SEC Info - 1 800 Flowers Com Inc. - ‘10-Q’ for 9/26/21

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		Alternative Formats (Word, et al.) Accompanying Notes to Condensed Consolidated Financial Statements Accounting Policies Business Segments Condensed Consolidated Balance Sheets -- September 26, 2021 (Unaudited) and June 27, 2021 Condensed Consolidated Financial Statements Condensed Consolidated Statements of Cash Flows (Unaudited) -- Three Months Ended September 26, 2021 and September 27, 2020 Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) -- Three Months Ended September 26, 2021 and September 27, 2020 Condensed Consolidated Statements of Stockholders' Equity (Unaudited) -- Three Months Ended September 26, 2021 and September 27, 2020 Controls and Procedures Debt, in Item 1 Defaults upon Senior Securities Exhibits Fair Value Measurements Financial Information in Part II Item 1 Item 1A Item 2 Item 3 Item 4 Item 5 Item 6 Leases in Item 1 Legal Proceedings Management ' s Discussion and Analysis of Financial Condition and Results of Operations Mine Safety Disclosures Note 10 -- Fair Value Measurements Note 12 -- Business Segments Note 13 Note 13 -- Leases in Item 1 Note 14 Note 1 -- Accounting Policies Note 8 -- Debt, in Item 1 Notes to Condensed Consolidated Financial Statements (Unaudited) Other Information Part I Part II Part II. Item 1A Part I. Item 2. Management ' s Discussion and Analysis of Financial Condition and Results of Operations Quantitative and Qualitative Disclosures About Market Risk Results of Operations Risk Factors Segment Information September 26, 2021 (Unaudited) and June 27, 2021 Signatures Table of Contents Three Months Ended September 26, 2021 and September 27, 2020 Unregistered Sales of Equity Securities and Use of Proceeds
1	1st Page – Filing Submission
"	Table of Contents
"	Part I
"	Financial Information
"	Item 1
"	Condensed Consolidated Financial Statements
"	Condensed Consolidated Balance Sheets -- September 26, 2021 (Unaudited) and June 27, 2021
"	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) -- Three Months Ended September 26, 2021 and September 27, 2020
"	Condensed Consolidated Statements of Stockholders' Equity (Unaudited) -- Three Months Ended September 26, 2021 and September 27, 2020
"	Condensed Consolidated Statements of Cash Flows (Unaudited) -- Three Months Ended September 26, 2021 and September 27, 2020
"	Notes to Condensed Consolidated Financial Statements (Unaudited)
"	Accompanying Notes to Condensed Consolidated Financial Statements
"	Note 1 -- Accounting Policies
"	Note 8 -- Debt, in Item 1
"	Note 10 -- Fair Value Measurements
"	Note 12 -- Business Segments
"	Note 13
"	Note 13 -- Leases in Item 1
"	Note 14
"	Item 2
"	Management ' s Discussion and Analysis of Financial Condition and Results of Operations
"	Part I. Item 2. Management ' s Discussion and Analysis of Financial Condition and Results of Operations
"	Segment Information
"	Results of Operations
"	Item 3
"	Quantitative and Qualitative Disclosures About Market Risk
"	Item 4
"	Controls and Procedures
"	Part II
"	Other Information
"	Part II. Item 1A
"	Legal Proceedings
"	Item 1A
"	Risk Factors
"	Unregistered Sales of Equity Securities and Use of Proceeds
"	Item 2 in Part II
"	Defaults upon Senior Securities
"	Mine Safety Disclosures
"	Item 5
"	Item 6
"	Exhibits
"	Signatures

i 0001084869 i 1 800 FLOWERS COM INC i false i --06-26 i Q1 i 2022 i i i 0.01 i 0.01 i 10,000,000 i 10,000,000 i 0 i 0 i 0.01 i 0.01 i 200,000,000 i 200,000,000 i 56,098,061 i 55,675,661 i 0.01 i 0.01 i 200,000,000 i 200,000,000 i 33,433,614 i 33,433,614 i 19,113,867 i 18,825,841 i 5,280,000 i 5,280,000 i 0 i 1 i 4.6 i 21 i 2019 2020 i 2016 2017 2018 2019 2020 On May 31, 2019, the Company and certain of its U.S. subsidiaries entered into a Second Amended and Restated Credit Agreement (the “2019 Credit Agreement”) with JPMorgan Chase Bank, N.A. as administrative agent, and a group of lenders. The 2019 Credit Agreement amended and restated the Company’s existing amended and restated credit agreement dated as of December 23, 2016 to, among other modifications: (i) increase the amount of the outstanding term loan (“Term Loan”) from approximately $97 million to $100 million, (ii) extend the maturity date of the outstanding Term Loan and the revolving credit facility (“Revolver”) by approximately 29 months to May 31, 2024, and (iii) decrease the applicable interest rate margins for LIBOR and base rate loans by 25 basis points. The Term Loan is payable in 19 quarterly installments of principal and interest beginning on September 29, 2019, with escalating principal payments, at the rate of 5.0% per annum for the first eight payments, and 10.0% per annum for the remaining 11 payments, with the remaining balance of $62.5 million due upon maturity. The Revolver, in the aggregate amount of $200 million, subject to seasonal reduction to an aggregate amount of $100 million for the period from January 1 through August 1, may be used for working capital and general corporate purposes, subject to certain restrictions. For each borrowing under the 2019 Credit Agreement, the Company may elect that such borrowing bear interest at an annual rate equal to either: (1) a base rate plus an applicable margin varying based on the Company’s consolidated leverage ratio, where the base rate is the highest of (a) the prime rate, (b) the New York fed bank rate plus 0.5%, and (c) a LIBOR rate plus 1%, or (2) an adjusted LIBOR rate plus an applicable margin varying based on the Company’s consolidated leverage ratio. On August 20, 2020, the Company, the Subsidiary Guarantors, JPMorgan Chase Bank, N.A. as administrative agent, and a group of lenders entered into a First Amendment (the “First Amendment”) to the 2019 Credit Agreement. The First Amendment amends the 2019 Credit Agreement (together the "2020 Credit Agreement”) to, among other modifications, (i) increase the aggregate principal amount of the existing Revolver commitments from $200.0 million to $250.0 million, (ii) establish a new tranche of term A-1 loans in an aggregate principal amount of $100.0 million (the “New Term Loan”), (iii) increase the working capital sublimit with respect to the Revolver from $175.0 million to $200.0 million, and (iv) increase the seasonally-reduced Revolver commitments from $100.0 million to $125.0 million for the period from January 1 through August 1 for each fiscal year of the Company. The New Term Loan will mature on May 31, 2024. Proceeds of the borrowing under the New Term Loan may be used for working capital and general corporate purposes of the Company and its subsidiaries, subject to certain restrictions. For each borrowing under the 2020 Credit Agreement, the Company may elect that such borrowing bear interest at an annual rate equal to either (1) a base rate plus the applicable margin for the relevant class of borrowing, which margins vary based on the Company’s consolidated leverage ratio, where the base rate is the highest of (a) the prime rate, (b) the New York fed bank rate plus 0.5%, and (c) a LIBOR rate plus 1%, or (2) an adjusted LIBOR rate plus an applicable margin varying based on the Company’s consolidated leverage ratio. The New Term Loan is payable in 15 quarterly installments of principal and interest beginning on September 27, 2020, with escalating principal payments, at the rate of 5.0% per annum for the first four payments, and 10.0% per annum for the remaining 11 payments, with the remaining balance of $67.5 million due upon maturity. The 2020 Credit Agreement requires that while any borrowings or commitments are outstanding the Company comply with certain financial covenants and affirmative covenants as well as certain negative covenants that, subject to certain exceptions, limit the Company’s ability to, among other things, incur additional indebtedness, make certain investments and make certain restricted payments. The Company was in compliance with these covenants as of March 28, 2021. The 2020 Credit Agreement is secured by substantially all of the assets of the Company. The measurement period adjustments did not have a significant impact on the Company’s condensed consolidated statements of income for the year ended June 27, 2021. The Company has established a NQDC Plan for certain members of senior management. Deferred compensation plan assets are invested in mutual funds held in a "rabbi trust," which is restricted for payment to participants of the NQDC Plan. Trading securities held in a rabbi trust are measured using quoted market prices at the reporting date and are included in the "Other assets" line item, with the corresponding liability included in the "Other liabilities" line item in the consolidated balance sheets. Corporate expenses consist of the Company’s enterprise shared service cost centers, and include, among other items, Information Technology, Human Resources, Accounting and Finance, Legal, Executive and Customer Service Center functions, as well as Stock-Based Compensation. In order to leverage the Company’s infrastructure, these functions are operated under a centralized management platform, providing support services throughout the organization. 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. 00010848692021-06-282021-09-26 xbrli:shares 0001084869us-gaap:CommonClassAMember2021-10-29 0001084869us-gaap:CommonClassBMember2021-10-29 thunderdome:item iso4217:USD 00010848692021-09-26 00010848692021-06-27 iso4217:USDxbrli:shares 0001084869us-gaap:CommonClassAMember2021-09-26 0001084869us-gaap:CommonClassAMember2021-06-27 0001084869us-gaap:CommonClassBMember2021-09-26 0001084869us-gaap:CommonClassBMember2021-06-27 00010848692020-06-292020-09-27 0001084869us-gaap:CommonClassAMemberus-gaap:CommonStockMember2021-06-27 0001084869us-gaap:CommonClassBMemberus-gaap:CommonStockMember2021-06-27 0001084869us-gaap:AdditionalPaidInCapitalMember2021-06-27 0001084869us-gaap:RetainedEarningsMember2021-06-27 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Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM i 10-Q

i ☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended i September 26, 2021

i ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ___

Commission File No. i 0-26841

1-800-FLOWERS.COM, Inc.

(Exact name of registrant as specified in its charter)

i Delaware	i 11-3117311
(State of incorporation)	(I.R.S. Employer Identification No.)
i Two Jericho Plaza, Suite 200, i Jericho, i NY i 11753	( i 516) i 237-6000
(Address of principal executive offices) (Zip code)	(Registrant’s telephone number, including area code)

One Old Country Road, Carle Place, New York, 11514
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
i Class A common stock	i FLWS	The i Nasdaq Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. i Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or such shorter period that the registrant was required to submit such files). i Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

☐Large accelerated filer		☑ i Accelerated filer
☐Non-accelerated filer		i ☐Smaller reporting company
		i ☐Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes i ☐ No ☑

The number of shares outstanding of each of the Registrant’s classes of common stock as of October 29, 2021:

Class A common stock:	i 36,935,994
Class B common stock:	i 28,153,614

Table of Contents

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

Three Months Ended September 26, 2021 and September 27, 2020

Common Stock

Additional

Retained

Accumulated

Total

Class A

Class B

Paid-in

Earnings

Other

Treasury Stock

Stockholders’

Shares

Amount

Shares

Amount

Capital

(Deficit)

Comprehensive Loss

Shares

Amount

Equity

Balance at June 27, 2021

i 55,675,661

i 557

i 33,433,614

i 334

i 371,103

i 286,175

( i 318

)

i 24,105,841

( i 148,781

)

i 509,070

Net loss

i -

( i 13,199

)

i -

( i 13,199

)

Stock-based compensation

i 172,500

i 2

i -

i 3,003

i -

i 3,005

Exercise of stock options

i 249,900

i 2

i -

i 561

i -

i 563

Acquisition of Class A treasury stock

i -

i 288,026

( i 9,065

)

( i 9,065

)

Balance at September 26, 2021

i 56,098,061

i 561

i 33,433,614

i 334

i 374,667

i 272,976

( i 318

)

i 24,393,867

( i 157,846

)

i 490,374

Balance at June 28, 2020

i 53,704,477

i 537

i 33,822,823

i 338

i 358,031

i 167,523

( i 243

)

i 23,243,551

( i 126,412

)

i 399,774

Net loss

i -

( i 9,762

)

i -

( i 9,762

)

Stock-based compensation

i 88,666

i 1

i -

i 2,392

i -

i 2,393

Exercise of stock options

i 76,378

i 1

i -

i 220

i -

i 221

Conversion – Class B into Class A

i 184,209

i 2

( i 184,209

)

( i 2

)

Acquisition of Class A treasury stock

i -

i 36,355

( i 1,088

)

( i 1,088

)

Balance at September 27, 2020

i 54,053,730

i 541

i 33,638,614

i 336

i 360,643

i 157,761

( i 243

)

i 23,279,906

( i 127,500

)

i 391,538

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

This “Management’s Discussion and Analysis of Financial Condition and Results of Operations” ("MD&A") is intended to provide an understanding of our financial condition, change in financial condition, cash flow, liquidity and results of operations. The following MD&A discussion should be read in conjunction with the consolidated financial statements and notes to those statements that appear elsewhere in this Form 10-Q and in the Company’s Annual Report on Form 10-K, for the year ended June 27, 2021. The following discussion contains forward-looking statements that reflect the Company’s plans, estimates and beliefs. The Company’s actual results could differ materially from those discussed or referred to in the forward-looking statements. Factors that could cause or contribute to any differences include, but are not limited to, those discussed under the caption “Forward-Looking Information and Factors That May Affect Future Results,” under Part I, Item 1A, of the Company’s Annual Report on Form 10-K, for the year ended June 27, 2021 under the heading “Risk Factors” and Part II-Other Information, Item 1A in this Form 10-Q.

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. 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®, Stock Yards® and Simply Chocolate®. 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. The Company also operates BloomNet®, an international floral and gift industry service provider offering a broad-range of products and services designed to help members grow their businesses profitably; Napco℠, a resource for floral gifts and seasonal décor; and DesignPac Gifts, LLC, a manufacturer of gift baskets and towers.

For additional information, see Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Overview” of our Annual Report on Form 10-K for the year ended June 27, 2021.

