1-800-FLOWERS.COM INC-CL A (NASDAQ:FLWS) reported fiscal second-quarter results that presented a mixed financial picture, with earnings surpassing expectations but revenue falling short, as the company executes a strategic shift focused on profitability over top-line growth.
Earnings and Revenue vs. Estimates
The company’s performance relative to Wall Street expectations is the focal point of the market’s initial reaction.
- Earnings Per Share (EPS): The company reported adjusted EPS of $1.20 for Q2 2026. This significantly exceeded the analyst consensus estimate of $0.88.
- Revenue: Total consolidated revenues were $702.2 million, a decline of 9.5% year-over-year. This missed the analyst estimate of approximately $714.6 million.
The divergence between the earnings beat and revenue miss highlights management’s stated priority: a "strategic shift that is focused on improving marketing effectiveness and profitability." Essentially, the company is spending less on customer acquisition to boost margins, accepting a near-term sales decline as a result.
Market Reaction
The stock is reacting positively in pre-market trading, indicating investors are favoring the profitability narrative over the revenue shortfall. The pre-market gain of approximately 10.4% suggests the market is rewarding the significant earnings beat and the company's progress on cost control. This positive momentum contrasts with the stock's slight decline over the past two weeks, which may have reflected investor caution heading into the report.
Key Takeaways from the Quarterly Report
Beyond the headline numbers, the earnings release outlines a company in the midst of a foundational transformation.
Financial Performance Highlights:
- Profitability Focus: The decline in revenue was attributed to more disciplined, ROI-focused marketing spend. Operating expenses decreased by $23.4 million, primarily due to lower marketing and labor costs.
- Segment Weakness: All three business segments reported revenue declines. The Consumer Floral & Gifts segment was the weakest, with revenue down 22.7%, while the core Gourmet Foods & Gift Baskets segment saw a more modest 3.8% drop.
- Bottom-Line Growth: Despite lower sales, net income rose to $70.6 million ($1.10 per diluted share), up from $64.3 million ($1.00 per share) in the prior year, aided by cost cuts and a favorable income tax benefit.
Strategic Outlook and Challenges: CEO Adolfo Villagomez described fiscal 2026 as a "pivotal period of foundation setting." The company provided a cautious outlook for the second half of the year, expecting:
- Revenue to decline in the low double-digit range, citing continued marketing optimization and challenges from search engine changes impacting organic traffic.
- Adjusted EBITDA to decline slightly year-over-year, but to increase slightly on a normalized basis which excludes certain one-time costs.
This internal forecast appears more conservative than current analyst expectations. Analysts had been modeling a full-year 2026 revenue decline of about 0.9% to $1.58 billion, a far less severe drop than the "low double-digit" decline projected by management for just the second half. For the upcoming Q3, analysts estimated a 0.55% revenue decline to $321.6 million.
Conclusion
1-800-FLOWERS.COM delivered a quarter that clearly illustrates its strategic crossroads. The substantial earnings beat demonstrates tangible success in its cost-optimization and efficiency efforts. However, the significant revenue miss and a sobering outlook for the remainder of the year confirm that this restructuring comes with a price—namely, a period of sustained sales pressure. The market’s positive pre-market reaction indicates a vote of confidence in management’s profit-first strategy, choosing to reward improved margins today while betting that a leaner, more data-driven organization will pave the way for sustainable growth in the future. The coming quarters will be critical in assessing whether this foundational work can eventually reignite top-line expansion.
For a detailed look at historical earnings, future estimates, and analyst projections, you can review the earnings data for FLWS here.
Disclaimer: This article is for informational purposes only and does not constitute financial advice, nor a recommendation to buy or sell any security. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.
