity
for all. We believe our base wages and salaries, which we review annually, are fair and competitive with the external labor
markets in which our associates work. We encourage and reward employees based upon the achievement of financial and
other key performance metrics, which strengthens the connection between pay and performance. We also grant equity
compensation awards that vest over time through our long-term incentive plan to eligible associates to align such associates’
incentives with the Company’s long-term strategic objectives and the interests of our stockholders. We also offer competitive
benefit programs, in line with local practices with flexibility to accommodate the needs of a diverse workforce, including
paid vacation and holidays, family leave, disability insurance, life insurance, healthcare, and a 401(k) plan with a company
match.
Health, Safety and Wellness. From a workplace safety standpoint, we focus on training, awareness, behavioral-based work
observation practices, and culture in our continuous effort to reduce workplace injuries and accidents. We are continually
focused on the safety of our associates and have a strong emphasis on identifying and addressing the safety risks to and
concerns of our associates.
9
Item 1A.
Risk Factors
Cautionary Statements Under the Private Securities Litigation Reform Act of 1995
Our disclosures and analysis in this Form 10-K contain some forward-looking statements that set forth anticipated results
based on management’s plans and assumptions. From time to time, we also provide forward-looking statements in other
statements we release to the public as well as oral forward-looking statements. Such statements give our current expectations
or forecasts of future events; they do not relate strictly to historical or current facts. We have tried, wherever possible, to
identify such statements by using words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe” and
similar expressions in connection with any discussion of future operating or financial performance. In particular, these include
statements relating to future actions; the effectiveness of our marketing programs; the performance of our existing products
and services; our ability to attract and retain customers and expand our customer base; our ability to enter into or renew online
marketing agreements; our ability to respond to competitive pressures; expenses, including shipping costs and the costs of
marketing our current and future products and services; the outcome of contingencies, including legal proceedings in the
normal course of business; and our ability to integrate acquisitions.
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 risk, uncertainties and potentially inaccurate assumptions.
Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual
results could differ materially from past results and those anticipated, estimated or projected. You should bear this in mind
as you 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 10-Q
and 8-K reports to the United States Securities and Exchange Commission (“SEC”). Also note we provide the following
cautionary discussion of risks, uncertainties and possibly inaccurate assumptions relevant to our business. These are factors
that, individually or in the aggregate, we think could cause our actual results to differ materially from expected and historical
results. We note these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995.
Macroeconomic Conditions and Related Risk Factors
The financial and credit markets and consumer sentiment have and will experience significant volatility, which may have an
adverse effect on our customers’ spending patterns and in turn our business, financial condition and results of operations.
The Company’s business and operating results are subject to economic conditions and their impact on consumer discretionary
spending. Factors that may negatively impact consumer spending include high levels of unemployment, higher consumer
debt levels, reductions in net worth, reductions in disposable income levels, declines in asset values, and related market
uncertainty; home foreclosures and reductions in home values; fluctuating interest rates and credit availability; fluctuating
fuel and other energy costs; fluctuating commodity prices; and general uncertainty regarding the overall future political and
economic environment. Consumer spending patterns are difficult to predict and are sensitive to the general economic climate,
the consumer’s level of disposable income, consumer debt, and overall consumer confidence. In the recent past, such
factors have impacted and may continue to impact our business in a number of ways. Included among these current and
potential future negative impacts are reduced demand and lower prices for our products and services. Adverse economic
changes could reduce consumer confidence and could thereby affect our operating results. In challenging and uncertain
economic environments, including the aftermath of the COVID-19 pandemic, and the geopolitical climate, we cannot predict
when macroeconomic conditions uncertainty may arise and whether such circumstances could impact the Company.
The impact of the COVID-19 pandemic has created significant uncertainty for our business, financial condition and results
of operations and for the prices of our publicly traded securities. The extent of the continuing impact of the COVID-19
pandemic on our business and financial results will depend on numerous evolving factors that we are not able to accurately
predict and which will vary by market, including global economic conditions after the pandemic, governmental actions that
have been taken, or may be taken in the future, in response to the pandemic, and changes in consumer behavior following the
pandemic.
10
Although our business experienced positive growth in our revenues and customer file during much of the COVID-19
pandemic, when many consumers shifted to online shopping, most pandemic-era restrictions have since been lifted, and it is
difficult to predict what lasting effects the pandemic and resulting macroeconomic patterns will have on consumer spending
patterns and e-commerce generally. We may fail to achieve our previous rate of growth or be unsuccessful in maintaining
some or all of the new customers we acquired during the pandemic, which could reduce demand for our products. Any
reduced demand for our products or change in customers' purchasing and consumption patterns, as well as continued
economic uncertainty, can adversely affect our customers’ and business partners’ financial condition, resulting in an inability
to pay for our products, reduced or canceled orders of our products, closing of florist or franchise locations, stores, or our
business partners’ inability to supply us with ingredients or other items necessary for us to make, manufacture, distribute or
sell our products. Such adverse changes in our customers’ or business partners’ financial condition may also result in our
recording charges for our inability to recover or collect any accounts receivable, owned or leased assets, or prepaid expenses.
Increased shipping costs and supply chain disruptions may adversely affect sales of the Company’s products. Many of the
Company's products are delivered to customers either directly from the manufacturer or from the Company’s fulfillment
centers. The Company has established relationships with Federal Express and other common carriers for the delivery of these
products. If these carriers continue to increase the prices they charge to ship the Company’s goods, and if the Company is
forced to pass these costs on to its customers, or if carrier capacity becomes constrained, due to strikes or otherwise, the
Company’s sales could be negatively impacted. In addition, ocean container availability and cost, as well as port and shipping
route disruptions could impact the Company’s ability to deliver products on a timely basis to our customers and adversely
affect its customer relationships, revenues and earnings.
We are dependent on international vendors for our supply of flowers, as well as certain components and products, exposing
us to significant regulatory, global economic, taxation, political instability and other risks, which could adversely impact our
financial results.
The availability and price of flowers, as well as certain components and products that we rely on to manufacture and sell our
products could be adversely affected by a number of factors affecting international locations, including:
●
import duties and quotas;
●
agricultural limitations and restrictions to manage pests and disease;
●
changes in trading status;
●
economic uncertainties and currency fluctuations;
●
severe weather;
●
work stoppages;
●
foreign government regulations and political unrest; and
●
trade restrictions, including United States retaliation against foreign trade practices.
The U.S. administration has instituted or proposed changes in trade policies that include the negotiation or termination of
trade agreements, the imposition of higher tariffs on imports into the U.S., economic sanctions on individuals, corporations
or countries, and other government regulations affecting trade between the U.S. and other countries where we conduct
business. As a result, there may be greater restrictions and economic disincentives on international trade and such changes
have the potential to adversely impact the U.S. economy, our industry and the demand for our products. In addition, it may
be time-consuming and expensive for us to alter our business operations in order to adapt to or comply with any such changes,
and as a result, such changes could have a material adverse effect on our business, financial condition and results of
operations.
If the supply of flowers for sale becomes limited, the price of flowers could rise or flowers may be unavailable and the
Company’s revenues and gross margins could decline. A variety of factors affect the supply of flowers in the United States
and the price of the Company’s floral products. If the supply of flowers available for sale is limited due to weather conditions,
farm closures, economic conditions, political conditions in supplier locations, or other factors, prices for flowers could rise
and as a result customer demand for the Company’s floral products may be reduced, causing revenues and gross margins to
decline. Alternatively, the Company may not be able to obtain high quality flowers in an amount sufficient to meet customer
demand. Even if available, flowers from alternative sources may be of lesser quality and/or may be more expensive than
those currently offered by the Company.
Most of the flowers sold in the United States are grown by farmers located abroad, primarily in Colombia, Ecuador and
Holland, and the Company expects that this will continue in the future.
The Company's operating results may suffer due to economic, political and social unrest or disturbances. Like other
American businesses, the Company is unable to predict what long-term effect acts of terrorism, war, or similar unforeseen
11
events may have on its business. The Company’s results of operations and financial condition could be adversely impacted
if such events cause an economic slowdown in the United States, negatively impact the supply chain, increase the cost of key
components for our gifts, or have other negative effects that cannot now be anticipated.
Business and Operational Risk Factors
The Company’s operating results may fluctuate, and this fluctuation could cause financial results to be below expectations.
The Company’s operating results may fluctuate from period to period for a number of reasons. In budgeting the Company’s
operating expenses for the foreseeable future, the Company makes assumptions regarding revenue trends; however, some of
the Company’s operating expenses are fixed in the short term. Sales of the Company’s products are seasonal, concentrated
in the fourth calendar quarter, due to the Thanksgiving and Christmas-time holidays, and the second calendar quarter, due to
Mother’s Day and Administrative Professionals’ Week. In anticipation of increased sales activity during these periods, the
Company hires a significant number of temporary employees to supplement its permanent staff and the Company increases
its inventory levels. If revenues during these periods do not meet the Company’s expectations, it may not generate sufficient
revenue to offset these increased costs and its operating results may suffer.
The Company’s quarterly operating results may significantly fluctuate and you should not rely on them as an indication of
its future results. The Company’s future revenues and results of operations may significantly fluctuate due to a combination
of factors, many of which are outside of management’s control. The most important of these factors include:
●
seasonality;
●
the retail economy;
●
the timing and effectiveness of marketing programs;
●
the timing of the introduction of new products and services;
●
the Company’s ability to find and maintain reliable sources for certain of its products;
●
the impact of severe weather or natural disasters on consumer demand;
●
the timing and effectiveness of capital expenditures;
●
the Company’s ability to enter into or renew online marketing agreements; and
●
competition.
The Company may be unable to reduce operating expenses quickly enough to offset any unexpected revenue shortfall. If the
Company has a shortfall in revenue without a corresponding reduction to its expenses, operating results may suffer. The
Company’s operating results for any particular quarter may not be indicative of future operating results. You should not rely
on quarter-to-quarter comparisons of results of operations as an indication of the Company’s future performance. It is possible
that results of operations may be below the expectations of public market analysts and investors, which could cause the
trading price of the Company’s Class A common stock to fall.
During peak periods, the Company utilizes temporary employees and outsourced staff, who may not be as well-trained or
committed to its customers as its permanent employees, and if they fail to provide the Company’s customers with high quality
customer service the customers may not return, which could have a material adverse effect on the Company’s business,
financial condition, results of operations and cash flows. The Company depends on its customer service department to
respond to its customers should they have questions or problems with their orders. During peak periods, the Company relies
on its permanent employees, as well as temporary employees and outsourced staff to respond to customer inquiries. These
temporary employees and outsourced staff may not have the same level of commitment to the Company’s customers or be as
well trained as its permanent employees. If the Company’s customers are dissatisfied with the quality of the customer service
they receive, they may not shop with the Company again, which could have a material adverse effect on its business, financial
condition, results of operations and cash flows.
If the Company fails to develop and maintain its brands, it may not increase or maintain its customer base or its revenues.
The Company must continue to develop and maintain the 1-800-FLOWERS.COM brands to expand its customer base and
its revenues. In addition, the Company has introduced and acquired other brands in the past, and may continue to do so in the
future. The Company believes that the importance of brand recognition will increase as it expands its product offerings. Many
of the Company’s customers may not be aware of the Company’s non-floral products. If the Company fails to advertise and
market its products effectively, it may not succeed in establishing its brands and may lose customers leading to a reduction
of revenues.
12
The Company’s success in promoting and enhancing the 1-800-FLOWERS.COM brands will also depend on its success in
providing its customers high-quality products and a high level of customer service. If the Company’s customers do not
perceive its products and services to be of high quality, the value of the 1-800-FLOWERS.COM brands would be diminished
and the Company may lose customers and its revenues may decline.
A failure to establish and maintain strategic online and social media relationships that generate a significant amount of
traffic could limit the growth of the Company’s business. Although the Company expects a significant portion of its online
customers will continue to come directly to its website and mobile applications, it will also rely on third party websites, search
engines and affiliates with which the Company has strategic relationships for traffic. If these third-parties do not attract a
significant number of visitors, the Company may not receive a significant number of online customers from these
relationships and its revenues from these relationships may decrease or remain flat. There continues to be strong competition
to establish or maintain relationships with leading Internet companies, and the Company may not successfully enter into
additional relationships or renew existing ones beyond their current terms. The Company may also be required to pay
significant fees to maintain and expand existing relationships. In addition, current or future legislation or changes to third
parties’ policies may limit the Company’s ability to effectively reach consumers whose behavior suggests that they might be
interested in Company products and may increase the cost of such marketing efforts. The Company’s online revenues may
suffer if it does not enter into new relationships or maintain existing relationships or if these relationships do not result in
traffic sufficient to justify their costs.
If local florists and other third-party vendors do not fulfill orders to the Company’s customers’ satisfaction, customers may
not shop with the Company again. In many cases, floral orders placed by the Company’s customers are fulfilled by local
independent florists, a majority of which are members of BloomNet. The Company does not directly control any of these
florists. In addition, many of the non-floral products sold by the Company are manufactured and delivered to its customers
by independent third-party vendors. If customers are dissatisfied with the performance of the local florist or other third-party
vendors, they may not utilize the Company’s services when placing future orders and its revenues may decrease.
If a florist discontinues its relationship with the Company, the Company’s customers may experience delays in service or
declines in quality and may not shop with the Company again. Many of the Company’s arrangements with local florists for
order fulfillment may be terminated by either party with 10 days’ notice. If a florist discontinues its relationship with the
Company, the Company will be required to obtain a suitable replacement located in the same geographic area, which may
cause delays in delivery or a decline in quality, leading to customer dissatisfaction and loss of customers.
If a significant number of customers are not satisfied with their purchase, the Company will be required to incur substantial
costs to issue refunds, credits or replacement products. The Company offers its customers a 100% satisfaction guarantee on
its products. If customers are not satisfied with the products they receive, the Company will either replace the product for the
customer or issue the customer a refund or credit. The Company’s net income would decrease if a significant number of
customers request replacement products, refunds or credits and the Company is unable to pass such costs onto the supplier.
Competition in the floral, plant, gift basket, gourmet food, and specialty gift industries is intense and a failure to respond to
competitive pressure could result in lost revenues. There are many companies that offer products in these categories.
In the floral category, the Company’s competitors include:
●
retail floral shops, some of which maintain toll-free telephone numbers and websites;
●
online floral retailers;
●
catalog companies that offer floral products;
●
floral telemarketers and wire services; and
●
supermarkets, mass merchants and specialty gift retailers with floral departments.
Similarly, the plant, gift basket, gourmet food, cookie, candy, fruit and specialty gift categories are each highly competitive.
Each of these categories encompasses a wide range of products and is highly fragmented. Products in these categories may
be purchased from a number of outlets, including mass merchants, retail shops, online retailers and mail-order catalogs.
Competition is intense and the Company expects it to increase. Increased competition could result in:
●
price reductions, decreased revenue and lower profit margins;
●
loss of market share; and
●
increased marketing expenditures.
These and other competitive factors could materially and adversely affect the Company’s results of operations.
13
If the Company does not accurately predict customer demand for its products, it may lose customers or experience increased
costs. If the Company overestimates customer demand for its products, excess inventory and outdated merchandise could
accumulate, tying up working capital and potentially resulting in reduced warehouse capacity and inventory losses due to
damage, theft and obsolescence. If the Company underestimates customer demand, it may disappoint customers who may
turn to its competitors. Moreover, the strength of the 1-800-FLOWERS.COM brands could be diminished due to
misjudgments in merchandise selection.
Extreme weather conditions and natural disasters, and other catastrophic events, may interrupt our business, or our
suppliers’ businesses. Some of our facilities and our suppliers’ facilities are located in areas that may be subject to extreme,
and occasionally prolonged, weather conditions, including hurricanes, tornadoes, and wildfires. Extreme weather conditions,
whether caused by global climate change or otherwise, may interrupt our operations in such areas, negatively impacting
various functions, such as production, distribution, and order fulfillment. Furthermore, extreme weather conditions may
interrupt our suppliers’ production or shipments, or increase our suppliers’ product costs, all of which could have an adverse
effect on our business, financial condition, and results of operations.
Various diseases, pests and certain weather conditions can affect fruit production. Various diseases, pests, fungi, viruses,
drought, frosts, hail, wildfires, floods and certain other weather conditions could affect the quality and quantity of our fruit
production in our Harry & David orchards, decreasing the supply of our products and negatively impacting profitability. Our
producing orchards also require adequate water supplies. A substantial reduction in water supplies could result in material
losses of crops, which could lead to a shortage of our product supply.
The ripening of our fruits is subject to seasonal fluctuations that could negatively impact profitability. The ripening of our
fruits in the Harry & David orchards can happen earlier than predicted due to warmer temperatures during the year. This
would result in an oversupply of fruits that we might not be able to sell on a timely basis and could result in significant
inventory write-offs. The ripening of the Company’s fruits can also happen later than predicted due to colder temperatures
during the year. This can cause a delay in product shipments and not being able to timely meet customer demand during the
critical holiday season. Both of these scenarios could adversely affect our business, financial condition and results of
operations.
If the Company is unable to hire and retain qualified employees, including key personnel, its business may suffer. The
Company’s success is dependent on its ability to hire, retain and motivate highly qualified personnel. Given the competitive
labor market, we cannot be assured that we can continue to hire, train and retain a sufficient number of qualified employees
at current wage rates. In particular, the Company’s success depends on the continued efforts of its Chief Executive Officer,
James F. McCann, as well as its senior management team, which help manage its business. The loss of the services of any of
the Company’s executive management or key personnel or its inability to attract qualified additional personnel could cause
its business to suffer and force it to expend time and resources in locating and training additional personnel.
A failure to integrate our acquisitions may cause the results of the acquired company, as well as the results of the Company
to suffer. The Company has opportunistically acquired a number of companies over the past several years. Additionally, the
Company may look to acquire additional companies in the future. As part of the acquisition process, the Company embarks
upon a project management effort to integrate the acquisition onto our information technology systems and management
processes. Due diligence undertaken with any acquisition may not reveal all potential problems or inefficiencies involved in
integrating the acquired entity into the Company. If we are unsuccessful in integrating our acquisitions, the results of
our acquisitions may suffer, management may have to divert valuable resources to oversee and manage the acquisitions, the
Company may have to expend additional investments in the acquired company to upgrade personnel and/or information
technology systems and the results of the Company may suffer.
A failure to dispose of assets or businesses in a timely manner may cause the results of the Company to suffer. The Company
continues to evaluate the potential disposition of assets and businesses that may no longer help meet its objectives. When the
Company decides to sell assets or a business, it may encounter difficulty in finding buyers or alternative exit strategies on
acceptable terms in a timely manner, which could delay the accomplishment of its strategic objectives. Alternatively, the
Company may dispose of a business at a price or on terms that are less than it had anticipated. After reaching an agreement
with a buyer or seller for the disposition of a business, the Company is subject to satisfaction of pre-closing conditions, which
may prevent the Company from completing the transaction. Dispositions may also involve continued financial involvement
in the divested business, such as through continuing equity ownership, guarantees, indemnities or other financial obligations.
Under these arrangements, performance by the divested businesses or other conditions outside the Company’s control could
affect its future financial results.
14
Information Technology and Systems
Failure to protect our website, networks and computer systems against disruption and cyber security threats, or otherwise
protect our and our customers’ confidential information, could damage our relationships with our customers, harm our
reputation, expose us to litigation and adversely affect our business. We rely extensively on our computer systems for the
successful operation of our business, including corporate email communications to and from employees, customers and retail
operations, the design, manufacture and distribution of our finished goods, digital marketing efforts, collection and retention
of customer data, employee information, the processing of credit card transactions, online e-commerce activities and our
interaction with the public in the social media space. Our systems are subject to damage or interruption from computer viruses,
malicious attacks and other security breaches. The possibility of a cyber-attack on any one or all of these systems is always
a serious threat and consumer awareness and sensitivity to privacy breaches and cyber security threats is high. If a
cybersecurity incident occurs, or there is a public perception that we have suffered a breach, our reputation and brand could
be damaged and we could be required to expend significant capital and other resources to alleviate problems.
As part of our business model, we collect, retain, and transmit confidential information over public networks. In addition to
our own databases, we use third party service providers to store, process and transmit this information on our behalf. Although
we contractually require these service providers to implement and use reasonable security measures, we cannot control third
parties and cannot guarantee that a security breach will not occur in the future either at their location or within their systems.
We have reasonable and up-to-date security measures in place to protect both our physical facilities and digital systems from
attacks. Despite these efforts, we may be vulnerable to targeted or random security breaches, acts of vandalism, computer
viruses, misplaced or lost data, programming and/or human errors, or other similar events.
Given the robust nature of our e-commerce presence and digital strategy, it is imperative that we and our e-commerce partners
maintain uninterrupted operation of our: (i) computer hardware, (ii) software systems, (iii) customer marketing databases,
and (iv) ability to email our current and potential customers.
If our systems are damaged or fail to function properly or reliably, we may incur substantial interruption, repair or replacement
costs, experience data loss or theft and impediments to our ability to conduct our operations. Any material disruptions in our
e-commerce presence or information technology systems could have a material adverse effect on our business, financial
condition and results of operations.
An increase in the number of employees working remotely has amplified certain risks to the Company’s business and
increased demand on the Company’s information technology resources and systems. Following the COVID-19 pandemic,
the Company experienced an increase in the number of its employees working remotely, which has led to increased phishing
and other cybersecurity attacks as cybercriminals try to exploit the uncertainty surrounding the COVID-19 pandemic, and an
increase in the number of points of potential attack, such as laptops and mobile devices (both of which are now being used in
increased numbers), to be secured, and any failure to effectively manage these risks, including to timely identify and
appropriately respond to any cyberattacks, may adversely affect the Company’s business.
If the Company fails to continuously improve its website (on all relevant platforms, including mobile), including successful
deployment of new technology, it may not attract or retain customers and may otherwise experience harm to its business. If
potential or existing customers do not find the Company’s website (on all relevant platforms, including mobile) a convenient
place to shop, the Company may not attract or retain customers and its sales may suffer. To encourage the use of the
Company’s website, it must continuously improve its accessibility, content and ease of use. If the Company is unable to
maintain a compelling web presence, including by successfully responding to new technology trends (such as generative
artificial intelligence), competitors' websites may be perceived as easier to use or better able to satisfy customer needs. In
addition, our use of generative AI in certain features of our website may present risks and challenges that remain uncertain
due to the relative novelty of this technology, and could subject us to competitive harm, regulatory action, legal liability and
brand or reputational harm.
The Company’s business could be injured by significant credit card, debit card and gift card fraud. Customers typically pay
for their on-line or telephone orders with debit or credit cards as well as a portion of their orders using gift cards. The
Company’s revenues and gross margins could decrease if it experienced significant credit card, debit card and gift card fraud.
Failure to adequately detect and avoid fraudulent credit card, debit card and gift card transactions could cause the Company
to lose its ability to accept credit cards or debit cards as forms of payment and/or result in charge-backs of the fraudulently
charged amounts and/or significantly decrease revenues. Furthermore, widespread credit card, debit card and gift card fraud
may lessen the Company’s customers’ willingness to purchase products through the Company’s websites or toll-free
telephone numbers. For this reason, such failure could have a material adverse effect on the Company’s business, financial
condition, results of operations and cash flows.
15
Unexpected system interruptions caused by system failures may result in reduced revenues and harm to the Company’s brand.
In the past, particularly during peak holiday periods, the Company has experienced significant increases in traffic on its
website and in its toll-free customer service centers. The Company’s operations are dependent on its ability to maintain its
computer and telecommunications systems in effective working order and to protect its systems against damage from fire,
natural disaster, power loss, telecommunications failure, security breaches (including breaches of our transaction processing
or other systems that could result in the compromise of confidential customer data), or similar events. The Company’s systems
have in the past, and may in the future, experience:
●
system interruptions;
●
long response times; and
●
degradation in service.
In addition, the Company periodically updates or replaces legacy systems with successor systems. If the Company fails to
timely and successfully effect any such updates, the Company’s order management, fulfillment, or other business processes
could experience interruptions.
The Company’s business depends on customers making purchases on its systems. Its revenues may decrease and its reputation
could be harmed if it experiences frequent or long system delays or interruptions or if a disruption occurs during a peak
holiday season.
If the Company’s telecommunications providers do not adequately maintain the Company’s service, the Company may
experience system failures and its revenues may decrease. The Company is dependent on telecommunication providers to
provide telephone services to its customer service centers and connectivity with its data centers. Although the Company
maintains redundant telecommunications systems, if these providers experience system failures or fail to adequately maintain
the Company’s systems, the Company may experience interruptions and will be unable to generate revenue. The Company
depends upon these third-party relationships because it does not have the resources to maintain its service without these or
other third parties. Failure to maintain these relationships or replace them on financially attractive terms may disrupt the
Company’s operations or require it to incur significant unanticipated costs.
