1-800-FLOWERS.COM, Inc. (FLWS) Bundle
Understanding 1-800-FLOWERS.COM, Inc. (FLWS) Revenue Streams
Understanding 1-800-FLOWERS.COM, Inc.’s Revenue Streams
Net Revenues: For the three months ended September 29, 2024, the total net revenues were $242,090 (in thousands), a decrease of 10.0% from $269,050 in the same period of the prior year.
Breakdown of Primary Revenue Sources
| Revenue Source | Q1 2024 (in $000) | Q1 2023 (in $000) | % Change |
|---|---|---|---|
| E-Commerce | $193,174 | $209,911 | -8.0% |
| Other Revenues | $48,916 | $59,139 | -17.3% |
| Total Net Revenues | $242,090 | $269,050 | -10.0% |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate for the e-commerce segment decreased by 8.0% and the other revenues experienced a decline of 17.3%. Overall, the company’s revenues decreased by 10.0% for the three months ended September 29, 2024 compared to the same period a year earlier.
Contribution of Different Business Segments
| Segment | Net Revenues Q1 2024 (in $000) | Net Revenues Q1 2023 (in $000) | % Change |
|---|---|---|---|
| Consumer Floral & Gifts | $135,180 | $142,194 | -4.9% |
| BloomNet | $23,075 | $28,870 | -20.1% |
| Gourmet Foods & Gift Baskets | $84,003 | $98,109 | -14.4% |
| Corporate | $89 | $270 | -67.0% |
| Eliminations | ($257) | ($393) | 34.6% |
Analysis of Significant Changes in Revenue Streams
The decrease in revenues across all segments reflects a continuation of trends experienced in the previous fiscal year, primarily due to macro-economic pressures affecting consumer discretionary spending. The Consumer Floral & Gifts segment saw a 4.9% decline in revenues, while BloomNet faced a more substantial drop of 20.1%.
The Gourmet Foods & Gift Baskets segment revenues declined by 14.4%, attributed to lower e-commerce sales and timing issues with wholesale shipments. Overall, the company has been adversely impacted by economic factors leading to reduced consumer spending.
A Deep Dive into 1-800-FLOWERS.COM, Inc. (FLWS) Profitability
Profitability Metrics
Gross Profit Margin: For the three months ended September 29, 2024, gross profit was $92,319 thousand, down from $101,928 thousand in the same period of the previous year, representing a decline of 9.4%. The gross profit margin improved slightly to 38.1% from 37.9% in the previous year.
Operating Profit Margin: The operating loss for the three months ended September 29, 2024, was ($46,981) thousand compared to an operating loss of ($37,577) thousand for the same period in 2023. This reflects an increase in the operating loss margin.
Net Profit Margin: The net loss for the three months ended September 29, 2024, was ($34,190) thousand, translating to a basic and diluted net loss per share of ($0.53). In comparison, the net loss for the same period in 2023 was ($31,242) thousand, with a net loss per share of ($0.48).
Trends in Profitability Over Time
Over the past year, the company has faced declining revenues, resulting in decreased gross and operating profits. Net revenues dropped 10.0% from $269,050 thousand in Q1 2023 to $242,090 thousand in Q1 2024. This decline in revenue has directly impacted overall profitability metrics.
Comparison of Profitability Ratios with Industry Averages
As of 2024, the industry average gross profit margin for e-commerce companies is approximately 40%. The company's gross profit margin of 38.1% indicates a slight underperformance relative to the industry average. The operating profit margin is significantly negative compared to the industry average of about 5-10%, highlighting operational challenges within the company.
