Good morning, and welcome to our fiscal 2027 first quarter earnings call. Joining us on today's call are Adolfo Villagomez, Chief Executive Officer, and James Langrock, Chief Financial Officer.

Before we begin, I'd like to remind you that some of the statements we make on today's call are covered by the safe harbor disclaimer contained in our press release and public documents. During this call, we will make forward-looking statements with predictions, projections, and other statements about future events.

These statements are based on current expectations and assumptions that are subject to risks and uncertainties, including those contained in our press release and public filings with the Securities and Exchange Commission. The company disclaims any obligation to update any of the forward-looking statements that may be made or discussed during this call.

Additionally, we will discuss certain supplemental financial measures that were not prepared in accordance with GAAP. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures can be found in the tables of our earnings release.

Now, I'll turn the call over to Adolfo.

Thank you, Andy, and good morning, everyone. As we begin the second year of our transformation, I would like to provide some perspective on the progress we have made, the encouraging trends we are beginning to see across our business, and our priorities as we move through fiscal 2027.

During fiscal 2026, we took important steps to strengthen our foundation, simplify our business, and sharpen our focus on our primary websites: 1-800-Flowers.com and HarryandDavid.com. These websites represent our greatest opportunity to improve our overall performance and are central to our strategy for returning the company to sustainable, profitable growth.

During the fiscal first quarter, we began to see early improvement in net order demand across our primary websites. Demand on these websites declined at a lower rate versus the same period last year, and in October, the decline moderated further to low single digits compared to double digits last year, which is encouraging.

An important part of our strategy has been shifting our focus from simply driving revenue to driving profitable growth. We are becoming more disciplined in where we invest our time and resources, prioritizing the products, customers, and initiatives that can make the greatest contribution to our financial performance.

We are organizing our top-line efforts around four functional areas: merchandising, marketing, digital, and new channels, including third-party marketplaces. In Q1, we began to see early impact from our merchandising and new channels work.

However, our marketing and digital initiatives were still being built or launched during the quarter. As we move through Q2, we are cautiously optimistic that these initiatives will begin to contribute, with benefits building over time.

Today, I will highlight some of the actions contributing to the improving trends mentioned above, discuss how we are leveraging the strength of our primary websites to support the broader portfolio, and provide an update on our marketing and operational initiatives. James will then review our financial performance, the changes to our reporting structure, and our outlook for fiscal 2027.

Let me begin with the progress we are seeing across our primary websites. Starting with 1-800-Flowers.com, we continue to make progress in improving the customer experience, strengthening product availability, and offering customers a more compelling assortment of floral products.

Two initiatives are beginning to contribute to the improvement we are seeing. The first is our direct-ship backup program, which supplements our nationwide florist network with direct-ship fulfillment capabilities for our most popular floral arrangements.

This program is designed to improve product availability and fulfillment coverage, making it easier for customers to purchase the arrangements they want regardless of their ship-to location. We launched the first phase in September and expect to expand the program during November.

Once fully implemented, we expect our top 10 floral products to have nearly complete market coverage. The second initiative is our assortment and pricing strategy, where we are expanding the range of options and price points across our best-performing floral arrangements.

This provides customers with greater choice while helping improve merchandising productivity and average order value. Early results have been encouraging, including higher average selling prices for products included in the initial rollout.

Finding the right assortment, price points, and value proposition for 1-800-Flowers.com required deliberate promotional and margin investment in Q1, which contributed to gross margin pressure. We are pleased with what we are learning about the products and offers that provide the strongest value for customers, and as those learnings materialize in our go-forward value proposition, the gross margin pressure should decline.

Together, these initiatives are helping improve the customer experience and contributing to the better demand trends we are seeing in our floral business. We're also preparing to launch a new AI-powered shopping agent on 1-800-Flowers.com in partnership with Google.

Expected to launch this month, this capability will provide customers with a more personalized shopping experience, helping them discover and select the right gifts based on the recipient and occasion. We believe this is another important step in making gifting easier and improving the overall customer experience.