Legal, Regulatory, Tax and Other Risks
Unauthorized use of the Company’s intellectual property by third parties may damage its brands. Unauthorized use of the
Company’s intellectual property by third parties may damage its brands and its reputation and may likely result in a loss of
customers. It may be possible for third parties to obtain and use the Company’s intellectual property without authorization.
Third parties have in the past infringed or misappropriated the Company’s intellectual property or similar proprietary rights.
The Company believes infringements and misappropriations will continue to occur in the future. Furthermore, the validity,
enforceability and scope of protection of intellectual property in Internet-related industries is uncertain and still evolving. The
Company has been unable to register certain of its intellectual property in some foreign countries and furthermore, the laws
of some foreign countries are uncertain or do not protect intellectual property rights to the same extent as do the laws of the
United States. The protection of the Company's intellectual property may require significant time and expense, and we may
not be successful in our efforts.
The Company’s franchisees may damage its brands or increase its costs by failing to comply with its franchise agreements
or its operating standards. The Company’s franchise business is governed by its Uniform Franchise Disclosure Document,
franchise agreements and applicable franchise law. If the Company’s franchisees do not comply with its established operating
standards or the terms of the franchise agreements, the 1-800-FLOWERS.COM brands may be damaged. The Company may
incur significant additional costs, including time-consuming and expensive litigation, to enforce its rights under the franchise
agreements. Additionally, the Company is the primary tenant on certain leases, which the franchisees sublease from the
Company. If a franchisee fails to meet its obligations as subtenant, the Company could incur significant costs to avoid default
under the primary lease. Furthermore, as a franchisor, the Company has obligations to its franchisees. Franchisees may
challenge the performance of the Company’s obligations under the franchise agreements and subject it to costs in defending
these claims and, if the claims are successful, costs in connection with their compliance.
If third parties acquire rights to use similar domain names or phone numbers or if the Company loses the right to use its
phone numbers, its brands may be damaged and it may lose sales. The Company’s Internet domain names are an important
aspect of its brand recognition. The Company cannot practically acquire rights to all domain names similar to
www.1800flowers.com, or its other brands, whether under existing top level domains or those issued in the future. If third
parties obtain rights to similar domain names, these third parties may confuse the Company’s customers and cause its
customers to inadvertently place orders with these third parties, which could result in lost sales and could damage its brands.
16
Likewise, the phone number that spells 1-800-FLOWERS is important to the Company’s brand and its business. While the
Company has obtained the right to use the phone numbers 1-800-FLOWERS, 1-888-FLOWERS and 1-877-FLOWERS, as
well as common toll-free “FLOWERS” misdials, it may not be able to obtain rights to use the FLOWERS phone number as
new toll-free prefixes are issued, or the rights to all similar and potentially confusing numbers. If third parties obtain the
phone number that spells “FLOWERS" with a different prefix or a toll-free number similar to FLOWERS, these parties may
also confuse the Company’s customers and cause lost sales and potential damage to its brands. In addition, under applicable
FCC rules, ownership rights to phone numbers cannot be acquired. Accordingly, the FCC may rescind the Company’s right
to use any of its phone numbers, including 1-800-FLOWERS (1-800-356-9377).
Defending against intellectual property infringement claims could be expensive and, if the Company is not successful, could
disrupt its ability to conduct business. The Company has been unable to register certain of its intellectual properties in some
foreign countries, including, “1-800-Flowers.com”, “1-800-Flowers” and “800-Flowers”. The Company cannot be certain
that the products it sells, or services it offers, do not or will not infringe valid patents, trademarks, copyrights or other
intellectual property rights held by third parties. The Company may be a party to legal proceedings and claims relating to the
intellectual property of others from time to time in the ordinary course of its business. The Company may incur substantial
expense in defending against these third-party infringement claims, regardless of their merit. Successful infringement claims
against the Company may result in substantial monetary liability or may materially disrupt its ability to conduct business.
Product liability claims may subject the Company to increased costs. Several of the products the Company sells, including
perishable food and alcoholic beverage products, may expose it to product liability claims in the event that the use or
consumption of these products results in personal injury or property damage. Although the Company has not experienced any
material losses due to product liability claims to date, it may be a party to product liability claims in the future and incur
significant costs in their defense. Product liability claims often create negative publicity, which could materially damage the
Company’s reputation and its brands. Although the Company maintains insurance against product liability claims, its
coverage may be inadequate to cover any liabilities it may incur.
Future litigation could have a material adverse effect on our business and results of operations. Lawsuits and other
administrative or legal proceedings that may arise in the course of our operations can involve substantial costs, including the
costs associated with investigation, litigation and possible settlement, judgment, penalty or fine. In addition, lawsuits and
other legal proceedings may be time consuming and may require a commitment of management and personnel resources that
will be diverted from our normal business operations. Although we generally maintain insurance to mitigate certain costs,
there can be no assurance that costs associated with lawsuits or other legal proceedings will not exceed the limits of insurance
policies. Moreover, we may be unable to continue to maintain our existing insurance at a reasonable cost, if at all, or to secure
additional coverage, which may result in costs associated with lawsuits and other legal proceedings being uninsured. Our
business, financial condition, and results of operations could be adversely affected if a judgment, penalty or fine is not fully
covered by insurance.
A privacy or data security breach could expose us to costly government enforcement actions and private litigation and
adversely affect our business. An important component of our business involves the receipt, processing, transmittal, and
storage of personal and confidential information about our customers. We have programs in place to detect, contain and
respond to data security incidents. However, because the techniques used to obtain unauthorized access, disable or degrade
service, or sabotage systems change frequently and may be difficult to detect for long periods of time, we may be unable to
anticipate these techniques or implement adequate preventive measures. In addition, hardware, software, or applications we
develop or procure from third parties may contain defects in design or manufacture or other problems that could unexpectedly
compromise information security. Unauthorized parties may also attempt to gain access to our systems or facilities, or those
of third parties with whom we do business, through fraud, trickery, or other forms of deceiving our team members,
contractors, vendors, and temporary staff. In addition, security breaches can also occur as a result of intentional or inadvertent
breaches by our employees or by persons with whom we have commercial relationships. Any actual or suspected security
breach or other compromise of our security measures or those of our third party vendors, whether as a result of banking
efforts, denial-of-service attacks, viruses, malicious software, break-ins, phishing attacks, social engineering or otherwise,
could harm our reputation and business, damage our brand and make it harder to retain existing customers or acquire new
ones, require us to expend significant capital and other resources to address the breach, and result in a violation of applicable
laws, regulations or other legal obligations. Moreover, any insurance coverage we may carry may be inadequate to cover the
expenses and other potential financial exposure we could face as a result of a privacy or data breach.
Our business is subject to government regulation in various areas, and the increasing costs of compliance efforts, as well as
any potential non-compliance, could adversely impact our business. We are subject to laws and regulations affecting our
operations in a number of areas, including consumer protection, labor and employment, data privacy, product safety, and
environmental. Compliance with these and similar laws and regulations may require significant effort and expense, and
variances and inconsistencies in requirements among jurisdictions may exacerbate this. The time and expense of compliance
17
with existing and future regulations could, in the aggregate, adversely affect our results of operations, limit our product and
service offerings in one or more regions, constrain our marketing efforts, or otherwise cause us to change or limit our business
practices.
We have implemented policies and procedures designed to ensure compliance with applicable laws and regulations, but there
can be no assurance that our customers, employees, contractors, vendors, franchisees, or agents will not violate such laws
and regulations or our policies and procedures. If we are held responsible for any such violations, we could incur substantial
aggregate expense from monetary penalties, resolution of customer claims, higher insurance premiums, and the time and
expense of addressing any such violation, which could be material to us. Additionally, we could experience reputational harm
as a result of any such violations.
Failure to comply with federal, state and international laws and regulations relating to privacy, data protection and consumer
protection, or the expansion of current or the enactment of new laws or regulations relating to privacy, data protection and
consumer protection, could adversely affect our business and our financial condition.
A variety of federal, state and international laws and regulations govern the collection, use, retention, sharing, export and
security of personal information. We also may choose to comply with, or may be required to comply with, self-regulatory
obligations or other industry standards. Laws and regulations relating to privacy, data protection and consumer protection are
evolving and subject to potentially differing interpretations, and laws providing for new privacy and security rights and
requirements may be enacted or come into effect in different jurisdictions. These requirements may be enacted, interpreted
or applied in a manner that is inconsistent from one jurisdiction to another or in a manner that conflicts with other rules or
our practices. As a result, our practices may not comply, or may not comply in the future with all such laws, regulations,
requirements and obligations. Any failure, or perceived failure, by us to comply with any federal, state or international privacy
or consumer protection-related laws, regulations, regulatory guidance, orders to which we may be subject or other legal
obligations relating to privacy or consumer protection could adversely affect our reputation, brand and business, and may
result in claims, proceedings or actions against us by governmental entities or others, including claims for statutory damages
asserted on behalf of purported classes of affected persons or other liabilities or require us to change our business practices,
including changing, limiting or ceasing altogether the collection, use, sharing, or transfer of data relating to customers, which
could materially adversely affect our business, financial condition and operating results.
Many governmental regulations may impact the Internet, which could affect the Company’s ability to conduct business. Any
new law or regulation, or the application or interpretation of existing laws, may adversely impact the growth in the use of the
Internet or the Company’s websites. The Company expects there will be an increasing number of laws and regulations
pertaining to the Internet in the United States and throughout the world. These laws or regulations may relate to liability for
information received from or transmitted over the Internet, online content regulation, user privacy, taxation and quality of
products and services sold over the Internet. Moreover, the applicability to the Internet of existing laws governing intellectual
property ownership and infringement, copyright, trademark, trade secret, obscenity, libel, employment, personal privacy and
other issues is uncertain and developing. This could decrease the demand for the Company’s products, increase its costs or
otherwise adversely affect its business.
Regulations imposed by the Federal Trade Commission may adversely affect the growth of the Company’s Internet business
or its marketing efforts. The Federal Trade Commission has proposed regulations regarding the collection and use of personal
identifying information obtained from individuals when accessing websites, with particular emphasis on access by minors.
These regulations may include requirements that the Company establish procedures to disclose and notify users of privacy
and security policies, obtain consent from users for collection and use of information and provide users with the ability to
access, correct and delete personal information stored by the Company. These regulations may also include enforcement and
redress provisions. Moreover, even in the absence of those regulations, the Federal Trade Commission has begun
investigations into the privacy practices of other companies that collect information on the Internet. One investigation resulted
in a consent decree under which an Internet company agreed to establish programs to implement the principles noted above.
The Company may become a party to a similar investigation, or the Federal Trade Commission’s regulatory and enforcement
efforts, or those of other governmental bodies, which may adversely affect its ability to collect demographic and personal
information from users, and could adversely affect its marketing efforts.
Our business is subject to evolving corporate governance and public disclosure regulations and expectations. We are subject
to evolving rules and regulations promulgated by a number of federal, state, and local governmental and self-regulatory
organizations, including the United States Securities and Exchange Commission (“SEC”), the Nasdaq Stock Exchange and
the Financial Accounting Standards Board. These rules and regulations continue to increase in scope and complexity, making
compliance more difficult, expensive and uncertain. In addition, public companies are encountering increased scrutiny on
ESG matters and related disclosures. These changing rules, regulations and stakeholder expectations have resulted in, and are
likely to continue to result in, increased general and administrative expenses and increased management time and attention
18
spent complying with or meeting such regulations and expectations. For example, developing and acting on initiatives within
the scope of ESG, and collecting, measuring and reporting ESG-related information and metrics can be costly, difficult and
time consuming and is subject to evolving reporting standards. We could be criticized, fined or suffer other adverse
consequences based on the inaccuracy, inadequacy or incompleteness of our reporting. If our ESG-related data, processes
and reporting are incomplete or inaccurate, or if we otherwise fail to comply with ESG-related regulations, our reputation,
business, financial performance and growth could be adversely affected.
The price at which the Company’s Class A common stock will trade may be highly volatile and may fluctuate substantially.
The stock market has from time to time experienced price and volume fluctuations that have affected the market prices of
securities, particularly securities of companies with Internet operations. As a result, investors may experience a material
decline in the market price of the Company’s Class A common stock, regardless of the Company’s operating performance.
In the past, following periods of volatility in the market price of a particular company’s securities, securities class action
litigation has often been brought against that company. The Company may become involved in this type of litigation in the
future. Litigation of this type is often expensive and diverts management’s attention and resources and could have a material
adverse effect on the Company’s business and its results of operations.
Additional Information
The Company’s internet address is www.1800flowers.com. We make available, through the investor relations tab located on
our website at www.1800flowersinc.com, access to our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 as soon as reasonably practicable after they are electronically filed with or furnished to the
SEC. All such filings on our investor relations website are available free of charge. (The information posted on the Company’s
website is not incorporated into this Annual Report on Form 10-K.)
A copy of this Annual Report on Form 10-K is available without charge upon written request to: Investor Relations, 1-800-
FLOWERS.COM, Inc., Two Jericho Plaza, Suite 200, Jericho, NY 11753. In addition, the SEC maintains a website
(http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that
file electronically with the SEC.
Item 1B.
Unresolved Staff Comments
We have received no written comments regarding our current or periodic reports from the staff of the SEC that were issued
180 days or more preceding the end of our fiscal year ended June 30, 2024 that remain unresolved.
Item 1C. Cybersecurity
Risk Management and Strategy
In the ordinary course of our business, we utilize technology systems to collect, use, store, and transmit information. The
confidentiality, integrity, and availability of the information in our systems is important to our operations, business strategy,
and maintaining the trust of our customers, employees and partners. As part of our enterprise risk management program, we
have processes in place to identify, assess, and manage material risks associated with cybersecurity threats, as such term is
defined in Item 106(a) of Regulation S-K.
Our cybersecurity team engages with applicable personnel across the enterprise and utilizes software tools to identify,
categorize, and quantify material cybersecurity threat risks. The team meets regularly to consider new, known, and evolving
risks and evaluate the measures in place to mitigate these risks.
Our strategy for managing cybersecurity risk is multifaceted and includes, without limitation: (i) robust security policies and
procedures, designed in part to comply with Payment Card Industry, or PCI, rules; (ii) an incident response plan,
(iii) comprehensive system security elements and vulnerability scanning; (iv) periodic cybersecurity awareness training and
testing for employees and certain contractors; (v) risk management of our third-party suppliers, vendors, and other partners,
which includes risk-based diligence and contractual provisions that generally allow for periodic auditing, and (vi) security
assessments of any businesses that we acquire.
As part of our cybersecurity risk management program, we periodically engage third parties to evaluate and test our systems,
run tabletop exercises to test our incident response processes, provide incident response support if needed, and review our
PCI compliance.
19
We face ongoing risks that, if realized, could materially impact our business, operations and financial results. See our risk
factor disclosures in Item 1A of this Annual Report on Form 10-K under the heading “Information Technology and Systems,”
which are incorporated by reference herein. To date, risks from cybersecurity threats, including as a result of any previous
cybersecurity incidents, have not materially affected the company, including our business strategy, results of operations, or
financial condition.
Governance
The Board of Directors of the Company (the “Board”), as a whole and through its committees, oversees the Company’s risk
management process, including operational, financial, legal, strategic, marketing and brand reputation risks. The Technology
and Cybersecurity Committee of the Board (the “Committee”) oversees risk management associated with the Company’s
information technology use and protection, including data governance, privacy, compliance, and cybersecurity. The
Committee comprises Board members with particular expertise in technology and management, equipping them to oversee
cybersecurity risks effectively.
The Committee is responsible for the oversight of the Company’s policies and procedures intended to provide security,
confidentiality, availability, and integrity of the Company’s information, including with respect to data privacy and the
Company’s compliance with applicable data privacy and cybersecurity laws and regulations. The Committee also oversees
the quality and effectiveness of the Company’s policies and procedures with respect to its information technology systems
and provides oversight on the Company’s policies and procedures in maintaining preparedness for responding to any material
incidents. The Committee also periodically coordinates with the Company’s Audit Committee, which reviews risks related
to the Company’s information technology systems, including privacy, network security and data security.
The Company’s program to identify, assess, and manage cybersecurity risks is led by our Chief Information Officer, and
leverages the expertise of our Chief Financial Officer and General Counsel. Our Chief Information Officer holds a Bachelor
of Science in Computer Science and has over 30 years of work experience, with more than 20 years in senior executive roles
involving managing information systems, including implementing effective information and cybersecurity programs. Our
Chief Information Officer, who reports to our Chief Executive Officer, meets regularly with the executive leadership team
regarding topics related to technology operations, including cybersecurity, and also periodically updates the Board and the
Committee regarding the Company’s cybersecurity and data privacy risk mitigation plans.
With respect to the prevention, detection, mitigation, and remediation of cybersecurity incidents, our information security
team, under the direction of our Chief Information Officer, monitors our information systems, assesses the severity of any
incidents it detects or that are otherwise reported, and follows escalation procedures embedded within our incident response
plan to inform the Chief Information Officer, other members of management, the Committee, and the Board, each as needed.
20
Item 2.
PROPERTIES
The table below lists the Company’s material properties at June 30, 2024:
Location
Type
Principal Use
Square Footage
Ownership
Medford, OR
Office, plant and
warehouse
Manufacturing, distribution
and administrative
1,112,000
owned
Bolingbrook, IL
Office, plant and
warehouse
Manufacturing, distribution
and administrative
361,176
leased
Hebron, OH
Office, plant and
warehouse
Manufacturing, distribution
and administrative
330,900
owned
Medford, OR
Warehouse
Storage
324,500
leased
Obetz, OH
Warehouse
Distribution
301,176
leased
Atlanta, GA
Warehouse
Manufacturing and
distribution
272,821
leased
Groveport, OH
Warehouse
Distribution
255,070
leased
Melrose Park, IL
Office and warehouse
Distribution, administrative
and customer service
250,000
leased
Jacksonville, FL
Office and warehouse
Distribution and
administrative
180,000
owned
Lake Forest, IL
Office, plant and
warehouse
Manufacturing, distribution
and administrative
148,000
leased
Hebron, OH
Warehouse
Storage
116,000
leased
Burr Ridge, IL
Office, plant and
warehouse
Manufacturing, distribution
and administrative
109,722
leased
Jericho, NY
Office
Headquarters
92,700
leased
Westerville, OH
Office, plant and
warehouse
Manufacturing, distribution
and administrative
88,000
owned
Reno, NV
Warehouse
Distribution
70,000
leased
Memphis, TN
Warehouse
Distribution
70,000
leased
Jackson County, OR
Orchards
Farming
41 (acres)
leased
Jackson County, OR
Orchards
Farming
1,705 (acres)
owned
Jackson County, OR
Land
Fallow land
1,476 (acres)
owned
Josephine County, OR
Orchards
Farming
67 (acres)
owned
Josephine County, OR
Land
Fallow land
112 (acres)
owned
Item 3.
LEGAL PROCEEDINGS
See Note 17 in Part IV, Item 15 for details.
Item 4.
MINE SAFETY DISCLOSURES
Not applicable.
21
PART II
Item 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
1-800-FLOWERS.COM’s Class A common stock trades on The NASDAQ Global Select Market under the ticker symbol
“FLWS.” There is no established public trading market for the Company’s Class B common stock.
Rights of Common Stock
Holders of Class A common stock generally have the same rights as the holders of Class B common stock, except that holders
of Class A common stock have one vote per share and holders of Class B common stock have 10 votes per share on all matters
submitted to the vote of stockholders. Holders of Class A common stock and Class B common stock generally vote together
as a single class on all matters presented to the stockholders for their vote or approval, except as may be required by Delaware
law. Class B common stock may be converted into Class A common stock at any time on a one-for-one share basis. Each
share of Class B common stock will automatically convert into one share of Class A common stock upon its transfer, with
limited exceptions. During Fiscal 2023 and 2022, 181,393 and 904,000 shares of Class B common stock, respectively, were
converted into shares of Class A common stock. During Fiscal 2024, no shares of Class B common stock were converted
into shares of Class A common stock.
Holders
As of August 30, 2024, there were approximately 190 stockholders of record of the Company’s Class A common stock,
although the Company believes that there is a significantly larger number of beneficial owners. As of August 30, 2024, there
were 12 stockholders of record of the Company’s Class B common stock.
Purchases of Equity Securities by the Issuer
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 additional increase to
its stock repurchase plan of up to $40.0 million. The Company repurchased a total of $10.4 million (1,079,415 shares), $1.2
million (147,479 shares), and $38.2 million (1,592,555 shares) during the fiscal years ended June 30, 2024, July 2, 2023, and
July 3, 2022, respectively, under this program. As of June 30, 2024, $21.6 million remains authorized under the plan.
22
The following table sets forth, for the months indicated, the Company’s purchase of common stock during the fiscal year
2024, which includes the period July 3, 2023 through June 30, 2024:
Total Number
of Shares
Purchased as
Dollar Value of
Part of
Shares
Total Number
Publicly
that May Yet
of
Average Price
Announced
Be Purchased
Shares
Paid Per Share
Plans or
Under the Plans
Period
Purchased
(1)
Programs
or Programs
(in thousands, except shares and 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
01/01/24 – 01/28/24 .............
180,000 $
10.38
180,000 $
25,305
01/29/24 – 02/25/24 .............
124,823 $
10.10
124,823 $
24,040
02/26/24 – 03/31/24 .............
120,000 $
10.42
120,000 $
22,787
04/01/24 – 04/28/24 .............
100,000 $
9.27
100,000 $
21,857
04/29/24 – 05/26/24 .............
31,131 $
9.15
31,131 $
21,571
05/27/24 – 06/30/24 .............
- $
-
- $
21,571
Total .....................................
1,079,415 $
9.60
1,079,415
(1) Average price per share excludes commissions and other transaction fees.
Dividends
We have never declared or paid cash dividends on our common stock. We currently do not anticipate paying any cash
dividends in the foreseeable future. Any future determination to declare cash dividends will be made at the discretion of our
board of directors, subject to applicable laws, and will depend on our financial condition, results of operations, capital
requirements, general business conditions and other factors that our board of directors may deem relevant.
Item 6.
RESERVED
Item 7.
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-K. 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 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 under Item 1A — “Risk Factors.”
Business overview
The Company is a leading provider of gifts designed to help inspire customers to give more, connect more, and build more
and better relationships. See Item 1 in Part I for a detailed description of the Company’s business.
23
Business Segments
The Company operates in the following three business segments: Consumer Floral & Gifts, Gourmet Foods & Gift Baskets,
and BloomNet. The Consumer Floral & Gifts segment includes the operations of the Company’s flagship brand, 1-800-
Flowers.com, PersonalizationMall, Things Remembered, FruitBouquets.com, Flowerama and Alice’s Table, while the
Gourmet Foods & Gift Baskets segment includes the operations of Harry & David, Wolferman’s Bakery, Vital Choice, Moose
Munch, Cheryl’s Cookies, Mrs. Beasley’s, The Popcorn Factory, DesignPac, 1-800-Baskets.com, Simply Chocolate, Shari’s
Berries, and Scharffen Berger. The BloomNet segment includes the operations of BloomNet, Napco, and Card Isle.
Fiscal 2024 Results
Fiscal 2024, was a challenging year from a top-line perspective due to lower demand across all segments. Consumers
continued to moderate their discretionary purchases in the face of macroeconomic pressures as they remain pressured by
persistent inflation, higher interest rates, and the resumption of student loan repayments. The downward trend in “Everyday”
demand and, to a lesser extent, “Holiday” demand, which began in the latter half of fiscal 2022, persisted throughout
fiscal 2024. The Company did see the consumer spend increase during the fiscal 2024 holiday season, but at softer than
anticipated levels and later in the holiday period. However, the Company has benefited from favorable product mix, as higher
income customers continued to purchase higher-end product offerings.
During fiscal 2024, net revenues declined by $186.4 million, or 9.2%, to $1,831.4 million, compared to fiscal 2023, primarily
due to the aforementioned slowing demand for everyday gifting occasions as discretionary income remains under pressure
and consumers continue to moderate their spending. The lower revenues were also due to the prudent use of promotional
offerings and advertising campaigns that balance the long-term goals of the Company with strategies to improve gross
margins and stabilize bottom-line metrics.
In fiscal 2024, the Company did experience less volatility in freight, labor, and certain commodity costs. This along with the
Company's logistics optimization efforts, have driven significant improvements in the Company’s margins, with fiscal 2024
gross margins improving throughout the year and ending at 40.1%; a 260-basis point improvement over fiscal 2023.
