1-800 FLOWERS.COM Inc.

11/06/2026 | Press release | Distributed by Public on 11/06/2026 07:28

Quarterly Report for Quarter Ending September 27, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This "Management's Discussion and Analysis of Financial Condition and Results of Operations" ("MD&A") is intended to provide an understanding of our financial condition, change in financial condition, cash flow, liquidity, and results of operations. The following MD&A discussion should be read in conjunction with the consolidated financial statements and notes to those statements that appear elsewhere in this Form 10-Q and in the Company's Annual Report on Form 10-K for the fiscal year ended June 28, 2026. The following discussion contains forward-looking statements that reflect the Company's plans, estimates and beliefs. The Company's actual results could differ materially from those discussed or referred to in the forward-looking statements. Factors that could cause or contribute to any differences include, but are not limited to, those discussed under the caption "Forward-Looking Information and Factors That May Affect Future Results," under Part I, Item 1A, of the Company's Annual Report on Form 10-K for the fiscal year ended June 28, 2026 under the heading "Risk Factors" and Part II-Other Information, Item 1A in this Form 10-Q.
Business Overview
1-800-FLOWERS.COM, Inc. and its subsidiaries (collectively, the "Company") is a leading provider of thoughtful expressions designed to help inspire customers to give more, connect more, and build more and better relationships. The Company's e-commerce business platform features our all-star family of brands, including: 1-800-Flowers.com®, 1-800-Baskets.com®, Cheryl's Cookies®, Harry & David®, Shari's Berries®, FruitBouquets.com®, Moose Munch®, The Popcorn Factory®, Wolferman's Bakery®, Vital Choice®, Scharffen Berger®, and Simply Chocolate®. Through the Celebrations Passport® loyalty program, which provides members with free standard shipping and no service charge on eligible products across our portfolio of brands, the Company strives to deepen relationships with customers. The Company also operates BloomNet®, an international floral and gift industry service provider offering a broad range of products and services designed to help its members grow their businesses profitably; Napco®, a resource for floral gifts and seasonal décor; DesignPac®, a manufacturer of gift baskets and towers; and Card Isle®, an e-commerce greeting card service.
For additional information, see Item 7 of Part II, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Overview" of our Annual Report on Form 10-K for the fiscal year ended June 28, 2026.
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. 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.
The Company is presenting the operating results and cash flows of the Personalization Businesses within discontinued operations in the current and prior periods. The assets and liabilities of the Personalization Businesses are presented as assets and liabilities of discontinued operations in the consolidated balance sheets for all periods presented.
See Note 3 - Discontinued operations, in the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q for additional information on discontinued operations.
Change in Segments
Historically, the Company had three reportable business 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 Accounting Standards Codification ("ASC") 280, Segment Reporting. As a result, the Company's operations were re-organized into the three following 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
On July 29, 2026, a fire occurred at the Company's Hebron, Ohio facility, resulting in damage to certain property, equipment and inventory. Operations were temporarily interrupted.
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.
Definitions of non-GAAP Financial Measures:
We sometimes use financial measures derived from consolidated financial information, but not presented in our financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). Certain of these are considered "non-GAAP financial measures" under the U.S. Securities and Exchange Commission rules. See below for definitions and the reasons why we use these non-GAAP financial measures, and reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures. These non-GAAP financial measures are referred to as "non-GAAP", "adjusted" or "on a comparable basis" below, as these terms are used interchangeably. Reconciliations for forward-looking figures would require unreasonable efforts at this time because of the uncertainty and variability of the nature and amount of certain components of various necessary GAAP components, including, for example, those related to compensation, tax items, amortization or others that may arise during the year, and the Company's management believes such reconciliations would imply a degree of precision that would be confusing or misleading to investors. For the same reasons, the Company is unable to address the probable significance of the unavailable information. The lack of such reconciling information should be considered when assessing the impact of such disclosures.
EBITDA and Adjusted EBITDA
We define EBITDA as net income (loss) from continuing operations before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted for the impact of stock-based compensation, Non-Qualified Deferred Compensation Plan ("NQDC Plan") investment appreciation/depreciation, and certain items affecting period-to-period comparability.
The Company presents EBITDA and Adjusted EBITDA because it considers such information meaningful supplemental measures of its performance and believes such information is frequently used by the investment community in the evaluation of similarly situated companies. The Company uses EBITDA and Adjusted EBITDA as factors to determine the total amount of incentive compensation available to be awarded to executive officers and other employees. The Company's credit agreement uses EBITDA and Adjusted EBITDA-related items to determine its interest rate and to measure compliance with certain covenants. EBITDA and Adjusted EBITDA are also used by the Company to evaluate and price potential acquisition candidates.