On August 3, 2020, the Company completed its acquisition of PersonalizationMall.com LLC ("PersonalizationMall"), a leading ecommerce provider of personalized products. The extensive offerings of PersonalizationMall include a wide variety of personalization processes such as sublimation, embroidery, digital printing, engraving and sandblasting, while providing an industry-leading customer experience based on a fully integrated business platform that includes a highly automated personalization process and rapid order fulfillment.

The Company used a combination of cash on its balance sheet and its existing credit facility to fund the $245.0 million purchase (subject to certain working capital and other adjustments), which included its newly renovated, leased 360,000 square foot state-of-the-art production and distribution facility, as well as customer database, tradenames and website. PersonalizationMall’s revenues were approximately $171.2 million during its fiscal year ended February 29, 2020.

Subsequent to, but in contemplation of the acquisition, on August 20, 2020, the Company entered into a First Amendment to its 2019 Credit Agreement to: (i) increase the aggregate principal amount of the existing Revolver commitments from $200.0 million to $250.0 million, (ii) establish a new tranche of term A-1 loans in an aggregate principal amount of $100.0 million (the “New Term Loan”), (iii) increase the working capital sublimit with respect to the Revolver from $175.0 million to $200.0 million, and (iv) increase the seasonally-reduced Revolver commitments from $100.0 million to $125.0 million for the period from January 1 through August 1 for each fiscal year of the Company. The $100.0 million proceeds of the New Term Loan were used to repay the $95.0 million borrowing that had been drawn on its existing Revolver to finance the acquisition, as well as financing fees of approximately $2.0 million (See Note 8 - Debt, in Item 1. for details).

In response to the global pandemic, the Company has taken actions to promote employee safety and business continuity, informed by the guidelines set forth by local, state and federal government and health officials. These initiatives include developing a “Pandemic Preparedness and Response Plan,” establishing an internal “nerve center” to allow for communication and coordination throughout the business, designing workstream teams to promote workforce protection and supply chain management, and dedicating resources to support customers, vendors, franchisees, and our BloomNet member florists.

The COVID-19 pandemic has affected, and will continue to affect, our operations and financial results for the foreseeable future. While there is significant uncertainty in the overall consumer environment due to the COVID-19 crisis, we continue to see strong e-commerce demand for gourmet foods and gift baskets and our floral and personalized products. With that said, there are headwinds (and resulting increased costs) that have been, and will continue to impact our operations during the foreseeable future, including:

The scale and overall economic impact of the COVID-19 crisis is still very difficult to assess as the Company began to annualize the impact that COVID-19 has had on consumer behavior in its fiscal fourth quarter of 2021. However, the Company believes that the operating platform it has built over the years, combined with its diversified product line, and ability to engage with its customers will allow it to successfully navigate this challenging environment and continue to grow revenues at a double-digit pace through fiscal 2022. The Company’s 9.0 percent revenue growth for the quarter, followed 51.5 percent growth achieved in last year’s first quarter, when ecommerce demand spiked during the early stages of the pandemic. As we had anticipated, the first quarter of fiscal 2022 started out somewhat slowly, with demand gradually ramping up, before reaching double-digit growth in the month of September. Continuing recognition and relevance of the Company’s products for everyday gifting and connective occasions, as well as an expanded product offering, including PersonalizationMall, were the primary drivers of growth.

In order to mitigate the impact of the aforementioned headwinds, the Company has implemented a number of initiatives designed to take advantage of the strong ecommerce demand we anticipate during the key holiday season. These initiatives include strategic pricing programs across our brands, as wells as the significant investments we have made in our operating platform, including pre-building inventory, which leverages our expanded cold-storage facilities, and deploying automation in our warehouse and distribution facilities to increase throughput and reduces reliance on seasonal labor. As a result, we are well positioned to help our customers connect and express themselves with the important people in their lives for both everyday occasions and the key holiday season.

The Company is reaffirming its guidance for its fiscal 2022 year, which includes:

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. See below for definitions and the reasons why we use these non-GAAP financial measures. Where applicable, see the Segment Information and Results of Operations sections below for reconciliations of these non-GAAP measures to their most directly comparable GAAP financial measures. We do not provide a reconciliation of adjusted EBITDA guidance to net income guidance or a reconciliation of free cash flow guidance to net cash provided by operating activities because doing so would require unreasonable efforts at this time, because of the uncertainty and variability of the nature and amount of certain components of various necessary GAAP components, including for example those related to compensation, tax items, amortization or others that may arise during the year, and the Company's management believes such reconciliations would imply a degree of precision that would be confusing or misleading to investors. These non-GAAP financial measures are referred to as “adjusted" or “on a comparable basis” below.

We define EBITDA as net income (loss) before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted for the impact of stock-based compensation, NQDC Plan investment appreciation/depreciation, and for certain items affecting period-to-period comparability. See Segment Information for details on how EBITDA and adjusted EBITDA were calculated for each period presented.

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 uses EBITDA and adjusted EBITDA as factors to determine the total amount of incentive compensation available to be awarded to executive officers and other employees. The Company's credit agreement uses EBITDA and adjusted EBITDA to measure compliance with covenants such as interest coverage and debt incurrence. 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. Some of the limitations are: (a) EBITDA and adjusted EBITDA do not reflect changes in, or cash requirements for, the Company's working capital needs; (b) EBITDA and adjusted EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on the Company's debts; and (c) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future and EBITDA does not reflect any cash requirements for such capital expenditures. 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. Adjusted segment contribution margin is defined as contribution margin adjusted for certain items affecting period-to-period comparability. See Segment Information for details on how segment contribution margin was calculated for each period presented.

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.

Segment contribution margin and adjusted segment contribution margin are used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures. The material limitation associated with the use of the segment contribution margin and adjusted segment contribution margin is that they are an incomplete measure of profitability as they do not include all operating expenses or non-operating income and expenses. Management compensates for these limitations when using this measure by looking at other GAAP measures, such as operating income and net income.

Adjusted net income (loss) and adjusted or comparable net income (loss) per common share

We define adjusted net income (loss) and adjusted or comparable net income (loss) per common share as net income (loss) and net income (loss) per common share adjusted for certain items affecting period-to-period comparability. See Segment Information below for details on how adjusted net income (loss) and adjusted or comparable net income (loss) per common share were calculated for each period presented.

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.

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.

We define free cash flow as net cash provided by operating activities less capital expenditures. The Company considers free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business after the purchases of fixed assets, which can then be used to, among other things, invest in the Company’s business, make strategic acquisitions, strengthen the balance sheet, and repurchase stock or retire debt. Free cash flow is a liquidity measure that is frequently used by the investment community in the evaluation of similarly situated companies.

Since free cash flow is not a measure of performance calculated in accordance with GAAP, it should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP. 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 presents the net revenues, gross profit and segment contribution margin from each of the Company’s business segments, as well as consolidated EBITDA, and adjusted EBITDA.

(a) Segment performance is measured based on segment contribution margin or segment Adjusted EBITDA, reflecting only the direct controllable revenue and operating expenses of the segments, both of which are non-GAAP measurements. As such, management’s measure of profitability for these segments does not include the effect of corporate overhead, described above, depreciation and amortization, other income (net), and other items that we do not consider indicative of our core operating performance.