Net loss was $6.1 million, compared with a net loss of $44.7 million in fiscal 2023. Adjusted EBITDA for fiscal 2024 was
$93.1 million, compared with $91.2 million in fiscal 2023, reflecting the improvement in Adjusted EBITDA of $1.9, driven
by improvements in gross margin and operating expense efficiencies that offset the revenue decline noted above (See
Reconciliation of net loss to adjusted EBITDA (non-GAAP) below).
Goodwill and Intangible Asset Impairment
During the second quarter of fiscal 2024, 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.
During the third quarter of fiscal 2023, the Company evaluated whether events or circumstances had changed such that it
would indicate it was more likely than not that its goodwill, intangible and other long-lived assets of the Gourmet Foods &
Gift Baskets reporting units fair values were less than their carrying amounts. After considering the continuing pressures on
consumer discretionary spending, ongoing geopolitical events, the current inflationary macro-economic conditions, related
cost input headwinds that have negatively impacted the Company’s gross margins, and resulting downward revisions to its
forecast, the Company concluded that a triggering event had occurred for its Gourmet Foods & Gift Baskets reporting unit.
As such, the Company performed an impairment test of the reporting unit’s goodwill, intangibles and long-lived assets as of
April 2, 2023, and recorded a non-cash adjustment to fully impair the related goodwill ($62.3 million), and partially impaired
certain tradenames ($2.3 million) within the reporting unit – see Note 6 – Goodwill and Intangible Assets in Item 15.
Acquisition of Card Isle
On April 3, 2024, the Company completed its acquisition of certain assets of Card Isle, an e-commerce greeting card company,
expanding the Company’s presence in the greeting card category across all brands. The Company used cash on its balance
sheet to fund the $3.6 million purchase. Card Isle annual revenue, based on its most recently available financial information,
is deemed immaterial to the Company's consolidated financial statements – see Note 4 – Acquisitions in Item 15.
24
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 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 ecommerce operations, based on its most recently available unaudited
financial information was $30.4 million for the twelve months ended November 30, 2022 – see Note 4 – Acquisitions in
Item 15.
Acquisition of Alice’s Table
On December 31, 2021, the Company completed its acquisition of Alice's Table LLC (“Alice’s Table”), a lifestyle business
offering fully digital livestreaming and on demand floral, culinary and other experiences to guests across the country. The
Company utilized existing cash of $0.8 million, converted the existing accounts receivable from Alice’s Table of $0.3 million
and its previous $0.3 million cost method investment in Alice’s Table, in order to acquire 100% ownership in Alice’s Table,
which included tradenames, customer lists, websites and operations. Alice’s Table revenues were approximately $3.8 million
during its fiscal twelve-month period ended September 30, 2021 – see Note 4 – Acquisitions in Item 15.
Acquisition of Vital Choice
On October 27, 2021, the Company completed its acquisition of Vital Choice Seafood LLC (“Vital Choice”), a provider of
wild-caught seafood and sustainably farmed shellfish, pastured proteins, organic foods, and marine-sourced nutritional
supplements. The Company utilized its credit facility to fund the $20.0 million purchase, which included tradenames,
customer lists, websites and operations. Vital Choice revenues were approximately $27.8 million during its most recent year
ended December 31, 2020 – see Note 4 – Acquisitions in Item 15.
Fiscal 2025 Guidance
For Fiscal 2025, with a sustained challenging consumer environment, the Company expects revenues trends to improve as
the fiscal year progresses benefitting from the company’s Relationship Innovation initiatives that have expanded the
Company’s product offerings, broadened price points, and enhanced the user experience, combined with increased marketing
spend. Additionally, the guidance assumes increased incentive compensation expense.
As a result, the Company expects Fiscal 2025:
• Total revenues on a percentage basis to be in a range of flat to a decrease in the low-single digits, as compared with
the prior year;
• Adjusted EBITDA to be in a range of $85 million to $95 million; and
• Free Cash Flow to be in a range of $45 million to $55 million.
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, and reconciliations of these non-GAAP financial
measures to their most directly comparable GAAP financial measures. These non-GAAP financial measures are referred to
as “non-GAAP”, “adjusted” or “on a comparable basis” 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 imply a degree of precision that 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 Plan Investment appreciation/depreciation,
and certain items affecting period-to-period comparability.
25
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 used 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.
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 and Adjusted EBITDA should only be used on a supplemental basis combined with GAAP
results when evaluating the Company’s performance.
The following table presents the EBITDA and adjusted EBITDA for fiscal years ended June 30, 2024 and July 2, 2023. For
EBITDA and adjusted EBITDA for the fiscal year ended July 3, 2022, please refer to our Annual Report on Form 10-K for
the fiscal year ended July 3, 2022.
Reconciliation of net loss to adjusted EBITDA (non-GAAP):
Years Ended
June 30,
July 2,
2024
2023
(in thousands)
Net loss ............................................................................................................................ $
(6,105) $
(44,702 )
Add: Interest expense and other expense, net ..............................................................
3,830
11,751
Add: Depreciation and amortization ............................................................................
53,752
53,673
Add: Income tax expense (benefit) ..............................................................................
203
(2,060 )
EBITDA ..........................................................................................................................
51,680
18,662
Add: Stock-based compensation ..................................................................................
10,688
8,334
Add: Compensation charge related to NQDC plan investment appreciation
(depreciation) ......................................................................................................
6,904
(822 )
Add: Goodwill and intangible impairment ..................................................................
19,762
64,586
Add: Transaction costs ................................................................................................
269
444
Add: Restructuring cost/Severance ..............................................................................
2,564
-
Add: Litigation settlement ...........................................................................................
1,200
-
Adjusted EBITDA ........................................................................................................... $
93,067 $
91,204
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. 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.
26
The following table presents the adjusted net income for fiscal years ended June 30, 2024 and July 2, 2023. For adjusted net
income for fiscal year ended July 3, 2022, please refer to our Annual Report on Form 10-K for the fiscal year ended July 3,
2022.
Reconciliation of net loss to adjusted net income (non-GAAP):
Years Ended
June 30,
July 2,
2024
2023
(in thousands)
Net loss ............................................................................................................................ $
(6,105) $
(44,702 )
Adjustments to reconcile net loss to adjusted net income (non-GAAP)
Add: Transaction costs ................................................................................................
269
444
Add: Restructuring cost/Severance ..............................................................................
2,564
-
Add: Litigation settlement ...........................................................................................
1,200
-
Add: Goodwill and intangible impairment ..................................................................
19,762
64,586
Deduct: Income tax effect on adjustments ...................................................................
(6,079)
(6,899 )
Adjusted net income (non-GAAP) ............................................................................... $
11,611 $
13,429
Basic and diluted net loss per common share .................................................................. $
(0.09) $
(0.69 )
Basic and diluted adjusted net income per common share (non-GAAP) ........................ $
0.18 $
0.21
Weighted average shares used in the calculation of basic and diluted net loss and
adjusted net income per common share .......................................................................
64,586
64,688
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 segment contribution margin adjusted
for certain items affecting period-to-period comparability. 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 the 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 these limitations when using this measure by looking at other GAAP measures, such
as Operating Income and Net Income.
27
The following table presents the net revenues, gross profit, segment contribution margin, and adjusted segment contribution
margin from each of the Company’s business segments, for fiscal years ended June 30, 2024 and July 2, 2023. For segment
contribution margin and adjusted segment contribution margin for the fiscal year ended July 3, 2022, please refer to our
Annual Report on Form 10-K for the fiscal year ended July 3, 2022.
Years Ended
As
Adjusted
As
Adjusted
Restructuring
(non-
GAAP)
Goodwill
and
(non-
GAAP)
June 30,
2024
Litigation
Settlement
Transaction
Costs
Intangible
Impairment
cost/
Severance
June 30,
2024
July 2,
2023
Intangible
Impairment
Transaction
Costs
July 2,
2023
%
Change
(dollars in thousands)
Net revenues:
Consumer Floral & Gifts ...... $ 849,791 $
- $
- $
- $
- $ 849,791 $ 920,510 $
- $
- $
920,510
-7.7 %
BloomNet ..............................
107,802
107,802
133,183
133,183 -19.1 %
Gourmet Foods & Gift
Baskets ................................
874,262
874,262
965,191
965,191
-9.4 %
Corporate ...............................
796
796
375
375 112.3 %
Intercompany eliminations ....
(1,230 )
(1,230 )
(1,406 )
(1,406 )
12.5 %
Total net revenues ............... $ 1,831,421 $
- $
- $
- $
- $ 1,831,421 $ 2,017,853 $
- $
- $ 2,017,853
-9.2 %
Gross profit:
Consumer Floral & Gifts ...... $ 346,951
$
- $
- $ 346,951 $ 363,342 $
- $
- $
363,342
-4.5 %
40.8 %
40.8 %
39.5 %
39.5 %
BloomNet ..............................
51,999
51,999
56,879
56,879
-8.6 %
48.2 %
48.2 %
42.7 %
42.7 %
Gourmet Foods & Gift
Baskets ................................
334,870
334,870
336,764
336,764
-0.6 %
38.3 %
38.3 %
34.9 %
34.9 %
Corporate ...............................
933
933
541
541
72.5 %
117.2 %
117.2 %
144.3 %
144.3 %
Total gross profit ................. $ 734,753 $
- $
- $
- $
- $ 734,753 $ 757,526 $
- $
- $
757,526
-3.0 %
40.1 %
-
-
-
-
40.1 %
37.5 %
-
-
37.5 %
EBITDA (non-GAAP):
Segment Contribution
Margin (non-GAAP) (a):
Consumer Floral & Gifts ...... $
67,278
$
19,762 $
630 $
87,670 $
95,535 $
- $
- $
95,535
-8.2 %
BloomNet ..............................
33,766
69
33,835
37,197
37,197
-9.0 %
Gourmet Foods & Gift
Baskets ................................
84,508
538
85,046
12,895
64,586
77,481
9.8 %
Segment Contribution
Margin Subtotal ..................
185,552
-
-
19,762
1,237
206,551
145,627
64,586
-
210,213
-1.7 %
Corporate (b) ......................... (133,872 )
1,200
269
1,327 (131,076 ) (126,965 )
444
(126,521 )
-3.6 %
EBITDA (non-GAAP) ........
51,680
1,200
269
19,762
2,564
75,475
18,662
64,586
444
83,692
-9.8 %
Add: Stock-based
compensation ......................
10,688
10,688
8,334
8,334
28.2 %
Add: Compensation charge
related to NQDC Plan
Investment Appreciation
(Depreciation) .....................
6,904
6,904
(822 )
(822 ) 939.9 %
Adjusted EBITDA (non-
GAAP) (c) .......................... $
69,272 $
1,200 $
269 $
19,762 $
2,564 $
93,067 $
26,174 $
64,586 $
444 $
91,204
2.0 %
(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.
(c) See reconciliation of the Company's net loss to adjusted EBITDA (non-GAAP) above.
28
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.
The following table reconciles net cash provided by operating activities, a GAAP measure, to free cash flow, a non-GAAP
measure.
Year ended
June 30,
July 2,
2024
2023
(in thousands)
Net cash provided by operating activities ........................................................................ $
94,999 $
115,351
Capital expenditures ........................................................................................................
(38,632)
(44,646 )
Free Cash Flow ................................................................................................................ $
56,367 $
70,705
Results of Operations
The Company’s fiscal year is a 52- or 53-week period ending on the Sunday nearest to June 30. Fiscal years 2024 and 2023,
which ended on June 30, 2024 and July 2, 2023, respectively, each consisted of 52 weeks. Fiscal year 2022, which ended on
July 3, 2022, consisted of 53 weeks.
Net Revenues
Years Ended
June 30, 2024 % Change July 2, 2023 % Change July 3, 2022
(dollars in thousands)
Net revenues:
E-Commerce..................................... $
1,614,199
-7.5 % $
1,744,622
-9.8% $
1,934,648
Other .................................................
217,222
-20.5 %
273,231
-%
273,237
$
1,831,421
-9.2 % $
2,017,853
-8.6% $
2,207,885
Net revenues consist primarily of the selling price of the merchandise, service or outbound shipping charges, less discounts,
returns and credits.
During the fiscal year ended June 30, 2024, net revenues decreased 9.2% in comparison to the prior year, due to lower order
volume across all segments, reflecting a continuation of the trends that we have experienced over the last two years, as
discretionary income remains pressured and consumers continue to moderate their spending. Contributing to this decline was
the prudent use of advertising spend, to balance the long-term goals of the Company with strategies to improve gross margins
and tightly control operating expenses during this challenging economic environment.
During the fiscal year ended July 2, 2023, net revenues decreased 8.6% in comparison to the prior year, due to lower order
volume across all segments, as discretionary income was pressured as discussed above, combined with the prudent use of
promotional offerings and advertising campaigns.
29
Disaggregated revenue by channel follows:
Years Ended
Consumer Floral &
Gourmet Foods &
Corporate and
Gifts
BloomNet
Gift Baskets
Eliminations
Consolidated
June 30, July 2,
%
June 30, July 2,
%
June 30, July 2,
%
June 30, July 2, June 30, July 2,
%
2024 2023 Change 2024 2023 Change 2024 2023 Change
2024
2023
2024
2023
Change
(dollars in thousands)
Net revenues
E-commerce .. $ 840,569 $ 911,302
-7.8% $
- $
-
- $ 773,630 $ 833,320
-7.2% $
- $
- $ 1,614,199 $ 1,744,622
-7.5%
Other .............
9,222
9,208
0.2% 107,802 133,183
-19.1% 100,632 131,871
-23.7%
(434) (1,031) 217,222 273,231 -20.5%
Total net
revenues ....... $ 849,791 $ 920,510
-7.7% $ 107,802 $ 133,183
-19.1% $ 874,262 $ 965,191
-9.4% $
(434) $ (1,031) $ 1,831,421 $ 2,017,853
-9.2%
Other
revenues
detail
Retail and
other ..............
9,222
9,208
0.2%
-
-
-
9,534
9,751
-2.2%
-
-
18,756
18,959
-1.1%
Wholesale .....
-
-
- 42,362 50,075
-15.4% 91,098 122,120
-25.4%
-
- 133,460 172,195 -22.5%
BloomNet
services .........
-
-
- 65,440 83,108
-21.3%
-
-
-
-
-
65,440
83,108 -21.3%
Corporate ......
-
-
-
-
-
-
-
-
-
796
375
796
375 112.3%
Eliminations ..
-
-
-
-
-
-
-
-
-
(1,230) (1,406)
(1,230)
(1,406)
12.5%
Total other
revenues ....... $ 9,222 $ 9,208
0.2% $ 107,802 $ 133,183
-19.1% $ 100,632 $ 131,871
-23.7% $
(434) $ (1,031) $ 217,222 $ 273,231 -20.5%
Revenue by sales channel:
●
E-commerce revenues (combined online and telephonic) decreased 7.5% during fiscal 2024, primarily as a result
of a decline in demand for “Everyday” gifts across all our segments, attributable to the macro-economic conditions
noted above, which have negatively impacted consumer discretionary spending, combined with planned reductions
in advertising spend. Lower order volumes (18.8 million, -9.9% vs. prior year) were slightly offset by higher average
order value ($85.70, +2.7% vs prior year) as a result of product mix trending into higher price point items, including
bundles, and customer mix with higher income customers buying at a higher rate than lower income customers.
E-commerce revenues decreased 9.8% during fiscal 2023, primarily as a result of a decline in demand due to the
macro-economic conditions noted above, which have negatively impacted consumer discretionary spending,
combined with planned reductions in advertising spend. Lower order volumes (20.9 million, -14.9% vs. prior year)
were slightly offset by higher average order value ($83.42, +5.9% vs prior year) as the Company prioritized earnings
over sales goals, strategically increasing price points where possible in a challenging economic environment, to help
offset rising costs.
●
Other revenues are comprised of the Company’s BloomNet segment, as well as the wholesale and retail channels
of its 1-800-Flowers.com Consumer Floral & Gifts and Gourmet Foods & Gift Baskets segments.
Other revenues decreased 20.5% during fiscal 2024 primarily due to lower order volume from big box retailers, as
well as lower BloomNet Wholesale and Service revenues. The lower service revenues were due to lower shop-to-
shop volumes.
Other revenues were consistent with prior year during fiscal 2023 as lower BloomNet revenues attributable to a
decline in wholesale product, transaction and directory sales, were offset by increased wholesale product demand
within the Gourmet Foods & Gift Baskets segment, as consumers returned to in person “brick-and-
mortar” shopping.
Revenue by segment:
Consumer Floral & Gifts, – this segment, which includes the operations of the 1-800-Flowers.com, as well as
PersonalizationMall, Alice’s Table, and Things Remembered brands derives revenue primarily 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 decreased 7.7% during fiscal 2024, due to the continued reduction of “Everyday” product demand, and weaker
than anticipated Valentine’s Day and Mother’s Day demand, as consumers’ available discretionary income remains strained
in the current inflationary environment, combined with planned reductions in advertising spend, as our brands focused their
efforts on improving gross margin and operating spend efficiency, in the face of softening demand. Despite these challenges,
30
the 1-800-Flowers and PersonalizationMall brands were able to maintain much of the sales gains achieved during the
pandemic and drive market share gains as a result of increased recognition and relevance for gifting and connective occasions
and continued emphasis on existing customers as our Celebrations Passport loyalty program has increased cross-brand
frequency, retention, and customer lifetime value.
Net revenues decreased 13.1% during fiscal 2023, due to the reduction of “Everyday” product demand, and weaker
Valentine’s Day and Mother’s Day demand, as discussed above, combined with planned reductions in advertising spend.
BloomNet – revenues in this segment are derived from membership fees, as well as other product and service offerings to
florists.
Net revenues decreased 19.1% during fiscal 2024, due to soft wholesale product sales, as the result of weakness in demand
across the industry and lower Service revenue. The lower service revenue was attributable to reduced
membership/transaction fee revenues, as well as lower florist-to-florist revenue associated with a decline in order volume
processed through the network, and lower directory services ad revenues.
Net revenues decreased 8.6% during fiscal 2023 due to soft wholesale product sales, as well as service revenues attributable
to reduced membership/transaction fee revenues associated with a decline in order volume processed through the network,
and lower directory services ad revenues.
Gourmet Foods & Gift Baskets – this segment includes the operations of Harry & David, Wolferman’s Bakery, Cheryl’s
Cookies, The Popcorn Factory, 1-800-Baskets.com/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 Cookies brand names, as well as wholesale
operations.
Net revenues decreased 9.4% during fiscal 2024, as e-commerce declined 7.2% due to lower consumer demand, as a result
of macro-economic weakness, which has significantly reduced “Everyday” occasion volumes, combined with planned
reductions in advertising spend, as the brands focused their efforts on improving gross margins and operating spend efficiency
in the face of softening demand. The unfavorable revenue trend was attributable to lower order volume, partially offset by
favorable average order value as a result of product mix including more bundles and other higher priced offerings as higher
income customers continued to buy at a higher rate. Wholesale/Retail channel revenues were unfavorable to prior year
primarily due to lower order volume from big box retailers.
Net revenues decreased 3.9% during fiscal 2023 due to lower e-commerce consumer demand, as a result of macro-economic
weakness discussed above, combined with planned reductions in advertising spend. The unfavorable revenue trend was
attributable to lower order volume, partially offset by favorable average order value as a result of strategic price increases
and product mix, although promotional activity was increased in order to reduce inventory levels. This segment has seen the
most dramatic reductions in “EveryDay” volumes, due to the disproportionate impact of the macro-economic conditions
noted above, combined with the fact that it also experienced the highest growth rates during the Pandemic when food
gifts/self-consumption peaked. Wholesale/Retail channel revenues were slightly favorable to prior year as consumers returned
to in person “brick-and-mortar” shopping.
Gross Profit
Years Ended
June 30, 2024 % Change July 2, 2023 % Change July 3, 2022
(dollars in thousands)
Gross profit ....................................... $
734,753
-3.0% $
757,526
-7.8 % $
821,738
Gross margin % ................................
40.1%
37.5%
37.2%
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.
31
Gross profit decreased 3.0% during fiscal 2024 due to the lower revenues noted above, partially offset by a higher gross
margin percentage, driven by favorable product mix, lower freight costs, a decline in commodity costs, and the Company’s
logistics optimization efforts. Gross margins improved throughout the year ending at 40.1%; a 260-basis point improvement
over fiscal 2023.
Gross profit decreased 7.8% during fiscal 2023 due to the lower revenues noted above, partially offset by a higher gross
margin percentage, driven by improvements across all three segments. Although the Company continued to face inflationary
pressures in the form of higher commodity costs (although certain commodities began declining during our third quarter),
fuel and related third party shipping rates, in addition to the challenges required to work down inventory levels, rates on ocean
containers have come down significantly off of their Fiscal 2022 peak, and the Company has focused on improving the
variables within its control, implementing strategic initiatives designed to mitigate the impact of these factors, including
pricing initiatives across our product assortment, implementing logistics optimization programs to enhance our outbound
shipping operations and manage rising third-party shipping costs and deploying automation to increase throughput and
efficiency and address the high cost of labor.
Consumer Floral & Gifts segment – Gross profit in fiscal 2024 decreased in comparison to prior year by 4.5%, due to the
unfavorable revenues noted above, partially offset by favorable gross profit percentage attributable to favorable product mix
into higher margin direct fulfilled sales, favorable fulfillment costs, as well as lower inbound and outbound shipping cost.
Gross profit in fiscal 2023 decreased in comparison to prior year by 12.8%, due to the unfavorable revenues noted above,
partially offset by favorable gross profit percentage attributable to favorable product mix, strategic pricing initiatives,
reflected in the higher average order value, as well as favorable rates for ocean freight, partially offset by higher outbound
shipping costs and higher labor rates.
BloomNet segment – Gross profit in fiscal 2024 from the BloomNet segment decreased in comparison to prior year by 8.6%,
due to the unfavorable revenues noted above, partially offset by an increase in gross margin percentage. Gross margin
percentage was higher than prior year due to lower florist rebates, which was driven by the lower shop-to-shop volume mainly
from partners that carried higher contracted rates. In addition, wholesale margins, improved as a result of strategic pricing
initiatives and lower cost of merchandise due to more favorable ocean freight rates.
Gross profit in fiscal 2023 from the BloomNet segment decreased in comparison to prior year by 7.6%, due to the unfavorable
revenues noted above, partially offset by an increase in gross margin percentage. Gross margin percentage was higher than
prior year due to improvements in wholesale margins, as a result of strategic pricing initiatives and favorable ocean freight
costs, partially offset by higher outbound shipping rates, and higher florist rebates due to higher shop-to-shop volume from
senders.
Gourmet Foods & Gift Baskets segment – Gross profit in fiscal 2024 decreased in comparison to prior year by 0.6%, due
to the unfavorable revenues noted above, partially offset by favorable gross profit percentage. The favorable gross profit
percentage was primarily due to lower delivery and shipping costs as logistical initiatives allowed the group to decrease
shipping costs. Favorable cost of merchandise (favorable inbound ocean freight and lower commodity costs), along with the
Company's inventory and labor optimization efforts, also contributed to the improved margin percentage. In addition, the
brand benefited from favorable product mix due to the continued gap in buying behavior of higher income customers
continuing to purchase higher priced merchandise with strong margins, while lower income customers continue to tighten
their discretionary spending.
Gross profit in fiscal 2023 was unfavorable in comparison to prior year by 1.9%, due to the unfavorable revenues noted
above, partially offset by favorable gross profit percentage. The favorable gross profit percentage was primarily attributable
to lower inbound/ocean freight costs and production efficiencies resulting from fulfillment automation projects, partially
offset by continued inflationary pressures on certain commodity costs, and increased markdowns to reduce inventory
positions.
32
Marketing and Sales Expense
Years Ended
June 30, 2024 % Change July 2, 2023 % Change July 3, 2022
(dollars in thousands)
Marketing and sales .......................... $
485,016
-3.2% $
500,840
-12.4 % $
571,661
Percentage of sales ...........................
26.5%
24.8%
25.9%
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 3.2% during fiscal 2024 due to lower variable portal expenses and labor efficiencies,
which was partially offset by higher general advertising expenses, as the brands reallocated dollars from less effective bottom
of the funnel advertising to other areas to generate additional revenue in a challenging and competitive environment.
Marketing and sales expense decreased 12.4% during fiscal 2023 due to variable components associated with lower revenues,
combined with reduced, but more efficient advertising spend (as the brands focused their efforts on driving profitable volume
and servicing their most loyal customers during a period when discretionary purchases are still under heavy pressure), and
expense optimization efforts.