EBITDA and Adjusted EBITDA have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP. Some of the limitations are: (a) EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, the Company's working capital needs; (b) EBITDA and Adjusted EBITDA do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments on the Company's debts; and (c) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future and EBITDA does not reflect any cash requirements for such capital expenditures. EBITDA and Adjusted EBITDA should only be used on a supplemental basis combined with GAAP results when evaluating the Company's performance.
The following table presents EBITDA and Adjusted EBITDA:
Reconciliation of net loss to Adjusted EBITDA (non-GAAP): Three Months Ended
September 27,
2026 		September 28,
2025
(in thousands)
Net loss $ (54,335) $ (52,957)
Net loss from discontinued operations, net of tax (3,721) (3,968)
Net loss from continuing operations (50,614) (48,989)
Add: Interest expense and other, net 3,457 1,543
Add: Depreciation and amortization 10,482 10,841
Add: Income tax expense 658 291
EBITDA (36,017) (36,314)
Add: Stock-based compensation 1,449 2,312
Add: Compensation charge related to NQDC Plan investment appreciation 1,855 2,352
Add: Transaction costs 54 -
Add: Net loss from fire 750 -
Adjusted EBITDA $ (31,909) $ (31,650)
Adjusted net income (loss) and adjusted or comparable net income (loss) per common share
We define adjusted net income (loss) and adjusted or comparable net income (loss) per common share as net income (loss) and net income (loss) per common share adjusted for certain items affecting period-to-period comparability. We believe that adjusted net income (loss) and adjusted or comparable net income (loss) per common share are meaningful measures because they increase the comparability of period-to-period results. Since these are not measures of performance calculated in accordance with GAAP, they should not be considered in isolation of, or as a substitute for, GAAP net income (loss) and net income (loss) per common share, as indicators of operating performance and they may not be comparable to similarly titled measures employed by other companies.
The following table presents the adjusted net loss and adjusted net loss per common share:
Reconciliation of net loss to adjusted net loss (non-GAAP): Three Months Ended
September 27,
2026 		September 28,
2025
(in thousands, except for per share data)
Net loss $ (54,335) $ (52,957)
Net loss from discontinued operations, net of tax (3,721) (3,968)
Net loss from continuing operations (50,614) (48,989)
Adjustments to reconcile net loss to adjusted net loss (non-GAAP):
Add: Transaction Costs 54 -
Add: Net loss from fire 750 -
Deduct: Income tax effect on adjustments 9 -
Adjusted net loss (non-GAAP) $ (49,819) $ (48,989)
Basic and diluted net loss per common share $ (0.85) $ (0.83)
Basic and diluted net loss per common share from discontinued operations (0.06) (0.06)
Basic and diluted net loss per common share from continuing operations $ (0.79) $ (0.77)
Basic and diluted adjusted net loss per common share from continuing operations (non-GAAP) $ (0.78) $ (0.77)
Weighted average shares used in the calculation of basic and diluted net loss and adjusted net loss per common share 64,187 63,630
Free Cash Flow
We define free cash flow as net cash provided by (used in) operating activities from continuing operations, less capital expenditures. The Company considers free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business after the purchases of fixed assets, which can then be used to, among other things, invest in the Company's business, make strategic acquisitions, strengthen the balance sheet and repurchase stock or retire debt. Free cash flow is a liquidity measure that is frequently used by the investment community in the evaluation of similarly situated companies. Since free cash flow is not a measure of performance calculated in accordance with GAAP, it should not be considered in isolation of, or as a substitute for analysis of, the Company's results as reported under GAAP. A limitation of the utility of free cash flow as a measure of financial performance is that it does not represent the total increase or decrease in the Company's cash balance for the period.
