1 800 FLOWERS COM INC

Notes to Condensed Consolidated Financial Statements

Note 1 –Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared by 1-800-FLOWERS.COM, Inc. and Subsidiaries (the “Company”) in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three month period ended September 27, 2026 are not necessarily indicative of the results that may be expected for the fiscal year ending June 27, 2027. These financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in our Annual Report on Form 10-K for the fiscal year ended June 28, 2026.

The Company’s quarterly results may experience seasonal fluctuations. Due to the seasonal nature of the Company’s business, and its continued expansion into non-floral products, the Thanksgiving through Christmas holiday season, which falls within the Company’s fiscal second quarter, typically generates over 40% of the Company’s annual revenues, and all of its earnings. Due to the number of major floral gifting occasions, including Mother's Day, Valentine’s Day, Easter, and Administrative Professionals Week, revenues have also historically risen during the Company’s fiscal third and fourth quarters in comparison to its fiscal first quarter.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Revenue Recognition

Net revenue is measured based on the amount of consideration that the Company expects to receive, reduced by discounts and estimates for credits and returns (calculated based upon previous experience and management’s evaluation). Service and outbound shipping charged to customers are recognized at the time the related merchandise revenues are recognized and are included in net revenues. Inbound and outbound shipping and delivery costs are included in cost of revenues. Net revenues exclude sales and other similar taxes collected from customers.

A description of the Company's principal revenue-generating activities is as follows:

•E-commerce revenues - consumer products sold through our online and telephonic channels. Revenue is recognized when control of the merchandise is transferred to the customer, which generally occurs upon shipment. Payment is typically due prior to the date of shipment.

•Retail revenues - consumer products sold through our retail stores. Revenue is recognized when control of the goods is transferred to the customer at the point of sale, at which time payment is received.

•Wholesale revenues - products sold to our wholesale customers for subsequent resale. Revenue is recognized when control of the goods is transferred to the customer, in accordance with the terms of the applicable agreement. Payment terms are typically 30 days from the date control over the product is transferred to the customer.

•BloomNet® services - membership fees as well as other service offerings to florists. Membership and other subscription-based fees are recognized monthly as earned. Services revenues related to orders sent through the floral network are variable, based on either the number of orders or the value of orders, and are recognized in the period in which the orders are delivered. The contracts within BloomNet services are typically month-to-month and, as a result, no consideration allocation is necessary across multiple reporting periods. Payment is typically due less than 30 days from the date the services were performed.

See Note 13 - Business segments for additional information on disaggregated revenue.

Discontinued Operations

On September 26, 2026, the Company and PlanetArt, LLC ("Purchaser") entered into an Asset Purchase Agreement (the "Purchase Agreement") related to the sale of certain assets and the assumption of certain liabilities of the Company's Personalization Mall, Things Remembered, and Personalization Universe businesses (collectively, the "Personalization Businesses"). The aggregate sale price was $45.0 million in cash (subject to certain working capital adjustments). The Company and Purchaser consummated the transactions contemplated by the Purchase Agreement on October 19, 2026. As of September 27, 2026, the Company determined that Personalization Businesses met the criteria for classification as held for sale under Accounting Standards Codification (“ASC”) 360. The disposition represented a strategic shift that had a major impact on the Company's operations and financial results and has been accounted for as discontinued operations.

See Note 3 - Discontinued operations for additional information.

Changes in Segments

Historically, the Company hadthree reportable segments, Consumer Floral & Gifts, BloomNet®, and Gourmet Foods & Gift Baskets. Effective June 29, 2026, the Company reassessed its segment reporting structure to reflect changes in how the Company’s Chief Executive Officer, who serves as the Chief Operating Decision Maker (“CODM”), manages the business, assesses performance, and allocates resources in accordance with ASC 280, Segment Reporting. As a result, the Company’s operations were re-organized into thethree following reportable segments: E-Commerce, Wholesale and Other, and BloomNet®. The revised segment structure aligns with the manner in which the CODM reviews the Company’s operating results and allocates resources and more closely reflects the Company’s channel strategy.

See Note 13 - Business segments for additional information.

Fire at the Hebron warehouse and distribution facility

The Company maintains insurance coverage for property damage and business interruption and has submitted a claim to its insurance carriers. The Company has already received some recovery amounts from its insurers and is continuing to work with them to finalize the evaluation and settlement of the claim.

See Note 14 - Fire at the Hebron warehouse and distribution facility for additional information.