Turning to HarryandDavid.com, we're also beginning to see encouraging improvement in our direct-to-consumer business. Over the past several quarters, we have taken steps to simplify and strengthen our product assortment, removing underperforming items and introducing more productive products from across our broader portfolio.

We're also expanding into adjacent food and gifting categories, including meals, entertaining, pantry items, and desserts. These changes provide customers with more reasons to shop HarryandDavid.com beyond its traditional assortment, while improving merchandising productivity and the overall customer experience.

Early customer response has been encouraging, and we believe these initiatives are contributing to the improving trends in the consumer business. We're also improving the digital shopping experience, including the launch of a new Harry & David mobile app.

The app is designed to make gifting easier by allowing customers to manage their contacts, personalize gift messages, simplify checkout, and track deliveries in one place. Over time, we believe the app will help drive greater customer engagement and repeat purchases, while improving marketing efficiency by enabling more direct, personalized communication through features such as gifting reminders, reducing our reliance on paid advertising to drive repeat purchases.

While we're encouraged by the progress in HarryandDavid.com consumer business, our overall performance was impacted by lower B2B revenue. To support our efforts to strengthen the B2B business, we recently began implementing a new bulk ordering system that significantly improves how we process and manage large customer orders.

We have completed the first phase of the rollout and are now moving into the second phase, which will expand the system's capabilities and improve order processing efficiency. While still early, we have seen a meaningful process improvement since implementation began.

Beyond improving the performance of our primary websites, another important part of our strategy is leveraging their scale, traffic, and digital capabilities to support our broader portfolio. We see an opportunity to simplify how customers discover and shop our broader assortment by bringing select products from our other websites onto our primary websites as complementary product categories.

We recently advanced this strategy by integrating Simply Chocolate and The Popcorn Factory into HarryandDavid.com. This allows us to introduce these products to a larger customer base, create additional cross-selling opportunities, and reduce complexity across the portfolio.

Over time, we believe this approach can help improve the performance of our broader portfolio while creating a more convenient shopping experience for our customers. Another important priority is improving how we engage with customers and increasing the effectiveness of our marketing investments.

Toward the end of the first quarter, we began investing in modernizing our marketing technology capabilities, including the implementation of our customer data platform and continued work to improve the digital customer experience. These efforts are designed to help us better understand our customers, deliver more relevant communications, and make shopping easier.

Our objective is to improve customer engagement, increase purchase frequency, and generate stronger returns on our marketing investments. We believe these investments are an important part of building a stronger foundation for long-term growth and improving the productivity of our marketing efforts.

As I mentioned before, these initiatives were still in the build and launch phase during Q1, we have not yet seen their full benefit in our results. As we move through Q2, we are cautiously optimistic that we will begin to see early contributions, with impact building over time.

Alongside our efforts to improve revenue performance, we remain focused on simplifying our operations, improving productivity, and reducing structural costs. We have several initiatives underway, including network optimization and Lean Six Sigma, which we believe will help create a more efficient operating model and support improved profitability over time.

James will provide additional details on these efforts in a few moments. We also continue to make progress in simplifying our portfolio and strengthening our financial flexibility.

As previously announced, we completed the sale of PersonalizationMall.com and Things Remembered during the fiscal second quarter. This transaction represents an important milestone in our strategy to sharpen our focus on our core businesses, strengthen our financial position, and provide additional capital to invest in initiatives that improve performance.

As we look ahead, our priorities remain clear: we remain focused on improving the performance of our primary websites, optimizing our broader portfolio, increasing marketing effectiveness, and simplifying our operations. While there is still considerable work ahead, we are encouraged by the early progress we are seeing and remain focused on executing our strategy as we enter the important holiday season.

With that, I will turn the call over to James.

Thank you, Adolfo, and good morning, everyone. As Adolfo discussed, we are beginning to see encouraging signs of improvement in net order demand across our primary websites.