The following table reconciles net cash used in operating activities from continuing operations, a GAAP measure, to free cash flow, a non-GAAP measure:
Three Months Ended
September 27,
2026 		September 28,
2025
(in thousands)
Net cash used in operating activities from continuing operations $ (126,084) $ (130,939)
Capital expenditures (3,716) (5,596)
Free cash flow $ (129,800) $ (136,535)
Segment contribution margin:
The following table presents the net revenues, gross profit, and segment contribution margin from each of the Company's business segments. We define Segment Contribution Margin as segment revenues less cost of sales, credit card fees, and direct advertising costs directly attributable to the respective segments. Segment Contribution Margin is the measure of segment profit or loss regularly reviewed by the Company's Chief Operating Decision Maker to evaluate segment performance and allocate resources and is reported in accordance with ASC 280, Segment Reporting. The Company believes Segment Contribution Margin provides useful information to investors in evaluating the performance of its reportable segments. Segment Contribution Margin excludes certain expenses that are managed centrally and are not allocated to the Company's reportable segments. Accordingly, Segment Contribution Margin should be considered in conjunction with the Company's consolidated results reported in accordance with GAAP.
See Note 13- Business segments for additional information.
E-Commerce Wholesale and Other BloomNet
Net Revenues
Net revenues - Q1 2027 $ 128,449 $ 20,542 $ 22,302
Net revenues - Q1 2026 $ 146,538 $ 22,993 $ 23,125
% change - FY27 net revenues vs. FY26 net revenues (12.3) % (10.7) % (3.6) %
Gross Profit
Gross profit - Q1 2027 $ 40,992 $ 6,569 $ 11,015
Gross profit - Q1 2026 $ 51,269 $ 5,776 $ 11,030
Gross profit % - Q1 2027 31.9 % 32.0 % 49.4 %
Gross profit % - Q1 2026 35.0 % 25.1 % 47.7 %
% change - FY27 gross profit vs. FY26 gross profit (20.0) % 13.7 % (0.1) %
Segment Contribution Margin
Contribution margin - Q1 2027 $ 16,180 $ 6,155 $ 10,630
Contribution margin - Q1 2026 $ 23,728 $ 5,288 $ 10,661
Results of Operations
Net revenues
Three Months Ended
September 27,
2026 		September 28,
2025 		%
Change
(dollars in thousands)
Net revenues by channel:
E-commerce $ 128,449 $ 146,538 -12.3 %
Other 42,902 46,186 -7.1 %
Total net revenues $ 171,351 $ 192,724 -11.1 %
Net revenues consist primarily of the selling price of the merchandise, service and outbound shipping charges, less discounts, returns and credits.
Net revenues decreased 11.1% during the three months ended September 27, 2026 primarily due to continued weakness in the Company's e-commerce channel, particularly across websites other than 1800flowers.com and harryanddavid.com, as well as a shift in the timing of wholesale orders from the first quarter of the prior year to the second quarter in the current year.
Three Months Ended
E-Commerce Wholesale and Other BloomNet Corporate Consolidated
September 27, 2026 September 28, 2025 % Change September 27, 2026 September 28, 2025 % Change September 27, 2026 September 28, 2025 % Change September 27, 2026 September 28, 2025 September 27, 2026 September 28, 2025 % Change
(dollars in thousands)
Net revenues
E-commerce $ 128,449 $ 146,538 -12.3 % $ - $ - - $ - $ - - $ - $ - $ 128,449 $ 146,538 -12.3 %
Other - - - 20,542 22,993 -10.7 % 22,302 23,125 -3.6 % 58 68 42,902 46,186 -7.1 %
Total net revenues $ 128,449 $ 146,538 -12.3 % $ 20,542 $ 22,993 -10.7 % $ 22,302 $ 23,125 -3.6 % $ 58 $ 68 $ 171,351 $ 192,724 -11.1 %
Other revenues detail
Retail and other - - - 2,960 3,264 -9.3 % - - - - - 2,960 3,264 -9.3 %
Wholesale - - - 17,582 19,729 -10.9 % 9,889 10,976 -9.9 % - - 27,471 30,705 -10.5 %
BloomNet services - - - - - - 12,413 12,149 2.2 % - - 12,413 12,149 2.2 %
Corporate - - - - - - - - - 58 68 58 68 -14.7 %
Total other revenues $ - $ - - % $ 20,542 $ 22,993 -10.7 % $ 22,302 $ 23,125 -3.6 % $ 58 $ 68 $ 42,902 $ 46,186 -7.1 %
Revenue by sales channel:
E-commerce revenues (combined online and telephonic) decreased 12.3% during the three months ended September 27, 2026, compared to the same period of the prior year, primarily due to continued weakness across websites other than 1800flowers.com and harryanddavid.com.
During the three months ended September 27, 2026, the Company fulfilled approximately 1.5 million orders through its e-commerce sales channel (online and telephonic sales), a decrease of 14.1%, compared to the same period of the prior year.
