Shares of 1-800-Flowers.com (FLWS, Financial) dropped 12.1% after the company released a disappointing quarterly earnings report.
Revenue fell 9.5% to $360.9 million, missing the consensus estimate of $374.4 million. Despite a 130 basis point improvement in gross margin to 38.4%, driven by lower freight and commodity costs, the company's adjusted EBITDA loss increased from $6.6 million to $8.8 million.
The adjusted loss per share widened to $0.34, compared to a $0.28 loss per share a year ago, and was worse than the expected loss of $0.26 per share.
CEO Jim McCann noted challenges with discretionary consumer spending but highlighted full-year EBITDA growth, improvements in the gifting platform, and expansion into new categories, including the acquisition of Scharffen Berger Chocolate Maker.
The company forecasts continued challenges, expecting flat to low single-digit revenue growth and adjusted EBITDA of $85 million-$95 million in fiscal 2024, compared to $93.1 million in fiscal 2024.
1-800-Flowers.com (FLWS, Financial) currently trades at $7.91. The company exhibits a GF Score of 84, reflecting a strong overall performance. However, there are several warning signs, including a severe decline in gross margin and operating margin over the past five years, with the former contracting at an average rate of 2.8% annually.
Despite the revenue decline, FLWS maintains a solid Altman Z-Score of 3.05, indicating low bankruptcy risk. The company's Piotroski F-Score is 7, suggesting a very healthy situation. Moreover, the Beneish M-Score of -3.48 indicates that the company is unlikely to be a manipulator.
The GF Value for FLWS is estimated at $9.02, categorizing it as "Modestly Undervalued." Investors can view the detailed GF Value analysis here. The company's price-to-book ratio stands at 1.05, and its PEG ratio is currently zero due to the lack of positive earnings growth estimates.
Institutional ownership of FLWS is 39.34%, with a Beta of 1.34, indicating higher volatility compared to the market. The company faces a significant short interest of 8.98% of the float, suggesting a bearish sentiment among investors.
In conclusion, 1-800-Flowers.com (FLWS, Financial) faces considerable challenges with declining revenue and widening losses. While there are positive signs of financial health, the company's valuation and future growth outlook remain areas of concern.