Technology and Development Expense
Years Ended
June 30, 2024 % Change July 2, 2023 % Change July 3, 2022
(dollars in thousands)
Technology and development .......... $
60,235
-0.8% $
60,691
7.3 % $
56,561
Percentage of sales ...........................
3.3%
3.0%
2.6%
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 expenses decreased by 0.8% during fiscal 2024, primarily due to reduced labor and consulting
costs, offset in part by increased maintenance and support for the Company's technology platform.
Technology and development expenses increased by 7.3% during fiscal 2023, primarily due to higher maintenance and
support for the Company’s technology platform, as well as higher labor costs due to annual increases.
During the fiscal years 2024, 2023 and 2022, the Company expended $86.8 million, $85.8 million and $83.2 million,
respectively, on technology and development, of which $26.6 million, $25.1 million and $26.6 million, respectively, has been
capitalized.
33
General and Administrative Expense
Years Ended
June 30, 2024 % Change July 2, 2023 % Change July 3, 2022
(dollars in thousands)
General and administrative ............... $
118,060
4.7% $
112,747
10.2 % $
102,337
Percentage of sales ...........................
6.4%
5.6%
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 expense increased 4.7% during fiscal 2024, primarily due to higher labor costs due to a change in
the value of the Company’s NQDC investments - refer to equal offset in “Other expense (income), net”, as well as severance
costs related to an enterprise reduction in workforce. This was partially offset by lower professional fees related to litigation
and acquisition costs, and lower bad debts expense primarily related to reserves for certain big box retailers and florists taken
in fiscal 2023.
General and administrative expense increased 10.2% during fiscal 2023, primarily due to: (i) higher labor costs due to a
change in the value of the Company’s NQDC investments - refer to equal offset in “Other expense (income), net”, (ii) higher
professional fees due to litigation costs, and (iii) higher bad debts expense primarily related to reserves for certain big box
retailers and florists.
Depreciation and Amortization
Years Ended
June 30, 2024 % Change July 2, 2023 % Change July 3, 2022
(dollars in thousands)
Depreciation and amortization ......... $
53,752
0.1% $
53,673
9.4 % $
49,078
Percentage of sales ...........................
2.9%
2.7%
2.2%
Depreciation and amortization expense for fiscal 2024 is in-line with the prior year.
Depreciation and amortization expense increased 9.4% during fiscal 2023, due to recent increases in distribution facility
automation projects, and IT-related e-commerce/platform enhancements, as well as incremental depreciation
and amortization associated with recent acquisitions.
Goodwill and Intangible Impairment
Years Ended
June 30, 2024 % Change July 2, 2023 % Change July 3, 2022
(dollars in thousands)
Goodwill and intangible
impairment .................................... $
19,762
-69.4% $
64,586
- % $
-
During fiscal 2024, 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.
During fiscal 2023, the Company recorded a non-cash impairment charge of $64.6 million related to its Gourmet Foods &
Gift Baskets reporting unit. The Company fully impaired the related goodwill and partially impaired certain tradenames
within the reporting unit.
See Note 6 in Part IV, Item 15 for additional information.
34
Interest Expense, net
Years Ended
June 30, 2024 % Change July 2, 2023 % Change July 3, 2022
(dollars in thousands)
Interest expense, net ......................... $
10,623
-3.0 % $
10,946
93.2% $
5,667
Interest expense, net consists primarily of interest expense and amortization of deferred financing costs attributable to the
Company’s credit facility (See Note 9 in Part IV, Item 15 for details), net of income earned on the Company’s available cash
balances.
Interest expense, net in fiscal 2024 is in-line with the prior year.
Interest expense, net increased 93.2% during fiscal 2023, due to higher interest rates and higher working capital borrowings
during the year, partially offset by favorable interest earned on available cash balances.
Other expense (income), net
Years Ended
June 30, 2024 % Change July 2, 2023 % Change July 3, 2022
(dollars in thousands)
Other expense (income), net ............. $
(6,793)
-943.9 % $
805
-84.9% $
5,332
Other (income), net during fiscal 2024 consists primarily of the gain on the Company's NQDC investments (for which the
offsetting expense was recorded in the general and administration expense line item).
Other expense, net during fiscal 2023 consists primarily of a loss on the Company's NQDC investments (for which the
offsetting credit was recorded in the general and administration expense line item).
Income Taxes
The Company recorded income tax expense of $0.2 million during fiscal 2024, an income tax benefit of $2.1 million in fiscal
2023, and income tax expense of $1.5 million in fiscal 2022, resulting in an effective tax rate of (3.4%), 4.4% and 4.8%,
respectively. The Company’s effective tax rate for fiscal 2024 differed from the U.S. federal statutory rate of 21.0% primarily
due to state taxes, increases in valuation allowances, and tax shortfalls related to stock-based compensation, partially offset
by enhanced deductions and various tax credits. The Company’s effective tax rate for fiscal 2023 differed from the U.S.
federal statutory rate of 21.0% primarily due to the impact of the non-deductible portion of the Company’s impairment charge,
as well as state income taxes and non-deductible expenses for executive compensation, tax shortfalls related to stock-based
compensation, partially offset by enhanced deductions and various tax credits. The Company’s effective tax rate for fiscal
2022 differed from the U.S. federal statutory rate of 21.0% primarily due to excess tax benefits from stock-based
compensation and various tax credits, partially offset by state income taxes and nondeductible expenses for executive
compensation. Further impacting fiscal 2022, was a reduction in the Company’s valuation allowance, offset in part by the
expiration of capital loss carryforwards, as well as enhanced deductions.
At June 30, 2024, the Company’s federal enhanced deduction carryforwards were $3.6 million, tax effected, which if not
utilized will begin to expire in 2027. At June 30, 2024, the Company’s state and foreign net operating loss carryforwards
were $2.9 million and $1.3 million, tax effected, respectively, which if not utilized will begin to expire in fiscal 2025 and
fiscal 2034, respectively.
35
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 9 in Part IV, Item 15 for details). At June 30, 2024, the Company
had working capital of $157.9 million, including cash and cash equivalents of $159.4 million, compared to working capital
of $152.9 million, including cash and cash equivalents of $126.8 million at July 2, 2023.
As of June 30, 2024, there were no borrowings outstanding under the Company’s Revolver.
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, generates 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.
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, (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 9 – Long-
Term Debt in Item 15 for details).
Based on our year-end cash balances, including the incremental term loan referenced above, combined with projected cash
flows, the Company expects to borrow against its Revolver to fund pre-holiday manufacturing and inventory purchases during
the first quarter of fiscal 2025. The Company expects to be able to repay all working capital borrowings prior to the end of
the second quarter of fiscal 2025.
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 $95.0 million for fiscal 2024 was primarily attributable to the Company’s net
loss, adjusted by a non-cash charge for an intangible asset impairment, depreciation and amortization, bad debt expense and
stock-based compensation, net of deferred income taxes, combined with net working capital generated primarily from a
decrease in inventories, and an increase in accounts payable and accrued expenses.
Net cash used in investing activities of $42.3 million was attributable to capital expenditures primarily related to the
Company's technology and automation initiatives, and the acquisition of Card Isle as noted above.
Net cash used in financing activities of $20.1 million related to net repayment of bank borrowings of $10.0 million, and the
acquisition of $10.4 million of treasury stock.
Free Cash Flow
Free cash flow was $56.4 million for fiscal 2024, compared with free cash flow of $70.7 million for fiscal 2023, a decrease
of $14.3 million primarily driven by a decrease in cash flows from operations. Refer to "Definitions of non-GAAP financial
measures" for reconciliation of non-GAAP results to applicable GAAP results.
36
Stock Repurchase Program
See Item 5 in Part II for details.
Contractual Obligations
At June 30, 2024, the Company’s contractual obligations consist of:
●
Long-term debt obligations – payments due under the Company’s Credit Agreement (See Note 9 – Long-Term Debt in
Item 15 for details).
●
Operating lease obligations – payments due under the Company’s long-term operating leases (See Note 16 – Leases in
Item 15 for details).
●
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)
Fiscal Fiscal Fiscal Fiscal Fiscal
2025
2026
2027
2028
2029 Thereafter
Total
Purchase commitments ..................... $ 156,940 $
9,722 $
5,202 $
3,447 $
3,447 $
- $ 178,758
Critical Accounting Estimates
The Company’s discussion and analysis of its financial position and results of operations are based upon the consolidated
financial statements of 1-800-FLOWERS.COM, Inc., which have been prepared in accordance with U.S. generally accepted
accounting principles. The preparation of these financial statements requires management to make estimates and assumptions
that affect the reported amount of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and
liabilities. Management evaluates its estimates on an ongoing basis and bases its estimates and judgments on historical
experience and on various other factors that are believed to be reasonable under the circumstances. Actual results may differ
from these estimates under different assumptions or conditions. We consider accounting estimates to be critical if both: (i)
the nature of the estimate or assumption is material due to the levels of subjectivity and judgment involved, and (ii) the impact
within a reasonable range of outcomes of the estimate and assumption is material to the Company’s financial condition. Our
critical accounting estimates relate to goodwill, other intangible assets and income taxes. Management of the Company has
discussed the selection of critical accounting estimates and the effect of estimates with the audit committee of the Company’s
board of directors.
Goodwill
Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in each business
combination, with the carrying value of the Company’s goodwill allocated to its reporting units, in accordance with the
acquisition method of accounting. Goodwill is not amortized, but it is subject to an annual assessment for impairment, which
the Company performs during the fourth quarter, or more frequently if events occur or circumstances change such that it is
more likely than not that an impairment may exist. The Company tests goodwill for impairment at the reporting unit level.
The Company identifies its reporting units by assessing whether the components of its operating segments constitute
businesses for which discrete financial information is available and management of each reporting unit regularly reviews the
operating results of those components.
In applying the goodwill impairment test, the Company has the option to perform a qualitative test (also known as “Step 0”)
or a quantitative test (“Step 1”). Under the Step 0 test, the Company first assesses qualitative factors to determine whether it
is more likely than not that the fair value of the reporting units is less than its carrying value. Qualitative factors may include,
but are not limited to, economic conditions, industry and market considerations, cost factors, overall financial performance
of the reporting unit and other entity and reporting unit specific events. If after assessing these qualitative factors, the
Company determines it is “more-likely-than-not” that the fair value of the reporting unit is less than the carrying value, then
performing the Step 1 quantitative test is necessary.
Step 1 of the quantitative test requires comparison of the fair value of each of the reporting units to the respective carrying
value. If the carrying value of the reporting unit is less than the fair value, no impairment exists. Otherwise, the Company
37
would recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value
up to the amount of goodwill allocated to that reporting unit.
The Company generally estimates the fair value of a reporting unit using an equal weighting of the income and market
approaches. The Company uses industry accepted valuation models and set criteria that are reviewed and approved by various
levels of management. Under the income approach, the Company uses a discounted cash flow methodology, which requires
management to make significant estimates and assumptions related to forecasted revenues, gross profit margins, operating
income margins, working capital cash flow, perpetual growth rates, and long-term discount rates, among others. For the
market approach, the Company uses the guideline public company method. Under this method, the Company utilizes
information from comparable publicly traded companies with similar operating and investment characteristics as the reporting
units, to create valuation multiples that are applied to the operating performance of the reporting unit being tested, in order
to obtain their respective fair values. The Company also reconciles the aggregate fair values of its reporting units determined
in the first step (as described above) to its current market capitalization, allowing for a reasonable control premium. See Note
6 – Goodwill and Intangible Assets, in Part IV, Item 15, for further information.
Other Intangibles, net
Other intangibles consist of definite-lived intangible assets (such as investment in licenses, customer lists, and others) and
indefinite-lived intangible assets (such as acquired trade names and trademarks). The cost of definite-lived intangible assets
is amortized to reflect the pattern of economic benefits consumed, over the estimated periods benefited, ranging from 3 to 16
years, while indefinite-lived intangible assets are not amortized.
Definite-lived intangibles are reviewed for impairment whenever changes in circumstances or events may indicate that the
carrying amounts are not recoverable. When such events or changes in circumstances occur, a recoverability test is performed
comparing projected undiscounted cash flows from the use and eventual disposition of an asset or asset group to its carrying
value. If the projected undiscounted cash flows are less than the carrying value, then an impairment charge would be recorded
for the excess of the carrying value over the fair value, which is determined by discounting future cash flows.
The Company tests indefinite-lived intangible assets for impairment at least annually, during the fourth quarter, or whenever
changes in circumstances or events may indicate that the carrying amounts are not recoverable. In applying the impairment
test, the Company has the option to perform a qualitative test (also known as “Step 0”) or a quantitative test. Under the Step
0 test, the Company assesses qualitative factors to determine whether it is more likely than not that an indefinite-lived
intangible asset is impaired. Qualitative factors may include, but are not limited, to economic conditions, industry and market
considerations, cost factors, financial performance, legal and other entity and asset specific events. If, after assessing these
qualitative factors, the Company determines it is “more-likely-than-not” that the indefinite-lived intangible asset is impaired,
then performing the quantitative test is necessary. The quantitative impairment test for indefinite-lived intangible assets
encompasses calculating a fair value of an indefinite-lived intangible asset and comparing the fair value to its carrying value.
If the carrying value exceeds the fair value, impairment is recognized for the difference. To determine fair value of other
indefinite-lived intangible assets, the Company uses 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. Other 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.
See Note 6 – Goodwill and Intangible Assets, in Part IV, Item 15, for further information.
Income Taxes
The Company uses the asset and liability method to account for income taxes. The Company has established deferred tax
assets and liabilities for temporary differences between the financial reporting bases and the income tax bases of its assets
and liabilities at enacted tax rates expected to be in effect when such assets or liabilities are realized or settled. The Company
also has net operating loss carryforwards and credit carryforwards in multiple jurisdictions and has recognized deferred assets
for those losses and credits.
The Company evaluates the realizability of its deferred tax assets on a quarterly basis and establishes valuation allowances
when it is more likely than not that all or a portion of a deferred tax asset may not be realized. In completing this evaluation,
the Company considers available positive and negative evidence. Such evidence includes historical operating results, the
existence of cumulative earnings and losses in the most recent fiscal years, taxable income in prior carryback year(s) if
permitted under the tax law, the time period over which our temporary differences will reverse, the implementation of feasible
and prudent tax planning strategies, and expectations for future pre-tax operating income. Estimating future taxable income
38
is inherently uncertain and requires judgment. Deferred tax assets are reduced by a valuation allowance if, based on the weight
of this evidence, it is more likely than not that all or a portion of the recorded deferred tax assets will not be realized in future
periods.
The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position
will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits
recognized in the financial statements on a particular tax position are measured based on the largest benefit that has a greater
than a 50% likelihood of being realized upon settlement. The amount of unrecognized tax benefits (“UTBs”) is adjusted as
appropriate for changes in facts and circumstances, such as significant amendments to existing tax law, new regulations or
interpretations by the taxing authorities, new information obtained during a tax examination, or resolution of an examination.
We recognize both accrued interest and penalties, where appropriate, related to UTBs in income tax expense. Assumptions,
judgment, and the use of estimates are required in determining if the “more likely than not” standard has been met when
developing the provision for income taxes.
See Note 11 – Income Taxes, in Part IV, Item 15, for further information.
Recently Issued Accounting Pronouncements
See Note 2 in Part IV, Item 15 for details regarding the impact of accounting standards that were recently issued on our
consolidated financial statements.
Item 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risk from the effect of interest rate changes and changes in the market values of its
investments.
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 have been approximately $1.1
million during the fiscal year ended June 30, 2024.
Item 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Annual Financial Statements: See Part IV, Item 15 of this Annual Report on Form 10-K.
39
Item 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
Item 9A.
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 June 30, 2024. 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 June 30, 2024.
Management’s Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal
control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act as a process designed
by, or under the supervision of, the Company’s principal executive and principal financial officers and effectuated by the
Company’s board of directors, management and other personnel to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally
accepted accounting principles (“U.S. GAAP”), and includes those policies and procedures that:
●
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the Company;
●
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with U.S. GAAP, and that receipts and expenditures of the Company are being made in accordance with
authorization of management and directors of the Company; and
●
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of
the Company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management, including the Company’s Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of
the Company’s internal control over financial reporting based on criteria established in Internal Control-Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based
on this assessment, management concluded that the Company’s internal control over financial reporting was effective as of
June 30, 2024.
The Company’s independent registered public accounting firm, BDO USA, P.C., audited the effectiveness of the Company’s
internal control over financial reporting as of June 30, 2024. BDO USA, P.C.’s report on the effectiveness of the Company’s
internal control over financial reporting as of June 30, 2024 is set forth below.
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.
Changes in Internal Control Over Financial Reporting
There was no change in internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act), during the three months ended June 30, 2024, that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.
40
Report of Independent Registered Public Accounting Firm
Board of Directors and Stockholders
1-800-FLOWERS.COM, Inc.
Jericho, NY
Opinion on Internal Control over Financial Reporting
We have audited 1-800-FLOWERS.COM, Inc.'s (the “Company’s”) internal control over financial reporting as of June 30,
2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission (the “COSO criteria”). In our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of June 30, 2024, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(“PCAOB”), the consolidated balance sheets of the Company as of June 30, 2024 and July 2, 2023, the related consolidated
statements of operations and comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years
in the period ended June 30, 2024, and the related notes and schedule and our report dated September 6, 2024 expressed an
unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Item 9A,
Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the
Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and
the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit of internal control over financial reporting in accordance with the standards of the PCAOB. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control
over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our
opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ BDO USA, P.C.
Melville, New York
September 6, 2024
41
Item 9B.
OTHER INFORMATION
Rule 10b5-1 Plans
During the three months ended June 30, 2024, none of the directors or executive officers adopted or terminated a "Rule 10b5-
1 trading arrangement" or a "non-rule 10b5-1 trading arrangement", as defined in the item 408 of Regulation S-K.
Item 9C.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
PART III
Item 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by Item 10 of Part III with respect to directors, executive officers, audit committee and audit
committee financial experts of the Company and Section 16(a) beneficial ownership reporting compliance will be included
in our Proxy Statement relating to our 2024 annual meeting of stockholders and is incorporated herein by reference.
The Company maintains a Code of Business Conduct and Ethics, which is applicable to all directors, officers and employees
on the Investor Relations-Corporate Governance tab of the Company’s investor relations website (investor.1800flowers.com),
which is also accessible through a link at the bottom of the main Company page at www.1800flowers.com. Any amendment
or waiver to the Code of Business Conduct and Ethics that applies to our directors or executive officers will be posted on our
website or in a report filed with the SEC on Form 8-K to the extent required by applicable law or the regulations of any
exchange applicable to the Company. A copy of the Code of Business Conduct and Ethics is available without charge upon
written request to: Investor Relations, 1-800-FLOWERS.COM, Inc., Two Jericho Plaza, Suite 200, Jericho, New York 11753.
Item 11.
EXECUTIVE COMPENSATION
The information required by Item 11 of Part III will be included in our Proxy Statement relating to our 2024 annual meeting
of stockholders and is incorporated herein by reference.
Item 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The information required by Item 12 of Part III will be included in our Proxy Statement relating to our 2024 annual meeting
of stockholders and is incorporated herein by reference.
Item 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
The information required by Item 13 of Part III will be included in our Proxy Statement relating to our 2024 annual meeting
of stockholders and is incorporated herein by reference.
Item 14.
PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required by Item 14 of Part III will be included in our Proxy Statement relating to our 2024 annual meeting
of stockholders and is incorporated herein by reference.
42
PART IV
Item 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) (1) Index to Consolidated Financial Statements:
Page
Report of Independent Registered Public Accounting Firm (BDO USA, P.C.; Melville, NY; PCAOB ID#243) .......... F-1
Consolidated Balance Sheets as of June 30, 2024 and July 2, 2023 ................................................................................ F-3
Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended June 30, 2024,
July 2, 2023 and July 3, 2022 ...................................................................................................................................... F-4
Consolidated Statements of Stockholders’ Equity for the years ended June 30, 2024, July 2, 2023 and July 3, 2022 ... F-5
Consolidated Statements of Cash Flows for the years ended June 30, 2024, July 2, 2023 and July 3, 2022 .................. F-6
Notes to Consolidated Financial Statements ................................................................................................................... F-7
(a) (2) Index to Financial Statement Schedule:
Schedule II- Valuation and Qualifying Accounts ............................................................................................................ F-30
All other information and financial statement schedules are omitted because they are not applicable, or required, or
because the required information is included in the consolidated financial statements or notes thereto.
(a) (3) Index to Exhibits
Exhibits marked with an asterisk (*) are incorporated by reference to exhibits or appendices previously filed with the SEC,
as indicated by the reference in parentheses. All other exhibits are filed herewith. Exhibits 10.1, 10.2, 10.3, 10.4. 10.5, 10.6,
10.7, 10.8, 10.9, 10.10, 10.11, 10.14, 10.15, 10.16, and 10.17 are management contracts or compensatory plans or
arrangements.
Exhibit
Description
*2.1
Equity Purchase Agreement dated as of February 14, 2020, by an among 1-800-Flowers.com, Inc., 800-Flowers,
Inc. PersonalizationMall.com, LLC, and Bed Bath & Beyond Inc. (Current Report on Form 8-K filed on
February 18, 2020, Exhibit 2.1)
*3.1
Third Amended and Restated Certificate of Incorporation. (Quarterly Report on Form 10-Q filed on February
10, 2017, Exhibit 3.1)
*3.2
Amendment No. 1 to Third Amended and Restated Certificate of Incorporation. (Registration Statement on
Form S-1/A (No. 333-78985) filed on July 22, 1999, Exhibit 3.2)
*3.3
Amendment No. 2 to Third Amended and Restated Certificate of Incorporation. (Current Report on Form 8-K
filed on December 15, 2016, Exhibit 3.1)
*3.4
Second Amended and Restated By-laws. (Current Report on Form 8-K filed on April 29, 2019, Exhibit 3.2)
*4.1
Specimen Class A common stock certificate. (Registration Statement on Form S-1/A (No. 333-78985 filed on
July 9, 1999, Exhibit 4.1)
*4.2
Description of Securities. (Annual Report on Form 10-K filed on September 13, 2019, Exhibit 4.2)
*10.1
Employment Agreement made October 4, 2016, effective as of July 4, 2016, between 1-800-Flowers.com,
Inc. and James F. McCann (Current report on form 8-K filed on October 6, 2016, Exhibit 10.1)
*10.2
Employment Agreement made October 4, 2016, effective as of July 4, 2016, between 1-800-Flowers.com, Inc.
and Christopher G. McCann (Current report on form 8-K filed on October 6, 2016, Exhibit 10.2)
*10.3
Section 16 Executive Officer’s Bonus Plan (as amended and restated as of September 14, 2016) (Quarterly
Report on Form 10-Q filed on February 10, 2017, Exhibit 10.2)
*10.4
Nonqualified Supplemental Deferred Compensation Plan dated December 21, 2010 (Quarterly Report on Form
10-Q filed on November 14, 2016, Exhibit 10.24)
*10.5
2003 Long Term Incentive and Share Award Plan (as amended and restated as of October 15, 2020) (Proxy
Statement on Form 14(a) filed on December 9, 2020, Annex A).
*10.6
Form of Restricted Share Agreement under 2003 Long Term Incentive and Share Award Plan. (Annual Report
on Form 10-K for the fiscal year ended June 29, 2008 filed on September 12, 2008, Exhibit 10.15)
*10.7
Form of Incentive Stock Option Agreement under 2003 Long Term Incentive and Share Award Plan. (Annual
Report on Form 10-K for the fiscal year ended June 29, 2008 filed on September 12, 2008, Exhibit 10.16)
*10.8
Form of Non-statutory Stock Option Agreement under 2003 Long Term Incentive and Share Award Plan.
