Q2 2026 Earnings Call Summary

1Key Financial Results and Metrics

Revenue: Consolidated revenue decreased by 9.5% year-over-year, with a significant 22.7% decline in the Consumer Floral and Gift segment and a 3.8% decline in the BloomNet segment.

Gross Margin: Declined by 120 basis points to 42.1%, impacted by lower fixed cost absorption, higher commodity costs, and tariffs.

Operating Expenses: Decreased by $23.4 million to $221.1 million, primarily due to lower marketing and labor costs.

Adjusted EBITDA: Reported at $98.1 million, down from $116.3 million in the prior year.

Cash Position: Net cash was $42.3 million, with a cash balance of $193.3 million and inventory at $148.9 million.

2Strategic Updates and Business Highlights

Operational Improvements: The company successfully addressed previous order management system issues, leading to smoother operations during the holiday season.

Organizational Restructuring: Transitioned to a function-based operating structure to enhance efficiency, reduce costs, and improve collaboration.

Leadership Changes: Welcomed Alex Selikowski as Chief Information Officer to spearhead technology strategy and support AI initiatives.

Marketing Strategy: Focused on improving marketing contribution margin and efficiency, resulting in a better ad spend to sales ratio despite a decline in direct traffic.

Retail Strategy: Evaluated pop-up stores and decided against further expansion due to unattractive returns; instead, will explore a year-round store concept.

3Forward Guidance and Outlook

Revenue Expectations: Anticipate a low double-digit decline in revenue for the remainder of 2026, influenced by ongoing marketing strategy adjustments and search engine changes.

Adjusted EBITDA: Expected to decline slightly year-over-year, but normalized adjusted EBITDA is projected to increase, excluding anticipated consultant costs.

Cost Savings: Targeting approximately $50 million in total cost savings over fiscal 2026 and 2027, with $15 million already achieved.

4Bad News, Challenges, or Points of Concern

Declining Metrics: Significant declines in revenue across key segments, particularly in Consumer Floral and Gifts.

Traffic Issues: A greater-than-expected decline in direct traffic due to changes in search engine results and increased competition for paid placements.

Commodity Costs: Continued pressure from elevated commodity prices, particularly cocoa, though some other commodities are stabilizing.

Market Conditions: Consumer confidence remains weak, particularly affecting lower-income households, which could impact sales.

5Notable Q&A Insights

Consumer Behavior: Passport members performed better than non-members, but feedback indicates the loyalty program needs improvement.

Segment Performance: The food business outperformed floral due to more disciplined marketing and a stronger B2B presence.

Valentine's Day Strategy: Adjustments are being made in marketing and merchandising to address the challenges posed by Valentine's Day falling on a Saturday.

Consultant Costs: Consultant fees are expected to continue through the fiscal year, impacting adjusted profit numbers.

Future Growth: The company is focused on stabilizing operations and improving efficiencies before considering acquisitions or further capital investments.