1-800-FLOWERS deliberately shed $182M of revenue to cut unprofitable marketing in fiscal 2026, but gross profit fell more than the marketing savings and corporate overhead rose, leaving adjusted EBITDA down 90% to $2.9M and lenders rewriting its covenants days before the 10-K was filed.
A deliberate $182 million revenue retreat that did not pay for itself
1-800-FLOWERS.COM, Inc. (NASDAQ: FLWS) closed fiscal 2026 on June 28, 2026 with net revenue of $1,503.5 million, down 10.8% from $1,685.7 million in fiscal 2025 — a third consecutive year of decline, and the steepest of the three. Unlike the prior two years, management does not attribute this one mainly to weak demand. The 10-K says revenue fell "primarily due to a focus on marketing effectiveness and profitability over near-term revenue growth" — in plain terms, the company chose to stop buying unprofitable orders with advertising and promotions.
It followed through on the spending side: marketing and sales expense fell 16.2% to $402.8 million, or 26.8% of revenue versus 28.5% a year earlier. The problem is what happened underneath. Gross profit — revenue minus the direct cost of the goods and shipping — fell $80.9 million, slightly more than the $77.6 million the company saved on marketing. The trade was roughly a wash at best, and then corporate overhead got worse. Adjusted EBITDA, management's preferred measure of underlying operating cash profit, collapsed 90% to $2.9 million from $29.2 million.
The reported net loss of $134.8 million looks like a large improvement from fiscal 2025's $200.0 million loss, but that comparison is almost entirely an artifact of write-downs: non-cash goodwill and intangible impairment charges were $45.2 million this year against $143.8 million last year, a $98.7 million swing. Strip impairments out of both years and the operating loss widened, from roughly $61.0 million to roughly $82.0 million. The company's own adjusted (non-GAAP) net loss tells the same story: $77.5 million, or $1.21 per share, versus $52.5 million, or $0.82 per share last year. On a headline basis fiscal 2026 was better. On an underlying basis it was worse.
Key metrics — fiscal year ended June 28, 2026 vs. June 29, 2025
Both years were 52 weeks, so no extra-week distortion.
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YoY Change
Net revenue
$1,503.5M
$1,685.7M
-10.8%
Gross profit
$571.3M
$652.3M
-12.4%
Gross margin
38.0%
38.7%
-70 bps
Marketing & sales (% of revenue)
$402.8M (26.8%)
$480.4M (28.5%)
-16.2%
Operating loss
-$127.1M
-$204.8M
loss narrowed $77.7M
Operating loss ex-impairments
-$82.0M
-$61.0M
loss widened $21.0M
Net loss
-$134.8M
-$200.0M
loss narrowed $65.2M
Diluted EPS
-$2.11
-$3.13
+$1.02
Adjusted net loss per share (non-GAAP)
-$1.21
-$0.82
-$0.39 (worse)
Adjusted EBITDA (non-GAAP)
$2.9M
$29.2M
-90.0%
E-commerce orders
14.3M
17.3M
-17.6%
Average order value
$89.23
$84.56
+5.5%
E-commerce revenue
$1,273.1M
$1,464.4M
-13.1%
Free cash flow (non-GAAP)
-$13.0M
-$67.8M
+$54.8M
"Basis points" (bps) are hundredths of a percentage point: a 70 bps decline means the margin fell by 0.70 percentage points. "Adjusted" figures strip out items management considers non-recurring — here, impairments, severance and, in fiscal 2025, costs of installing a new order system.
Fewer orders, bigger baskets
The clearest evidence that the strategy is doing what it was designed to do sits in the order data. E-commerce orders fell 17.6% to 14.3 million, while average order value — the average dollar amount per order — rose 5.5% to $89.23, which the filing attributes to higher revenue per unit. In fiscal 2025 the pattern was the opposite and worse: orders down 8.0% and average order value down 1.3%, as customers traded into cheaper items.
So the customers who left were disproportionately the discount-driven ones, and the ones who stayed spend more each time. That is the intended shape of a profitability-first reset. The open question the filing does not answer is whether shedding 3.0 million orders is a one-time cleanup of unprofitable demand or the start of a smaller installed base that keeps shrinking. Nothing in the 10-K distinguishes the two.
The one revenue line that grew was wholesale: "other" revenue rose 4.1% to $230.4 million, driven by a 10.3% increase to $127.0 million in Gourmet Foods & Gift Baskets wholesale, on larger orders from big-box retailers. That growth is real but dilutive — selling gift baskets through another retailer carries a lower margin than selling them direct, which is part of why that segment's gross margin fell.
Segment detail: the segments mostly held; the corporate center did not
The company runs three segments. Segment contribution margin below is management's non-GAAP measure of each segment's own profit before corporate overhead and depreciation; the "adjusted" version also excludes severance and, in fiscal 2025, system-implementation costs.
