1-800-Flowers (FLWS) Bets On Discipline While Revenue Keeps Fading

In September, 1-800-Flowers.com Inc. (FLWS) disclosed its fiscal 2026 earnings, reporting a 10.8% drop in full-year revenue to $1.5 billion. The fourth quarter saw a 12.9% decline in revenue to $293.1 million. Despite these declines, the company has demonstrated financial discipline, shrinking inventory, and improving free cash flow by $55 million.

The company streamlined its operations by merging teams and implementing cost-saving measures, leading to early attainment of a $50 million cost savings goal and additional savings of $15 million to $20 million for fiscal 2027. This financial restructuring has positively impacted free cash flow and reduced inventory, while maintaining a positive average order value growth rate.

However, the overall outlook remains challenging, with total transactions falling 17.6% and gross margins sliding. Management acknowledges the difficulty in improving revenue trends but remains committed to executing improvements. Hedge fund interest increased, while short sellers remained skeptical. The stock is currently trading at a forward P/E of 12.79, a valuation that appears undervalued given the company's potential for growth in the AI sector.