Although our first quarter financial results continue to reflect the challenges we have been addressing throughout our transformation, the improving demand trends reinforce our confidence in the priorities we established last year. Before reviewing this quarter's financial performance, I'd like to highlight several changes to our financial reporting that took effect in the first quarter of fiscal 2027.

During fiscal 2026, we made significant changes to how we manage and evaluate our business. We moved to a functional operating structure with a greater emphasis on managing the business across channels and functions, rather than by brands.

To better align our external financial reporting with how we are managing the business internally, we have revised our reportable segment structure. Beginning this quarter, we will report results across E-commerce, Wholesale and Other, and BloomNet.

We believe this new structure better reflects how we operate today and provides investors with greater visibility into the performance of our business. To provide a better understanding of how these segments are defined, the E-commerce segment includes sales made directly to customers through our own websites, third-party marketplaces, and our B2B operations.

The Wholesale and Other segment primarily includes sales of products to retailers and other distribution partners. The BloomNet segment includes sales of products and services to florists in our member network.

Beginning this quarter, we are providing a breakdown of net order demand trends across our own websites and apps, separating our primary websites from our other websites. Our primary websites include 1-800-Flowers.com and HarryandDavid.com, while our other websites include the remaining websites in our portfolio.

This includes consumer and business orders placed directly through our websites and mobile apps. It excludes third-party marketplace orders and B2B orders placed through our sales representatives.

This additional disclosure is highly relevant given our strategic focus on strengthening our primary websites to drive improvement in our overall performance. We believe it will provide investors with a clearer understanding of the underlying demand trends across our portfolio and help them evaluate the progress we are making as our transformation continues.

Turning to our first quarter results, all financial results discussed today exclude PersonalizationMall.com and Things Remembered, which are now reflected as discontinued operations. Total consolidated revenue was $171.4 million compared with $192.7 million in the prior-year period, representing a decline of 11.1%.

As Adolfo highlighted, we began to see encouraging improvement in net order demand across our primary websites, 1-800-Flowers.com and HarryandDavid.com, with the pace of decline moderating throughout the quarter and continuing into October. E-commerce segment revenues declined 12.3% to $128.4 million, reflecting continued weakness across our other websites and B2B operations, partially offset by improving demand trends on our primary websites, where we have concentrated our resources and investments.

Net order demand on our primary websites declined 8% year-over-year in the first quarter of fiscal 2027, compared with a 12.6% year-over-year decline in the first quarter of fiscal 2026. Meanwhile, net order demand across our other websites declined 36%, although we saw sequential improvement in these trends in the latter part of the quarter and into October.

We continue to evaluate these businesses based on their contribution to the organization and long-term potential. This includes opportunities to integrate select products into our primary websites, operate them independently, or pursue other options that create the greatest value.

Turning to our other segments, Wholesale and Other revenues decreased 10.7% to $20.5 million, while BloomNet revenues declined 3.6% to $22.3 million, both compared with the prior-year period. Our first quarter results were also affected by a fire at our Hebron, Ohio facility, which disrupted operations and temporarily limited our ability to fulfill and sell certain products.

That impacted revenues by approximately 1%. Turning to gross margin, first quarter gross margin decreased 120 basis points to 34.1% compared with 35.3% in the prior-year period.

The decline reflected lower sales volume, higher fuel surcharges, and the impact of testing different promotional offers on 1-800-Flowers.com, partially offset by cost reduction and operational efficiency initiatives. Moving to operating expenses, excluding nonrecurring charges and the impact of the company's nonqualified deferred compensation plan in both periods, operating expenses decreased $10.6 million as compared with the prior year to $102.3 million.

This was primarily driven by our efforts to improve the efficiency of our marketing investments and our cost savings initiatives. Our first quarter adjusted EBITDA loss from continuing operations was $31.9 million, compared with an adjusted EBITDA loss from continuing operations of $31.7 million in the prior year.