Segment
FY2026 revenue
YoY
Gross margin
Adj. segment contribution margin
YoY
Consumer Floral & Gifts
$638.9M
-17.7%
39.4% (vs 39.3%)
$48.6M
-3.7%
Gourmet Foods & Gift Baskets
$768.5M
-5.2%
35.5% (vs 36.8%)
$52.7M
-10.3%
BloomNet
$96.8M
-1.9%
48.4% (vs 48.5%)
$27.2M
-7.0%
Segment subtotal
$128.5M
-7.2%
Corporate overhead (adjusted)
-$144.6M
-14.1%
Consumer Floral & Gifts — the 1-800-Flowers.com, Personalization Mall and Things Remembered brands — absorbed almost the entire revenue decline, with e-commerce revenue down 17.8%. Yet its adjusted contribution margin fell only 3.7%, and its gross margin actually ticked up 10 bps on lower merchandise and shipping costs. That is the marketing-discipline trade working as designed at the segment level: revenue fell a sixth, segment profit barely moved.
Gourmet Foods & Gift Baskets (Harry & David, Cheryl's Cookies, The Popcorn Factory and others) is now over half of company revenue, but its gross margin fell 130 bps to 35.5% on three named causes: fixed costs spread over lower direct sales, higher commodity and shipping costs, and increased inventory reserves. That last item — writing down the carrying value of unsold stock — is worth flagging; it suggests inventory was bought against a demand plan that did not materialize.
BloomNet, the florist network business that sells memberships and services to independent florists, is the most profitable of the three at a 48.4% gross margin, but it is shrinking with the volume flowing through the network, including orders from 1-800-Flowers itself. Its decline is a mechanical consequence of the parent's smaller order count.
Add the three up and adjusted segment profit fell $10.0 million. Adjusted corporate overhead — shared IT, finance, legal, HR and executive costs — grew by $17.9 million, more than the segments' entire shortfall. Even after stripping out severance, stock compensation and the mark-to-market on the deferred-compensation plan (all non-cash or non-recurring), corporate cost still rose roughly $16 million, or about 15%, in a year revenue fell 10.8%. Management's explanation in the general and administrative discussion is "increased consulting costs" alongside severance. G&A rose 18.9% to $139.0 million, from 6.9% of revenue to 9.2%.
Takeaway: The segments delivered close to what the profitability-over-growth strategy promised — Consumer Floral & Gifts gave up 17.7% of revenue and only 3.7% of its segment profit. What erased that was the corporate center, where overhead rose roughly $16 million in cash terms while revenue fell $182 million. FLWS did not fail to cut; it cut in the divisions and added at headquarters, and adjusted EBITDA of $2.9 million is what was left.
The write-downs, and why they keep happening
For the second consecutive year, a decline in the company's stock market value triggered an interim impairment test in the March quarter. An impairment is an accounting recognition that assets carried on the balance sheet — here, goodwill from past acquisitions and brand names — are worth less than their recorded value.
The fiscal 2026 charge was $45.2 million: $34.6 million writing off all remaining goodwill in the Consumer Floral & Gifts unit, plus $10.6 million against the Personalization Mall tradename. That follows $143.8 million in fiscal 2025 and $19.8 million in fiscal 2024 — $208.7 million of write-downs in three years, essentially the accounting unwinding of the Personalization Mall acquisition. Goodwill on the balance sheet is now $3.1 million, down from $37.6 million, and what remains relates mainly to BloomNet. There is very little left to write off in that segment.
Two details matter for next year. The Personalization Mall tradename was written down to exactly its estimated fair value of $10.6 million, leaving zero cushion — the filing states plainly that this creates "a risk of future impairments if any assumptions, estimates, or market factors change." And $65.5 million of other indefinite-lived trademarks remain on the books.
A second, easily missed item: the tax line. In fiscal 2025 the pre-tax loss produced a $13.4 million tax benefit; in fiscal 2026 it produced a benefit of $4 thousand — an effective tax rate of 0.0%. The company has established a valuation allowance against its deferred tax assets, meaning accountants no longer believe it will earn enough future profit to use those losses. Practically: losses no longer soften the bottom line at all. The company is carrying $76.1 million of indefinite-lived federal and $167.3 million of state net operating loss carryforwards that only become valuable if profitability returns.
The balance sheet is now the constraint
This is the part of the filing that should drive how an investor reads everything above.
