FLWS 10-K Deep Dive: A $144M Write-Down Fuels a $200M Loss

In a challenging retail landscape, gift-giving giant 1-800-FLOWERS.COM INC (FLWS) recently released its annual financial results, offering a detailed look into its performance over the past year. By digging into the numbers from their latest 10-K filing, we can see how the company, which operates a family of brands including Harry & David, PersonalizationMall.com, and Shari's Berries, navigated a tough consumer environment.

The headline figures reveal a difficult fiscal year. Total revenue for the year ending June 29, 2025, came in at $1.69 billion, a decrease of 8% from the $1.83 billion reported in the previous year. More strikingly, the company reported a significant net loss of nearly $200 million, a sharp downturn from the modest $6.1 million loss in fiscal 2024.

From Revenue to Loss

A major contributor to this substantial loss was a non-cash impairment charge of $143.8 million related to goodwill and other intangible assets. In simple terms, a goodwill impairment is an accounting adjustment that happens when a company determines that an asset it previously acquired—like a brand name from another company—is no longer worth its recorded value. While this doesn't impact immediate cash flow, it signals that past acquisitions are not generating the expected returns.

The following flow diagram illustrates how the company's revenue was allocated across various costs and expenses, ultimately leading to its net loss for the year.

You may notice the "Unallocated" items in the diagram. These represent financial figures not assigned to a specific business division. The negative revenue and cost of revenue figures shown are primarily due to intercompany eliminations—accounting adjustments that cancel out transactions occurring between the company's own segments to avoid double-counting and ensure that final revenue only reflects sales to external customers.

A Look Across the Segments

Breaking down the performance by division reveals that the downturn was broad-based, though some areas were hit harder than others.

• Gourmet Foods & Gift Baskets: The company's largest segment, featuring brands like Harry & David, saw its revenue decline by 7.2% to $811 million. Despite the sales drop, it remained profitable, contributing $47 million in operating income.
• Consumer Floral & Gifts: This segment, which includes the flagship 1-800-Flowers.com brand, experienced an 8.6% drop in revenue to $777 million. Critically, this division recorded an operating loss of $94.6 million, which includes the bulk of the aforementioned impairment charges.
• BloomNet: The smallest division, which provides products and services to a network of professional florists, saw revenue fall by 8.4% to $99 million. However, it maintained strong profitability with a $29 million operating income, highlighting the resilience of its service-based model.

Shrinking Margins and Rising Costs

Profitability was also squeezed by tightening margins. The company's gross margin fell from 40.1% to 38.7%, a decline attributed to higher merchandise costs and the deleveraging of fixed costs. This "deleveraging" occurs when falling sales cause fixed expenses, like warehouse rent, to eat up a larger percentage of each dollar earned.

Furthermore, while marketing and sales expenses were held relatively steady at $480 million, they grew as a percentage of revenue from 26.5% to 28.5%. This suggests the company is having to spend more to attract customers in a competitive and promotional market, a challenge the report acknowledges as "inefficient marketing spend."

Facing these headwinds, 1-800-FLOWERS.COM is focusing its strategy on improving efficiency. The company has outlined priorities for the upcoming year that include driving cost savings, becoming a more data-driven organization, and finding new sales channels. For a company reliant on discretionary consumer spending, its ability to execute this plan will be crucial as it navigates the persistent economic pressures affecting its customers.