(b) Corporate expenses consist of the Company’s enterprise shared service cost centers, and include, among other items, Information Technology, Human Resources, Accounting and Finance, Legal, Executive and Customer Service Center functions, as well as Stock-Based Compensation. In order to leverage the Company’s infrastructure, these functions are operated under a centralized management platform, providing support services throughout the organization. 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.

Net revenues consist primarily of the selling price of the merchandise, service or outbound shipping charges, less discounts, returns and credits.

Net revenues increased 9.0% during the three months ended September 26, 2021, compared to the same period of the prior year, due to higher revenues within the Consumer Floral & Gifts and Gourmet Foods & Gift Baskets segments, partially offset by a decline within the BloomNet segment. Adjusted for the impact of the non-comparative period of PersonalizationMall, which was acquired on August 3, 2020, and is included in our Consumer Floral & Gifts segment, consolidated revenues grew 4.3% in comparison to the prior year. This revenue growth was during one of our most challenging year-over-year comparisons, as it followed the 51.5% revenue growth we reported in the first quarter last year, which was accelerated by the growth of e-commerce shopping during the pandemic, and as we faced significant headwinds affecting revenue growth, including increased digital marketing costs, and wide-spread delays in obtaining certain product components. This illustrates the strong growth momentum that we have been building over the past several years, as a result of increased recognition and relevance for our family of brands for everyday gifting and connective occasions, which was complemented by an expanded product assortment, including PersonalizationMall products. We also continued to see growth in our Celebrations Passport loyalty program, which helps drive increased cross-brand purchasing, purchase frequency, retention, and customer life-time value.

The Company fulfilled approximately 3.7 million orders through its e-commerce sales channels (online and telephonic sales) during the three months ended September 26, 2021, an increase of 5.9% compared to the same period of the prior year, while average order value increased 4.1% to $70.95 during the same period.

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 subsequent to its August 3, 2020 acquisition date, derives revenue 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.

Net revenues within this segment increased 12.2% during the three months ended September 26, 2021, compared to the same period of the prior year, reflecting the contributions of PersonalizationMall and the marketing and merchandising investments made in our flagship brand, which are continuing to drive growth and market share gains. This growth came during a period when consumers were distracted by summer activities that re-opened as COVID-19 restrictions were being lifted, validating the strength of the brand and its customer base. Pro-forma segment revenue growth was 3.9%, during the three months ended September 26, 2021, adjusting for the August 3, 2020 acquisition of PersonalizationMall.

BloomNet - revenues in this segment are derived from membership fees, as well as other product and service offerings to florists. Net revenues decreased 5.8% during the three months ended September 26, 2021, compared to the same period of the prior year, reflecting delays in wholesale hard-goods shipments due to supply chain constraints which have delayed receipt of product, and reduced florist-to-florist order volume, partially offset by favorable membership related services.

Gourmet Foods & Gift Baskets – this segment includes the operations of Harry & David, Wolferman’s, Stock Yards, Cheryl’s Cookies, The Popcorn Factory, 1-800-Baskets/DesignPac, and Shari’s Berries. Revenue is derived from the sale of gourmet fruits, cookies, baked gifts, premium chocolates and confections, gourmet popcorn, gift baskets, dipped berries, and prime steaks and chops 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.

Net revenues within this segment increased 8.4% during the three months ended September 26, 2021, compared to the same period of the prior year, due to: (i) favorable e-commerce revenues of 6.3% resulting from increased penetration of “everyday” volume driven by Harry & David, Cheryl’s Cookies, and Shari’s Berries initiatives, as well as (ii) wholesale and retail revenue growth of 23.4%, due to improving demand as COVID-19 restrictions were lifted and foot-traffic in customer locations continued to return to more normalized levels.

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. 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 sent through the Company’s BloomNet network.

Gross profit increased 8.7% during the three months ended September 26, 2021, compared to the same period of the prior year, as a result of the increase in revenues noted above, partially offset by slightly lower gross margin percentage. Gross profit percentage decreased 10 basis points, during the three months ended September 26, 2021, compared to the same period of the prior year, primarily due to lower margins within the Gourmet Foods & Gift Baskets segment, partially offset by higher margins within the Consumer Floral & Gifts and Bloomnet segments. On a pro-forma basis, adjusting for the impact of PersonalizationMall, gross margin percentage was 40.0% during the three months ended September 26, 2021. The lower margins reflect macro-economic headwinds including limited availability and increased costs for labor, as well as widespread delays and rising costs of inbound and outbound transportation. The Company has implemented a number of initiatives designed to mitigate the impact of these issues, including strategic pricing initiatives across our brands, as well as the investments we have made in our operating platform, consisting of pre-building inventory, deploying automation to increase throughput and reduce reliance on seasonal labor. Gross profit by segment follows:

Consumer Floral & Gifts segment - Gross profit increased by 15.9% during the three months ended September 26, 2021, compared to the same period of the prior year, as a result of the revenue increase noted above, as well as higher gross margin percentage, which increased 130 basis points, to 41.9%, due to the impact of the acquisition of PersonalizationMall, which carries higher margins, as well as pricing initiatives, partially offset by higher component and transportation costs. On a pro-forma basis, adjusting for the impact of PersonalizationMall, gross margin percentage was 41.1% during the three months ended September 26, 2021.

BloomNet segment - Gross profit increased by 3.8% during the three months ended September 26, 2021, compared to the same period of the prior year, due to an increase in gross margin percentage of 470 basis points to 50.0%, partially offset by the decrease in revenue noted above. The increase in gross margin percentage was due to revenue mix resulting from growth in high margin services revenue streams, and decreases in lower margin wholesale revenues and florist-to-florist volumes.

Gourmet Foods & Gift Baskets segment - Gross profit decreased by 2.4% during the three months ended September 26, 2021, compared to the same period of the prior year, due to the decrease in gross profit percentage of 390 basis points, to 35.0%, partially offset by the revenue increase noted above. The decline in gross margin percentage was primarily reflecting increased costs for labor and transportation, as well as higher discounts.

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.

Marketing and sales expense increased 17.6% during the three months ended September 26, 2021, compared to the same period of the prior year, due to: (i) the variable components of revenue growth, (ii) the annualization of the impact of the acquisition of PersonalizationMall, which carries both higher product gross margins, as well as higher advertising ratios, and (iii) increased digital marketing and labor costs, reflecting the competitive post COVID-19 environment.

During the three months ended September 26, 2021, the Company added approximately 0.9 million new e-commerce customers, a decrease of 5.3% compared to the same period of the prior year, while purchase activity from existing customers increased 13.1%.

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 increased 15.7% during the three months ended September 26, 2021, compared to the same period of the prior year, 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 costs associated with PersonalizationMall, which was acquired on August 3, 2020.

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.