Despite the decline in consolidated revenue, adjusted EBITDA was relatively flat year-over-year, reflecting our continued focus on cost discipline and prioritizing activities that make the greatest contribution to profitability. At the same time, we continue investing in initiatives designed to improve performance over time, including enhancements to our marketing technology capabilities.

These investments are reflected in our first quarter results, and we expect to see early benefits beginning in the second quarter, with their contribution growing over time. Turning to our cost savings and operational efficiency initiatives, we continue to make progress on the opportunities we identified as part of our transformation strategy.

A network optimization initiative is underway, with an initial focus on evaluating opportunities to reduce structural costs, improve the efficiency of our fulfillment and distribution network, and maximize returns on invested capital. While this work remains in its early stages, we believe there are meaningful opportunities to improve how we utilize our existing infrastructure and create a more efficient operating model.

Separately, we have launched our Lean Six Sigma initiative, with a focus on identifying and implementing productivity improvements. The objective is to capture efficiencies and cost savings while establishing a stronger foundation for continuous improvement across our operations.

Together, these initiatives are an important part of our efforts to improve profitability and build a more efficient and flexible operating model. Turning to our balance sheet, at quarter-end, our net debt was $263.6 million, compared with $259.3 million a year ago.

Our cash balance was $9.4 million. In terms of our debt, we had $133 million in term debt and $140 million outstanding under our revolving credit facility in preparation for the upcoming holiday season.

We expect borrowings under the revolver to be fully repaid during the fiscal second quarter. As we discussed during our fourth quarter earnings call, we initiated a process to evaluate capital raising alternatives and other opportunities to enhance our financial flexibility.

An important development in that process was the completion of the sale of PersonalizationMall.com and Things Remembered during the fiscal second quarter. The transaction had an approximate value of $45 million, represents an important step in simplifying our portfolio, and sharpening our focus on our core businesses.

It also provides additional financial flexibility to reduce debt and support investments in our strategic priorities. Approximately half of the proceeds, or $22 million, were used to pay down our term loan, with the other half available to fund our strategic initiatives.

As a result, subsequent to the end of the quarter, we reduced our outstanding term loan balance to $111.3 million. We have also entered into agreement to sell our Jacksonville, Florida facility for approximately $10 million, subject to customary closing conditions.

This transaction represents another step in our ongoing efforts to optimize our capital structure, reduce debt, and strengthen our financial flexibility. We remain committed to maintaining financial discipline and allocating capital to the initiatives we believe offer the greatest potential to improve operating performance and create long-term shareholder value.

Turning now to our outlook, as we have outlined, we are seeing encouraging early signs of progress on our 1-800-Flowers.com and HarryandDavid.com websites, including a moderation in the pace of net order demand declines. At the same time, our other websites continue to face significant pressure.

While there is more work ahead, we remain focused on turning these early improvements into sustained revenue growth and improved profitability. The completed sale of PersonalizationMall.com and Things Remembered provides additional financial flexibility to make targeted investments in our business, particularly in our primary websites, while maintaining discipline around spending and capital allocation.

Our updated outlook reflects the impact of these divestitures as well as our current expectations for the underlying business. For fiscal 2027, we now expect total revenues to decline between 2% and 5%, and adjusted EBITDA to be in the range of approximately $10 million to $15 million.

With that, we are ready to begin the Q&A session. Operator, please provide the instructions.

Hi, thank you. It's Jacob Muchow on for Michael this morning.

My first question comes regarding the wholesale business. The Wholesale and Other business demonstrated improving profitability despite continued revenue pressure.

Could you discuss what's changing in the underlying economics of that business and whether there are opportunities to apply similar operating practices to other business segments?

This is James. With the Wholesale and Other, as you mentioned revenue was down, but profitability was up.

What that is, a lot of that has to do just with the customer mix and the timing of shipments to the various customers. That was the big driver in the improvement, and it was really more around customer and product mix.

Gotcha. Then with respect to the personalization divestiture and proposed Jacksonville facility sale, how are you thinking about the current portfolio?