Deferred Revenues

Deferred revenues are recorded when the Company has received consideration (i.e. advance payment) before satisfying its performance obligations. As such, customer orders are recorded as deferred revenue prior to shipment or rendering of product or services. Deferred revenues primarily relate to e-commerce orders placed, but not shipped, prior to the end of the fiscal period, as well as for subscription programs, including our various food, wine, and plant-of-the-month clubs, and our Celebrations Passport® program.

Our total deferred revenue as of June 28, 2026 was $19.5 million, of which $18.7 million relates to the Company's continuing operations, of which $10.2 million was recognized as revenue during the three months ended September 27, 2026. The deferred revenue balance as of September 27, 2026 for continuing operations was $16.5 million and is included within the “Accrued expenses” line item in the consolidated balance sheets.

Recently Issued Accounting Pronouncements

In December 2025, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2025-12, Codification Improvements. ASU 2025-12 includes changes that clarify, correct errors in or make other minor improvements to a broad range of topics that are intended to make them easier to understand and apply, including ASC 260, Earnings Per Shareand ASC 325, Investments – Other. The amendments in ASU 2025-12 are effective for annual periods beginning after December 15, 2026, and interim reporting periods within those reporting periods, with early adoption permitted. Entities are required to apply the amendments to ASC 260 retrospectively. All other amendments may be applied prospectively or retrospectively. The Company is currently evaluating the impact of ASU 2025-12 on its consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. ASU 2025-11 clarifies and improves existing interim reporting guidance by consolidating disclosure requirements within Topic 270 and introducing a disclosure principle requiring entities to disclose events and changes occurring after the most recent annual reporting period that are expected to have a material effect on the entity’s financial condition or results of operations. The ASU does not introduce significant changes to recognition or measurement guidance. The amendments in ASU 2025-11 are effective for interim reporting periods within fiscal years beginning after December 15, 2027, with early adoption permitted. ASU 2025-11 allows for either a prospective or retrospective approach on adoption. The Company is currently evaluating the impact of ASU 2025-11 on its consolidated financial statements and related disclosures.

In September 2025, the FASB issued ASU 2025-06, Intangibles – Goodwill and Other – Internal – Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal – Use Software, which amends certain aspects of the accounting and disclosure of software costs under ASC 350-40, Intangibles – Goodwill and Other – Internal – Use Software. ASU 2025-06 replaces the prior “project stage” model and provides a principles-based framework for cost recognition and capitalization, incorporates website development guidance from ASC 350-50, Intangibles — Goodwill and Other — Website Development Costs, into a new internal-use software framework, and clarifies disclosure requirements. The amendments in this ASU are effective for all entities for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted. ASU 2025-06 allows for a prospective transition approach, a modified transition approach that is based on the status of the project and whether software costs were capitalized before the date of adoption, or a retrospective transition approach on adoption. The Company is currently evaluating the impact of ASU 2025-06 on its consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. ASU 2024-03 requires enhanced disclosures about a business entity's expenses, includes enhanced interim disclosure requirements, and requires additional disclosure about specific types of expenses included in the expense captions presented on the face of the income statement, as well as disclosures about selling expenses. In January 2025, the FASB issued ASU 2025-01, which amended ASU 2024-03, to clarify its effective date. The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within fiscal years beginning after December 15, 2027, with early adoption permitted. ASU 2024-03 allows for either a prospective or retrospective approach on adoption. The Company is currently evaluating the impact of ASU 2024-03 on its consolidated financial statements and related disclosures.

Note 2 –Net loss per common share

Basic net loss per common share is computed by dividing the net loss during the period by the weighted average number of common shares outstanding during the period. Diluted net loss per common share reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock.

The following table sets forth the computation of basic and diluted net loss per common share:

Note 3 –Discontinued operations

Sale of Personalization Mall, Things Remembered, and Personalization Universe Businesses

On September 26, 2026, the Company and PlanetArt, LLC entered into the Purchase Agreement related to the sale of certain assets and the assumption of certain liabilities of the Company's Personalization Businesses. The aggregate sale price was $45.0 million in cash (subject to certain working capital adjustments). The Company and Purchaser consummated the transactions contemplated by the Purchase Agreement on October 19, 2026 for an estimated preliminary purchase price of $44.7 million with approximately $2.8 million held in escrow.