(Annual Report on Form 10-K for the fiscal year ended June 29, 2008 filed on September 12, 2008, Exhibit
10.17)
43
*10.9
Form of Restricted Share Agreement under 2003 Long Term Incentive and Share Award Plan (Quarterly Report
on Form 10-Q filed on February 10, 2012, Exhibit 10.20)
*10.10
Form of Performance Restricted Share Agreement under 2003 Long Term Incentive and Share Award Plan
(Quarterly Report on Form 10-Q filed on February 10, 2012, Exhibit 10.21)
*10.11
Form of Non-Statutory Stock Option Agreement under 2003 Long Term Incentive and Share Award Plan
(Quarterly Report on Form 10-Q filed on February 10, 2012, Exhibit 10.22)
*10.12
Amendment to Equity Purchase Agreement dated July 20, 2020 (Current Report on Form 8-K filed on July 22,
2020, Exhibit 10.1)
*10.13
Third Amended and Restated Credit Agreement, dated as of June 27, 2023, among 1-800-FLOWERS.COM,
INC., the subsidiary borrowers party thereto, the subsidiary guarantors party thereto, the lenders party thereto,
and JPMorgan Chase Bank, N.A., as Administrative Agent (Current Report on Form 8-K filed on June 28,
2023, Exhibit 10.1)
*10.14
James F. McCann Consent Letter, dated June 29, 2023 (Annual Report on Form 10-K for the fiscal year
ended July 2, 2023 filed on September 15, 2023, Exhibit 10.14)
*10.15
Christopher G. McCann Resignation Letter, dated June 29, 2023 (Annual Report on Form 10-K for the fiscal
year ended July 2, 2023 filed on September 15, 2023, Exhibit 10.15)
*10.16
Consulting Agreement, dated as of December 20, 2023, between 1-800-FLOWERS.COM, Inc., and Hanft
Ideas LLC and Adam Hanft. (Quarterly Report on Form 10-Q filed on February 8, 2024, Exhibit 10.1)
*10.17
Appointment Letter from 1-800-FLOWERS.COM, Inc. to Christopher G. McCann, dated December 31, 2023
(Current Report on Form 8-K filed on January 2, 2024, Exhibit 99.1)
19.1
Policy on the Prevention of Insider Trading for 1-800-FLOWERS.COM, Inc.
21.1
Subsidiaries of the Registrant.
23.1
Consent of Independent Registered Public Accounting Firm.
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.
97.1
1-800-FLOWERS.COM, Inc. Clawback Policy
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)
Item 16.
FORM 10-K SUMMARY
Not applicable.
44
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused
this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: September 6, 2024
1-800-FLOWERS.COM, Inc.
By: /s/ James F. McCann
James F. McCann
Executive Chairman, Chief Executive Officer
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated below:
Dated: September 6, 2024
By: /s/ James F. McCann
James F. McCann
Executive Chairman, Chief Executive Officer
(Principal Executive Officer)
Dated: September 6, 2024
By: /s/ William E. Shea
William E. Shea
Senior Vice President, Treasurer and Chief Financial Officer
(Principal Financial and Accounting Officer)
Dated: September 6, 2024
By: /s/ Christopher G. McCann
Christopher G. McCann
Director
Dated: September 6, 2024
By: /s/ Celia R. Brown
Celia R. Brown
Director
Dated: September 6, 2024
By: /s/ James A. Cannavino
James A. Cannavino
Director
Dated: September 6, 2024
By: /s/ Dina M. Colombo
Dina Colombo
Director
Dated: September 6, 2024
By: /s/ Eugene F. DeMark
Eugene F. DeMark
Director
Dated: September 6, 2024
By: /s/ Leonard J. Elmore
Leonard J. Elmore
Director
Dated: September 6, 2024
By: /s/ Adam Hanft
Adam Hanft
Director
Dated: September 6, 2024
By: /s/ Stephanie Redish Hofmann
Stephanie Redish Hofmann
Director
Dated: September 6, 2024
By: /s/ Christina Shim
Christina Shim
Director
Dated: September 6, 2024
By: /s/ Larry Zarin
Larry Zarin
Director
F-1
Report of Independent Registered Public Accounting Firm
Board of Directors and Stockholders
1-800-FLOWERS.COM, Inc.
Jericho, NY
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of 1-800-FLOWERS.COM, Inc. (the “Company”) as of June
30, 2024 and July 2, 2023, the related consolidated statements of operations and comprehensive income (loss), stockholders’
equity, and cash flows for each of the three years in the period ended June 30, 2024, and the related notes and schedule
(collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements
present fairly, in all material respects, the financial position of the Company at June 30, 2024 and July 2, 2023 and the results
of its operations and its cash flows for each of the three years in the period ended June 30, 2024, in conformity with accounting
principles generally accepted in the United States of America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(“PCAOB”), the Company's internal control over financial reporting as of June 30, 2024, based on criteria established in
Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission (“COSO”) and our report dated September 6, 2024 expressed an unqualified opinion thereon.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express
an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our
audits also included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable
basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or
disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective,
or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the
consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below,
providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Valuation of Indefinite-lived Intangible Asset – PersonalizationMall Tradename
As described in Note 2 and Note 6 to the consolidated financial statements, the Company’s consolidated balance for
trademarks with indefinite lives was $111.5 million as of June 30, 2024. During its quarterly assessment in the second quarter
of fiscal year 2024, as a result of a decline in the actual and projected revenue for the Company’s PersonalizationMall
tradename (an 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. The Company’s
impairment test for its PersonalizationMall tradename encompassed calculating the fair value of the asset and comparing that
result to its carrying value. To determine the fair value, the Company used an income approach, the relief-from-royalty
method. The quarterly 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 also performed a quantitative test
F-2
during the fourth quarter of fiscal year 2024, which determined that the estimated fair value of the PersonalizationMall
tradename exceeded its carrying value.
We identified the forecasted long-term terminal growth rate, discount rate, and royalty rate included in the relief-from-royalty
method for the valuation of the PersonalizationMall tradename during the second and fourth quarter of fiscal year 2024 as a
critical audit matter. The principal considerations for our determination included the subjectivity and judgment required to
determine the forecasted long term terminal growth rate, discount rate and royalty rate. Auditing these elements involved
especially challenging auditor judgment due to the nature and extent of audit effort required to address these matters, including
the extent of specialized skills or knowledge needed.
The primary procedure we performed to address this critical audit matter included:
● Utilizing personnel with specialized skills and knowledge in valuation to assist in evaluating the reasonableness of the
forecasted long-term terminal growth rate, discount rate and royalty rate.
We have served as the Company's auditor since 2014.
/s/ BDO USA, P.C.
Melville, NY
September 6, 2024
F-3
1-800-FLOWERS.COM, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share data)
June 30, 2024 July 2, 2023
Assets
Current assets:
Cash and cash equivalents ........................................................................................... $
159,437 $
126,807
Trade receivables, net ..................................................................................................
18,024
20,419
Inventories ...................................................................................................................
176,591
191,334
Prepaid and other .........................................................................................................
31,680
34,583
Total current assets ...................................................................................................
385,732
373,143
Property, plant and equipment, net ..................................................................................
223,789
234,569
Operating lease right-of-use assets ..................................................................................
113,926
124,715
Goodwill ..........................................................................................................................
156,537
153,376
Other intangibles, net ......................................................................................................
116,216
139,888
Other assets .....................................................................................................................
36,448
25,739
Total assets ..................................................................................................................... $
1,032,648 $
1,051,430
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable ......................................................................................................... $
80,005 $
52,588
Accrued expenses ........................................................................................................
121,303
141,914
Current maturities of long-term debt ...........................................................................
10,000
10,000
Current portion of long-term operating lease liabilities ...............................................
16,511
15,759
Total current liabilities .............................................................................................
227,819
220,261
Long-term debt, net .........................................................................................................
177,113
186,391
Long-term operating lease liabilities ...............................................................................
105,866
117,330
Deferred tax liabilities, net ..............................................................................................
19,402
31,134
Other liabilities ................................................................................................................
36,106
24,471
Total liabilities ...............................................................................................................
566,306
579,587
Commitments and contingencies (Note 17)
Stockholders' equity:
Preferred stock, $.01 par value, 10,000,000 shares authorized, none issued ...................
-
-
Class A common stock, $.01 par value, 200,000,000 shares authorized, 58,792,695
and 58,273,747 shares issued in 2024 and 2023, respectively .....................................
588
583
Class B common stock, $.01 par value, 200,000,000 shares authorized, 32,348,221
shares issued in 2024 and 2023 ....................................................................................
323
323
Additional paid-in capital ................................................................................................
399,165
388,215
Retained earnings ............................................................................................................
264,978
271,083
Accumulated other comprehensive loss ..........................................................................
(127)
(170 )
Treasury stock, at cost, 21,645,290 and 20,565,875 Class A shares in 2024 and 2023,
respectively, and 5,280,000 Class B shares in 2024 and 2023 .....................................
(198,585)
(188,191 )
Total stockholders’ equity ............................................................................................
466,342
471,843
Total liabilities and stockholders’ equity..................................................................... $
1,032,648 $
1,051,430
See accompanying Notes to Consolidated Financial Statements.
F-4
1-800-FLOWERS.COM, Inc. and Subsidiaries
Consolidated Statements of Operations and Comprehensive Income (Loss)
(in thousands, except per share data)
Years ended
June 30, 2024 July 2, 2023 July 3, 2022
Net revenues ....................................................................................... $
1,831,421 $
2,017,853 $
2,207,885
Cost of revenues (excludes depreciation and amortization) ...............
1,096,668
1,260,327
1,386,147
Gross profit .........................................................................................
734,753
757,526
821,738
Operating expenses:
Marketing and sales ........................................................................
485,016
500,840
571,661
Technology and development .........................................................
60,235
60,691
56,561
General and administrative .............................................................
118,060
112,747
102,337
Depreciation and amortization ........................................................
53,752
53,673
49,078
Goodwill and intangible impairment ..............................................
19,762
64,586
-
Total operating expenses .............................................................
736,825
792,537
779,637
Operating income (loss) .....................................................................
(2,072)
(35,011 )
42,101
Interest expense, net ...........................................................................
10,623
10,946
5,667
Other expense (income), net ...............................................................
(6,793)
805
5,332
Income (loss) before income taxes .....................................................
(5,902)
(46,762 )
31,102
Income tax (benefit) expense..............................................................
203
(2,060 )
1,492
Net income (loss) ...............................................................................
(6,105)
(44,702 )
29,610
Other comprehensive income (currency translation) ..........................
43
41
107
Comprehensive income (loss) ............................................................ $
(6,062) $
(44,661 ) $
29,717
Basic net income (loss) per common share ........................................ $
(0.09) $
(0.69 ) $
0.46
Diluted net income (loss) per common share ..................................... $
(0.09) $
(0.69 ) $
0.45
Weighted average shares used in the calculation of net income
(loss) per common share:
Basic ...................................................................................................
64,586
64,688
64,977
Diluted ................................................................................................
64,586
64,688
65,617
See accompanying Notes to Consolidated Financial Statements.
F-5
1-800-FLOWERS.COM, Inc. and Subsidiaries
Consolidated Statements of Stockholders' Equity
Years ended June 30, 2024, July 2, 2023, and July 3, 2022
(in thousands, except share data)
Accumulated
Common Stock
Additional Retained
Other
Total
Class A
Class B
Paid-in Earnings Comprehensive
Treasury Stock
Stockholders’
Shares
Amount
Shares
Amount
Capital (Deficit)
Loss
Shares
Amount
Equity
Balance at
June 27,
2021 ............. 55,675,661 $
557 33,433,614 $
334 $
371,103 $ 286,175 $
(318 ) 24,105,841 $
(148,781) $
509,070
Net income .....
-
-
-
-
-
29,610
-
-
-
29,610
Translation
adjustment ....
-
-
-
-
-
-
107
-
-
107
Stock-based
compensation
805,028
8
-
-
7,939
-
-
-
-
7,947
Exercise of
stock options
321,700
3
-
-
843
-
-
-
-
846
Conversion of
Class B stock
into Class A
stock .............
904,000
9
(904,000)
(9)
-
-
-
-
-
-
Acquisition of
Class A
treasury
stock .............
-
-
-
-
-
-
-
1,592,555
(38,171)
(38,171)
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 loss ..........
-
-
-
-
-
(44,702)
-
-
-
(44,702)
Translation
adjustment ....
-
-
-
-
-
-
41
-
-
41
Stock-based
compensation
385,965
4
-
-
8,330
-
-
-
-
8,334
Conversion of
Class B stock
into Class A
stock .............
181,393
2
(181,393)
(2)
-
-
-
-
-
-
Acquisition of
Class A
treasury
stock .............
-
-
-
-
-
-
-
147,479
(1,239)
(1,239)
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 loss ..........
-
-
-
-
-
(6,105)
-
-
-
(6,105)
Translation
adjustment ....
-
-
-
-
-
-
43
-
-
43
Stock-based
compensation
480,708
5
-
-
10,683
-
-
-
-
10,688
Exercise of
stock options
38,240
-
-
-
329
-
-
-
-
329
Acquisition of
Class A
treasury
stock .............
-
-
-
-
(62)
-
-
1,079,415
(10,394)
(10,456)
Balance at
June 30,
2024 ............. 58,792,695 $
588 32,348,221 $
323 $
399,165 $ 264,978 $
(127 ) 26,925,290 $
(198,585) $
466,342
See accompanying Notes to Consolidated Financial Statements.
F-6
1-800-FLOWERS.COM, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
Years ended
June 30, 2024 July 2, 2023 July 3, 2022
Operating activities:
Net income (loss) ............................................................................... $
(6,105) $
(44,702 ) $
29,610
Reconciliation of net income (loss) to net cash provided by
operating activities net of acquisitions:
Goodwill and intangible impairment ..................................................
19,762
64,586
-
Depreciation and amortization ...........................................................
53,752
53,673
49,078
Amortization of deferred financing costs ...........................................
724
1,834
1,269
Deferred income taxes ........................................................................
(11,732)
(4,608 )
1,579
Bad debt expense (recoveries) ............................................................
251
3,991
(411)
Stock-based compensation .................................................................
10,688
8,334
7,947
Other non-cash items ..........................................................................
310
95
3,194
Changes in operating items:
Trade receivables ............................................................................
2,143
(597 )
(2,452)
Inventories ......................................................................................
14,572
57,591
(85,047)
Prepaid and other ............................................................................
2,913
12,554
6,731
Accounts payable and accrued expenses ........................................
6,404
(38,623 )
(6,595)
Other assets and other liabilities .....................................................
1,317
1,223
286
Net cash provided by operating activities .......................................
94,999
115,351
5,189
Investing activities:
Acquisitions, net of cash acquired ......................................................
(3,672)
(6,151 )
(21,280)
Capital expenditures ...........................................................................
(38,632)
(44,646 )
(66,408)
Purchase of equity investments ..........................................................
-
(32 )
(2,000)
Net cash used in investing activities ................................................
(42,304)
(50,829 )
(89,688)
Financing activities:
Acquisition of treasury stock ..............................................................
(10,394)
(1,239 )
(38,171)
Proceeds from exercise of employee stock options ............................
329
-
846
Proceeds from bank borrowings .........................................................
82,000
395,900
125,000
Repayment of bank borrowings..........................................................
(92,000)
(360,900 )
(145,000)
Debt issuance costs .............................................................................
-
(2,941 )
(284)
Net cash (used in) provided by financing activities .......................
(20,065)
30,820
(57,609)
Net change in cash and cash equivalents ........................................
32,630
95,342
(142,108)
Cash and cash equivalents:
Beginning of year ...............................................................................
126,807
31,465
173,573
End of year ........................................................................................ $
159,437 $
126,807 $
31,465
Supplemental Cash Flow Information:
-
Interest paid amounted to $16.3 million, $12.8 million, and $4.6 million for the years ended June 30, 2024, July 2,
2023, and July 3, 2022, respectively.
-
The Company paid income taxes of approximately $8.0 million, and $1.4 million, net of tax refunds, for the years
ended June 30, 2024 and July 3, 2022, respectively and received refunds of approximately $8.8 million, net of tax
payments, for the year ended July 2, 2023.
See accompanying Notes to Consolidated Financial Statements.
F-7
1-800-FLOWERS.COM, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 1. Description of Business
1-800-FLOWERS.COM, Inc. 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 our 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®, Scharffen Berger® and Simply Chocolate®. Through the Celebrations Passport® loyalty program,
which provides members with free standard shipping and no service charge on eligible products 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 its
members grow their businesses profitably; Napco℠, a resource for floral gifts and seasonal décor; DesignPac Gifts, LLC, a
manufacturer of gift baskets and towers; Alice’s Table®, a lifestyle business offering fully digital on demand floral, culinary
and other experiences to guests across the country and Card Isle®, an e-commerce greeting card service.
Note 2. Significant Accounting Policies
Basis of Presentation
The consolidated financial statements include the accounts of 1-800-FLOWERS.COM, Inc. and its subsidiaries. All
significant intercompany accounts and transactions have been eliminated in consolidation. The Company’s net revenues from
international sources were not material during fiscal years 2024, 2023 and 2022.
Fiscal Year
The Company’s fiscal year is a 52- or 53-week period ending on the Sunday nearest to June 30. Fiscal years 2024 and 2023,
which ended on June 30, 2024 and July 2, 2023, respectively, each consisted of 52 weeks. Fiscal year 2022, which ended on
July 3, 2022, consisted of 53 weeks.
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.
Cash and Cash Equivalents
Cash and cash equivalents consist of demand deposits with banks, highly liquid money market funds, United States
government securities, overnight repurchase agreements and commercial paper with maturities of three months or less when
purchased.
Inventories
Inventories are valued at the lower of cost or net realizable value. Inventories are accounted for using a standard costing
methodology, which approximates cost on a first-in, first-out basis.
Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation and amortization. Depreciation expense is
computed using the straight-line method over the assets’ estimated useful lives. Amortization of leasehold improvements and
capital leases is computed using the straight-line method over the shorter of the estimated useful lives or the initial lease
terms. The Company capitalizes certain internal and external costs incurred to acquire or develop internal-use software.
Capitalized software costs are amortized on a straight-line basis over the estimated useful life of the software. Orchards in
production, consisting of direct labor and materials, supervision and other items, are capitalized as part of capital projects in
progress – orchards until the orchards produce fruit in commercial quantities, at which time they are reclassified to orchards
in production. Estimated useful lives are periodically reviewed, and where appropriate, changes are made prospectively.
F-8
The Company’s property, plant and equipment are depreciated using the following estimated lives:
Building and building improvements (years) ................................................................................................
10 - 40
Leasehold improvements (years) ...................................................................................................................
3 - 10
Furniture, fixtures and production equipment (years) ...................................................................................
3 - 20
Software (years) ............................................................................................................................................
3 - 7
Orchards in production and land improvements (years) ................................................................................
15 - 45
Property, plant and equipment are reviewed for impairment whenever changes in circumstances or events may indicate that
the carrying amounts are not recoverable.
Goodwill
Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in each business
combination, with the carrying value of the Company’s goodwill allocated to its reporting units, in accordance with the
acquisition method of accounting. Goodwill is not amortized, but it is subject to an annual assessment for impairment, which
the Company performs during the fourth quarter, or more frequently if events occur or circumstances change such that it is
more likely than not that an impairment may exist. The Company tests goodwill for impairment at the reporting unit level.
The Company identifies its reporting units by assessing whether the components of its operating segments constitute
businesses for which discrete financial information is available and management of each reporting unit regularly reviews the
operating results of those components.
In applying the goodwill impairment test, the Company has the option to perform a qualitative test (also known as “Step 0”)
or a quantitative test (“Step 1”). Under the Step 0 test, the Company first assesses qualitative factors to determine whether it
is more likely than not that the fair value of the reporting units is less than its carrying value. Qualitative factors may include,
but are not limited to, economic conditions, industry and market considerations, cost factors, overall financial performance
of the reporting unit and other entity and reporting unit specific events. If after assessing these qualitative factors, the
Company determines it is “more-likely-than-not” that the fair value of the reporting unit is less than the carrying value, then
performing the Step 1 quantitative test is necessary.
Step 1 of the quantitative test requires comparison of the fair value of each of the reporting units to the respective carrying
value. If the carrying value of the reporting unit is less than the fair value, no impairment exists. Otherwise, the Company
would recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value
up to the amount of goodwill allocated to that reporting unit.
The Company generally estimates the fair value of a reporting unit using an equal weighting of the income and market
approaches. The Company uses industry accepted valuation models and set criteria that are reviewed and approved by various
levels of management. Under the income approach, the Company uses a discounted cash flow methodology, which requires
management to make significant estimates and assumptions related to forecasted revenues, gross profit margins, operating
income margins, working capital cash flow, perpetual growth rates, and long-term discount rates, among others. For the
market approach, the Company uses the guideline public company method. Under this method, the Company utilizes
information from comparable publicly traded companies with similar operating and investment characteristics as the reporting
units, to create valuation multiples that are applied to the operating performance of the reporting unit being tested, in order
to obtain their respective fair values. The Company also reconciles the aggregate fair values of its reporting units determined
in the first step (as described above) to its current market capitalization, allowing for a reasonable control premium.
During Fiscal 2022, as a result of changes within the macroeconomic environment, geopolitical pressures and the Company’s
financial performance and market capitalization, the Company performed a Step 1 analysis, which indicated that the fair
values of the Consumer Floral & Gifts and Gourmet Foods & Gift Baskets reporting units exceeded their respective carrying
amounts.
F-9
During its quarterly assessment in the third quarter of Fiscal 2023, the Company concluded that a triggering event had
occurred for its Gourmet Foods & Gift Baskets reporting unit. As such, the Company performed a Step 1 analysis of the
reporting unit’s goodwill, intangibles and long-lived assets as of April 2, 2023, and fully impaired the related goodwill, and
partially impaired certain tradenames within the reporting unit. The Company concluded that the definite-lived and other
long-lived assets of the reporting unit were not impaired.
As of its annual impairment testing date during the fourth quarter of Fiscal 2023, the Company completed a step 0 analysis
of its Consumer Floral & Gifts reporting unit, the only reporting unit with goodwill at the time, and concluded that it was not
"more likely than not" that the fair value of its reporting unit was less than its carrying value.
As of its annual impairment testing date during the fourth quarter of Fiscal 2024, the Company completed a step 0 analysis
of its Consumer Floral & Gifts and BloomNet reporting units, the only reporting units with goodwill, and concluded that it
was not "more likely than not" that the fair values of its reporting units were less than their carrying values.
See Note 6 – Goodwill and Intangible Assets for further information.
Other Intangibles, net
Other intangibles consist of definite-lived intangible assets (such as investment in licenses, customer lists, and others) and
indefinite-lived intangible assets (such as acquired trade names and trademarks). The cost of definite-lived intangible assets
is amortized to reflect the pattern of economic benefits consumed, over the estimated periods benefited, ranging from 3 to 16
years, while indefinite-lived intangible assets are not amortized.
Definite-lived intangibles are reviewed for impairment whenever changes in circumstances or events may indicate that the
carrying amounts are not recoverable. When such events or changes in circumstances occur, a recoverability test is performed
comparing projected undiscounted cash flows from the use and eventual disposition of an asset or asset group to its carrying
value. If the projected undiscounted cash flows are less than the carrying value, then an impairment charge would be recorded
for the excess of the carrying value over the fair value, which is determined by discounting future cash flows.
The Company tests indefinite-lived intangible assets for impairment at least annually, during the fourth quarter, or whenever
changes in circumstances or events may indicate that the carrying amounts are not recoverable. In applying the impairment
test, the Company has the option to perform a qualitative test (also known as “Step 0”) or a quantitative test. Under the Step
0 test, the Company assesses qualitative factors to determine whether it is more likely than not that an indefinite-lived
intangible asset is impaired. Qualitative factors may include, but are not limited to economic conditions, industry and market
considerations, cost factors, financial performance, legal and other entity and asset specific events. If, after assessing these
qualitative factors, the Company determines it is “more-likely-than-not” that the indefinite-lived intangible asset is impaired,
then performing the quantitative test is necessary. The quantitative impairment test for indefinite-lived intangible assets
encompasses calculating a fair value of an indefinite-lived intangible asset and comparing the fair value to its carrying value.
If the carrying value exceeds the fair value, impairment is recognized for the difference. To determine fair value of other
indefinite-lived intangible assets, the Company uses 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. Other 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.
During Fiscal 2022, the Company performed a quantitative test, which determined that the estimated fair value of the
Company's intangibles exceeded their respective carrying value.
As noted in the Goodwill section above, during the third quarter of Fiscal 2023, the Company concluded that a triggering
event had occurred within its Gourmet Foods & Gift Baskets reporting unit and, as such, performed an impairment test of the
indefinite lived intangibles, which resulted in a partial impairment of certain tradenames within the reporting unit.
During the fourth quarter of Fiscal 2023, the Company performed a Step 0 analysis and determined that it was not “more
likely than not” that the fair values of its indefinite-lived intangibles were less than their carrying amounts.
During its quarterly assessment in the second quarter of fiscal year 2024, as a result of a decline in the actual and projected
revenue for the Company’s PersonalizationMall tradename (an 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 a partial impairment of this tradename.
F-10
During the fourth quarter of fiscal year 2024, the Company performed a Step 0 analysis for its indefinite-lived intangible
assets, excluding its PersonalizationMall tradename, and determined that it was not “more likely than not” that the fair values
of its indefinite-lived intangibles were less than their carrying amounts. For the Company's PersonalizationMall tradename,
the Company performed a quantitative test, which determined that the estimated fair value of the Company's intangible asset
exceeded its respective carrying amount.
