What changed in 1 800 FLOWERS COM INC's 10-K — 2023 vs 2024
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Paragraph-level year-over-year comparison of 1 800 FLOWERS COM INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.
+280 added−314 removedSource: 10-K (2024-09-06) vs 10-K (2022-09-16)
Top changes in 1 800 FLOWERS COM INC's 2024 10-K
280 paragraphs added · 314 removed · 178 edited across 2 sections
- Item 3. Legal Proceedings+153 / −184 · 83 edited
- Item 1. Business+127 / −130 · 95 edited
Item 1. Business
Business — how the company describes what it does
95 edited+32 added−35 removed141 unchanged
Item 1. Business
Business — how the company describes what it does
95 edited+32 added−35 removed141 unchanged
2023 filing
2024 filing
Biggest changeThe extent of the 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 the duration and scope of the pandemic, global economic conditions during and 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 in response to the pandemic, some of which may be more than just temporary. 9 Table of Contents Our operations expose us to risks associated with the COVID-19 pandemic, which has resulted in challenging operating environments.
Biggest changeThe 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. 9 Table of Contents 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.
Our employees are a key source of 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 .
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 may become a party to a similar investigation, or the Federal Trade Commission's regulatory and enforcement efforts, or those of other governmental bodies, may adversely affect its ability to collect demographic and personal information from users, which could adversely affect its marketing efforts.
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.
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.
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.
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.
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.
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. 17 Table of Contents Many governmental regulations may impact the Internet, which could affect the Company ’ s ability to conduct business.
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. 16 Table of Contents Many governmental regulations may impact the Internet, which could affect the Company ’ s ability to conduct business.
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 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’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’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.
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.
This extended line of gift offerings helps our customers with all of their celebratory occasions, and will enable the Company to increase the purchase frequency and average order value for existing customers who have come to trust the 1-800-FLOWERS.COM brand, as well as continue to attract new customers.
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 order value for existing customers who have come to trust the 1-800-FLOWERS.COM brand, as well as continue to attract new customers.
Competition The growing 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.
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.
Except for certain crops which are grown in our Harry & David orchards, all of the 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.
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.
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.
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.
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-owned distribution centers and vendors who ship directly to the Company’s customers.
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.
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. 3 Table of Contents 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, personalized products, dipped berries, popcorn, gourmet foods and gift baskets, cookies, chocolates, candy, wine, and gift-quality fruit.
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. 3 Table of Contents 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.
The Company’s Cheryl’s cookies and baked gifts are manufactured 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.
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.
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 which could negatively impact profitability.
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.
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 it meet its objectives.
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.
Under these arrangements, performance by the divested businesses or other conditions outside the Company’s control could affect its future financial results. 14 Table of Contents 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.
Under these arrangements, performance by the divested businesses or other conditions outside the Company’s control could affect its future financial results. 13 Table of Contents 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.
Factors that may negatively impact consumer spending include high levels of unemployment, higher consumer debt levels, reductions in net worth, 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.
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.
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 Table of Contents 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 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. 11 Table of Contents 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.
Fulfillment and manufacturing of products is as follows: Flowers and Plants. 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.
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.
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, acquired a single retail florist in New York City, which he subsequently expanded to a 14-store chain.
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.
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.
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.
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% satisfaction guarantee, and the Company’s business is not dependent on any single third-party supplier.
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.
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. 15 Table of Contents 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.
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. 14 Table of Contents 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.
Although the Company expects a significant portion of its online customers will continue to come directly to its website, it will also rely on third party websites, search engines and affiliates with which the Company has strategic relationships for traffic.
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.
In addition, ocean container availability and cost, as well as port 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.
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.
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 all of our customers’ gifting and celebratory needs.
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.
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 confidential security measures in place to protect both our physical facilities and digital systems from attacks.
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.
An important component of our business involves the receipt, processing, transmittal, and storage of personal, confidential or sensitive information about our customers. We have programs in place to detect, contain and respond to data security incidents.
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.
Orders are fed 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.
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.
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. Gift basket confection and fulfillment for both wholesale and 1-800-Baskets.com is handled by DesignPac, located in Melrose Park, 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.
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, generates over 40% of the Company’s annual revenues, and all of its earnings.
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.
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 at an all-time high.
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.
The Company’s focus is 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 experience of the connection.
The Company’s focus is 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.