Are there additional opportunities for asset monetization or portfolio right-sizing?

As we mentioned, obviously the PersonalizationMall sale as well as the Jacksonville pending sale, that was part of the process. We are still working with Guggenheim evaluating our overall structure.

We continue to look at non-strategic asset sales or other capital raise opportunities.

Gotcha. Then just one last question.

If you could just briefly discuss some of the differences in spending behavior between the higher- and lower-income consumers. Just curious what you're seeing in the consumer environment today, and how you're managing that promotional environment as we approach the holiday season, and how that's influencing merchandising and pricing strategies.

Thank you.

Good morning. This is Adolfo.

As you can imagine, the lower-income consumer continues to be pressured by inflation, diesel prices, and everything you have heard in the news. The business, naturally, is moving toward high price points, and that's why you are seeing our 1-800-Flowers strategy moving in that direction.

Our AOV is increasing, and so the business is benefiting from that shift in strategy, focusing on, I'd say, higher-income customers.

Gotcha. Thank you for taking my questions.

I'll hop back in queue.

Good morning, and thank you for taking the questions. First, just a quick follow-up to the last question as far as the AOV.

Did you provide that number as far as what that was, how much of an increase in the quarter?

Yeah. Anthony, this is James.

Overall, the net AOV was up 2%, at $84, almost $84.58 versus last year $82.90. That's the overall amount.

Flowers was higher, Anthony.

Okay. Thank you, James.

All right. Then, so as we look at the improved trends for the net order demand for your primary brands, there was a notable shift as we look at the monthly data that you provided, especially in September, October.

Just wanted to get a little bit better understanding as to what drove that improvement, as far as whether your guidance that you have, basically it sounds like it kind of implies that these trends will continue into the key holiday season. Is that fair to say?

That is fair to say, and certainly we are cautiously optimistic that that is the case, Anthony. If I step back for a second, and you look at our historical strategy and what is changing.

Our historical strategy was dependent on buying clicks, sending emails, affiliates, and getting SEO traffic from Google Chrome. Those channels have been impacted for a while by lots of trends, the LLMs, and everything that you have read in the news.

We implemented a different strategy, as I mentioned before, focused on four pillars, is we're looking into our true merchandising strategy and how that is driving growth, what I call digital, which is all about product discoverability and helping the customers find the right products and the right to fulfill their needs, optimizing marketing investments, and then growing in new channels. Now, the good news is we are seeing that strategy is working.

This is a strategy that you cannot easily apply across 10 websites, because it's very personalized. Let me give an example.

We are now moving towards channels where you're promoting a product, and you can only promote one product. If you're going to have a TV commercial, you cannot talk about 10 websites, you need to focus on something.

Our priority number one has been 1-800-Flowers.com. If you look at our financials, really 1-800-Flowers.com drives the websites portion of our segment, and also BloomNet.

If you look at our BloomNet performance, there's some other products in there, but you can see how the gross profit is improving, and what that is telling you is that the orders from the florists are improving. Those are actually really good for the business.

As we mentioned before, those two websites drive the majority of the profitability. We started with 1-800-Flowers, and 1-800-Flowers over the last two weeks has been comping positive, it's moving in the right direction.

Now we're focusing on Harry & David. That's super important for Q2.

As we mentioned in the prepared remarks, some of the things that are going to impact the website across these four pillars that I mentioned, were just coming online towards the end of the previous quarter, but we're starting to see the impact of that on the business. That's the way you should think about it, is we're focusing on those core websites, making sure that they are healthy.

That is going to also drive profitability in our BloomNet business. That's what the team is focusing on right now.

1-800-Flowers is still a lot of work to do, but moving in the right direction. It's great to see so far.

It's early in the month, but positive numbers. The next challenge is now, okay, Harry & David, let's give it all the attention it deserves to make sure that we deliver a great holiday season.

Thank you, Adolfo. Appreciate the context there.