Balance sheet / liquidity
6/28/2026
6/29/2025
Cash and equivalents
$11.4M
$46.5M
Working capital
-$17.8M
+$61.3M
Inventories
$152.8M
$177.1M
Term loan outstanding
$139.0M
$160.0M
Revolver drawn at year-end
$0
$0
Total stockholders' equity
$143.7M
$268.3M
Operating cash flow
+$18.3M
-$26.4M
Capital expenditures
$31.3M
$41.5M
Cash fell to $11.4 million and working capital — current assets minus current liabilities, a rough measure of near-term cushion — went negative $17.8 million from positive $61.3 million. Operating cash flow did swing positive, to $18.3 million from negative $26.4 million, on better inventory management, but capital spending of $31.3 million kept free cash flow negative at -$13.0 million.
Against that, $139.0 million of term loan sits on the books at a 7.2% effective rate, with $24.0 million due in fiscal 2027 and $115.0 million in fiscal 2028, including a $97.0 million balloon at the June 27, 2028 maturity. Net debt of roughly $128 million against $2.9 million of adjusted EBITDA is about 44 times — a ratio that is less a leverage measure than a statement that earnings have stopped covering the capital structure.
The business is also intensely seasonal: Thanksgiving through Christmas generates over 40% of annual revenue "and all of its earnings," and the pre-holiday inventory build has to be financed. Revolver borrowings peaked at $175.0 million in November 2025 before being repaid in December. The company enters fiscal 2027 needing to fund that same build from an $11.4 million cash balance.
The September 2026 covenant reset is the real news
Two days before filing this 10-K, on September 9, 2026, the company signed a Third Amendment to its credit agreement with JPMorgan and its lenders. The substance, per the filing:
The existing financial covenants were replaced with a minimum liquidity covenant through the quarter ending September 26, 2027, and then a minimum consolidated EBITDA covenant from the quarter ending December 26, 2027.
Restrictions on selling assets were loosened: the company may now retain up to $30.0 million of asset-sale proceeds, after first using proceeds to prepay at least $15.0 million of the term loan.
New restrictions block transferring material intellectual property to subsidiaries that do not guarantee the loan.
The company must hold monthly conference calls with its lenders.
Read together, that is a lender package for a borrower that cannot meet a leverage test. Swapping a leverage covenant for a liquidity floor concedes that the earnings denominator has gone to zero; monthly lender calls and the IP-transfer block are creditor-protection terms. The company was in compliance with its covenants as of June 28, 2026 — but the covenants it was complying with have now been rewritten.
Management is explicit about what comes next, stating it "is evaluating the potential sale of non-strategic assets, along with a range of other capital raising options," which "may include one or more public or private debt or equity financings, potential divestitures of non-strategic assets, or other capital structure transactions." The expanded asset-sale carve-out in the amendment is not incidental — it was negotiated because a sale is contemplated.
Outlook
The 10-K contains no revenue or earnings guidance, which is normal for this form. Management's only concrete forward statements are operational and financial-structural: it expects to draw on the revolver during the first quarter of fiscal 2027 to fund the holiday build and to repay those borrowings before the end of the second quarter, and it believes its funding sources are sufficient for at least the next twelve months — with the caveat, in its own words, that "any projections of future cash needs and cash flows are subject to substantial uncertainty."
Our read on trajectory: the strategy is coherent and the segment-level evidence says it works, but fiscal 2026 consumed the margin for error that would let it play out. Three things should be watched in that order.
First, the December quarter. With over 40% of revenue and all of the year's earnings concentrated there, fiscal 2027 is effectively decided by one holiday season. A second consecutive holiday of double-digit e-commerce decline, on a cash balance of $11.4 million and a fresh minimum-liquidity covenant, is a materially different event than it would have been two years ago.
Second, corporate cost. The segments have already demonstrated they can hold profit through a revenue decline. The $16 million cash increase in corporate overhead is the single line most within management's control and the one that turned a workable segment outcome into $2.9 million of adjusted EBITDA. Severance of $12.3 million was spent this year on workforce reductions; fiscal 2027 should show whether that spending actually lowered the run rate or merely coincided with consulting costs replacing it.
Third, the asset sale. The amendment's structure — prepay $15 million, keep up to $30 million — implies a transaction in the tens of millions, not a transformative one. That would relieve the liquidity covenant without changing the $115 million due in fiscal 2028. Absent a genuine earnings recovery, the 2028 maturity remains the binding problem, and the closer it gets without adjusted EBITDA rebuilding toward the $29 million of fiscal 2025 or the levels before it, the more likely the resolution involves equity issuance at a depressed valuation rather than refinancing on ordinary terms.
The company describes fiscal 2026 as "a year of meaningful progress" in building a foundation. The order data partly supports that. The balance sheet says the foundation now has to hold weight immediately, not eventually.
Source: 1-800-FLOWERS.COM, Inc. Form 10-K for the fiscal year ended June 28, 2026, filed with the SEC on September 11, 2026 (accession 0001084869-26-000029). Auditor: BDO USA, P.C. Non-GAAP measures (adjusted EBITDA, adjusted net loss, segment contribution margin, free cash flow) are as defined and reconciled by the company in that filing.