General and administrative expenses decreased 4.1% during the three months ended September 26, 2021, compared to the same period of the prior year, due to lower transaction and litigation costs, and lower labor costs caused by a smaller increase in the value of the Company’s NQDC Plan assets (offset within Other (income) expenses noted below), combined with the impact of severance paid to terminated PersonalizationMall employees in the prior year. These decreases were partially offset by higher health insurance and facility costs.

Depreciation and amortization expense increased 24.1% during the three months ended September 26, 2021, compared to the same period of the prior year, due to incremental depreciation and customer list amortization associated with PersonalizationMall, and recent short-lived IT related e-commerce/platform enhancements.

Interest expense, net consists primarily of interest expense and amortization of deferred financing costs attributable to the Company’s credit facility (See Note 8 - Debt, in Item 1. for details), net of income earned on the Company’s available cash balances.

Interest expense, net increased 46.9% during the three months ended September 26, 2021, compared to the same period of the prior year, due to the incremental interest expense associated with the New Term Loan, which was used to partially finance the acquisition of PersonalizationMall, and lower interest income on the Company’s outstanding cash balances due to lower interest rates.

Other income, net for the three months ended September 26, 2021, consists primarily of investment gains on the Company’s NQDC Plan assets.

The Company recorded income tax benefit of $8.1 million and $3.7 million, during the three months ended September 26, 2021 and September 27, 2020, respectively. The Company’s effective tax rate for the three months ended September 26, 2021 was 37.9%, compared to 27.7% in the same period of the prior year. The effective rate for the three months ended September 26, 2021 and September 27, 2020 differed from the U.S. federal statutory rate of 21% primarily from excess tax benefit from stock-based compensation during the respective interim tax periods, as well as state income taxes and nondeductible expenses for executive compensation.

The Company's principal sources of liquidity are cash on hand, cash flows generated from operations and borrowings available under the 2020 Credit Agreement (see Note 8 - Debt in Item 1 for details). At September 26, 2021, the Company had working capital of $110.7 million, including cash and cash equivalents of $3.8 million, compared to working capital of $134.1 million, including cash and cash equivalents of $173.6 million, at June 27, 2021.

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 nearly 50% of the Company’s annual revenues, and all of its earnings. However, with the onset of the pandemic of COVID-19, our customers have increasingly turned to our brands and our expanded product offerings to help them connect and express themselves, and our “everyday” gifting product line has seen increased volume. While the continuing impacts of COVID-19 are difficult to predict, the Company expects that its fiscal second quarter will continue to be its largest in terms of revenues and earnings, although the aforementioned increase in the Company’s “everyday” business has and is expected to continue to lessen the seasonality of our business.

During the first quarter of fiscal 2022, the Company did not borrow under its revolving credit agreement. Working capital borrowings typically peak in November, after which time cash generated from operations during the Christmas holiday shopping season are expected to enable the Company to repay such borrowings. In addition, on October 27, 2021, the Company completed its acquisition of Vital Choice, a provider of premium wild-caught seafood and sustainably farmed shellfish, pastured proteins, organic foods, and marine-sourced nutritional supplements. The Company utilized its existing credit facility to fund the $20.0 million purchase (subject to certain working capital and other adjustments).

While we believe that our sources of funding will be sufficient to meet our anticipated operating cash needs for at least the next twelve months, any projections of future cash needs and cash flows are subject to substantial uncertainty. 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.

Net cash used in operating activities of $150.2 million, for the first quarter of fiscal 2022, was primarily attributable to the Company’s net loss during the period, combined with seasonal changes in working capital, including increases in inventory, trade receivables and prepaid and other, partially offset by non-cash charges for depreciation and amortization and stock-based compensation.

Net cash used in investing activities of $11.1 million, for the first quarter of fiscal 2022, was primarily attributable to capital expenditures related to the Company's technology initiatives, as well as manufacturing production and warehousing equipment.

Net cash used in financing activities of $8.5 million, for the first quarter of fiscal 2022, was primarily due to the acquisition of treasury stock.

As disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended June 27, 2021, the discussion and analysis of the Company’s financial condition and results of operations are based upon the consolidated financial statements, which have been prepared in conformity with U.S. generally accepted accounting principles. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. Management bases its estimates and assumptions on historical experience and on various other factors that are believed to be reasonable under the circumstances, and management evaluates its estimates and assumptions on an ongoing basis. Actual results may differ from these estimates under different assumptions or conditions. The Company’s most critical accounting policies relate to goodwill, other intangible assets and income taxes. There have been no significant changes to the assumptions and estimates related to the Company’s critical accounting policies, since June 27, 2021.

See Note 1 - Accounting Policies in Item 1 for details regarding the impact of accounting standards that were recently issued on our consolidated financial statements.

Our disclosure and analysis in this report contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent the Company’s current expectations or beliefs concerning future events and can generally be identified by the use of statements that include words such as “estimate,” “project,” “believe,” “anticipate,” “intend,” “plan,” “foresee,” “likely,” “will,” “goal,” “target” or similar words or phrases. These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of the Company’s control that could cause actual results to differ materially from the results expressed or implied in the forward-looking statements, including:

We cannot guarantee that any forward-looking statement will be realized, although we believe we have been prudent in our plans and assumptions. Achievement of future results is subject to risks, uncertainties and inaccurate assumptions. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could vary materially from past results and those anticipated, estimated or projected. Investors should bear this in mind as they consider forward-looking statements.

We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our Forms 10-Q, 8-K and 10-K reports to the Securities and Exchange Commission. Our Annual Report on Form 10-K filing for the fiscal year ended June 27, 2021, listed various important factors that could cause actual results to differ materially from expected and historic results. We note these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995. Readers can find them in Part I, Item 1A, of that filing under the heading “Cautionary Statements Under the Private Securities Litigation Reform Act of 1995”. We incorporate that section of that Form 10-K in this filing and investors should refer to it. In addition, please refer to additional risk factors in Part II, Item 1A in this Form 10-Q.

The Company’s exposure to market risk for changes in interest rates relates primarily to the Company’s investment of available cash balances and its long-term debt. The Company generally invests its cash and cash equivalents in investment grade corporate and U.S. government securities. Due to the currently low rates of return the Company is receiving on its cash equivalents, the potential for a significant decrease in short-term interest rates is low and, therefore, a further decrease would not have a material impact on the Company’s interest income. Borrowings under the Company’s 2020 Credit Agreement 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 be approximately $0.3 million during the three months ended September 26, 2021, respectively.

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 September 26, 2021. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of September 26, 2021.

There were no changes in our internal control over financial reporting identified in connection with the Company’s evaluation required by Rules 13a-15(d) or 15d-15(d) of the Securities Exchange Act of 1934 during the quarter ended September 26, 2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. To the extent our normal procedures and controls related to our financial close or other reporting processes were adversely impacted by the COVID-19 outbreak, we took appropriate actions and safeguards to reasonably ensure the fair presentation of the financial statements in accordance with GAAP.