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, as well as steaks, chops and prepared meals.
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.
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.
Although the Company maintains insurance against product liability claims, its coverage may be inadequate to cover any liabilities it may incur. 15 Table of Contents Future litigation could have a material adverse effect on our business and results of operations.
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. 2 Table of Contents 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.
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.
These and other competitive factors could materially and adversely affect the Company’s results of operations. If the Company does not accurately predict customer demand for its products, it may lose customers or experience increased costs.
These and other competitive factors could materially and adversely affect the Company’s results of operations. 12 Table of Contents If the Company does not accurately predict customer demand for its products, it may lose customers or experience increased costs.
Dipped berries and other specialty treats for our Shari’s Berries brand are manufactured and fulfilled through our network of dropship vendors. 5 Table of Contents Sources and Availability of Raw Materials The Company’s raw materials consist of ingredients for manufactured products (including various commodities such as sugar, flour, cacao, eggs, fruit and flowers), packaging supplies, and other supplies used in the manufacturing and transportation processes (such as fuel, natural gas and derivative products).
Dipped berries and other specialty treats for our Shari’s Berries brand are manufactured and fulfilled through our network of drop ship vendors. 5 Table of Contents 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).
If the supply of flowers available for sale is limited due to weather conditions, farm closures, economic conditions, 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.
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.
The Company also has rights to numerous domain names, including: www.1800flowers.com, www.800flowers.com, www.1800baskets.com, www.flowers.com, www.personalizationuniverse.com, www.personalizationmall.com, www.plants.com, www.florists.com, www.greatfoods.com, www.stockyards.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, and www.sharisberries.com. In addition, the Company owns a number of international trademarks and/or service marks.
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.
Provider of lifestyle offerings, including fully digital livestreaming floral, culinary and other experiences to guests across the country, acquired in December 2021. BLOOMNET 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 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.
The Company’s competitors include: ● retail floral shops, some of which maintain toll-free telephone numbers and websites; ● online floral 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.
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.
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.
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. 8 Table of Contents Item 1A.
The Company ’ s Strategy 1-800-FLOWERS.COM’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 ’ 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 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; and Alice’s Table®, a lifestyle business offering fully digital livestreaming floral, culinary and other experiences to guests across the country.
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.
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 2022, 2021 and 2020. Flowers and Plants.
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 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 now also provides lifestyle offerings, including fully digital livestreaming floral, culinary and other experiences to guests across the country. Personalized Gifts.
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.
Successful infringement claims against the Company may result in substantial monetary liability or may materially disrupt its ability to conduct business. 16 Table of Contents Product liability claims may subject the Company to increased costs.
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.
The Company offers a wide array of premium brand signature baked products, confections, gift baskets, gourmet popcorn, dipped berries, giftable fruit towers and baskets, and "good for you" products through its Gourmet Foods & Gift Baskets’ brands.
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.
In challenging and uncertain economic environments, including the COVID-19 pandemic, its after effects, and the geopolitical climate, we cannot predict when macroeconomic conditions uncertainty may arise and whether such circumstances could impact the Company.
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.
As of July 3, 2022, the Company had approximately 4,700 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.
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.
During fiscal 2022, our fiscal second quarter revenues represented approximately 43% of annual revenues, while our first, third and fourth quarters generated 14%, 21%, and 22% of annual revenues, respectively. In preparation for the Company’s second quarter holiday season, the Company significantly increases its inventories.
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.
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.
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.
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. BloomNet.
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.
The Company’s 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®, Moose Munch®, The Popcorn Factory®, Wolferman’s Bakery®, Vital Choice®, Stock Yards® and Simply Chocolate®.
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 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. Gourmet Foods & Gift Baskets.
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 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”, “FruitBrouquets.com”, “BloomNet”, “GreatFood.com”, “The Popcorn Factory”, “Cheryl’s Cookies”, “Mrs. Beasley’s”, “Celebrations Passport”, “Flowerama”, “DesignPac”, “Napco”, “Harry & David”, “Wolferman’s Bakery", “Moose Munch”, Cushman’s”, “Simply Chocolate”, “Personalization Universe”, “PersonalizationMall”, “Shari’s Berries”, “Vital Choice” and “Alice’s Table”.
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”.
If the Company fails to continuously improve its website (on all relevant platforms, including mobile), it may not attract or retain customers. 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.
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.
