Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures can be found in the table of our earnings release. As we move through fiscal 2026, we remain focused on stabilizing the business and building a stronger foundation for future growth. From a category perspective, our Gourmet Foods & Gift Baskets segment performed better than our Consumer Floral & Gifts segment. In addition, we are evolving how we operate our floral business, including how we balance florist-fulfilled orders with shipments fulfilled from our distribution centers.
We are now operating these areas in a more coordinated way, with our florist-fulfilled orders and direct shipment team working together on assortment decisions. Looking ahead, as our strategic initiatives take hold, we're beginning to shift toward a more balanced approach that includes targeted marketing investments to support future growth. While these efforts are expected to take time to translate into revenue, they are an important step in rebuilding demand in a more sustainable way. These investments will begin in the fourth quarter and continue into the next fiscal year as we strengthen the capabilities needed to support long-term growth.
More broadly, while cost discipline remains a priority, we believe these actions, combined with our structural improvements, are strengthening the foundation to stabilize the business and enable long-term growth. During the third quarter, revenue came in line with our expectations, reflecting continued execution against our disciplined marketing approach and the ongoing impact of changes in search engine results and pressure on direct traffic. From a category perspective, our Gourmet Foods & Gift Baskets segment performed meaningfully better than our Consumer Floral & Gifts segment during the quarter. Gourmet Foods & Gift Baskets segment benefited from an approximate 5% revenue lift from the timing of Easter.
| Metric | Period | Current guidance |
|---|---|---|
| Consolidated revenue | FY2026 | decline of approximately 10%-12% versus prior year |
| Adjusted EBITDA | FY2026 | approximately break even within a range of plus/minus $2 million, including approximately $22 million of incentive compensation and consultant costs |
| Marketing spend as a percent of sales | Q4 FY2026 | approximately flat compared to the prior-year period |
| Incremental run-rate cost savings | next fiscal year (FY2027) | additional $15 million-$20 million, bringing total identified savings to approximately $65 million-$70 million |
| Metric | YoY | Note |
|---|---|---|
| Consolidated revenue | -11.6% | Disciplined marketing approach, prior-year inefficient marketing spend, and changes in search engine results pressuring organic and direct traffic. |
| Consumer Floral & Gifts segment revenue | -18.7% | Easter timing shift and heavier prior-year inefficient marketing spend, combined with focus on improving marketing contribution margin. |
| Gourmet Foods & Gift Baskets segment revenue | essentially flat | Approximate 5% revenue lift from the timing of Easter and more disciplined prior-year marketing relative to floral. |
| BloomNet segment revenue | -5.9% | Same factors discussed for the broader business including search engine result changes and direct traffic pressure. |
| Gross margin (ex prior-year system issues) | +10 bps to 33.2% | Benefits from cost reduction initiatives partially offset by tariffs, commodity costs, and fixed cost absorption. |
| Adjusted EBITDA | loss of $31.2M vs loss of $34.9M | Modest year-over-year improvement from cost actions and improved marketing efficiency. |
| Operating expenses (adjusted) | -$16.4M to $144.3M | Cost reduction initiatives and lower marketing/labor costs. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Cost savings program | $50 million two-year run-rate target across FY2026-FY2027 | Full $50 million achieved ahead of plan in under a year; new incremental $15M-$20M target raising total to $65M-$70M | — |
| Marketing strategy | Primary focus on marketing contribution margin and reducing bottom-of-funnel spend | Transition to a more balanced approach with targeted top- and mid-funnel investments beginning in Q4 to rebuild the brand and reach younger customers via Instagram, TikTok, and podcasts | — |
| Third-party marketplaces | Selling on Amazon, Walmart, DoorDash, Uber Eats | Launched Instacart partnership ahead of Valentine's Day supported by local florists; expects out-of-own-site sales to reach double digits of company revenue within three years | — |
| AI and digital experience | Early product discoverability and conversion testing | Fully implemented AI-powered sorting and ranking on 1-800-Flowers.com prioritizing customer best-sellers; deploying AI in the call center; martech stack investments beginning in Q4 | — |
| Headcount and operating model | Transition to function-driven operating structure | Reduced core headcount by approximately 20% since January 2025, driving synergies and more efficient decision-making | — |