On April 1, 2020, the Seller commenced an action against the Company in the Court of Chancery for the State of Delaware, which is captioned Bed Bath & Beyond Inc. v. 1-800-Flowers.com, et ano., C.A. (the “Complaint”), alleging a breach of the Equity Purchase Agreement (the “Purchase Agreement”), dated February 14, 2020, between Seller, PersonalizationMall, the Company and the Purchaser, pursuant to which the Seller agreed to sell to Purchaser, and the Purchaser agreed to purchase from Seller, all of the issued and outstanding membership interests of PersonalizationMall. The action was initiated after the Company requested a reasonable delay in the closing under the Purchase Agreement due to the unprecedented circumstances created by COVID-19. The Complaint requested an order of specific performance to consummate the transaction under the Purchase Agreement plus attorney’s fees and costs in connection with the action. The Company filed its answer to the Complaint on April 17, 2020 and an order governing expedited proceedings was approved on April 9, 2020 that set a trial date for late September 2020. On July 21, 2020, the Company and Seller entered into a settlement agreement, pursuant to which the Company agreed to move forward with its purchase of PersonalizationMall for $245.0 million, subject to certain working capital and other adjustments. The transaction closed on August 3, 2020. In connection with the settlement agreement, the parties executed a Stipulation and Proposed Order of Dismissal, resulting in the voluntary dismissal with prejudice of the litigation relating to the transaction.

In addition, there are various claims, lawsuits, and pending actions against the Company and its subsidiaries incident to the operations of its businesses. It is the opinion of management, after consultation with counsel, that the final resolution of such claims, lawsuits and pending actions will not have a material adverse effect on the Company's consolidated financial position, results of operations or liquidity.

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. On April 22, 2021, the Company’s Board of Directors authorized an increase to its stock repurchase plan of up to $40.0 million. As of September 26, 2021, $23.4 million remained authorized under the plan.

The following table sets forth, for the months indicated, the Company’s purchase of common stock during the first three months of fiscal 2022, which includes the period June 28, 2021 through September 26, 2021:

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	September 26, 2021			June 27, 2021
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	i 3,785		$	i 173,573
Trade receivables, net		i 30,635			i 20,831
Inventories, net		i 282,439			i 153,863
Prepaid and other		i 68,644			i 51,792
Total current assets		i 385,503			i 400,059

Property, plant and equipment, net		i 216,083			i 215,287
Operating lease right-of-use assets		i 114,345			i 86,230
Goodwill		i 208,150			i 208,150
Other intangibles, net		i 138,144			i 139,048
Other assets		i 27,661			i 27,905
Total assets	$	i 1,089,886		$	i 1,076,679

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	i 65,363		$	i 57,434
Accrued expenses		i 172,998			i 178,512
Current maturities of long-term debt		i 25,000			i 20,000
Current portion of long-term operating lease liabilities		i 11,453			i 9,992
Total current liabilities		i 274,814			i 265,938

Long-term debt, net		i 156,811			i 161,512
Long-term operating lease liabilities		i 107,532			i 79,375
Deferred tax liabilities		i 33,421			i 34,162
Other liabilities		i 26,934			i 26,622
Total liabilities		i 599,512			i 567,609

Commitments and contingencies (See Note 13 and Note 14)

Stockholders' equity:
Preferred stock, $.01 par value, 10,000,000 shares authorized, none issued		i -			i -
Class A common stock, $.01 par value, 200,000,000 shares authorized, 56,098,061 and 55,675,661 shares issued at September 26, 2021 and June 27, 2021, respectively		i 561			i 557
Class B common stock, $.01 par value, 200,000,000 shares authorized, 33,433,614 shares issued at September 26, 2021 and June 27, 2021, respectively		i 334			i 334
Additional paid-in capital		i 374,667			i 371,103
Retained earnings		i 272,976			i 286,175
Accumulated other comprehensive loss		( i 318	)		( i 318	)
Treasury stock, at cost, 19,113,867 and 18,825,841 Class A shares at September 26, 2021 and June 27, 2021, respectively, and 5,280,000 Class B shares at September 26, 2021 and June 27, 2021		( i 157,846	)		( i 148,781	)
Total stockholders’ equity		i 490,374			i 509,070
Total liabilities and stockholders’ equity	$	i 1,089,886		$	i 1,076,679

	Three Months Ended
	September 26, 2021			September 27, 2020

Net revenues	$	i 309,373		$	i 283,772
Cost of revenues		i 183,859			i 168,292
Gross profit		i 125,514			i 115,480
Operating expenses:
Marketing and sales		i 94,379			i 80,285
Technology and development		i 13,423			i 11,603
General and administrative		i 27,066			i 28,213
Depreciation and amortization		i 10,970			i 8,840
Total operating expenses		i 145,838			i 128,941
Operating loss		( i 20,324	)		( i 13,461	)
Interest expense, net		i 1,528			i 1,040
Other income, net		i 596			i 999
Loss before income taxes		( i 21,256	)		( i 13,502	)
Income tax benefit		( i 8,057	)		( i 3,740	)
Net loss and comprehensive net loss	$	( i 13,199	)	$	( i 9,762	)

Basic and diluted net loss per common share	$	( i 0.20	)	$	( i 0.15	)

Basic and diluted weighted average shares used in the calculation of net loss per common share		i 65,062			i 64,320

	Three months ended
	September 26, 2021			September 27, 2020

Operating activities:
Net loss	$	( i 13,199	)	$	( i 9,762	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		i 10,970			i 8,840
Amortization of deferred financing costs		i 299			i 156
Deferred income taxes		( i 741	)		( i 603	)
Bad debt expense		( i 96	)		( i 280	)
Stock-based compensation		i 3,005			i 2,393
Other non-cash items		i 260			i 261
Changes in operating items:
Trade receivables		( i 9,708	)		( i 15,154	)
Inventories		( i 128,577	)		( i 77,854	)
Prepaid and other		( i 16,852	)		( i 10,374	)
Accounts payable and accrued expenses		i 2,415			i 7,046
Other assets and liabilities		i 2,060			i 4,623
Net cash used in operating activities		( i 150,164	)		( i 90,708	)

Investing activities:
Acquisitions, net of cash acquired		i -			( i 250,943	)
Capital expenditures, net of non-cash expenditures		( i 11,122	)		( i 6,958	)
Purchase of equity investments		i -			( i 325	)
Net cash used in investing activities		( i 11,122	)		( i 258,226	)

Financing activities:
Acquisition of treasury stock		( i 9,065	)		( i 1,088	)
Proceeds from exercise of employee stock options		i 563			i 221
Proceeds from bank borrowings		i -			i 220,000
Repayment of notes payable and bank borrowings		i -			( i 97,500	)
Debt issuance cost		i -			( i 2,193	)
Net cash (used in) provided by financing activities		( i 8,502	)		i 119,440

Net change in cash and cash equivalents		( i 169,788	)		( i 229,494	)
Cash and cash equivalents:
Beginning of period		i 173,573			i 240,506
End of period	$	i 3,785		$	i 11,012

●	E-commerce revenues - consumer products sold through our online and telephonic channels. Revenue is recognized when control of the merchandise is transferred to the customer, which generally occurs upon shipment. Payment is typically due prior to the date of shipment.
●	Retail revenues - consumer products sold through our retail stores. Revenue is recognized when control of the goods is transferred to the customer, at the point of sale, at which time payment is received.
●	Wholesale revenues - products sold to our wholesale customers for subsequent resale. Revenue is recognized when control of the goods is transferred to the customer, in accordance with the terms of the applicable agreement. Payment terms are typically 30 days from the date control over the product is transferred to the customer.
●	BloomNet Services - membership fees as well as other service offerings to florists. Membership and other subscription-based fees are recognized monthly as earned. Services revenues related to orders sent through the floral network are variable, based on either the number of orders or the value of orders, and are recognized in the period in which the orders are delivered. The contracts within BloomNet Services are typically month-to-month and as a result no consideration allocation is necessary across multiple reporting periods. Payment is typically due less than 30 days from the date the services were performed.