The Company used a portion of the proceeds from the sale, net of transaction costs, to prepay a portion of the principal amount of term loans outstanding under its credit facility, in accordance with the terms of the Company’s credit facility, as amended. The Company determined that the disposal of the Personalization Businesses represented a strategic shift that had a major effect on the Company’s operations and financial results. As of September 27, 2026, the Company determined that the Personalization Businesses met the criteria for classification as held for sale under Accounting Standards Codification (“ASC”) 360. Accordingly, the operations of the Personalization Businesses are reported as discontinued operations. The Personalization Businesses were previously included within the Company's E-Commerce reportable segment and are excluded from continuing operations for all periods presented.

The following table presents the major classes of the Personalization Businesses line items constituting the "Net loss from discontinued operations, net of tax" in our Consolidated Statements of Operations and Comprehensive Income (Loss):

Assets and liabilities of discontinued operations associated with the Personalization Businesses in the Consolidated Balance Sheets as of September 27, 2026 and June 28, 2026 are included in the following table:

Note 4 –Inventory

The Company’s inventory, valued at the lower of cost or net realizable value, includes purchased and manufactured finished goods for sale, packaging supplies, crops, raw material ingredients for manufactured products and associated manufacturing labor, and is classified as follows:

Note 5 –Property, plant and equipment, net

The Company’s property, plant and equipment, net consists of the following:

Note 6 –Goodwill, trademarks with indefinite lives and other intangibles, net

The following table presents goodwill by business segment:

(1) The total carrying value of goodwill is reflected net of $287.0 million of accumulated impairment charges.

The Company’s trademarks with indefinite lives and other intangible assets, net consists of the following:

Future estimated amortization expense is as follows: remainder of fiscal 2027 - $0.3 million, fiscal 2028 - $0.3 million, fiscal 2029 - $0.2 million, fiscal 2030 - $0.1 million, and fiscal 2031 - $0.1 million.

Additional indefinite-lived intangible asset considerations

Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions, estimates, and market factors. Estimating the fair value of indefinite-lived intangible assets requires the Company to make assumptions and estimates regarding our future plans, as well as industry, economic, and regulatory conditions. These assumptions and estimates include the assets' estimated cash flows as well as the appropriate discount and royalty rates applied to those cash flows to determine fair value. If current expectations of future growth rates and margins are not met, if market factors outside of our control change, such as discount rates, income tax rates, or inflation, or if management’s expectations or plans otherwise change, including updates to our long-term operating plans, then indefinite-lived intangible assets might become impaired in the future.

Note 7 –Leases

The Company currently leases plants, warehouses, offices, store facilities, and equipment under various leases through fiscal 2036. Most lease agreements are of a long-term nature (over a year), although the Company also enters into short-term leases, primarily for seasonal needs. Lease agreements may contain renewal options and rent escalation clauses and require the Company to pay real estate taxes, insurance, common area maintenance and operating expenses applicable to the leased properties. The Company accounts for its leases in accordance with ASC 842.

At contract inception, the Company determines whether a contract is, or contains, a lease by determining whether it conveys the right to control the use of the identified asset for a period of time, by assessing whether the Company has the right to obtain substantially all of the economic benefits from the use of the identified asset and the right to direct the use of the identified asset.

At the lease commencement date, the Company determines if a lease should be classified as an operating or a finance lease (the Company currently has no finance leases) and recognizes a corresponding lease liability and a right-of-use asset on its consolidated balance sheet. The lease liability is initially and subsequently measured as the present value of the remaining fixed minimum rental payments (including base rent and fixed common area maintenance) using discount rates as of the commencement date. Variable payments (including most utilities, real estate taxes, insurance and variable common area maintenance) are expensed as incurred. Further, the Company elected a short-term lease exception policy, permitting it not to apply the recognition requirements of this standard to short-term leases (i.e. leases with terms of 12 months or less) and an accounting policy to account for lease and non-lease components as a single component for certain classes of assets. The right-of-use asset is initially and subsequently measured at the carrying amount of the lease liability adjusted for any prepaid or accrued lease payments, remaining balance of lease incentives received, unamortized initial direct costs, or impairment charges relating to the right-of-use asset. Right-of-use assets are assessed for impairment using the long-lived assets impairment guidance. The discount rate used to determine the present value of lease payments is the Company’s estimated collateralized incremental borrowing rate, based on the yield curve for the respective lease terms, as the Company generally cannot determine the interest rate implicit in the lease.

The Company recognizes expense for its operating leases on a straight-line basis over the lease term. As these leases expire, it can be expected that in the normal course of business they will be renewed or replaced. Renewal option periods are included in the measurement of lease liability, where the exercise is reasonably certain to occur. Key estimates and judgments in accounting for leases include how the Company determines: (1) lease payments, (2) lease term, and (3) the discount rate used in calculating the lease liability.