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.
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 these carriers were to further increase the prices they charge to ship the Company’s goods, and if the Company is forced to pass these costs onto its customers, or if carrier capacity becomes constrained, the Company’s sales could be negatively impacted.
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.
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.
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.
In addition, the increase in certain of our employees working remotely has amplified certain risks to our business, including increased demand on our information technology resources and systems, 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 our business.
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.
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 July 3, 2022 that remain unresolved. 18 Table of Contents Item 2.
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. 17 Table of Contents
The impact of the spread of COVID-19 is creating significant uncertainty for our business, financial condition and results of operations and for the prices of our publicly traded securities.
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.
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 customers express, connect and celebrate.
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.
Through the Celebrations Passport® loyalty program, which provides members with free standard shipping and no service charge across our portfolio of brands, 1-800-FLOWERS.COM, Inc. strives to deepen relationships with customers.
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.
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.
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.
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 products program, fresh from the farm. Personalized Gifts.
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.
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.
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.
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 and Moose Munch brands. The Company also licenses the Stock Yards name through which it sells premium meats.
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.
E-commerce provider of gourmet steaks, chops, burgers and other gourmet meat gifts. 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.
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.
If the Company is unable to hire and retain key personnel, its business may suffer. The Company’s success is dependent on its ability to hire, retain and motivate highly qualified personnel. In particular, the Company’s success depends on the continued efforts of its Chief Executive Officer, Christopher G.
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.
Such adverse changes in our customers’ or business partners’ financial condition may also result in our recording impairment charges for our inability to recover or collect any accounts receivable, owned or leased assets, or prepaid expenses.
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.
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.
Provider of digital and physical greeting cards to sister brands, as well as independent florist and other wholesale customers, acquired in April 2024. 2 Table of Contents 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.
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.
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.
E-commerce retailer of artisan chocolates and confections. E-commerce retailer of dipped berries and other specialty treats, acquired in August 2019. 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.
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.
Similarly, the plant, gift basket, gourmet food, cookie, candy, fruit and specialty gift categories are highly competitive . Each of these categories encompasses a wide range of products and is highly fragmented.
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.
The Company intends to accomplish this through organic development, and where appropriate, through acquisition of complementary businesses. A summary of the Company’s significant brands and/or businesses follows: 1 Table of Contents 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.
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: 1 Table of Contents 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.
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Item 3. Legal Proceedings
Legal Proceedings — active lawsuits and investigations
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Item 3. Legal Proceedings
Legal Proceedings — active lawsuits and investigations
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2023 filing
2024 filing
Biggest changeAs of July 3, 2022, $33.2 million remains authorized under the plan. 20 Table of Contents The following table sets forth, for the months indicated, the Company’s purchase of common stock during the fiscal year 2022, which includes the period June 28, 2021 through July 3, 2022: Period Total Number of Shares Purchased Average Price Paid Per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands, except shares and average price paid per share) 06/28/21 - 07/25/21 34,835 $ 30.03 34,835 $ 31,409 07/26/21 - 08/22/21 99,602 $ 31.07 99,602 $ 28,312 08/23/21 - 09/26/21 153,589 $ 32.01 153,589 $ 23,393 09/27/21 - 10/24/21 100,000 $ 30.60 100,000 $ 20,330 10/25/21 - 11/21/21 284,281 $ 34.11 284,281 $ 10,633 11/22/21 - 12/26/21 155,331 $ 23.82 155,331 $ 6,926 12/27/21 - 01/23/22 185,000 $ 23.83 185,000 $ 2,512 01/24/22 - 02/20/22 77,783 $ 18.34 77,783 $ 39,876 02/21/22 - 03/27/22 240,000 $ 14.24 240,000 $ 36,576 03/28/22 - 04/24/22 190,000 $ 13.41 190,000 $ 34,022 04/25/22 - 05/22/22 72,134 $ 11.32 72,134 $ 33,203 05/23/22 – 07/03/22 - $ - - $ 33,203 Total 1,592,555 $ 23.94 1,592,555 (1) Average price per share excludes commissions and other transaction fees.
Biggest changeAs of June 30, 2024,$21.6 million remains authorized under the plan. 20 Table of Contents 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.