See Note 6 – Goodwill and Intangible Assets for further information.
Business Combinations
The Company accounts for business combinations in accordance with Accounting Standards Codification ("ASC") Topic
805, which requires, among other things, the acquiring entity in a business combination to recognize the fair value of all the
assets acquired and liabilities assumed; the recognition of acquisition-related costs in the consolidated results of operations;
the recognition of restructuring costs in the consolidated results of operations for which the acquirer becomes obligated after
the acquisition date; and contingent purchase consideration to be recognized at their fair values on the acquisition date with
subsequent adjustments recognized in the consolidated results of operations. The fair values assigned to identifiable intangible
assets acquired are determined primarily by using an income approach, which is based on assumptions and estimates made
by management. Significant assumptions utilized in the income approach are based on company specific information and
projections that are not observable in the market and are therefore considered Level 3 measurements. The excess of the
purchase price over the fair value of the identified assets and liabilities is recorded as goodwill. Operating results of the
acquired entity are reflected in the Company’s consolidated financial statements from date of acquisition.
Deferred Catalog Costs
The Company capitalizes the costs of producing and distributing its catalogs and expenses them upon mailing. Included
within prepaid and other current assets were $1.5 million and $2.4 million at June 30, 2024 and July 2, 2023, respectively,
relating to prepaid catalog expenses.
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 cost method investments was $2.4 million as of June 30, 2024 and $2.6 million as of July 2, 2023.
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 10 - Fair Value Measurements).
Concentration of Credit Risk
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of
cash and cash equivalents and accounts receivable. The Company maintains cash and cash equivalents with high quality
financial institutions, although bank deposits, at times, may exceed federally insured limits. Concentration of credit risk with
respect to accounts receivable is limited due to the Company's large number of customers and their dispersion throughout the
United States, and the fact that a substantial portion of receivables are related to balances owed by major credit card
companies. Allowances relating to consumer, corporate and franchise accounts receivable ($2.8 million at June 30, 2024 and
$5.8 million at July 2, 2023) have been recorded based upon previous experience and management’s evaluation.
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
F-11
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, included in "Accrued expenses" on our consolidated balance sheets, as of July 3, 2022, was $33.7
million, of which $33.1 million was recognized during the year ended July 2, 2023. Our total deferred revenue as of July 2,
2023 was $30.8 million of which, $30.2 million was recognized as revenue during the year ended June 30, 2024. The deferred
revenue balance as of June 30, 2024 was $25.0 million.
Cost of Revenues
Cost of revenues consists 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 manufacturing and production operations.
Marketing and Sales
Marketing and sales expense consists primarily of advertising expenses, catalog costs, online portal and search expenses,
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.
The Company expenses all advertising costs, with the exception of catalog costs (see Deferred Catalog Costs above), at the
time the advertisement is first shown. Advertising expense was $283.6 million, $291.9 million and $347.7 million for the
years ended June 30, 2024, July 2, 2023, and July 3, 2022, respectively.
Technology and Development
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, content development and maintenance and support
costs related to the Company’s order entry, customer service, fulfillment and database systems. Costs associated with the
acquisition or development of software for internal use are capitalized if the software is expected to have a useful life beyond
one year and amortized over the software’s useful life, typically three to seven years. Costs associated with repair
maintenance, or the development of website content are expensed as incurred, as the useful lives of such software
modifications are less than one year.
F-12
Stock-Based Compensation
The Company records compensation expense associated with restricted stock awards and other forms of equity compensation
based upon the fair value of stock-based awards as measured at the grant date. The cost associated with share-based awards
that are subject solely to time-based vesting requirements is recognized over the awards’ service period for the entire award
on a straight-line basis. The cost associated with performance-based equity awards is recognized for each tranche over the
service period, based on an assessment of the likelihood that the applicable performance goals will be achieved.
Derivatives and Hedging
The Company does not enter into derivative transactions for trading purposes, but rather, on occasion, to manage its exposure
to interest rate fluctuations. When entering into these transactions, the Company has periodically managed its floating rate
debt using interest rate swaps in order to reduce its exposure to the impact of changing interest rates on its consolidated results
of operations and future cash outflows for interest. The Company did not have any open derivative positions at June 30, 2024
and July 2, 2023.
Income Taxes
The Company uses the asset and liability method to account for income taxes. The Company has established deferred tax
assets and liabilities for temporary differences between the financial reporting bases and the income tax bases of its assets
and liabilities at enacted tax rates expected to be in effect when such assets or liabilities are realized or settled. The Company
also has net operating loss carryforwards and credit carryforwards in multiple jurisdictions and has recognized deferred assets
for those losses and credits.
The Company evaluates the realizability of its deferred tax assets on a quarterly basis and establishes valuation allowances
when it is more likely than not that all or a portion of a deferred tax asset may not be realized. In completing this evaluation,
the Company considers available positive and negative evidence. Such evidence includes historical operating results, the
existence of cumulative earnings and losses in the most recent fiscal years, taxable income in prior carryback year(s) if
permitted under the tax law, the time period over which our temporary differences will reverse, the implementation of feasible
and prudent tax planning strategies, and expectations for future pre-tax operating income. Estimating future taxable income
is inherently uncertain and requires judgment. Deferred tax assets are reduced by a valuation allowance if, based on the weight
of this evidence, it is more likely than not that all or a portion of the recorded deferred tax assets will not be realized in future
periods.
The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position
will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits
recognized in the financial statements on a particular tax position are measured based on the largest benefit that has a greater
than 50% likelihood of being realized upon settlement. The amount of unrecognized tax benefits (“UTBs”) is adjusted as
appropriate for changes in facts and circumstances, such as significant amendments to existing tax law, new regulations or
interpretations by the taxing authorities, new information obtained during a tax examination, or resolution of an examination.
We recognize both accrued interest and penalties, where appropriate, related to UTBs in income tax expense. Assumptions,
judgment and the use of estimates are required in determining if the “more likely than not” standard has been met when
developing the provision for income taxes.
Net Income (Loss) Per Share
Basic net income (loss) 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 is computed by dividing the
net income during the period by the sum of the weighted-average number of common shares outstanding during the period
and the potential dilutive common shares (consisting of employee stock options and unvested restricted stock awards). Diluted
net loss per common share is computed using the weighted-average number of common shares outstanding during the period
and excludes the dilutive potential common shares (consisting of unvested restricted stock awards), as their inclusion would
be antidilutive. As a result of the net loss for the years ended June 30, 2024 and July 2, 2023, there is no dilutive impact to
the net loss per share calculation.
Recently Issued Accounting Pronouncements
In November 2023, the Financial Accounting Standards 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
F-13
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.
Note 3 – Net Income (Loss) Per Common Share
The following table sets forth the computation of basic and diluted net income (loss):
Years Ended
June 30, 2024 July 2, 2023 July 3, 2022
(in thousands, except per share data)
Numerator:
Net income (loss) ............................................................................... $
(6,105) $
(44,702 ) $
29,610
Denominator:
Weighted average shares outstanding ................................................
64,586
64,688
64,977
Effect of dilutive securities:
Employee stock options......................................................................
-
-
45
Employee restricted stock awards ......................................................
-
-
595
Total effect of dilutive securities ....................................................
-
-
640
Adjusted weighted-average shares and assumed conversions ............
64,586
64,688
65,617
Net income (loss) per common share:
Basic ................................................................................................... $
(0.09) $
(0.69 ) $
0.46
Diluted ................................................................................................ $
(0.09) $
(0.69 ) $
0.45
Due to our net loss for the years ended June 30, 2024, and July 2, 2023, all common stock equivalents including stock options
and unvested restricted stock awards have been excluded from the computation of diluted net loss per share because the effect
would have been anti-dilutive to the computation.
There were 212,178 and 7,762 restricted stock awards and stock options, respectively, excluded from the Company's
calculation of diluted net income (loss) per common share for the year ended July 3, 2022, as such awards were anti-dilutive.
Note 4. Acquisitions
Acquisition of Card Isle
On April 3, 2024, the Company, within its BloomNet segment, completed its acquisition of certain assets of Card Isle, an e-
commerce greeting card company, expanding the Company’s presence in the greeting card category across all brands. The
Company used cash on hand to fund the purchase.
The total consideration of $3.6 million was primarily allocated to the identifiable assets acquired and liabilities assumed based
on the preliminary estimates of their fair values on the acquisition date, including: goodwill of $3.0 million (deductible for
F-14
income tax purposes) and artist contracts of $0.6 million (5-year life). The Company is in the process of finalizing its
allocation and this may result in potential adjustments to the carrying value of the respective recorded assets and liabilities,
establishment of certain additional intangible assets, revisions of useful lives of intangible assets, and the determination of
any residual amount that will be allocated to goodwill.
Card Isle annual revenue and profit, based on its most recently available financial information, is deemed immaterial to the
Company's consolidated financial statements, and as such pro forma results of operations have not been presented.
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 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 preliminarily allocated to the identifiable assets acquired and liabilities assumed
based on our preliminary estimates of their fair values, as a result of information that was available as of the date of
acquisition. 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. The consideration transferred was allocated to 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.
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.
Acquisition of Alice’s Table
On December 31, 2021, the Company completed its acquisition of Alice’s Table, Inc. (“Alice’s Table”), a lifestyle business
offering fully digital livestreaming and on demand floral, culinary and other experiences to guests across the country. The
Company utilized existing cash of $0.8 million, contributed accounts receivable due from Alice’s Table of $0.3 million, and
converted its cost method investment in Alice’s Table of $0.3 million, in order to acquire 100% ownership in Alice’s Table,
which included tradenames, customer lists, websites and operations. Immediately prior to completing the acquisition, the
Company wrote down its previous cost method investment in Alice’s Table to its $0.3 million fair value, on the date of the
acquisition, resulting in an impairment of $0.7 million, which is recorded in the “Other expense (income), net” line item on
the Statement of Operations for the fiscal year ended July 3, 2022. Alice’s Table revenues were approximately $3.8 million
during its most recent fiscal year ended September 30, 2021.
The resulting total consideration of $1.3 million was preliminarily allocated to the identifiable assets acquired and liabilities
assumed based on our preliminary estimates of their fair values, as a result of information that was available as of the date of
acquisition. During the quarter ended January 1, 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. The consideration transferred was allocated to: goodwill of $0.8 million, trademarks of $0.5 million
(indefinite life), customer lists of $0.2 million (4-year life), and liabilities of $0.2 million.
Operating results of the Alice’s Table 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.
Acquisition of Vital Choice
On October 27, 2021, the Company completed its acquisition of all of the membership interests in Vital Choice Seafood LLC
(“Vital Choice”), a provider of wild-caught seafood and sustainably farmed shellfish, pastured proteins, organic foods, and
marine-sourced nutritional supplements. The Company utilized its existing credit facility to fund the $20.0 million purchase
(subject to certain working capital and other adjustments), which included tradenames, customer lists, websites and
operations. Vital Choice revenues were approximately $27.8 million during its most recent year ended December 31, 2020.
F-15
After working capital and related adjustments, total consideration was approximately $20.0 million and was preliminarily
allocated to the identifiable assets acquired and liabilities assumed based on our preliminary estimates of their fair values, as
a result of information that was available as of the date of acquisition. During the quarter ended January 1, 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.
The following table summarizes the allocation of the purchase price to the fair values of assets acquired and liabilities
assumed:
Vital Choice
Preliminary
Vital Choice
Purchase Price
Purchase Price
Allocation
Measurement Period
Allocation
October 27, 2021
Interim Adjustments
January 1, 2023
(in thousands)
Inventory ................................................ $
8,653 $
- $
8,653
Other current assets ................................
929
(474)
455
Property, plant and equipment ................
205
(205)
-
Intangible assets .....................................
9,800
(600)
9,200
Goodwill .................................................
4,383
634
5,017
Total assets acquired ..............................
23,970
(645)
23,325
Current liabilities ....................................
3,621
(256)
3,365
Net assets acquired ................................. $
20,349 $
(389) $
19,960
The estimated fair value of the acquired work in process and finished goods inventory was determined utilizing the income
approach. The income approach estimates the fair value of the inventory based on the net retail value of the inventory, less
operating expenses and a reasonable profit allowance. Raw materials inventory was valued at book value, as there have not
been any significant price fluctuations or other events that would materially change the cost to replace the raw materials.
Of the acquired intangible assets, $4.3 million was assigned to customer lists, which is being amortized over the estimated
remaining life of 5 years, $4.9 million was assigned to tradenames (indefinite life), and $5.0 million was assigned to goodwill
(indefinite life), which is expected to be deductible for tax purposes. The goodwill recognized is primarily related to
synergistic value created in terms of both operating costs and revenue growth opportunities, enhanced financial and
operational scale, and other strategic benefits.
The estimated fair value of the acquired tradenames was determined using the relief from royalty method, which is a risk-
adjusted discounted cash flow approach. The relief from royalty method values an intangible asset by estimating the royalties
saved through ownership of the asset. The relief from royalty method requires identifying the future revenue that would be
generated by the trademark, multiplying it by a royalty rate deemed to be avoided through ownership of the asset and
discounting the projected royalty savings amounts back to the acquisition date. The royalty rate used in the valuation was
based on a consideration of market rates for similar categories of assets. The discount rate used in the valuation was based on
the Company’s weighted average cost of capital, the riskiness of the earnings stream associated with the trademarks and the
overall composition of the acquired assets.
The estimated fair value of the acquired customer lists was determined using the excess earnings method under the income
approach. This method requires identifying the future revenue that would be generated by existing customers at the time of
the acquisition, considering an appropriate attrition rate based on the historical experience of the Company. Appropriate
expenses are then deducted from the revenues and economic rents are charged for the return on contributory assets. The after-
tax cash flows attributable to the asset are discounted back to their net present value at an appropriate intangible asset rate of
return and summed to calculate the value of the customer lists.
Operating results of the Vital Choice business are reflected in the Company’s consolidated financial statements from the date
of acquisition within the Gourmet Foods & Gift Baskets segment. Pro forma results of operations have not been presented,
as the impact on the Company’s consolidated financial results was not material.
F-16
Note 5. Inventory
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:
June 30, 2024 July 2, 2023
(in thousands)
Finished goods................................................................................................................. $
94,590 $
92,582
Work-in-process ..............................................................................................................
25,849
33,818
Raw materials ..................................................................................................................
56,152
64,934
Total inventory ................................................................................................................ $
176,591 $
191,334
Note 6. Goodwill and Intangible Assets
The following table presents goodwill by segment and the related change in the net carrying amount:
Gourmet
Consumer
Foods &
Floral &
Gift
Gifts
BloomNet
Baskets
Total
(in thousands)
Balance at July 3, 2022......................................................... $
151,600 $
- $
61,687 $
213,287
Measurement period adjustment for Vital Choice
Acquisition ........................................................................
-
-
600
600
Measurement period adjustment for Alice's Table
Acquisition ........................................................................
112
-
-
112
Acquisition of Things Remembered .....................................
1,664
-
-
1,664
Goodwill impairment ...........................................................
-
-
(62,287)
(62,287)
Balance at July 2, 2023......................................................... $
153,376 $
- $
- $
153,376
Measurement period adjustment for Things Remembered ...
201
-
-
201
Acquisition of Card Isle .......................................................
-
2,960
-
2,960
Balance at June 30, 2024 ...................................................... $
153,577 $
2,960 $
- $
156,537
The Company’s other intangible assets consist of the following:
June 30, 2024
July 2, 2023
Gross
Gross
Amortization Carrying Accumulated
Carrying Accumulated
Period (1) Amount Amortization
Net
Amount Amortization
Net
(in years)
(in thousands)
Intangible assets with determinable lives
Investment in licenses .......................................
14 - 16
$
7,420 $
6,674 $
746 $
7,420 $
6,569 $
851
Customer lists ....................................................
3 - 10
29,647
25,932
3,715 29,071
21,611
7,460
Other .................................................................
5 - 14
2,946
2,664
282
2,946
2,604
342
Total intangible assets with determinable
lives .................................................................
40,013
35,270
4,743 39,437
30,784
8,653
Trademarks with indefinite lives .......................
111,473
- 111,473 131,235
- 131,235
Total identifiable intangible assets ....................
$ 151,486 $
35,270 $116,216 $ 170,672 $
30,784 $139,888
(1) The amortization of intangible assets for the years ended June 30, 2024, July 2, 2023 and July 3, 2022 was $4.4
million, $4.2 million and $3.9 million, respectively. Future estimated amortization expense is as follows: 2025 -
$2.1 million, 2026 - $1.4 million, 2027 -$0.6 million, 2028 -$0.3 million, 2029 -$0.2 million, and thereafter -
$0.1 million.
F-17
During the year ended July 3, 2022, the Company experienced a sustained decline in its share price and a resulting decrease
in its market capitalization, primarily due to the overall macroeconomic environment. Inflationary cost increases, which began
during the first half of the fiscal year, were exacerbated by geopolitical events, further pressuring the Company’s gross margin
and operating expenses. Due to this overall market decline and the Company’s operating performance, the Company
completed impairment assessments of the goodwill and intangible assets of its three reporting units. The quantitative
impairment tests as of July 3, 2022, did not indicate an impairment.
Although originally projected to be transitory, through the nine months ended April 2, 2023, the trend of adverse
macroeconomic conditions and geopolitical pressures continued, and there was a sustained decline in the Company’s market
capitalization. As the expected duration of these factors changed during the three months ended April 2, 2023, the Company
made downward projections to its business forecasts, and therefore determined a triggering event had occurred that required
an interim impairment assessment of the goodwill, intangibles and other long-lived assets of the Gourmet Foods & Gift
Baskets reporting unit as of April 2, 2023.
The Company performed its goodwill impairment test by comparing the fair value of its Gourmet Foods & Gift Baskets
reporting unit to its respective carrying value. The Company estimated the fair value of the Gourmet Foods & Gift Baskets
reporting unit using an equal weighting of the income and market approaches, and a discount rate of 13%. The Company
used industry accepted valuation models and set criteria that were reviewed and approved by various levels of management.
Under the income approach, the Company used a discounted cash flow methodology which required management to make
significant estimates and assumptions related to forecasted revenues, gross profit margins, operating income margins,
working capital cash flow, perpetual growth rates, and long-term discount rates, among others. For the market approach, the
Company used the guideline public company method. Under this method, the Company utilized information from comparable
publicly traded companies with similar operating and investment characteristics as the reporting units, to create valuation
multiples that were applied to the operating performance of the reporting unit being tested, in order to obtain their respective
fair values. The Company also reconciled the aggregate fair values of its reporting units to its current market capitalization.
The Company’s impairment test for indefinite-lived intangible assets encompassed calculating a fair value of the indefinite-
lived intangible asset and comparing that result to its carrying value. To determine fair value of indefinite-lived intangible
assets, 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.
The Company’s impairment test for definite-lived intangibles was performed through a recoverability test, comparing
projected undiscounted cash flows from the use and eventual disposition of the asset or asset group to its carrying value.
Based on the impairment assessment performed during the quarter ended April 2, 2023, the Company recorded a non-cash
goodwill and intangible impairment charge against its Gourmet Foods & Gift Baskets reporting unit of $64.6 million,
comprised of $62.3 million, which was attributable to goodwill, and $2.3 million, which was attributable to certain tradenames
within the same reporting unit. The Company concluded that the definite-lived and other long-lived assets of the reporting
unit were not impaired.
As of its annual impairment testing date during the fourth quarter of Fiscal 2023, the Company completed a step 0 analysis
of its Consumer Floral & Gift reporting unit, the only reporting unit with goodwill at that time, and its indefinite-lived
intangibles and concluded that it was not “more likely than not” that the fair values were less than their carrying values.
During its quarterly assessment in the second quarter of fiscal year 2024, as a result of a decline in the actual and projected
revenue for the Company’s PersonalizationMall tradename (an 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. The Company’s impairment test for its PersonalizationMall tradename encompassed calculating the fair
value of the asset and comparing that result to its carrying value. To determine fair value the Company used an income
approach, the relief-from-royalty method. As discussed above, 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. 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.
During the fourth quarter of fiscal year 2024, the Company performed a Step 0 analysis for its Consumer Floral & Gift and
BloomNet reporting units, the only reporting units with goodwill, and its indefinite-lived intangible assets, excluding its
PersonalizationMall tradename, and determined that it was not “more likely than not” that the fair values were less than their
F-18
carrying amounts. For the Company’s PersonalizationMall tradename, the Company performed a quantitative test, which
determined that the estimated fair value of the Company's intangible asset exceeded its respective carrying value.
Note 7. Property, Plant and Equipment
June 30, 2024 July 2, 2023
(in thousands)
Land................................................................................................................................. $
33,827 $
33,866
Orchards in production and land improvements ..............................................................
20,604
20,401
Building and building improvements ..............................................................................
69,089
67,647
Leasehold improvements .................................................................................................
31,289
29,524
Production equipment .....................................................................................................
131,664
125,297
Furniture and fixtures ......................................................................................................
9,325
9,102
Computer and telecommunication equipment .................................................................
42,159
41,859
Software ..........................................................................................................................
176,160
181,085
Capital projects in progress .............................................................................................
23,172
18,205
Property, plant and equipment, gross ..............................................................................
537,289
526,986
Accumulated depreciation and amortization ...................................................................
(313,500)
(292,417 )
Property, plant and equipment, net .................................................................................. $
223,789 $
234,569
Depreciation expense for the years ended June 30, 2024, July 2, 2023, and July 3, 2022 was $49.3 million, $49.5 million, and
$45.2 million, respectively.
Note 8. Accrued Expenses
Accrued expenses consisted of the following:
June 30, 2024 July 2, 2023
(in thousands)
Payroll and employee benefits......................................................................................... $
29,954 $
33,927
Deferred revenue .............................................................................................................
25,009
30,811
Accrued marketing expenses ...........................................................................................
10,709
13,679
Accrued florist payout .....................................................................................................
9,526
13,437
Accrued purchases ...........................................................................................................
15,338
18,351
Other ................................................................................................................................
30,767
31,709
Accrued expenses ............................................................................................................ $
121,303 $
141,914
Note 9. Long-Term Debt
The Company’s current and long-term debt consists of the following:
June 30, 2024 July 2, 2023
(in thousands)
Revolver (1) .................................................................................................................... $
- $
-
Term Loan (1) .................................................................................................................
190,000
200,000
Deferred financing costs ..................................................................................................
(2,887)
(3,609 )
Total debt ........................................................................................................................
187,113
196,391
Less: current maturities of long-term debt ......................................................................
10,000
10,000
Long-term debt, net ......................................................................................................... $
177,113 $
186,391
(1) On May 31, 2019, the Company and certain of its U.S. subsidiaries entered into a Second Amended and Restated Credit
Agreement (the “2019 Credit Agreement”) with JPMorgan Chase Bank, N.A. as administrative agent, and a group of
lenders. The 2019 Credit Agreement amended and restated the Company’s existing amended and restated credit
agreement dated as of December 23, 2016 to, among other modifications: (i) increase the amount of the outstanding term
loan (“Term Loan”) from approximately $97 million to $100 million, (ii) extend the maturity date of the outstanding
F-19
Term Loan and the revolving credit facility (“Revolver”) by approximately 29 months to May 31, 2024, and (iii)
decrease the applicable interest rate margins for LIBOR and base rate loans by 25 basis points. The Term Loan was
payable in 19 quarterly installments of principal and interest beginning on September 29, 2019, with escalating principal
payments, at the rate of 5.0% per annum for the first eight payments, and 10.0% per annum for the
remaining 11 payments, with the remaining balance of $62.5 million due upon maturity. The Revolver, in the aggregate
amount of $200 million, subject to seasonal reduction to an aggregate amount of $100 million for the period from January
1 through August 1, was able to be used for working capital and general corporate purposes, subject to certain
restrictions. For each borrowing under the Existing Credit Agreement (as defined below), the Company was able to 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) a LIBOR rate plus 1%, or (2) an adjusted LIBOR rate plus an applicable margin varying
based on the Company’s consolidated leverage ratio.
On August 20, 2020, the Company, the Subsidiary Guarantors, JPMorgan Chase Bank, N.A. as administrative agent, and
a group of lenders entered into a First Amendment (the “First Amendment”) to the 2019 Credit Agreement. The First
Amendment amended the 2019 Credit Agreement to, among other modifications: (i) increase the aggregate principal
amount of the existing Revolver commitments from $200.0 million to $250.0 million, (ii) establish a new tranche of term
A-1 loans in an aggregate principal amount of $100.0 million (the “2020 Term Loan”), (iii) increase the working capital
sublimit with respect to the Revolver from $175.0 million to $200.0 million, and (iv) increase the seasonally-reduced
Revolver commitments from $100.0 million to $125.0 million for the period from January 1 through August 1 for each
fiscal year of the Company.