Additional information related to the Company's leases associated with continuing operations is as follows:

Maturities of lease liabilities associated with continuing operations as of September 27, 2026, and the reconciliation to the consolidated balance sheet, in accordance with ASC 842, are as follows (in thousands):

Note 8 –Accrued expenses

Accrued expenses consists of the following:

Severance and restructuring charges

Severance and restructuring charges incurred in the prior year related to an enterprise reduction in workforce focused on reducing costs and streamlining the organization. At September 27, 2026, the Company had $2.3 million recorded related to these charges within the “Accrued expenses” line item in the Consolidated Balance Sheet. The Company expects the majority of these costs to be paid in the next 12 months.

Note 9 –Long-term debt, net

The Company’s current and long-term debt, net consists of the following:

The Company, certain of its U.S. subsidiaries, the lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent, are party to a Third Amended and Restated Credit Agreement (the “Third Restated Credit Agreement” and, as amended by that certain First Amendment (the “First Amendment”), dated as of January 28, 2025, and that certain Second Amendment (the “Second Amendment”), dated as of May 6, 2025, the “Amended Third Restated Credit Agreement,” and the Amended Third Restated Credit Agreement as amended by that certain Third Amendment, dated as of September 9, 2026 (the “Third Amendment”), the “Existing Credit Agreement”).

On September 9, 2026, the Company, certain of its U.S. subsidiaries, the lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent, entered into the Third Amendment to the Amended Third Restated Credit Agreement. The Third Amendment amended the Amended Third Restated Credit Agreement by, among other modifications, (i) replacing the financial covenants set forth therein with (x) a minimum liquidity financial covenant until the end of the Company’s fiscal quarter ending September 26, 2027 and (y) a minimum consolidated EBITDA financial covenant for the period of the fiscal quarter ending December 26, 2027 through the end of the Affected Period (as defined below), (ii) modifying the negative covenant restricting asset sales and the corresponding obligation to make mandatory prepayments of the Term Loan (as defined below) with the proceeds of certain asset sales, in each case, as in effect during the Affected Period, to expand the existing permissions for asset sales and permit the Company to retain a portion of the proceeds of certain asset sales, up to $30.0 million in the aggregate, after the Company has used a portion of such proceeds to make a prepayment of the Term Loan of at least $15.0 million, (iii) imposing additional restrictions on the ability of the Company and its U.S. subsidiaries that are guarantors under the Existing Credit Agreement to transfer material intellectual property to the Company’s subsidiaries that are not guarantors under the Existing Credit Agreement, (iv) requiring the Company to participate in monthly conference calls with the lenders under the Existing Credit Agreement, and (v) imposing during the Affected Period additional prepayment obligations with respect to the revolving credit facility. For accounting purposes, pursuant to ASC 470, Debt, this transaction was accounted for as a modification of the Amended Third Restated Credit Agreement. In connection with the Third Amendment, the Company incurred $4.5 million of deferred financing costs, of which $3.4 million was recorded on the Company's Consolidated Balance Sheet and is being amortized over the life of the Existing Credit Agreement (the "Term Loan"), and the remaining costs were recognized in Interest expense on the Company's Consolidated Statement of Operations in connection with the amendment.

For each borrowing under the Existing Credit Agreement, the Company may elect that such borrowing bear interest at an annual rate equal to either: (1) a base rate plus an applicable margin varying (other than during the Affected Period) based on the Company’s consolidated leverage ratio, where the base rate is the highest of (a) the prime rate, (b) the New York fed bank rate plus 0.5%, and (c) an adjusted SOFR rate for a one-month interest period plus 1.0%, or (2) an adjusted SOFR rate plus an applicable margin varying (other than during the Affected Period) based on the Company’s consolidated leverage ratio. The adjusted SOFR rate includes a credit spread adjustment of 0.1% for all interest periods. The effective interest rate as of September 27, 2026 related to the Company's outstanding borrowings was 7.3%.

The principal of the outstanding Term Loan was subject to a quarterly payment of $3.0 million on September 26, 2025, and is subject to quarterly payments of $6.0 million for the next 10 payments, with the remaining balance of $97.0 million due upon maturity on June 27, 2028. In accordance with the Existing Credit Agreement, upon completion of the sale of the Personalization Businesses, the Company used a portion of the net proceeds, after transaction costs, to prepay $21.7 million of the outstanding principal balance of the Term Loan. Based on this, the Company reclassified this prepayment amount to the "Current maturities of long-term debt" line item in the Consolidated Balance Sheet. Following this prepayment in October 2026, future principal Term Loan payments are as follows: $18.0 million – fiscal 2027, and $93.3 million – fiscal 2028.