Revenue is derived from the sale of gourmet fruits, cookies, baked gifts, premium chocolates and confections, gourmet popcorn, gift baskets, dipped berries, prime steaks, chops, and fish, through the Company’s e-commerce sales channels (telephonic and online sales) and company-owned and operated retail stores under the Harry & David and Cheryl’s brand names, as well as wholesale operations.
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.
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 and net income per common share, as indicators of operating performance and they may not be comparable to similarly titled measures employed by other companies.
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.
The Company’s effective tax rate for fiscal 2022 and fiscal 2021 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.
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.
Our critical accounting policies relate to goodwill, other intangible assets and income taxes. Management of the Company has discussed the selection of critical accounting policies and the effect of estimates with the audit committee of the Company’s board of directors.
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.
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. For further discussion see Note 11 , in Part IV, Item 15.
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.
Acquisition of Alice ’ s Table On December 31, 2021, the Company completed its acquisition of Alice Table LLC (“Alice’s Table”), a lifestyle business offering fully digital livestreaming floral, culinary and other experiences to guests across the country.
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.
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.
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.
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. 38 Table of Contents Definite-lived intangibles are reviewed for impairment whenever changes in circumstances or events may indicate that the carrying amounts are not recoverable.
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.
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. 39 Table of Contents Item 7A.
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. 38 Table of Contents Item 7A.
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.
EBITDA and adjusted EBITDA are also used by the Company to evaluate and price potential acquisition candidates. 24 Table of Contents 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.
Alice’s Table revenues were approximately $3.8 million during the twelve-month period ended September 30, 2021 - see Note 4 – Acquisitions in Item 15 .
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 .
The Consumer Floral & Gifts segment includes the operations of the Company’s flagship brand, 1-800-Flowers.com, PersonalizationMall, 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, Stock Yards, Cheryl’s, Mrs. Beasley’s, The Popcorn Factory, DesignPac, 1-800-Baskets.com, Simply Chocolate and Shari’s Berries.
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.
Stock Repurchase Program See Item 5 in Part II for details. 36 Table of Contents Contractual Obligations At July 3, 2022, the Company’s contractual obligations consist of: ● Long-term debt obligations - payments due under the Company's existing 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.
Stock Repurchase Program See Item 5 in Part II for details. 35 Table of Contents 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.
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.
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.
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 customers express, connect and celebrate.
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.
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 July 3, 2022.
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.
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 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.
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. The Company utilized cash on hand to fund its operations through the first quarter of fiscal 2022.
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.
At July 3, 2022, the Company’s state and foreign net operating loss carryforwards were $57.7 million and $4.9 million, respectively, which if not utilized, will begin to expire in fiscal 2023 and fiscal 2034, respectively. 35 Table of Contents 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’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. 34 Table of Contents 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).
Jericho, NY Opinion on Internal Control over Financial Reporting We have audited 1-800-FLOWERS.COM, Inc. and Subsidiaries (the “Company”) internal control over financial reporting as of July 3 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”).
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”).
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.
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.
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.
We believe that our audit provides a reasonable basis for our opinion. De finition 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.
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 2022 and 2021, 904,000 and 389,209 shares of Class B common stock were converted into shares of Class A common stock, respectively, while none were converted during fiscal year 2020.
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.
Technology and Development Expense Years Ended July 3, 2022 % Change June 27, 2021 % Change June 28, 2020 (dollars in thousands) Technology and development $ 56,561 3.9 % $ 54,428 11.8 % $ 48,698 Percentage of sales 2.6 % 2.6 % 3.3 % Technology and development expense consists primarily of payroll and operating expenses of the Company’s information technology group, costs associated with its websites, including hosting, design, content development and maintenance and support costs related to the Company’s order entry, customer service, fulfillment and database systems.
Technology and Development Expense 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.
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.
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.
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. To date, we have not identified any material liquidity deficiencies as a result of the COVID-19 pandemic.
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.
Gross Profit Years Ended July 3, 2022 % Change June 27, 2021 % Change June 28, 2020 (dollars in thousands) Gross profit $ 821,738 -8.3 % $ 896,429 44.1 % $ 622,196 Gross margin % 37.2 % 42.2 % 41.8 % 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.
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.