Analysis of Operational Efficiency
The total operating expenses for the three months ended September 29, 2024, were $139,300 thousand, which is relatively stable compared to $139,505 thousand in the prior year. However, marketing and sales expenses remained high at $82,097 thousand, indicating a need for better cost management strategies to improve profitability.
| Metric | Q1 2024 | Q1 2023 | Change (%) |
|---|---|---|---|
| Gross Profit | $92,319 | $101,928 | -9.4% |
| Gross Profit Margin | 38.1% | 37.9% | +0.2% |
| Operating Loss | ($46,981) | ($37,577) | -25.8% |
| Net Loss | ($34,190) | ($31,242) | -9.7% |
| Net Loss per Share | ($0.53) | ($0.48) | -10.4% |
| Total Operating Expenses | $139,300 | $139,505 | -0.1% |
Debt vs. Equity: How 1-800-FLOWERS.COM, Inc. (FLWS) Finances Its Growth
Debt vs. Equity: How 1-800-FLOWERS.COM, Inc. Finances Its Growth
Overview of Debt Levels
As of September 29, 2024, the company's total debt was $229.8 million, which includes $187.5 million in term loans and $45 million in revolving credit. The current maturities of long-term debt stand at $57.5 million, leaving a long-term debt net of $172.3 million .
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio for the company is approximately 0.53, calculated by dividing total debt of $229.8 million by total equity of $433.4 million . This ratio is below the industry average, which typically ranges from 0.6 to 1.0 for similar companies in the e-commerce and retail sectors, indicating a relatively conservative approach to leveraging debt .
Recent Debt Issuances and Credit Ratings
The company entered into a Third Amended and Restated Credit Agreement on June 27, 2023, which allowed for an increase in the outstanding term loan to $200 million . The company is currently rated B3 by Moody's, reflecting a stable outlook but indicating some risk associated with its financial structure .
Balancing Debt Financing and Equity Funding
The company employs a balanced approach between debt and equity financing. In the most recent quarter, it raised $45 million through bank borrowings, while also utilizing cash flows from operations to fund acquisitions and capital expenditures . As of September 29, 2024, the company's cash and cash equivalents were $8.4 million, down from $159.4 million at the end of the previous quarter .
| Debt Type | Amount (in millions) |
|---|---|
| Total Debt | $229.8 |
| Term Loans | $187.5 |
| Revolving Credit | $45.0 |
| Current Maturities of Long-Term Debt | $57.5 |
| Long-Term Debt Net | $172.3 |
Overall, the company's strategy of maintaining a debt-to-equity ratio below industry norms, alongside recent refinancing efforts, positions it to manage growth responsibly while navigating evolving market conditions .
Assessing 1-800-FLOWERS.COM, Inc. (FLWS) Liquidity
Assessing Liquidity
The liquidity position of the company can be evaluated through several key metrics, including current and quick ratios, working capital trends, and cash flow statements.
Current and Quick Ratios
As of September 29, 2024, the company's current ratio was calculated at 1.31, while the quick ratio stood at 0.54. These ratios indicate the ability of the company to cover its short-term liabilities with its short-term assets.
Working Capital Trends
Working capital as of September 29, 2024, was $118.7 million, a decrease from $157.9 million reported on June 30, 2024. This decline reflects a notable shift in liquidity conditions, primarily attributed to seasonal inventory build-up for the upcoming holiday season.
| Date | Working Capital (in millions) | Current Ratio | Quick Ratio |
|---|---|---|---|
| September 29, 2024 | $118.7 | 1.31 | 0.54 |
| June 30, 2024 | $157.9 | 1.45 | 0.62 |
Cash Flow Statements Overview
The cash flow statement for the three months ended September 29, 2024, reported the following:
- Net cash used in operating activities: $(177.2 million)
- Net cash used in investing activities: $(15.1 million)
- Net cash provided by financing activities: $41.3 million
Overall, the net cash flow resulted in a decrease in cash and cash equivalents, ending the period with $8.4 million compared to $159.4 million at the beginning of the quarter.
Potential Liquidity Concerns or Strengths
Despite the decline in working capital, the company maintains access to liquidity through its credit facilities. As of September 29, 2024, the company had $45 million outstanding under its revolving credit agreement, which provides a buffer for operational cash needs. However, the significant net cash used in operating activities raises potential concerns regarding cash generation amidst declining revenues, which decreased by 10% year-over-year during the same period.