	Three Months Ended
	September 26, 2021		September 27, 2020
	(in thousands)
Stock options	$	i -	$	i 9
Restricted stock		i 3,005		i 2,384
Total		i 3,005		i 2,393
Deferred income tax benefit		i 741		i 603
Stock-based compensation expense, net	$	i 2,264	$	i 1,790

1 800 Flowers Com Inc. – ‘10-Q’ for 9/26/21

On: Friday, 11/5/21, at 12:36pm ET · For: 9/26/21 · Accession #: 1437749-21-25463 · File #: 0-26841

Previous ‘10-Q’: ‘10-Q’ on 5/7/21 for 3/28/21 · Next: ‘10-Q’ on 2/4/22 for 12/26/21 · Latest: ‘10-Q’ on 2/8/24 for 12/31/23 · 1 Reference: To: 1-800-FLOWERS.COM, Inc. – ‘10-K’ on 9/10/21 for 6/27/21

Quarterly Report — Form 10-Q

Filing Table of Contents

‘10-Q’ — Quarterly Report

Document Table of Contents

This is an HTML Document rendered as filed. [ Alternative Formats ]

Dates Referenced Herein and Documents Incorporated by Reference

1 Previous Filing that this Filing References

		Page
Part I.	Financial Information
Item 1.	Condensed Consolidated Financial Statements		1
	Condensed Consolidated Balance Sheets – September 26, 2021 (Unaudited) and June 27, 2021		1
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) – Three Months Ended September 26, 2021 and September 27, 2020		2
	Condensed Consolidated Statements of Stockholders' Equity (Unaudited) – Three Months Ended September 26, 2021 and September 27, 2020		3
	Condensed Consolidated Statements of Cash Flows (Unaudited) – Three Months Ended September 26, 2021 and September 27, 2020		4
	Notes to Condensed Consolidated Financial Statements (Unaudited)		5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		29
Item 4.	Controls and Procedures		29

Part II.	Other Information
Item 1.	Legal Proceedings		30
Item 1A.	Risk Factors		30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		30
Item 3.	Defaults upon Senior Securities		30
Item 4.	Mine Safety Disclosures		30
Item 5.	Other Information		30
Item 6.	Exhibits		31

Signatures			32

	Shares			Weighted Average Grant Date Fair Value
Non-vested at June 27, 2021		i 1,638,806		$	i 18.12
Granted		i 7,500		$	i 31.76
Vested		( i 172,500	)	$	i 11.90
Forfeited		( i 6,604	)	$	i 21.89
Non-vested at September 26, 2021		i 1,467,202		$	i 18.90

	Three months ended September 27, 2020
	(in thousands)
Net revenues	$	i 299,765
Net loss	$	( i 4,171	)

	September 26, 2021		June 27, 2021
	(in thousands)
Finished goods	$	i 163,834	$	i 72,267
Work-in-process		i 25,981		i 19,058
Raw materials		i 92,624		i 62,538
Total inventory	$	i 282,439	$	i 153,863

Level 1		Valuations based on quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.
Level 2		Valuations based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.
Level 3		Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

	Three Months Ended
Net Revenues:	September 26, 2021			September 27, 2020
Segment Net Revenues:	(in thousands)
Consumer Floral & Gifts	$	i 181,229		$	i 161,546
BloomNet		i 30,834			i 32,738
Gourmet Food & Gift Baskets		i 97,482			i 89,929
Corporate		i 45			i 106
Intercompany eliminations		( i 217	)		( i 547	)
Total net revenues	$	i 309,373		$	i 283,772

	Three Months Ended
Operating Income (Loss):	September 26, 2021			September 27, 2020
	(in thousands)
Segment Contribution Margin:
Consumer Floral & Gifts	$	i 19,190		$	i 19,236
BloomNet		i 10,860			i 10,421
Gourmet Food & Gift Baskets		( i 7,673	)		( i 2,581	)
Segment Contribution Margin Subtotal		i 22,377			i 27,076
Corporate (a)		( i 31,731	)		( i 31,697	)
Depreciation and amortization		( i 10,970	)		( i 8,840	)
Operating loss	$	( i 20,324	)	$	( i 13,461	)

	Three Months Ended
	September 26, 2021
	(in thousands)
Lease costs:
Operating lease costs	$	i 3,963
Variable lease costs		i 5,130
Short-term lease cost		i 1,581
Sublease income		( i 182	)
Total lease costs	$	i 10,492

	September 26, 2021
	(in thousands)
Weighted-average remaining lease term - operating leases (in years)		i 9.2
Weighted-discount rate - operating leases		i 3.9	%

Remainder of 2022	$	i 10,972
2023		i 16,469
2024		i 17,758
2025		i 15,459
2026		i 14,284
Thereafter		i 68,870
Total Future Minimum Lease Payments		i 143,812
Less Imputed Remaining Interest		i 24,827
Total	$	i 118,985

	September 26, 2021			June 27, 2021
	(in thousands)
Land	$	i 30,284		$	i 30,284
Orchards in production and land improvements		i 18,829			i 18,829
Building and building improvements		i 62,254			i 62,232
Leasehold improvements		i 24,712			i 26,451
Production equipment		i 83,373			i 82,526
Furniture and fixtures		i 8,277			i 8,860
Computer and telecommunication equipment		i 55,330			i 55,841
Software		i 184,072			i 177,844
Capital projects in progress - orchards		i 20,400			i 18,090
Property, plant and equipment, gross		i 487,531			i 480,957
Accumulated depreciation and amortization		( i 271,448	)		( i 265,670	)
Property, plant and equipment, net	$	i 216,083		$	i 215,287

	●	Increased operating costs - we are seeing increased costs associated with the changes we have made, and continue to make, to our manufacturing, warehouse and distribution facilities to provide for the safety and wellbeing of our associates, including: required social distancing, enhanced facility cleaning and sanitizing schedules, and staggered production shifts, as well as overall wage rate increases and labor supply shortages.

	●	Supply chain constraints – the nationwide increase in e-commerce volume has also resulted in third-party carrier capacity constraints, and higher delivery costs, while ocean transport capacity shortages, caused by the ongoing global recovery from the pandemic, have contributed to supply chain shortages and increased costs.