The 2020 Term Loan was payable in 15 quarterly installments of principal and interest beginning on September 27,
2020, with escalating principal payments, at the rate of 5.0% per annum for the first four payments, and 10.0% per
annum for the remaining 11 payments, with the remaining balance of $67.5 million due upon maturity on May 31, 2024.
On November 8, 2021, the Company, certain of its U.S. subsidiaries, the lenders party thereto and JPMorgan Chase
Bank, N.A., as Administrative Agent, entered into a Second Amendment (the “Second Amendment”) to the 2019 Credit
Agreement. The Second Amendment amended the 2019 Credit Agreement to, among other modifications, decrease the
interest margins and LIBOR floor applicable to the 2020 Term Loan.
On August 29, 2022, 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 Amendment (the “Third Amendment”) to the 2019 Credit
Agreement. The Third Amendment amended the 2019 Credit Agreement (the 2019 Credit Agreement, as amended by
the First Amendment, the Second Amendment, and the Third Amendment, the “Existing Credit Agreement”) to modify
certain financial covenants.
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”) 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, (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.
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 0.10% 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 June 30,
2024. The Third Amended Credit Agreement is secured by substantially all of the assets of the Company.
Future principal term loan payments under the Third Amended Credit Agreement are as follows: $10.0 million – Fiscal
2025, $20.0 million – Fiscal 2026, $20.0 million – Fiscal 2027, and $140.0 million – Fiscal 2028.
F-20
Note 10. 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
Fair Value Measurements
Value
Assets (Liabilities)
Level 1
Level 2
Level 3
(in thousands)
Assets (liabilities) as of June 30, 2024:
Trading securities held in a “rabbi trust” (1) ........................ $
32,805 $
32,805 $
- $
-
$
32,805 $
32,805 $
- $
-
Assets (liabilities) as of July 2, 2023:
Trading securities held in a “rabbi trust” (1) ........................ $
22,617 $
22,617 $
- $
-
$
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 the “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.
F-21
Note 11. Income Taxes
Significant components of the income tax provision are as follows:
Years ended
June 30, 2024 July 2, 2023 July 3, 2022
(in thousands)
Current provision (benefit):
Federal ......................................................................................... $
11,774 $
976 $
(1,676)
State .............................................................................................
161
1,572
1,589
Current income tax expense (benefit) ..................................
11,935
2,548
(87)
Deferred provision (benefit):
Federal .........................................................................................
(14,246)
(3,145 )
2,679
State .............................................................................................
2,514
(1,463 )
(1,100)
Deferred income tax expense (benefit) ................................
(11,732)
(4,608 )
1,579
Income tax expense (benefit) ............................................................. $
203 $
(2,060 ) $
1,492
A reconciliation of the U.S. federal statutory tax rate to the Company’s effective tax rate is as follows:
Years ended
June 30, 2024 July 2, 2023 July 3, 2022
Tax at U.S. statutory rates .................................................................
21.0%
21.0%
21.0%
State income taxes, net of federal tax benefit ....................................
(8.1)
(0.2)
4.2
Capital loss expiration .......................................................................
-
-
15.5
Non-deductible impairment charge ...................................................
-
(16.8)
-
Valuation allowance change ..............................................................
(28.5)
(0.2)
(19.8)
Non-deductible compensation ...........................................................
(0.6)
(2.1)
5.3
Excess tax benefit/shortfalls from stock-based compensation ..........
(11.9)
(1.7)
(16.1)
Tax credits .........................................................................................
16.9
2.7
(3.9)
Enhanced deductions .........................................................................
11.8
2.6
(2.1)
Other, net ...........................................................................................
(4.0)
(0.9)
0.7
Effective tax rate ...............................................................................
(3.4)%
4.4%
4.8%
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income tax purposes. The significant components of the
Company's deferred income tax assets (liabilities) are as follows:
June 30, 2024 July 2, 2023
(in thousands)
Deferred income tax assets:
Loss and carryforwards ............................................................................................ $
8,096 $
13,598
Accrued expenses and reserves ................................................................................
3,146
3,531
Inventory ..................................................................................................................
5,417
4,422
Stock-based compensation .......................................................................................
1,767
1,549
Deferred compensation ............................................................................................
6,815
3,602
Operating lease liability ...........................................................................................
30,763
33,186
Gross deferred income tax assets ....................................................................................
56,004
59,888
Less: Valuation allowance .......................................................................................
(4,868)
(3,182 )
Deferred tax assets, net ....................................................................................................
51,136
56,706
Deferred income tax liabilities:
Other intangibles ......................................................................................................
(10,693)
(14,916 )
Tax in excess of book depreciation ..........................................................................
(31,206)
(41,826 )
Operating lease right-of-use asset ............................................................................
(28,639)
(31,098 )
Deferred tax liabilities .....................................................................................................
(70,538)
(87,840 )
Net deferred income tax liabilities .................................................................................. $
(19,402) $
(31,134 )
F-22
At June 30, 2024, the Company’s federal enhanced deduction and carryforwards were $3.6 million, tax effected, which if not
utilized will begin to expire in 2027. At June 30, 2024, the Company’s state and foreign net operating loss carryforwards
were $2.9 million and $1.3 million, tax effected, respectively, which if not utilized will begin to expire in Fiscal 2025 and
Fiscal 2034, respectively.
The Company evaluates the realizability of its deferred tax assets on a quarterly basis and establishes valuation allowances
when it is more likely than not that all or a portion of a deferred tax asset may not be realized. In completing this evaluation,
the Company considers available positive and negative evidence. Such evidence includes historical operating results, the
existence of cumulative earnings and losses in the most recent fiscal years, taxable income in prior carryback year(s) if
permitted under the tax law, the time period over which our temporary differences will reverse, the implementation of feasible
and prudent tax planning strategies, and expectations for future pre-tax operating income. Estimating future taxable income
is inherently uncertain and requires judgment. Deferred tax assets are reduced by a valuation allowance if, based on the weight
of this evidence, it is more likely than not that all or a portion of the recorded deferred tax assets will not be realized in future
periods. During Fiscal 2024, the Company recorded valuation allowances of $1.7 million relating to certain state and foreign
jurisdictions and concluded no further valuation allowances were necessary despite a three-year cumulative loss. This is based
on a detailed analysis of future taxable income, with a particular focus on the scheduling of temporary differences that are
expected to reverse in periods where the Company anticipates taxable income. Specifically, the timing and amount of future
reversals of deferred tax liabilities are expected to fully offset the Company’s deferred tax assets, allowing it to realize their
value without relying on additional sources of taxable income. At June 30, 2024 and July 2, 2023, the Company had valuation
allowances of approximately $4.9 million and $3.2 million, respectively, primarily related to certain state and foreign net
operating losses.
The Company files income tax returns in the U.S. federal jurisdiction, various state jurisdictions, and various foreign
countries. The Company’s last completed U.S. federal examination was for Fiscal 2018. Fiscal 2021, Fiscal 2022, and Fiscal
2023 remain subject to U.S. federal examination. Due to nonconformity with the U.S. federal statute of limitations for
assessment, certain states remain open from Fiscal 2020. The Company's foreign income tax filings from Fiscal 2017 forward
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 June 30, 2024, the Company has an unrecognized tax benefit, including accrued interest and penalties,
of approximately $3.2 million all of which if fully recognized would impact our effective tax rate. The Company believes
that $0.4 million of the unrecognized tax positions will be resolved over the next twelve months.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
Years ended
June 30, 2024 July 2, 2023 July 3, 2022
(in thousands)
Beginning balance .............................................................................. $
1,724 $
1,374 $
1,134
Increases on tax positions for prior years........................................
1,100
30
21
Increases on tax positions for current year ......................................
387
320
267
Settlements ......................................................................................
-
-
(19)
Statute of limitation expirations ......................................................
(431)
-
(29)
Ending balance ................................................................................... $
2,780 $
1,724 $
1,374
Note 12. Capital Stock
Holders of Class A common stock generally have the same rights as the holders of Class B common stock, except that holders
of Class A common stock have one vote per share and holders of Class B common stock have 10 votes per share on all matters
submitted to the vote of stockholders. Holders of Class A common stock and Class B common stock generally vote together
as a single class on all matters presented to the stockholders for their vote or approval, except as may be required by Delaware
law. Class B common stock may be converted into Class A common stock at any time on a one-for-one share basis. Each
share of Class B common stock will automatically convert into one share of Class A common stock upon its transfer, with
limited exceptions. During Fiscal 2023 and 2022, 181,393 and 904,000 shares of Class B common stock, respectively, were
converted into shares of Class A common stock. During Fiscal 2024, no shares of Class B common stock were converted
into shares of Class A common stock.
F-23
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. On February 3, 2022, the Company’s Board of Directors authorized an additional increase to its stock
repurchase plan of up to $40.0 million. The Company repurchased a total of $10.4 million (1,079,415 shares), $1.2 million
(147,479 shares), and $38.2 million (1,592,555 shares) during the fiscal years ended June 30, 2024, July 2, 2023, and July 3,
2022, respectively, under this program. Included in the repurchase is stock withheld to cover required employee
withholdings, upon vesting of restricted stock awards. As of June 30, 2024, $21.6 million remains authorized under the plan.
The Company has stock options and restricted stock awards outstanding to participants under the 1-800-FLOWERS.COM
2003 Long Term Incentive and Share Award Plan (as amended and restated as of October 22, 2009, October 28, 2011,
September 14, 2016, October 15, 2020, and October 3, 2023, the “Plan”). The Plan is a broad-based, long-term incentive
program that is intended to provide incentives to attract, retain and motivate employees, consultants and directors in order to
achieve the Company’s long-term growth and profitability objectives. The Plan provides for the grant to eligible employees,
consultants and directors of stock options, share appreciation rights (“SARs”), restricted shares, restricted share units,
performance shares, performance units, dividend equivalents, and other share-based awards (collectively, “Awards”).
Note 13. Stock Based Compensation
The Plan is administered by the Compensation Committee or such other Board committee (or the entire Board) as may be
designated by the Board.
The amounts of stock-based compensation expense recognized within operating income (1) in the periods presented are as
follows:
Years Ended
June 30, 2024 July 2, 2023 July 3, 2022
(in thousands)
Stock options ...................................................................................... $
4,422 $
2,536 $
(41)
Restricted stock awards ......................................................................
6,266
5,798
7,988
Total ...................................................................................................
10,688
8,334
7,947
Deferred income tax benefit ...............................................................
2,571
2,042
1,943
Stock-based compensation expense, net ............................................. $
8,117 $
6,292 $
6,004
(1) Stock-based compensation expense has not been allocated between business segments, but is reflected as part of
Corporate overhead (See Note 15 - Business Segments for details).
Stock-based compensation expense is recorded within the following line items of operating expenses:
Years Ended
June 30, 2024 July 2, 2023 July 3, 2022
(in thousands)
Marketing and sales ............................................................................ $
4,916 $
3,818 $
3,414
Technology and development ............................................................
855
698
319
General and administrative .................................................................
4,917
3,818
4,214
Total ................................................................................................... $
10,688 $
8,334 $
7,947
F-24
Stock Options
The weighted average fair value of stock options on the date of grant, and the assumptions used to estimate the fair value of
the stock options using the Black-Scholes option valuation model, were as follows:
Years ended
June 30, 2024 July 2, 2023
July 3, 2022
(1)
Weighted average fair value of options granted ................................. $
6.09 $
5.13
n/a
Expected volatility ..............................................................................
56%
52%
n/a
Expected life (in years) .......................................................................
7.0
7.5
n/a
Risk-free interest rate .........................................................................
3.9%
4.3%
n/a
Expected dividend yield .....................................................................
0.0%
0.0%
n/a
(1) No options were granted during the fiscal year ended July 3, 2022.
The expected volatility of the option is determined using historical volatilities based on historical stock prices. The Company
estimated the expected life of options granted based upon the historical weighted average. The risk-free interest rate is
determined using the yield available for zero-coupon U.S. government issues with a remaining term equal to the expected
life of the option. The Company has never paid a dividend, and as such the dividend yield is 0.0%.
The following table summarizes stock option activity during the year ended June 30, 2024:
Weighted
Weighted
Average
Average
Remaining
Aggregate
Exercise
Contractual
Intrinsic
Options
Price
Term
Value
(in years)
(in thousands)
Outstanding beginning of period ...............................
2,285,608 $
8.59
Granted ......................................................................
1,000,000 $
10.13
Exercised ...................................................................
(38,240) $
8.59
Forfeited/Expired ......................................................
(61,831) $
8.59
Outstanding end of period .........................................
3,185,537 $
9.07
8.34 $
2,033
Exercisable at June 30, 2024 .....................................
707,806 $
8.59
7.80 $
658
The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the
Company’s closing stock price on the last trading day of Fiscal 2024 and the exercise price, multiplied by the number of in-
the-money options) that would have been received by the option holders had all option holders exercised their options on
June 30, 2024. This amount changes based on the fair market value of the Company’s stock. The total intrinsic value of
options exercised during the years ended June 30, 2024, July 2, 2023, July 3, 2022, were $0.1 million, $0.0 million, and $9.2
million, respectively.
The following table summarizes information about stock options outstanding at June 30, 2024:
Options Outstanding
Options Exercisable
Weighted-
Average
Remaining
Options
Contractual
Life
Weighted-
Average Exercise
Options
Weighted-
Average Exercise
Exercise Price
Outstanding
(years)
Price
Exercisable
Price
$
8.59
2,185,537
7.8
$
8.59
707,806 $
8.59
$
10.13
1,000,000
9.5
$
10.13
- $
-
3,185,537
8.3
$
9.07
707,806 $
8.59
F-25
As of June 30, 2024, the total future compensation cost related to non-vested options not yet recognized in the statement of
operations was $10.6 million and the weighted average period over which these awards are expected to be recognized was
2.6 years.
Restricted Stock
The Company grants shares of Common Stock to its employees that are subject to restrictions on transfer and risk of forfeiture
until fulfillment of applicable service conditions and, in certain cases, holding periods (Restricted Stock).
The following table summarizes the activity of non-vested restricted stock during the year ended June 30, 2024:
Weighted
Average
Grant Date
Shares
Fair Value
Non-vested – beginning of period ...................................................................................
1,231,634 $
15.01
Granted ............................................................................................................................
1,396,457 $
10.02
Vested ..............................................................................................................................
(480,708 ) $
15.22
Forfeited ..........................................................................................................................
(442,934 ) $
10.26
Non-vested - end of period ..............................................................................................
1,704,449 $
12.09
The fair value of non-vested shares is determined based on the closing stock price on the grant date. As of June 30, 2024,
there was $13.9 million of total unrecognized compensation cost related to non-vested, restricted, stock-based compensation
to be recognized over a weighted-average period of 2.3 years.
Note 14. Employee Retirement Plans
The Company has a 401(k) Profit Sharing Plan covering substantially all of its eligible employees. All employees who have
attained the age of 21 are eligible to participate upon completion of one month of service. Participants may elect to make
voluntary contributions to the 401(k) plan in amounts not exceeding federal guidelines. On an annual basis, the Company, as
determined by its Board of Directors, may make certain discretionary contributions. Employees are vested in the Company's
contributions based upon years of service. The Company contributed $1.7 million, $1.9 million, and $1.9 million during
Fiscal 2024, 2023, and 2022, respectively.
The Company also has a nonqualified supplemental deferred compensation plan for certain executives pursuant to Section
409A of the Internal Revenue Code. Participants can defer from 1% up to a maximum of 100% of salary and performance
and non-performance based bonus. There were no Company contributions to the plan during Fiscal 2024, 2023 and 2022.
Distributions will be made to participants upon termination of employment or death in a lump sum, unless installments are
selected by the participant. As of June 30, 2024 and July 2, 2023, these plan liabilities, which are included in “Other liabilities”
within the Company’s consolidated balance sheets, totaled $32.8 million and $22.6 million, respectively. The associated plan
assets, which are subject to the claims of the creditors, are primarily invested in mutual funds and are included in “Other
assets” within the Company’s consolidated balance sheets. The gains (losses) on these investments, which were $6.9 million,
($0.8 million), and ($3.6 million), for the years ended June 30, 2024, July 2, 2023, and July 3, 2022, respectively, are included
in “Other expense (income), net", with a corresponding offset in "General and administrative" expenses, within the
Company’s consolidated statements of operations.
F-26
Note 15. Business Segments
The Company’s management reviews the results of the Company’s 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 expense (income), 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.
Years ended
Net revenues
June 30, 2024 July 2, 2023 July 3, 2022
(in thousands)
Segment Net revenues:
Consumer Floral & Gifts ................................................................ $
849,791 $
920,510 $
1,059,570
BloomNet ........................................................................................
107,802
133,183
145,702
Gourmet Foods & Gift Baskets ......................................................
874,262
965,191
1,004,272
Corporate ........................................................................................
796
375
201
Intercompany eliminations .............................................................
(1,230)
(1,406 )
(1,860)
Total net revenues .............................................................................. $
1,831,421 $
2,017,853 $
2,207,885
Years ended
Operating Income (Loss)
June 30, 2024 July 2, 2023 July 3, 2022
(in thousands)
Segment Contribution Margin:
Consumer Floral & Gifts ................................................................ $
67,278 $
95,535 $
104,319
BloomNet ........................................................................................
33,766
37,197
42,515
Gourmet Foods & Gift Baskets ......................................................
84,508
12,895
62,021
Segment Contribution Margin Subtotal ..............................................
185,552
145,627
208,855
Corporate (a) ...................................................................................
(133,872)
(126,965 )
(117,676)
Depreciation and amortization ........................................................
(53,752)
(53,673 )
(49,078)
Operating income (loss) ..................................................................... $
(2,072) $
(35,011 ) $
42,101
(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.
F-27
The following tables represent a disaggregation of revenue from contracts with customers, by channel:
Years Ended
Consumer Floral & Gifts
BloomNet
Gourmet Foods & Gift Baskets
Corporate and Eliminations
Consolidated
June 30, July 2,
July 3,
June 30, July 2, July 3, June 30, July 2,
July 3,
June 30, July 2, July 3, June 30,
July 2,
July 3,
2024
2023
2022
2024
2023
2022
2024
2023
2022
2024
2023
2022
2024
2023
2022
(in thousands)
Net revenues
E-commerce ............................... $ 840,569 $ 911,302 $ 1,049,821 $
- $
- $
- $ 773,630 $ 833,320 $
884,827 $
- $
- $
- $ 1,614,199 $ 1,744,622 $ 1,934,648
Other ..........................................
9,222
9,208
9,749 107,802 133,183 145,702 100,632 131,871
119,445
(434 ) (1,031 ) (1,659 )
217,222
273,231
273,237
Total net revenues ................... $ 849,791 $ 920,510 $ 1,059,570 $ 107,802 $ 133,183 $ 145,702 $ 874,262 $ 965,191 $ 1,004,272 $
(434 ) $ (1,031 ) $ (1,659 ) $ 1,831,421 $ 2,017,853 $ 2,207,885
Other revenues detail
Retail and other .........................
9,222
9,208
9,749
-
-
-
9,534
9,751
10,134
-
-
-
18,756
18,959
19,883
Wholesale ..................................
-
-
-
42,362
50,075
53,957
91,098 122,120
109,311
-
-
-
133,460
172,195
163,268
BloomNet services ....................
-
-
-
65,440
83,108
91,745
-
-
-
-
-
-
65,440
83,108
91,745
Corporate ...................................
-
-
-
-
-
-
-
-
-
796
375
201
796
375
201
Eliminations ...............................
-
-
-
-
-
-
-
-
- (1,230 ) (1,406 ) (1,860 )
(1,230 )
(1,406 )
(1,860 )
Total other revenues ................ $
9,222 $
9,208 $
9,749 $ 107,802 $ 133,183 $ 145,702 $ 100,632 $ 131,871 $
119,445 $
(434 ) $ (1,031 ) $ (1,659 ) $
217,222 $
273,231 $
273,237
F-28
Note 16. Leases
The Company currently leases plants, warehouses, offices, store facilities, and equipment under various leases through Fiscal
2036. While most lease agreements are of a long-term nature (over a year), the Company also enters 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 the 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
Consolidated 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:
Years Ended
June 30, 2024 July 2, 2023
(in thousands)
Lease costs:
Operating lease costs ....................................................................................................... $
22,775 $
22,208
Variable lease costs .........................................................................................................
26,326
24,582
Short-term lease cost .......................................................................................................
4,144
5,307
Sublease income ..............................................................................................................
(999)
(988 )
Total lease costs .............................................................................................................. $
52,246 $
51,109
Years Ended
June 30, 2024 July 2, 2023
(in thousands)
Cash paid for amounts included in measurement of operating lease liabilities ............... $
22,699 $
21,020
Right-of-use assets obtained in exchange for new operating lease liabilities .................. $
6,799 $
12,040
June 30, 2024 July 2, 2023
Weighted-average remaining lease term - operating leases (in years) ............................
7.9
8.7
Weighted-discount rate - operating leases .......................................................................
4.3 %
4.0%
F-29
Maturities of lease liabilities in accordance with ASC 842 as of June 30, 2024 and reconciliation to balance sheet are as
follows (in thousands):
2025 ............................................................................................................................................................... $
21,344
2026 ...............................................................................................................................................................
20,487
2027 ...............................................................................................................................................................
17,591
2028 ...............................................................................................................................................................
16,596
2029 ...............................................................................................................................................................
16,017
Thereafter ......................................................................................................................................................
52,798
Total Future Minimum Lease Payments .......................................................................................................
144,833
Less: Imputed Remaining Interest .................................................................................................................
22,456
Total Operating Lease Liabilities ..................................................................................................................
122,377
Less: Current portion of long-term operating lease liabilities .......................................................................
16,511
Long-term operating lease liabilities ............................................................................................................. $
105,866
Note 17. Commitments and Contingencies
Other Commitments
The Company’s purchase commitments consist primarily of inventory, equipment and technology (hardware and software)
purchase orders made in the ordinary course of business, most of which have terms less than one year. As of June 30, 2024,
the Company had fixed and determinable off-balance sheet purchase commitments with remaining terms in excess of one
year of approximately $21.8 million, primarily related to the Company’s technology infrastructure and inventory
commitments.
The Company had approximately $1.5 million and $2.7 million in unused stand-by letters of credit as of June 30, 2024 and
July 2, 2023, respectively.
Litigation
Call Center Worker Claim:
In March of 2018, a putative class action lawsuit was filed against a subsidiary of the Company (the “Subsidiary”) in the U.S.
District Court for the District of Oregon, Medford Division (the “Court”), alleging violations of the federal Fair Labor
Standards Act (“FLSA”) and Oregon state law. The complaint was brought on behalf of a putative class of call center workers
and alleged that certain Subsidiary policies and practices resulted in class members’ performance of unpaid work. The
plaintiff sought class certification, compensation for alleged unpaid and underpaid wages, civil penalties, prejudgment
interest, liquidated damages, litigation costs, and attorneys’ fees. Following mediation, the parties reached an agreement in
April 2022 to resolve all claims. In September 2022, the Court granted final approval of the settlement agreement, and in
November 2022, the Company remitted payment of approximately $2.9 million, which was previously accrued during the
quarter ended March 27, 2022, and was included in "Accrued expenses" in the consolidated balance sheets at July 3, 2022.
In entering into the settlement agreement, the Subsidiary made no admission of liability.
Subsequent to June 30, 2024, the Company settled a pre-existing litigation matter for $1.2 million, which was accrued as of
June 30, 2024.
In addition, 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.
Note 18. Subsequent Events
Acquisition of Scharffen Berger
On July 1, 2024, the Company completed its acquisition of Scharffen Berger, a chocolate manufacturing company, expanding
the Company's product offerings in the Gourmet Foods & Gift Baskets Segment.
The Company used cash on its balance sheet to fund the approximately $3.3 million purchase. Scharffen Berger annual
revenue, based on its most recent available financial information, is deemed immaterial to the Company's consolidated
financial statements.