Other revenues are comprised of the Company's Wholesale and Other and BloomNet® segments.
Other revenues during the three months ended September 27, 2026 decreased 7.1% compared to the same period of the prior year, primarily due to a shift in the timing of wholesale orders from the first quarter of the prior year to the second quarter in the current year.
Revenue by segment:
E-Commerce Segment - this segment consists primarily of the Company's direct-to-consumer gifting business operating through digital platforms, including Company-owned websites, third-party marketplaces, and other direct ordering channels.
Net revenues decreased 12.3% during the three months ended September 27, 2026 compared to the same period of the prior year, primarily due to continued weakness across websites other than 1800flowers.com and harryanddavid.com.
During the three months ended September 27, 2026, E-Commerce orders decreased 14.1% compared to the same period of the prior year. In addition, during the three months ended September 27, 2026, the average order value increased 2.0% compared to the same period of the prior year.
Wholesale and Other Segment - this segment consists primarily of wholesale distribution of gifting products to commercial customers for resale, as well as Company-operated retail stores and franchise operations.
Net revenues within this segment decreased 10.7% during the three months ended September 27, 2026, compared to the same period of the prior year, primarily due to a shift in the timing of wholesale orders from the first quarter of the prior year to the second quarter in the current year.
BloomNet® Segment - revenues in this segment are derived from membership fees, as well as other product and service offerings.
Net revenues decreased 3.6% during the three months ended September 27, 2026, compared to the same period of the prior year. The revenue decrease was primarily due to lower membership and wholesale revenues primarily from lower network order volumes and lower directory revenue.
Gross profit
Three Months Ended
September 27,
2026 		September 28,
2025 		%
Change
(dollars in thousands)
Gross profit $ 58,500 $ 68,104 -14.1 %
Gross profit % 34.1 % 35.3 %
Gross profit consists of net revenues less cost of revenues, which is comprised primarily of florist fulfillment costs (fees paid directly to florists), the cost of floral and non-floral merchandise sold from inventory or through third parties, and associated costs, including inbound and outbound shipping charges. Additionally, cost of revenues includes labor and facility costs related to direct-to-consumer and wholesale production operations, as well as payments made to sending florists related to order volume referred through the Company's BloomNet network.
Gross profit decreased 14.1% and gross profit percentage decreased 120 basis points during the three months ended September 27, 2026 compared to the same period of the prior year, primarily due to lower sales volume, higher fuel surcharges, and promotional strategy testing, partially offset by savings from the Company's cost-efficiency initiatives.
E-Commerce Segment - Gross profit decreased by 20.0% during the three months ended September 27, 2026, compared to the same period of the prior year, due to the impact of the lower revenues noted above, as well as an unfavorable gross profit percentage during the three months ended September 27, 2026 compared to the same period of the prior year primarily attributable to deleveraging on the sales decline, increased fuel surcharges, and promotional strategy testing.
Wholesale and Other Segment- Gross profit increased by 13.7% during the three months ended September 27, 2026 compared to the same period of the prior year, primarily driven by timing of orders and customer mix.
BloomNet® Segment - Gross profit decreased by 0.1% during the three months ended September 27, 2026 compared to the same period of the prior year.
Marketing and sales expense
Three Months Ended
September 27,
2026 		September 28,
2025 		%
Change
(dollars in thousands)
Marketing and sales $ 50,889 $ 61,294 -17.0 %
Percentage of net revenues 29.7 % 31.8 %
Marketing and sales expense consists primarily of advertising and promotional expenditures, catalog costs, online portal and search costs, retail store and fulfillment operations (other than costs included in cost of revenues), and customer service center expenses, as well as the operating expenses of the Company's departments engaged in marketing, selling and merchandising activities.
Marketing and sales expenses decreased 17.0% during the three months ended September 27, 2026, compared to the same period of the prior year, and also decreased as a percentage of revenues, primarily due to reduced labor costs related to the Company's cost-saving initiatives.
Technology and development expense
Three Months Ended
September 27,
2026 		September 28,
2025 		%
Change
(dollars in thousands)
Technology and development $ 15,151 $ 13,797 9.8 %
Percentage of net revenues 8.8 % 7.2 %
Technology and development expense consists primarily of payroll and operating expenses of the Company's information technology group, costs associated with its websites, including hosting, design, content development, and maintenance and support costs related to the Company's order entry, customer service, fulfillment, and database systems.