During the fiscal years 2022, 2021 and 2020, the Company expended $83.2 million, $79.7 million and $69.5 million, respectively, on technology and development, of which $26.6 million, $25.3 million and $20.8 million, respectively, has been capitalized. 33 Table of Contents General and Administrative Expense Years Ended July 3, 2022 % Change June 27, 2021 % Change June 28, 2020 (dollars in thousands) General and administrative $ 102,337 -12.6 % $ 117,136 20.3 % $ 97,394 Percentage of sales 4.6 % 5.5 % 6.5 % 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.
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. 32 Table of Contents 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.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of 1-800-FLOWERS.COM, Inc. and Subsidiaries as of July 3, 2022 and June 27, 2021 and the related consolidated statements of income and comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended July 3, 2022, and the related notes and schedule and our report dated September 16, 2022 expressing an unqualified opinion thereon.
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.
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.
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.
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.
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.
Additionally, cost of revenues includes labor and facility costs related to direct-to-consumer and wholesale production operations, as well as payments made to referring florists related to order volume sent through the Company’s BloomNet network. 31 Table of Contents Gross profit decreased 8.3% during fiscal 2022 due to a significantly lower gross profit percentage, partially offset by the higher revenues noted above.
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. 30 Table of Contents 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 f avorable product mix, lower freight costs, a decline in commodity costs, and the Company’s logistics optimization efforts.
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.
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.
Gourmet Foods & Gift Baskets – this segment includes the operations of Harry & David, Wolferman’s Bakery, Stock Yards, Cheryl’s Cookies, The Popcorn Factory, 1-800-Baskets/DesignPac, Shari’s Berries (subsequent to its acquisition date of August 14, 2019), and Vital Choice (subsequent to its acquisition date of October 27, 2021).
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.
Payments due by period (in thousands) Fiscal 2023 Fiscal 2024 Fiscal 2025 Fiscal 2026 Fiscal 2027 Thereafter Total Purchase commitments $ 169,291 $ 11,236 $ 6,724 $ 2,472 $ 148 $ - $ 189,871 37 Table of Contents Critical Accounting Policies and 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.
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 36 Table of Contents 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 Company’s effective tax rate for fiscal 2020 differed from the U.S. federal statutory rate of 21% primarily due to state income taxes and nondeductible expenses for executive compensation, partially offset by excess tax benefits from stock-based compensation 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 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) Income tax effect on adjustments is calculated based upon the Company's effective tax rate during the applicable period.
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.
Holders As of September 9, 2022, there were approximately 201 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 September 9, 2022, there were approximately 13 stockholders of record of the Company’s Class B 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 a result, the Company expects to generate substantial positive year-over-year free cash flow. 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.
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.
The Company repurchased a total of $38.2 million (1,592,555 shares), $22.4 million (862,290 shares), and $10.7 million (754,458 shares), during the fiscal years ended July 3, 2022, June 27, 2021, and June 28, 2020, respectively, under this program.
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.
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.
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.
Revenue by segment: Consumer Floral & Gifts – this segment, which historically has consisted primarily of the operations of the 1-800-Flowers.com brand, but now includes revenues attributable to PersonalizationMall and Alice’s Table, subsequent to their August 3, 2020 and December 31, 2021 acquisition dates, respectively, derives revenue from the sale of consumer floral products and gifts, primarily through its e-commerce sales channel (telephonic and online sales), as well as retail stores, and royalties from its franchise operations.
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.
See Segment Information below for details on how adjusted net income and adjusted net income per common share were calculated for each period presented. We believe that adjusted net income and adjusted net income per common share are meaningful measures because they increase the comparability of period-to-period results.
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.
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. For point of reference, revenue increased 54.9%, compared with pre-pandemic fiscal 2019 revenue.
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.
For segment information for the fiscal year ended June 28, 2020, please refer to our Annual Report on Form 10-K for the fiscal year ended June 28, 2020.
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 .
Net Revenues Years Ended July 3, 2022 % Change June 27, 2021 % Change June 28, 2020 (dollars in thousands) Net revenues: E-Commerce $ 1,934,648 2.9 % $ 1,879,550 52.8 % $ 1,230,385 Other 273,237 12.6 % 242,695 -6.4 % 259,252 $ 2,207,885 4.0 % $ 2,122,245 42.5 % $ 1,489,637 Net revenues consist primarily of the selling price of the merchandise, service or outbound shipping charges, less discounts, returns and credits.
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.
These non-GAAP financial measures are referred to as “non-GAAP”, “ adjusted" or “on a comparable basis” below, as these terms are used interchangeably.
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.