The Existing Credit Agreement requires that, while any borrowings or commitments are outstanding, the Company comply with certain financial covenants and certain affirmative covenants and negative covenants that, subject to certain exceptions, limit the Company’s ability to, among other things, (i) incur additional indebtedness, (ii) make certain investments, (iii) make certain restricted payments and, (iv) hold cash deposits in accounts not maintained with lenders under the Existing Credit Agreement or their affiliates during the period (the “Affected Period”) from May 6, 2025 until the earlier of (A) June 26, 2028 and (B) the date the Company has (x) demonstrated compliance with the financial covenants as in effect under the Third Restated Credit Agreement as amended by the First Amendment and (y) if applicable, elected to terminate the applicable period during which various applicable modifications set forth in the Second Amendment and the Third Amendment are in effect. The Company was in compliance with these covenants as of September 27, 2026. The Existing Credit Agreement is secured by substantially all of the assets of the Company.

Note 10 –Fair value measurements

Cash and cash equivalents, trade and other receivables, prepaids, accounts payable and accrued expenses are reflected in the consolidated balance sheets at carrying value, which approximates fair value due to the short-term nature of these instruments. Although no trading market exists, the Company believes that the carrying amount of its debt approximates fair value due to its variable nature (these are level 2 investments). The Company’s investments in non-marketable equity instruments of private companies are carried at cost and are periodically assessed for other-than-temporary impairment when an event or circumstance indicates that an other-than-temporary decline in value may have occurred. The Company’s remaining financial assets and liabilities are measured and recorded at fair value (see table below). The Company’s non-financial assets, such as definite lived intangible assets and property, plant and equipment, are recorded at cost and are assessed for impairment when an event or circumstance indicates that an other-than-temporary decline in value may have occurred. Goodwill and indefinite-lived intangibles are tested for impairment annually, or more frequently, if events occur or circumstances change such that it is more likely than not that an impairment may exist, as required under the accounting standards.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability, in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants at the measurement date. The authoritative guidance for fair value measurements establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under the guidance are described below:

The following table presents by level, within the fair value hierarchy, financial assets and liabilities measured at fair value on a recurring basis:

(1)The Company has established a Non-Qualified Deferred Compensation Plan (“NQDC Plan”) for certain members of senior management. Deferred compensation plan assets are invested in mutual funds held in a “rabbi trust,” which is restricted for payment to participants of the NQDC Plan. Trading securities held in a "rabbi trust" are measured using quoted market prices at the reporting date and are included in the “Other assets” line item, with the corresponding liability included in the “Other liabilities” line item in the consolidated balance sheets.

Note 11 –Income taxes

The Company computed the interim tax provision using an estimated annual effective rate applied to the loss from continuing operations, adjusted for discrete items. This estimate is used in providing for income taxes from continuing operations on a year-to-date basis and may change in subsequent interim periods. The Company’s effective tax rate for the three months ended September 27, 2026 was (1.3)% compared to (0.6)% in the same period of the prior year. The Company’s effective tax rate for the three months ended September 27, 2026 and September 28, 2025 each differed from the U.S. federal statutory rate of 21.0% primarily due to the change in valuation allowance, state income taxes and interest on uncertain tax positions.

For the year ended June 28, 2026, the Company had a total valuation allowance of approximately $71.8 million primarily related to net operating losses, charitable contributions, and deferred tax assets that are not more likely than not realizable. For the three months ended September 27, 2026, the Company increased its valuation allowance by $12.8 million.

During the quarter, the Company classified the results of the Personalization Businesses as discontinued operations. In accordance with ASC 740, the Company allocated income tax expense between continuing and discontinued operations. The income tax effects attributable to discontinued operations are reflected in the net loss from discontinued operations, net of tax, in the accompanying Statements of Operations.

The One Big Beautiful Bill Act (“OBBBA”), which was signed into law on July 4, 2025, included various tax law changes, and made permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, domestic research cost expensing, and the business interest expense limitation. The OBBBA has multiple effective dates, with certain provisions effective in 2025 and others phased in through 2027. These provisions and modifications have not had a material impact on the Company’s consolidated financial statements. The Company will continue to evaluate the impact of the legislation on its consolidated financial statements as additional guidance is issued.