Furthermore, free cash flow was reported at $(189.3 million) for the three months ended September 29, 2024, compared to $(150.8 million) for the same period in the prior year. This indicates a worsening liquidity position that investors should monitor closely.
| Cash Flow Statement (in thousands) | September 29, 2024 | October 1, 2023 |
|---|---|---|
| Net cash used in operating activities | $(177,241) | $(143,884) |
| Net cash used in investing activities | $(15,075) | $(6,974) |
| Net cash provided by financing activities | $41,286 | $32,426 |
| Free cash flow | $(189,316) | $(150,858) |
Is 1-800-FLOWERS.COM, Inc. (FLWS) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we will analyze key financial ratios, stock price trends, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The current P/E ratio is NA due to a net loss reported in the latest earnings, which makes the ratio non-applicable.
Price-to-Book (P/B) Ratio
The P/B ratio stands at 1.1 as of September 29, 2024, with a book value per share of approximately $5.33.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is calculated at NA due to the negative EBITDA reported for the last quarter.
Stock Price Trends
Over the past 12 months, the stock price has fluctuated as follows:
- 12 months ago: $22.50
- Current price (as of the latest report): $10.00
- Percentage decrease: -55.6%
Dividend Yield and Payout Ratios
The company does not currently pay a dividend, resulting in a dividend yield of 0%.
Analyst Consensus on Stock Valuation
The consensus among analysts is mixed, with the following recommendations:
- Buy: 1
- Hold: 5
- Sell: 2
Financial Summary Table
| Metric | Value |
|---|---|
| P/E Ratio | NA |
| P/B Ratio | 1.1 |
| EV/EBITDA Ratio | NA |
| Current Stock Price | $10.00 |
| 12-Month Price Change | -55.6% |
| Dividend Yield | 0% |
| Analyst Buy Recommendations | 1 |
| Analyst Hold Recommendations | 5 |
| Analyst Sell Recommendations | 2 |
Key Risks Facing 1-800-FLOWERS.COM, Inc. (FLWS)
Key Risks Facing 1-800-FLOWERS.COM, Inc.
1-800-FLOWERS.COM, Inc. faces a variety of internal and external risks that could significantly impact its financial health. These risks can be broadly categorized into operational, financial, and strategic risks.
Industry Competition
The floral and gifting industry is characterized by intense competition. The company competes with both online retailers and traditional brick-and-mortar stores, including local florists and supermarkets. In the three months ended September 29, 2024, net revenues decreased by 10.0% to $242.1 million, down from $269.1 million during the same period in the previous year. This decline is attributed to decreased demand, which is a direct consequence of competitive pricing and promotional strategies employed by rivals.
Regulatory Changes
Changes in regulations affecting shipping, labor, and e-commerce can pose risks. For example, potential increases in shipping costs due to regulatory changes could adversely affect profit margins. The company has also faced scrutiny regarding compliance with labor laws, particularly concerning wage and hour regulations. As of September 29, 2024, the company reported an effective tax rate of 29.6%, up from 24.8% in the prior year, which reflects changes in tax regulations.
Market Conditions
Economic conditions significantly influence consumer spending. The company has noted pressure from persistent inflation and higher interest rates, which have led to a decrease in discretionary spending. For instance, e-commerce revenues fell by 8.0% during the three months ended September 29, 2024. The average order value also decreased by 1.5% to $78.25, indicating a shift towards lower-priced items as consumers tighten their budgets.
Operational Risks
Operationally, the company faces risks related to supply chain disruptions and fulfillment challenges. For the three months ended September 29, 2024, the company fulfilled approximately 2.5 million orders, a decrease of 6.5% year-over-year. These disruptions can lead to delays in order fulfillment and increased costs, which can further impact customer satisfaction and revenue.
Financial Risks
Financially, the company is exposed to liquidity risks. As of September 29, 2024, the company reported working capital of $118.7 million, down from $157.9 million at the end of June 2024. Cash and cash equivalents were $8.4 million, a significant drop from $159.4 million. Additionally, net cash used in operating activities was $177.2 million for the three months ended September 29, 2024.
Strategic Risks
Strategically, the company has undertaken acquisitions to diversify its product offerings. The acquisition of Scharffen Berger for approximately $3.3 million and Card Isle for $3.6 million may not yield immediate revenue benefits, as these revenues were not significant during the initial quarter post-acquisition. The company must effectively integrate these acquisitions to realize expected synergies and growth.