The increase in gross profit percentage was primarily attributable to lower promotions, merchandise assortment, channel mix, and fixed cost efficiency, partially offset by higher transportation costs due to surcharges and expedited ship methods, as well as increased labor costs. 32 Table of Contents Marketing and Sales Expense Years Ended July 3, 2022 % Change June 27, 2021 % Change June 28, 2020 (dollars in thousands) Marketing and sales $ 571,661 7.2 % $ 533,268 46.8 % $ 363,227 Percentage of sales 25.9 % 25.1 % 24.4 % 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.
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. 31 Table of Contents 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.
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.
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.
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.
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. 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 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. The assessment of the recoverability of goodwill contains uncertainties requiring management to make assumptions and to apply judgment to estimate economic factors and the profitability of future operations.
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.
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, LLP Melville, New York September 16, 2022 42 Table of Contents Item 9B. OTHER INFORMATION None.
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.
For further discussion of the methods used and factors considered in our estimates as part of the impairment testing for Goodwill, see Note 2 and Note 6 in Part IV, Item 15 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).
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).
Based on current 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 2023. The Company expects to be able to repay all working capital borrowings prior to the end of the second quarter in fiscal 2023.
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.
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.
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. 37 Table of Contents 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.
At July 3, 2022, the Company had working capital of $82.5 million, including cash and cash equivalents of $31.5 million, compared to working capital of $134.1 million, including cash and cash equivalents of $173.6 million at June 27, 2021. As of July 3, 2022, there were no borrowings outstanding under the Company’s Revolver.
At June 30, 2024, the Company had working capital of $157.9 million, including cash and cash equivalents of $159.4 m illion, 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.
In the beginning of the second quarter, the Company borrowed under its Revolver to fund short-term working capital needs, and the acquisition of Vital Choice, with borrowings peaking at $125.0 million in November 2021. Cash generated from operations during the Christmas holiday shopping season enabled the Company to repay the borrowings under the Revolver in December 2021.
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.
The Company’s independent registered public accounting firm, BDO USA, LLP, audited the effectiveness of the Company’s internal control over financial reporting as of July 3, 2022.
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.
Other (income) expense, net Years Ended July 3, 2022 % Change June 27, 2021 % Change June 28, 2020 (dollars in thousands) Other (income) expense, net $ 5,332 -190.6 % $ (5,888 ) 7,109.5 % $ 84 Other expense, net during fiscal 2022 consists of a $3.6 million loss on the Company’s NQDC deferred compensation investments (for which the offsetting expense was recorded in the General and Administration expense line item), compared to a $5.7mm gain in the prior year, (ii) a $0.7 million impairment of the Company’s investment in Alice’s Table, prior to completion of the acquisition during Q3, and (iii) a $1.2 million impairment of certain of the Company’s cost method investments.
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).
Depreciation and amortization expense increased 30.7% during fiscal 2021, primarily due to the incremental depreciation and customer list amortization associated with PersonalizationMall, recent short-lived IT related ecommerce/platform enhancements and accelerated depreciation on certain legacy systems, which are being replaced with modern platforms. 34 Table of Contents Interest Expense, net Years Ended July 3, 2022 % Change June 27, 2021 % Change June 28, 2020 (dollars in thousands) Interest expense, net $ 5,667 -3.3 % $ 5,860 140.4 % $ 2,438 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.
See Note 6 in Part IV, Item 15 for additional information. 33 Table of Contents 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.
Other income, net for the fiscal years 2021 and 2020, respectively, consist primarily of investment (earnings)/ losses on the Company’s NQDC Plan assets. Income Taxes During the fiscal years 2022, 2021 and 2020, the Company recorded income tax expense of $1.5 million, $30.5 million and $18.8 million, respectively, resulting in an effective tax rate of 4.8%, 20.4% and 24.2%, respectively.
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.
Technology and development expenses increased by 3.9% during fiscal 2022, primarily due to higher maintenance and support incurred to support the Company’s technology platform enhancements, partially offset by lower labor costs, resulting from reductions in performance related bonuses.
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.
Results of Operations The Company’s fiscal year is a 52- or 53-week period ending on the Sunday nearest to June 30. Fiscal year 2022, which ended on July 3, 2022, consisted of 53 weeks. Fiscal years 2021 and 2020, which ended on June 27, 2021 and June 28, 2020, respectively, each consisted of 52 weeks.
