Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures can be found in the tables in our earnings release. By leaning into this approach, we intend to address the factors that matter most to our growth and financial performance and position the company for long-term success. To return to revenue growth, we are modernizing the customer experience, sharpening how we acquire and retain customers, and expanding our reach beyond our e-commerce sites. Our top line remained pressured, and we continued to navigate an evolving customer acquisition landscape.
This was comprised of an 8.8% decline in our Consumer Floral & Gifts segment, a 3.6% decline in our Gourmet Foods & Gift Baskets segment, and a 0.6% decline in our BloomNet segment. At the end of fiscal 2025, we had 9.5 million customers, over 900,000 Passport members, and 74% of our revenue came from existing customers. As compared to the prior year, our customer count declined in line with our revenue decline, while our Passport membership declined at a greater rate. We are reviewing opportunities to improve our loyalty program along with the overall shopping experience to increase membership and promote multi-branded selling.
Turning to gross margin, our Q4 gross margin declined 290 basis points to 35.5%, compared with 38.4% in the prior year period. On a full-year basis, excluding costs associated with the OMS system implementation challenges, our gross margin declined 100 basis points to 39.1%. Excluding non-recurring charges and the impact of the company's non-qualified deferred compensation plan in both periods, operating expenses declined $3.7 million to $159.7 million. On a full-year basis, our adjusted operating expenses declined $10.9 million to $695.2 million.
| Metric | Period | Current guidance |
|---|---|---|
| FY2026 framing | FY2026 | approached as a pivotal period of foundation setting under the multi-year celebration strategy, prioritizing cost savings, a customer-centric data-driven organization, new channels, and talent |
| Cost savings (annualized) | FY2025-FY2026 | approximately $40 million annualized target, including $17 million already implemented, with an external consultant engaged to identify additional opportunities |
| Capital expenditures | FY2026 | expected to be slightly down versus last year, including investment in physical retail locations (no formal guidance) |
| Metric | YoY | Note |
|---|---|---|
| Consolidated revenue (Q4) | -6.7% | Pressured top line, declining traditional SEO, and bottom-of-funnel marketing that did not yield expected results, partly mitigated by the Easter shift into Q4. |
| Consumer Floral & Gifts segment revenue (Q4) | -8.8% | Top-line pressure and an evolving customer acquisition landscape. |
| Gourmet Foods & Gift Baskets segment revenue (Q4) | -3.6% | Top-line pressure, partly offset by wholesale gains. |
| BloomNet segment revenue (Q4) | -0.6% | Relatively modest decline amid broader pressure. |
| Consolidated revenue (full year) | -8% | 8.2% decline in transactions and 1.1% decline in AOV, partially offset by gains in wholesale. |
| Gross margin (Q4) | -290 bps to 35.5% | Highly promotional sales environment and deleveraging on the sales decline. |
| Adjusted EBITDA (Q4) | loss of $24.2M vs loss of $8.8M | Inefficient marketing, sales deleveraging, and promotional pressure. |
| Adjusted EBITDA (full year) | $29.2M vs $93.1M | Lower volume against fixed overhead, the OMS issue, and unproductive marketing spend increases. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Leadership transition | James Langrock serving in transitional capacity | Adolfo Villagomez stepped into the CEO role (joined in May), outlining a four-pillar transformation | — |
| Marketing strategy | Bottom-of-funnel spend focused on driving revenue | Shifting to a full-funnel approach emphasizing variable contribution margin, awareness, acquisition, retention, and a customer lifetime value flywheel | — |
| Cost structure | Expenses not adjusted in line with lower revenues | Comprehensive review of structure, supply chain, procurement, and IT; ~$40 million annualized savings target with $17 million implemented and an external consultant engaged | — |
| Channel expansion | Heavy dependence on own e-commerce sites | Broadening reach into marketplaces, on-demand delivery, and physical retail (pop-ups at Macy's, malls, and the Long Island store), plus a self-consumption focus beyond gifting | — |
| OMS / customer care | Holiday OMS performance issues and overwhelmed customer care | System performance issues resolved with the new system outperforming the prior one, and customer care redundancies built | — |