Mitigation Strategies
To address these risks, the company is focusing on improving operational efficiencies and enhancing customer experience through technology investments. Management continues to evaluate its capital structure and liquidity needs while exploring strategic partnerships to strengthen market positioning. The company has also implemented cost-control measures to mitigate the impact of rising operational costs.
| Risk Factor | Description | Impact on Financials | Current Status |
|---|---|---|---|
| Competition | Intense rivalry from online and offline retailers | Net revenues decreased by 10.0% to $242.1 million | Significant |
| Regulatory Changes | Potential changes in shipping and labor regulations | Effective tax rate increased to 29.6% | Ongoing |
| Market Conditions | Economic downturn affecting consumer spending | E-commerce revenues fell by 8.0% | Challenging |
| Operational Risks | Supply chain disruptions impacting order fulfillment | Fulfilled 2.5 million orders, a decrease of 6.5% | Critical |
| Financial Risks | Liquidity concerns and cash flow challenges | Working capital decreased to $118.7 million | Concerning |
| Strategic Risks | Integration of acquisitions may not yield immediate benefits | Acquisitions of Scharffen Berger and Card Isle for $3.3 million and $3.6 million, respectively | Under Evaluation |
Future Growth Prospects for 1-800-FLOWERS.COM, Inc. (FLWS)
Future Growth Prospects for 1-800-FLOWERS.COM, Inc.
Analysis of Key Growth Drivers
The company is focusing on several key growth drivers that are expected to enhance its market position. These include:
- Product Innovations: The introduction of new product lines, particularly in the Gourmet Foods & Gift Baskets segment, is a priority. Following the acquisition of Scharffen Berger, the company aims to integrate gourmet chocolates into its offerings.
- Market Expansions: Expansion into new markets, especially through e-commerce, is essential. The company is leveraging its existing platforms to enhance reach.
- Acquisitions: The acquisition of Card Isle on April 3, 2024, aims to enhance the company’s presence in the greeting card market, providing a broader range of gifting options.
Future Revenue Growth Projections and Earnings Estimates
For Fiscal 2025, the company anticipates total revenues to be in a range of flat to a decrease in the low single digits, reflecting ongoing macroeconomic pressures. However, it expects a rebound during the holiday season, traditionally a peak period for gifting.
Net revenues for the three months ended September 29, 2024, were $242.1 million, a decrease of 10.0% compared to $269.1 million in the same period the previous year .
Strategic Initiatives or Partnerships
The company has initiated several strategic partnerships and initiatives aimed at driving future growth:
- Partnerships with Local Florists: Strengthening relationships with local florists through its BloomNet network enhances product offerings and delivery capabilities.
- Technological Enhancements: Investments in technology to improve the e-commerce platform are a focus, aimed at enhancing customer experience and streamlining operations.
Competitive Advantages
The company holds several competitive advantages that position it well for future growth:
- Brand Recognition: With a well-established brand, it benefits from customer loyalty and recognition in the floral and gifting market.
- Diverse Product Range: A wide variety of products across different categories appeals to a broad consumer base.
- Strong E-commerce Presence: The company fulfills approximately 2.5 million orders through its e-commerce sales channel, indicating robust online demand .
| Metric | Q1 2024 | Q1 2023 | % Change |
|---|---|---|---|
| Net Revenues | $242.1 million | $269.1 million | -10.0% |
| E-commerce Revenues | $193.2 million | $209.9 million | -8.0% |
| Gross Profit | $92.3 million | $101.9 million | -9.4% |
| Operating Loss | $(46.98) million | $(37.58) million | -25.0% |
| Net Loss | $(34.19) million | $(31.24) million | -9.9% |
In conclusion, while the company faces challenges in the current economic environment, its strategic initiatives, acquisitions, and market positioning provide a foundation for potential growth moving forward.
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Article updated on 8 Nov 2024
Resources:
- 1-800-FLOWERS.COM, Inc. (FLWS) Financial Statements – Access the full quarterly financial statements for Q1 2024 to get an in-depth view of 1-800-FLOWERS.COM, Inc. (FLWS)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View 1-800-FLOWERS.COM, Inc. (FLWS)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.