F-30
1-800-FLOWERS.COM, Inc. and Subsidiaries
Schedule II - Valuation and Qualifying Accounts
Additions
Charged to Charged to
Balance at
Costs
Other
Balance at
Beginning
and
Accounts- Deductions-
End of
Description
of Period Expenses Describe Describe (a)
Period
Reserves and allowances deducted from asset
accounts:
Reserve for estimated credit losses-
accounts/notes receivable
Year Ended June 30, 2024 .................................... $ 5,836,000 $
251,000 $
- $ (3,330,000) $ 2,757,000
Year Ended July 2, 2023 ...................................... $ 2,396,000 $ 3,991,000 $
- $
(551,000) $ 5,836,000
Year Ended July 3, 2022 ...................................... $ 4,032,000 $ (411,000) $
- $ (1,225,000) $ 2,396,000
Valuation allowance for deferred tax assets
Year Ended June 30, 2024 .................................... $ 3,182,000 $ 1,882,000 $
- $
(196,000) $ 4,868,000
Year Ended July 2, 2023 ...................................... $ 3,096,000 $
86,000 $
- $
- $ 3,182,000
Year Ended July 3, 2022 ...................................... $ 9,258,000 $
58,000 $
- $ (6,220,000) $ 3,096,000
Valuation allowance for inventory
Year Ended June 30, 2024 .................................... $ 9,910,000 $ 8,980,000 $
- $ (10,900,000) $ 7,990,000
Year Ended July 2, 2023 ...................................... $ 11,370,000 $ 3,010,000 $
- $ (4,470,000) $ 9,910,000
Year Ended July 3, 2022 ...................................... $ 8,680,000 $ 4,670,000 $
- $ (1,980,000) $ 11,370,000
(a) Reduction in reserve due to amounts written off/recovered.
Exhibit 19.1
POLICY ON THE PREVENTION OF INSIDER TRADING
FOR
1-800-FLOWERS.COM, Inc.
In the normal course of business, officers, directors and employees of 1-800-FLOWERS.COM, Inc. and its
subsidiaries (collectively, “1-800-FLOWERS.COM” or the “Company”) may come into possession of significant, sensitive
information about 1-800-FLOWERS.COM. This information is considered the property of 1-800-FLOWERS.COM; you
have been entrusted with it. In particular, you may not seek to profit from it by buying or selling securities yourself or passing
on the information to others to enable them to profit. The purpose of this policy statement is both to inform you of your legal
responsibilities and to make clear to you that the misuse of sensitive information is contrary to Company policy and will be
dealt with severely. Persons violating 1-800-FLOWERS.COM policy on insider trading shall be subject to significant
disciplinary action, including dismissal and possible criminal prosecution.
Illegal insider trading is a crime, penalized by fines of up to $5,000,000 and 20 years in jail for individuals.
In addition, the SEC may seek the imposition of a civil penalty of up to three times the profits made or losses avoided from
the trading. Insider traders must also disgorge any profits made and are often subjected to an injunction against future
violations. Finally, insider traders may be subjected to civil liability in private lawsuits.
Employers and other controlling persons (including supervisory personnel) are also at risk under federal
law. Controlling persons may, among other things, face penalties of the greater of $1,000,000 (adjusted upward for inflation)
or three times the profits made or losses avoided by the trader if they recklessly fail to take preventive steps to control insider
trading.
Thus, it is important both to you and 1-800-FLOWERS.COM that insider trading violations not occur. You
should be aware that stock market surveillance techniques are becoming more and more sophisticated, and the chance that
federal or other regulatory authorities will detect and prosecute even small-level trading is significant. The risk is simply not
worth taking.
This memorandum describes 1-800-FLOWERS.COM’s Policy on the Prevention of Insider Trading (this
“Policy”) to ensure that all 1-800-FLOWERS.COM directors (meaning a member of the Board of Directors), officers,
employees and 1-800-FLOWERS.COM itself comply with laws prohibiting trading in 1-800-FLOWERS.COM stock by
persons with material, non-public information. This memorandum supersedes all previous communications, if any, on the
same subject.
If you have any questions about the scope or application of this Policy then please contact Michael R.
Manley, General Counsel (phone: [***], e-mail: [***]@1800flowers.com).
SUMMARY OF POLICY
The following Policy applies to all 1-800-FLOWERS.COM directors, officers and employees worldwide:
If you are in possession of material, non-public information relating to 1-800-FLOWERS.COM, it is 1-
800-FLOWERS.COM’s policy that neither you, nor your spouse or your dependents, nor any other person living in your
household, may buy or sell securities of 1-800-FLOWERS.COM or engage in any other action to take advantage of, or pass
on to others, that information. This Policy also applies to trading in the securities of any other company, including 1-800-
FLOWERS.COM’s customers or suppliers, if you are in possession of material, non-public information about that company
that you obtained in the course of your employment with 1-800-FLOWERS.COM. This Policy, however, does not apply to
and does not prohibit trading pursuant to a plan meeting the requirements of Rule 10b5-1 under the Securities Exchange Act
of 1934, as amended, that has been approved by 1-800-FLOWERS.COM.
2
Transactions that may be necessary or justifiable for independent reasons, including emergency
expenditures and transactions planned before you learned the material, non-public information, are not exceptions. Even the
appearance of an improper transaction must be avoided to prevent any potential prosecution of 1-800-FLOWERS.COM or
the individual trader.
In addition to your obligation to refrain from trading while in possession of material, non-public
information, you are also prohibited from “tipping” others. The concept of unlawful tipping includes passing on information
to friends or family members, whether or not under circumstances that suggests that you were trying to help them make a
profit or avoid a loss. For the avoidance of doubt, the sharing of material information in the absence of a close relationship is
also prohibited. In addition to being considered a form of insider trading, tipping is a serious breach of corporate
confidentiality. For this reason, you should be careful to avoid discussing sensitive information in any place (for instance, at
lunch, on public transportation, at social gatherings, on-line, in elevators) where others may hear such information. You
should also be careful when disposing of any materials, including documents and files, which may contain sensitive
information.
The rules regarding insider trading – particularly the prohibition against “tipping” others to information not
available to the general public – cover all forms and channels of communication, including those conducted via the Internet’s
World Wide Web. Information communicated via e-mail, internal and external, is sometimes confidential and “material” in
nature and thus subject to insider trading rules. You are cautioned that the various Internet “chat rooms” and message boards
dedicated to the stock market are largely unsecured and unregulated and should not be used to communicate any Company
information whether confidential or not.
It is the policy of 1-800-FLOWERS.COM that no director, officer or employee shall initiate or respond to
messages posted in such forums that pertain to 1-800-FLOWERS.COM or companies that 1-800-FLOWERS.COM does or
may do business with about which you may learn something in the course of your employment. Such forums often contain
rumors and misinformation that you may, as a loyal employee, feel compelled to correct. However, doing so, even with
innocent and laudable intention, could be considered “tipping” and thereby in violation of insider trading rules. Should you
come across information posted in an electronic forum that you believe to be false and potentially damaging to 1-800-
FLOWERS.COM, please do not respond directly yourself. Instead, kindly contact Michael R. Manley or Andrew Milevoj,
Senior Vice President of Investor Relations (phone: (516) 237-4617, e-mail: amilevoj@1800Flowers.com).
If material, non-public information is inadvertently disclosed, no matter what the circumstances, by any
director, officer or employee of 1-800-FLOWERS.COM, the person making or discovering that disclosure should
immediately report the disclosure to Michael R. Manley.
DEFINITIONS AND DETAILS
1. “Material” information is information that a reasonable investor would consider important in a
decision to buy, sell or hold 1-800-FLOWERS.COM securities. Chances are, if you learn something that leads you to want
to buy or sell stock, that information will be considered material. It is important to keep in mind that material information can
be any kind of information: information that something is likely to happen, or even just that it may happen, can be considered
material. In short, any information that could reasonably affect the price of or influence a person’s decision to buy or sell 1-
800-FLOWERS.COM’s stock is “material.” If you are in doubt as to the materiality of non-public information, you should
presume that the information is material until you speak with Michael R. Manley.
3
Examples of material information include, but are not limited to:
-
quarterly or annual financial results
-
knowledge of a cybersecurity breach or harm that resulted from a breach
-
unanticipated changes in the level of sales, orders or expenses
-
contract negotiations with a potentially significant new customer
-
major new products
-
serious product defects or recalls
-
stock splits or dividend information
-
major financings
-
significant personnel changes
-
significant operational changes
-
significant acquisitions or dispositions of assets
-
significant litigation
-
merger negotiations
2. “Non-public” information is any information that is not reasonably accessible to the investing
public. Keep in mind that once 1-800-FLOWERS.COM releases information through public channels (for instance, a press
release) it is deemed to take a few additional days for it to be broadly disseminated and for investors to be given the
opportunity to absorb the information. For example, a speech to an audience, a TV or radio appearance or an article in a trade
magazine does not qualify as full disclosure. Therefore, “non-public” information made available in any such manner will
continue to be considered “non-public” until more broadly disseminated and is generally considered “non-public” for the first
two business days after the day of release to the public.
3. All 1-800-FLOWERS.COM directors, officers and other specifically identified employees are
considered insiders (“Insiders”). Employees specifically notified by the Company are considered Insiders for purposes of this
Policy. An Insider is permitted to trade stock only during certain specified periods (the “trading window”) and only if the
Insider is not in possession of material, non-public information. The trading window opens (i.e., trading is permissible) on
the third business day after the day on which 1-800-FLOWERS.COM releases information to the financial community about
the prior quarter results. The trading window closes (i.e., trading is prohibited) fifteen days prior to the last day of the fiscal
quarter in which the window had been opened. In addition, the Company may “shut the window” at any time.
4. Other 1-800-FLOWERS.COM employees, regardless of title, who acquire material, non-public
information are also insiders (“Temporary Insiders”). Temporary Insiders must abide by the “trading windows” applicable to
Insiders (see paragraph 3 above). It is a Temporary Insiders’ responsibility to know when a trading window is in effect.
5. (a) All trades (purchases or sales) of any Company security, including those made while the
trading window is open, by any Insider or Temporary Insider, the spouse and dependants of an Insider or Temporary
Insider, or any other person living in the household of an Insider or Temporary Insider must be cleared with Michael
R. Manley Esq., or counsel designated by him for such purpose, before the trade is initiated. This will help ensure that
you do not create the appearance of improperly trading in 1-800-FLOWERS.COM stock.
(b) Insiders and Temporary Insiders, the spouse and dependents of any Insider or Temporary Insider, and
any other person living in the household of an Insider or Temporary Insider (each, a “Restricted Group Member”) shall not
(i) purchase or sell financial instruments or derivatives (including, but not limited to, puts and calls) that hedge or offset any
change in the market value of Company common stock, or otherwise engage in transactions that are designed to, or have, the
same effect or (ii) purchase on margin or pledge Company common stock.
4
6. Insiders and Temporary Insiders who wish to exercise their outstanding stock options under the
Company’s stock option plan must abide by the following guidelines:
-
If the option is being exercised with a cash payment or with shares of 1-800-FLOWERS.COM common
stock, without the concurrent sale of the purchased shares, then the exercise may occur at any time.
-
If the option is being exercised in connection with a same-day sale program, the exercise and sale must occur
during the quarterly window period specified for open-market transactions and otherwise comply with this
Policy.
7. Even when the trading window is open, all directors, officers and employees must abstain from
trading stock while in possession of material, non-public information. 1-800-FLOWERS.COM’s directors, officers and
employees who acquire material, non-public information may not buy or sell 1-800-FLOWERS.COM stock, including stock
obtained by option exercises, from the time they obtain such information until the third business day following a press release
of the information by 1-800-FLOWERS.COM or upon approval of Michael R. Manley.
8. All directors, officers and employees are prohibited from revealing material, non-public information
to third parties who may engage in trading activities, and from making buy or sell recommendations to third parties based
upon such information. If you are in possession of material, non-public information, your family members and close friends
may also be deemed to be in possession of such information, regardless of whether they have actual knowledge of the
information (that is, it would be difficult to prove they did not have actual knowledge). Consequently, they could also be
liable for violations of the insider trading laws if they trade during a time in which you are prohibited from trading, regardless
of whether they actually knew the material, non-public information at that time.
9. In order to avoid placing employees in a position in which they are prevented from trading, and for
other good business reasons, material non-public information should be limited to those who need to know such information
in order to perform their jobs. If, however, 1-800-FLOWERS.COM management becomes aware that material non-public
information may have been widely disseminated within 1-800-FLOWERS.COM, then management will impose a ban on
trading for all employees.
10. In order to avoid disclosure of material information to parties outside of 1-800-FLOWERS.COM,
all inquiries regarding 1-800-FLOWERS.COM’s financial performance, operating results, projections or other requests for
financial information should be referred to the Company’s Vice President of Investor Relations. This includes requests by
analysts or others to corroborate or comment upon their financial projections for 1-800-FLOWERS.COM.
11. Any director, officer or employee who knowingly trades 1-800-FLOWERS.COM stock while in
the possession of material, non-public information or who provides such information to others will be subject to significant
disciplinary action, including dismissal. No exceptions will be made to this Policy, even where the transaction is very small
or where the individual planned to make the transaction before learning the information. If you know or suspect that a 1-800-
FLOWERS.COM employee has violated this Policy, we encourage you to call Michael R. Manley. You are free to do so on
an anonymous basis.
5
ADDITIONAL PROHIBITED TRANSACTIONS
1. 1-800-FLOWERS.COM believes it is improper and inappropriate for 1-800-FLOWERS.COM
personnel to engage in short sales of 1-800-FLOWERS.COM’s stock. Therefore, it is 1-800-FLOWERS.COM’s policy that
directors, officers and employees of 1-800-FLOWERS.COM (including the spouse and dependents of any such person, any
other person living in such person’s household and entities over which such person exercises such control) may not engage
in short sales of 1-800-FLOWERS.COM stock under any circumstances. For purposes of this Policy, “short sale” means any
transaction in which you may benefit from a decline in 1-800-FLOWERS.COM’s stock price. Similarly, it is 1-800-
FLOWERS.COM’s policy that directors, officers and employees of 1-800-FLOWERS.COM may not trade in options of 1-
800-FLOWERS.COM stock, irrespective of the nature of the options, e.g., puts or calls.
2. If you are a Board of Directors member or an executive officer, as determined by the Board of
Directors, you are bound by Rule 16(b), which prohibits profiting from the purchase and sale of stock during the same six-
month period. Finally, you must report any changes in your stock ownership position, including stock granted under an option
plan, by filing a Form 4 with the SEC, in most cases, not later than the second business day after the transaction giving rise
to the change in your ownership position is executed.
If you have any questions about the scope or application of this Policy, please contact Michael R. Manley.
Exhibit 21.1
Subsidiaries of the Registrant
(as of June 30, 2024)
1-800-FLOWERS Retail Inc. (Delaware)
1-800-FLOWERS Service Support Center, Inc. (New York)
1-800-FLOWERS Team Services, Inc. (Delaware)
1-800-FLOWERS.COM Franchise Co., Inc. (Delaware)
1-800-Flowers.com DO Brasil Participacoes LTDA (Brazil)
1800Flowers.com Australia Pty LTD (Australia)
1873349 Ontario Inc. (Canada)
18F UK Holding Company Limited (United Kingdom)
18F Virginia, Inc. (Virginia)
800-Flowers, Inc. (New York)
Alice’s Table LLC (Delaware)
Bear Creek Orchards, Inc. (Delaware)
BloomNet, Inc. (Delaware)
Celebrations.com, LLC (Delaware)
Cheryl & Co. (Ohio)
CI Acquisition, LLC. (Delaware)
Conroy’s Inc. (California)
DesignPac Co., Inc. (Delaware)
DesignPac Gifts LLC (Illinois)
Floranet Iberia S.L. (Spain)
Flowerama of America, Inc. (Iowa)
FOL UK Holding Company Limited (United Kingdom)
Fresh Gift Cards, Inc. (Florida)
Goodsey.com, LLC (Delaware)
Great Foods, LLC (Delaware)
Guarded Realty Holdings, LLC (Delaware)
Harry & David Holdings, Inc. (Delaware)
Harry and David, LLC (Oregon)
Harry & David Operations, Inc. (Delaware)
MyFlorist.net, LLC (Delaware)
Napco Marketing Corp. (Delaware)
Plants.com, LLC (Delaware)
PersonalizationMall.com, LLC (Delaware)
Personalization Universe, LLC (Delaware)
Shari's Berries.com, LLC (Delaware)
The Popcorn Factory, Inc. (Delaware)
TR Acquisition, LLC (Delaware)
Vital Choice Seafood LLC (Delaware)
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
1-800-FLOWERS.COM, Inc.
Jericho, New York
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-276042, 333-
259759, 333-192304, 333-164727, and 333-119999) of 1-800-FLOWERS.COM, Inc. and Subsidiaries (the "Company") of
our reports dated September 6, 2024, relating to the consolidated financial statements and schedule, and the effectiveness of
the Company's internal control over financial reporting, which appear in this Annual Report on Form 10-K.
/s/ BDO USA, P.C.
Melville, New York
September 6, 2024
Exhibit 31.1
CERTIFICATIONS 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 annual report on Form 10-K 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 fiscal 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: September 6, 2024
/s/ James F. McCann
James F. McCann
Executive Chairman and Chief Executive Officer
Exhibit 31.2
CERTIFICATIONS 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 annual report on Form 10-K 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 fiscal 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 the
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: September 6, 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, each
of the undersigned officers of 1-800-FLOWERS.COM, Inc. (the “Company”) hereby certifies, to the best of such officer’s
knowledge, that:
(1) the Annual Report on Form 10-K of the Company for the year ended June 30, 2024, 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: September 6, 2024
/s/ James F. McCann
James F. McCann
Executive Chairman and Chief Executive Officer
Dated: September 6, 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 into 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.
Exhibit 97.1
1-800-FLOWERS.COM, INC.
Clawback Policy
The Board of Directors of 1-800-FLOWERS.COM, Inc. (the “Company”) has adopted this policy, which provides for the
recoupment of certain executive compensation from Covered Executives (as defined below) in the event of a Restatement
(the “Policy”). A “Restatement” includes any required accounting restatement to correct an error in previously issued
financial statements that is material to the previously issued financial statements, or that would result in a material
misstatement if the error were corrected in the current period or left uncorrected in the current period, as determined in
accordance with Rule 10D-1 under the Securities Exchange Act of 1934, as amended, and The Nasdaq Stock Market LLC
Listing Rule 5608, as such rules may be amended or interpreted from time to time (the “Clawback Rules”). This Policy shall
be administered by the Board of Directors of the Company (the “Board”) or, if so designated by the Board, the Compensation
Committee, in which case, references herein to the Board shall be deemed references to the Compensation Committee. Any
determinations made by the Board shall be final and binding on all affected individuals.
This Policy applies to the Company’s current and former executive officers, as determined by the Board in accordance with
the Clawback Rules (“Covered Executives”). In the event the Company is required to prepare a Restatement, the Company
will recover reasonably promptly the amount of any excess Incentive Compensation received by the Covered Executive
during the last three (3) completed fiscal years immediately preceding the date on which the Company is required to prepare
the Restatement in accordance with the Clawback Rules.
For purposes of this Policy, “Incentive Compensation” means any compensation under the Company’s short-term and long-
term incentive plans, including bonuses under the Sharing Success Program and grants under the 2003 Long Term Incentive
and Share Award Plan (or any successor programs or plans) and any other contingent compensation that is granted, earned
or vested from time to time; provided that such compensation is granted, earned, or vested based wholly or in part on the
attainment of a financial reporting measure within the meaning of the Clawback Rules, and Incentive Compensation is
deemed “received” in the Company’s fiscal period during which the financial reporting measure specified in the incentive-
based compensation award is attained.
The amount to be recovered will be the excess of the Incentive Compensation received (or the number of shares granted or
that became vested under an equity award grant) by the Covered Executive over the Incentive Compensation that would have
been received (or the number of shares that would have been granted or become vested) by the Covered Executive had it been
based on the restated financial results, computed without regard to any taxes paid, as determined by the Board in accordance
with and subject to the Clawback Rules. For Incentive Compensation based on stock price or total shareholder return, where
the amount of excess Incentive Compensation received by the Covered Executive is not subject to mathematical recalculation
directly from the information in the Restatement, the amount must be based on a reasonable estimate of the effect of the
Restatement.
The Company will recover any excess Incentive Compensation in accordance with this Policy unless the Compensation
Committee has made a determination that recovery would be impracticable in accordance with and subject to the requirements
of the Clawback Rules. The Board will determine, in its sole discretion, the method for recouping Incentive Compensation
hereunder. The Company shall not indemnify any Covered Executives against the loss of any incorrectly awarded Incentive
Compensation. This Policy shall be effective as of October 2, 2023 (the “Effective Date”) and shall apply to Incentive
Compensation received by Covered Executives on or after that date.
This Policy is designed to ensure that the Company is in compliance with the Clawback Rules and shall be interpreted and
construed consistent with the requirements of the Clawback Rules. The Board may at any time supplement or amend any
provision of this Policy in any respect, repeal the Policy in whole or part or adopt a new policy relating to recoupment of
certain executive compensation with such terms as the Board determines in its sole discretion to be appropriate and shall
amend this Policy as it deems necessary from time to time to reflect any rules or standards adopted by the Securities and
Exchange Commission or a national securities exchange on which the Company’s securities are listed. The Board will have
the exclusive power and authority to administer this Policy, including, without limitation, the right and power to interpret the
provisions of this Policy and to make all determinations deemed necessary or advisable for the administration of this Policy.
All such actions, interpretations and determinations that are done or made by the Board in good faith will be final, conclusive
and binding.
The Board intends that this Policy will be applied to the fullest extent of the law. Any employment agreement, equity award
agreement, or similar agreement entered into on or after the Effective Date shall, as a condition to the grant of any Incentive
Compensation thereunder, require a Covered Executive to agree to abide by the terms of this Policy, as it may be amended
from time to time. Any right of recoupment under this Policy is in addition to, and not in lieu of, any other remedies or rights
of recoupment that may be available to the Company pursuant to the terms of any similar policy or in any employment
agreement, equity award agreement, or similar agreement and any other legal remedies available to the Company. This Policy
shall be binding and enforceable against all Covered Executives and their beneficiaries, heirs, executors, administrators or
other legal representatives.
CORPORATE
INFORMATION
• BOARD OF DIRECTORS •
James F. McCann
Founder, Chairman and Chief Executive Officer
1-800-FLOWERS.COM, Inc.
Christopher G. McCann
Former Chief Executive Officer, 1-800-FLOWERS.COM, Inc.
Celia R. Brown
Former Executive Vice President, Group HR Director, Willis Group
James A. Cannavino
Senior Vice President, IBM Company, Retired
Dina M. Colombo
Chief Operating Officer and Chief Financial Officer,
GreyLion Capital LP
Eugene F. DeMark C.P.A.
Area Managing Partner KPMG, LLP, Retired,
Former Director, BankUnited and MSG Network
Leonard J. Elmore
Network Television Sports Analyst, Attorney at Law,
Senior Lecturer at Columbia University
Adam Hanft
Founder and Chief Executive Officer, Hanft Projects LLC
Stephanie Redish Hofmann
Managing Director, Google
Christina Shim
Chief Sustainability Officer, IBM
Larry Zarin
Senior Vice President, Chief Marketing Officer,
Express Scripts, Inc., Retired
• LEADERSHIP TEAM •
James F. McCann
Founder, Chairman and Chief Executive Officer
Thomas G. Hartnett
President
William E. Shea
Senior Vice President, Treasurer and Chief Financial Officer
James Langrock
Senior Vice President, Chief Administrative Officer
Michael R. Manley
Senior Vice President, General Counsel and Corporate Secretary
Arnold P. Leap
Chief Information Officer
Steve Roberts
Senior Vice President, Business Development
Jason John
Chief Marketing Officer
Joseph Rowland
Group President, Gourmet Foods & Gift Baskets
Jon Feldman
President, BloomNet
Nelson Tejada
President, PersonalizationMall.com
Abhay Patel
Brand President, 1-800-Flowers.com
STOCKHOLDER
INFORMATION
• STOCK PERFORMANCE •
Comparison of 5 Year Cumulative Total Return*
Among 1-800-FLOWERS.COM, Inc., the Russell 2000 Index
and the S&P 500 Consumer Discretionary Index
Corporate Headquarters
1-800-FLOWERS.COM, Inc.
Two Jericho Plaza, Suite 200
Jericho, NY 11753
(516) 237-6000
Stock Exchange Listing
NASDAQ Global Select Market
Symbol: FLWS
Transfer Agent & Registrar
Equiniti Trust Company, LLC
48 Wall Street, 23rd Floor
New York, NY 10005
(718) 921-8200
Independent Auditors
BDO USA, P.C.
401 Broadhollow Road, Suite 201
Melville, NY 11747
(631) 501-9600
SEC Counsel
Cahill Gordon and Reindel LLP
32 Old Slip
New York, NY 10005
(212) 701-3000
Shareholder Inquiries
Copies of the Company’s reports on Forms 10-K and 10-Q as filed with
the Securities and Exchange Commission and additional information
about 1-800-FLOWERS.COM, Inc. may be obtained by visiting the
Investors section at www.1800flowersinc.com.