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.
Technology and development expenses increased by 11.8% during fiscal 2021, primarily due to increased consulting and labor costs, increased hosting and maintenance costs incurred to support the Company’s technology platform, in addition to the incremental technology costs associated with PersonalizationMall, which was acquired on August 3, 2020.
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.
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. 25 Table of Contents Segment Information The following table presents the net revenues, gross profit and segment contribution margin from each of the Company’s business segments, as well as consolidated EBITDA, adjusted EBITDA and adjusted net income, for fiscal years ended July 3, 2022 and June 27, 2021.
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.
Management compensates for these limitations when using this measure by looking at other GAAP measures, such as Operating Income and Net Income.
Management compensates for these limitations when using this measure by looking at other GAAP measures, such as Operating Income and Net Income. 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.
On a pro-forma basis, excluding the impact of PersonalizationMall, acquired on August 3, 2020, gross margin percentage was 37.9% during the fiscal year 2021. BloomNet segment – Gross profit from the BloomNet segment was unfavorable in comparison to prior year by 5.3%, due to lower margins, partially offset by the increased revenues noted above.
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.
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 $1.0 million during the fiscal year ended July 3, 2022.
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.
Gourmet Foods & Gift Baskets segment – Gross profit was unfavorable in comparison to prior year by 16.3%, due to a decrease in gross profit percentage of 870 basis points, to 34.2%, partially offset by the aforementioned increase in revenues.
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.
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.
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.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Annual Financial Statements: See Part IV, Item 15 of this Annual Report on Form 10-K. Selected Quarterly Financial Data: See Part II, Item 7 of this Annual Report on Form 10-K. Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. Item 9A.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. Item 9A.
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 not effective as of July 3, 2022, due to a material weakness in internal control over financial reporting related to logical access and segregation of duties, at the application control level, in certain information technology environments, as discussed in Management's Report on Internal Control over Financial Reporting referred to below.
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.
During fiscal 2021, the Company fulfilled approximately 26.0 million e-commerce orders (an increase of 54.9% compared to fiscal 2020) at an average order value of $72.22 (a decrease of 1.4% compared to fiscal 2020). ● 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.
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.
Net cash used in investing activities of $89.7 million was primarily attributable to the acquisitions of Vital Choice and Alice’s Table for a combined $21.3 million, and capital expenditures of $66.4 million related to the Company's technology initiatives, as well as manufacturing production and warehousing equipment.
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.
EBITDA should only be used on a supplemental basis combined with GAAP results when evaluating the Company's performance. Segment contribution margin and adjusted segment contribution margin We define segment contribution margin as earnings before interest, taxes, depreciation and amortization, before the allocation of corporate overhead expenses.
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.
General and administrative expense decreased 12.6% during fiscal 2022, primarily due to: (i) lower labor costs as a result of lower performance-related bonuses, and a decrease in the value of the Company’s non-qualified deferred compensation plan investments in the current year of $3.6 million compared to a $5.7 million increase in the prior year (refer to equal offset in “Other income/expense, net”), partially offset by overall increased labor rates, and (ii) lower professional fees due to lower litigation and transaction costs, partially offset by higher insurance costs due to increased health claims and business insurance rates.
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.
In our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of July 3, 2022, based on the COSO criteria. We do not express an opinion or any other form of assurance on management’s statements referring to any corrective actions taken by the Company after the date of management’s assessment.
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 .
Depreciation and Amortization Years Ended July 3, 2022 % Change June 27, 2021 % Change June 28, 2020 (dollars in thousands) Depreciation and amortization $ 49,078 15.5 % $ 42,510 30.7 % $ 32,513 Percentage of sales 2.2 % 2.0 % 2.2 % Depreciation and amortization expense increased 15.5% during fiscal 2022, primarily due to recent increases in distribution facility automation projects and IT related e-commerce/platform enhancements, as well as an incremental amortization related to the acquisition of Vital Choice, and the incremental depreciation and customer list amortization associated with PersonalizationMall.
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.
The Company has and will continue to implement strategic initiatives designed to mitigate the impact of these issues, including pricing initiatives across our product assortment, as well as pre-building inventory to offset supply chain delays, implementing logistics optimization programs to enhance our outbound shipping operations and manage rising third-party shipping costs, and deploying automation to increase throughput and address labor shortages.
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.
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