All right. Then a couple of other questions, if I could.

James, you mentioned work on network optimization. Is any of that included in your guidance, or is that something that may impact fiscal '28 as you move through that work?

Anthony, it's not included in the guidance. We're working through that now.

We believe that the beginning of FY '28, we'll be getting the benefit of the network optimization project that we're working through.

Gotcha. Then lastly, just more of a, I guess, a housekeeping question.

I know it's part of discontinued operations, but as far as the revenue from P-Mall and Things Remembered for Q1, can you share what that was?

Last year Q1 was $22.5 million, and roughly in Q1 of this quarter was roughly about $19 million.

All right, thank you very much. Best of luck.

Thank you.

Thank you.

Yes, hi. Thank you.

Adolfo, I was wondering if we could just step back a minute and just consider the broader industry and the structure. Can you just comment on what your perceptions are of flowers in general as a desirable category for consumers?

Also secondly, what's going on in terms of the channel mix? Is e-commerce in floral gaining or losing market share to brick-and-mortar retail stores that sell flowers?

That's my number one question. Then number two, my second question is on your facilities and manufacturing and the fact that you're sort of backward integrated in a lot of manufacturing areas, and I'm wondering how you're viewing that, and is there a way to outsource some of those manufacturing things even for the product lines that you're keeping?

Thanks very much.

Lots of questions there, Linda. Let me try to address them one by one, if I remember.

Number one, I think it's well-known in the industry that physical retail has entered this category almost across the board. There isn't a single physical retail location that at this point, probably doesn't sell flowers.

Of course, that has a little bit of an impact on the websites. I think the websites, and this is what we're seeing in the numbers, still fulfill a need for our customers.

Think about our occasions: birthday, sympathy, Valentine's Day, Mother's Day. In many of those situations, you just want to send something to somebody.

That need will continue to exist. I think the real challenge for e-commerce operators is figure out how the customer needs and your value proposition needs to evolve to capture that market.

Historically, our flower strategy was focused on revenue growth at expense of, sometimes, profitability. We tried to drive units, which move us into lower price points.

The merchandising team is doing an amazing job of taking customer feedback, talking to our florist partners, and say, "Hey, what is needed in the market?" As I mentioned in my prepared remarks, what that is leading us to is actually higher-end bouquets, and also bouquets that are almost identical to the ones created by florists, but that we can ship to locations where a florist doesn't exist.

Internally, I always talk about Big Sky, Montana. There isn't a florist in Big Sky, Montana.

If somebody in there, you want to send flowers there, now we have our box-delivered business that can offer identical SKUs. That strategy is showing that it is working.

As James mentioned, we had to invest a little bit of gross margin just to understand price points, promotional strategy. All of that is stabilizing now.

As I mentioned, fingers crossed, but so far, month to date, that business is positive as of right now. I think there's a future for e-commerce, but you need to differentiate your value proposition and provide what the customer is looking for and making the online experience frictionless so that they want to come back to your website.

That was one question, or two questions. What was the other one?

The network, outsourcing.

Oh, the other one, that applies primarily to our food business, Harry & David and the other categories. I would say this, Linda: everything is on the table right now.

That's what we are doing with network optimization, looking into, okay, what do we do today? Are we the right owners of that?

Do we continue doing that? Do we outsource that?

Can we do it now? What is the lease saying?

All of that is what James referred to as the network optimization and Lean Six Sigma. Everything is on the table.

As James said, it's a lot of work. We have none of that included in our guidance for this year, but we believe that definitely would drive impact next year.

Thank you very much.

Thank you. As we look ahead, we are encouraged by the progress we are making and the improving demand trends across our primary websites.

While there is still work ahead, we believe we are moving in the right direction. Our focus now is on executing our plans and delivering a strong customer experience during the important holiday season, while continuing to build a stronger and more profitable business.

On behalf of everyone at 1-800-Flowers.com, I want to wish you and your families a happy and healthy holiday season. Thank you for your continued interest in our company.