	Three Months Ended
	September 26, 2021			Transaction Costs		As Adjusted (non-GAAP) September 26, 2021			September 27, 2020			PersonalizationMall Litigation & Transaction Costs		Harry & David Store Closure Costs			As Adjusted (non-GAAP) September 27, 2020			% Change
Net revenues:
Consumer Floral & Gifts	$	181,229		$	-	$	181,229		$	161,546		$	-	$	-		$	161,546			12.2	%
BloomNet		30,834					30,834			32,738								32,738			-5.8	%
Gourmet Foods & Gift Baskets		97,482					97,482			89,929								89,929			8.4	%
Corporate		45					45			106								106			-57.5	%
Intercompany eliminations		(217	)				(217	)		(547	)							(547	)		60.3	%
Total net revenues	$	309,373		$	-	$	309,373		$	283,772		$	-	$	-		$	283,772			9.0	%

Gross profit:
Consumer Floral & Gifts	$	76,003				$	76,003		$	65,586							$	65,586			15.9	%
		41.9	%				41.9	%		40.6	%							40.6	%

BloomNet		15,409					15,409			14,838								14,838			3.8	%
		50.0	%				50.0	%		45.3	%							45.3	%

Gourmet Foods & Gift Baskets		34,163					34,163			35,007								35,007			-2.4	%
		35.0	%				35.0	%		38.9	%							38.9	%

Corporate		(61	)				(61	)		49								49			-224.5	%
		-135.6	%				-135.6	%		46.2	%							46.2	%

Total gross profit	$	125,514		$	-	$	125,514		$	115,480		$	-	$	-		$	115,480			8.7	%
		40.6	%		-		40.6	%		40.7	%		-		-			40.7	%

EBITDA (non-GAAP):
Segment Contribution Margin (non-GAAP) (a):
Consumer Floral & Gifts	$	19,190		$	-	$	19,190		$	19,236		$	-	$	-		$	19,236			-0.2	%
BloomNet		10,860					10,860			10,421								10,421			4.2	%
Gourmet Foods & Gift Baskets		(7,673	)				(7,673	)		(2,581	)				(405	)		(2,986	)		-157.0	%
Segment Contribution Margin Subtotal		22,377			-		22,377			27,076			-		(405	)		26,671			-16.1	%
Corporate (b)		(31,731	)		456		(31,275	)		(31,697	)		4,890					(26,807	)		-16.7	%
EBITDA (non-GAAP)		(9,354	)		456		(8,898	)		(4,621	)		4,890		(405	)		(136	)		-6442.6	%
Add: Stock-based compensation		3,005					3,005			2,393								2,393			25.6	%
Add: Compensation charge related to NQ Plan Investment Appreciation		567					567			980								980			-42.1	%
Adjusted EBITDA (non-GAAP)	$	(5,782	)	$	456	$	(5,326	)	$	(1,248	)	$	4,890	$	(405	)	$	3,237			-264.5	%

Reconciliation of net loss to adjusted net loss (non-GAAP):	Three Months Ended
	September 26, 2021			September 27, 2020

Net loss	$	(13,199	)	$	(9,762	)
Adjustments to reconcile net loss to adjusted net loss (non-GAAP)
Add: Transaction costs		456			4,890
Deduct: Harry & David store closure cost adjustment		-			(405	)
Deduct: Income tax effect on adjustments		(173	)		(1,242	)
Adjusted net loss (non-GAAP)	$	(12,916	)	$	(6,519	)

Basic and diluted net loss per common share	$	(0.20	)	$	(0.15	)

Basic and diluted adjusted net loss per common share (non-GAAP)	$	(0.20	)	$	(0.10	)

Weighted average shares used in the calculation of net loss and adjusted net loss per common share		65,062			64,320

●	Long-term debt obligations - payments due under the Company's 2020 Credit Agreement (see Note 8 - Debt in Item 1 for details and payments due by period).
●	Operating lease obligations – payments due under the Company’s operating leases (see Note 13 - Leases in Item 1 for details and payments due by period for the long-term operating leases).
●	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.

	Payments due by period
	(in thousands)
	Remaining Fiscal 2022		Fiscal 2023		Fiscal 2024		Fiscal 2025		Fiscal 2026		Thereafter		Total
Purchase commitments	$	175,121	$	8,158	$	5,941	$	3,750	$	2,000	$	-	$	194,970

	o	to achieve revenue and profitability;
	o	to leverage its operating platform and reduce operating expenses;
	o	to manage the increased seasonality of its business;
	o	to cost effectively acquire and retain customers;
	o	to effectively integrate and grow acquired companies;
	o	to reduce working capital requirements and capital expenditures;
	o	to compete against existing and new competitors;
	o	to manage expenses associated with sales and marketing and necessary general and administrative and technology investments; and
	o	to cost effectively manage inventories;

●	general consumer sentiment and economic conditions that may affect levels of discretionary customer purchases of the Company’s products; and
●	the impact of COVID-19 on our business and financial statements.

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 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

Total		288,026	$	31.44		288,026

31.1		Certification of the principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
31.2		Certification of the principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
32.1		Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *
101.INS		Inline XBRL Instance Document
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Document
101.PRE		Inline XBRL Taxonomy Definition Presentation Document
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

	1-800-FLOWERS.COM, Inc. (Registrant)
Date: November 5, 2021	/s/ *Christopher G. McCann* Christopher G. McCann Chief Executive Officer, Director and President (Principal Executive Officer)

Date: November 5, 2021	/s/ *William E. Shea* William E. Shea Senior Vice President, Treasurer and Chief Financial Officer (Principal Financial and Accounting Officer)

1 800 Flowers Com Inc. – ‘10-Q’ for 9/26/21

On: Friday, 11/5/21, at 12:36pm ET · For: 9/26/21 · Accession #: 1437749-21-25463 · File #: 0-26841

Previous ‘10-Q’: ‘10-Q’ on 5/7/21 for 3/28/21 · Next: ‘10-Q’ on 2/4/22 for 12/26/21 · Latest: ‘10-Q’ on 2/8/24 for 12/31/23 · 1 Reference: To: 1-800-FLOWERS.COM, Inc. – ‘10-K’ on 9/10/21 for 6/27/21

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‘10-Q’ — Quarterly ReportDocument Table of Contents

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Quarterly Report — Form 10-Q

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‘10-Q’ — Quarterly Report

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This ‘10-Q’ Filing	Date	Other Filings

	5/31/24
	7/3/22
Filed on:	11/5/21	4
	10/29/21
	10/27/21
For Period end:	9/26/21
	6/28/21
	6/27/21	10-K
	4/22/21	3, 4, 8-K
	3/28/21	10-Q
	12/31/20	4
	9/27/20	10-Q
	8/20/20	8-K
	8/3/20	8-K, 8-K/A
	7/21/20
	7/20/20	8-K
	6/28/20	10-K, 5
	4/17/20
	4/9/20
	4/1/20	8-K
	3/27/20
	2/29/20
	2/14/20	8-K, SC 13G
	9/29/19	10-Q
	5/31/19	8-K
	12/23/16
		List all Filings