Technology and development expense increased by 9.8% during the three months ended September 27, 2026 compared to the same period of the prior year primarily due to higher labor costs.
General and administrative expense
Three Months Ended
September 27,
2026 		September 28,
2025 		%
Change
(dollars in thousands)
General and administrative $ 28,477 $ 29,327 -2.9 %
Percentage of net revenues 16.6 % 15.2 %
General and administrative expense consists of payroll and other expenses in support of the Company's executive, finance and accounting, legal, human resources and other administrative functions, as well as professional fees and other general corporate expenses.
General and administrative expenses decreased 2.9% during the three months ended September 27, 2026, compared to the same period of the prior year, primarily due to lower labor costs, insurance costs, and professional fees, partially offset by changes in the value of the Company's NQDC Plan investments (offset in Other income, net below).
Depreciation and amortization expense
Three Months Ended
September 27,
2026 		September 28,
2025 		%
Change
(dollars in thousands)
Depreciation and amortization $ 10,482 $ 10,841 -3.3 %
Percentage of net revenues 6.1 % 5.6 %
Depreciation and amortization expenses decreased 3.3% during the three months ended September 27, 2026 due to timing of certain assets becoming fully depreciated.
Interest income
Three Months Ended
September 27,
2026 		September 28,
2025 		%
Change
(dollars in thousands)
Interest income $ (130) $ (311) -58.2 %
Interest income consists of income earned on the Company's available cash balances.
Interest income decreased 58.2% during the three months ended September 27, 2026 due to a decline in interest earned on lower available cash balances.
Interest expense
Three Months Ended
September 27,
2026 		September 28,
2025 		%
Change
(dollars in thousands)
Interest expense $ 5,442 $ 4,192 29.8 %
Interest expense consists primarily of interest expense and amortization of deferred financing costs attributable to the Company's credit facilities (See Note 9- Long-term debt, net, Item 1 for details).
Interest expense increased 29.8% during the three months ended September 27, 2026 primarily due to debt refinancing costs and an increase in revolver borrowings.
Other income, net
Three Months Ended
September 27,
2026 		September 28,
2025 		%
Change
(dollars in thousands)
Other income, net $ (1,855) $ (2,338) -20.7 %
Other income, net consists primarily of investment losses (gains) on the Company's NQDC Plan investments (for which the offsetting expense or income was recorded in general and administrative expense above).
Income Taxes
The Company recorded an income tax expense of $0.7 million during the three months ended September 27, 2026, compared to $0.3 million during the three months ended September 28, 2025. The Company's effective tax rate for the three months ended September 27, 2026 was (1.3)% compared to (0.6)% in the same respective period of the prior year. The Company's effective tax rate for the three months ended September 27, 2026 and September 28, 2025 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.
Net loss from discontinued operations, net of tax
Three Months Ended
September 27,
2026 		September 28,
2025 		%
Change
(dollars in thousands)
Net loss from discontinued operations, net of tax $ (3,721) $ (3,968) -6.2 %
Net loss from discontinued operations, net of tax, represents the results of the Personalization Businesses. Net loss from discontinued operations, net of tax decreased 6.2% during the three months ended September 27, 2026 due to a decrease in income tax expense.
Liquidity and Capital Resources
Liquidity and borrowings
The Company's principal sources of liquidity are cash on hand, cash flows generated from operations, and borrowings available under the Company's credit agreement (see Note 9 - Long-term debt, net in Item 1 for details). At September 27, 2026, the Company had working capital of negative $63.7 million, including cash and cash equivalents of $9.4 million, compared to working capital of negative $17.8 million at June 28, 2026.
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, is expected to generate 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 also have historically risen during the Company's fiscal third and fourth quarters in comparison to its fiscal first quarter.
As of September 27, 2026, the Company had $140.0 million outstanding under its revolving credit agreement in order to fund pre-holiday manufacturing and inventory procurement requirements. Working capital borrowings typically peak in November, after which time cash generated from operations during the Christmas holiday season is expected to enable the Company to repay the borrowings.
While we believe that our sources of funding will be sufficient to meet our anticipated operating cash needs for at least the next twelve months, any projections of future cash needs and cash flows are subject to uncertainty. We continually evaluate, and will, from time to time, consider the acquisition of, or investment in, complementary businesses, products, services, capital infrastructure, and technologies, which might affect our liquidity requirements or cause us to require additional financing.
Cash Flows
Net cash used in operating activities from continuing operations of $126.1 million for the three months ended September 27, 2026, was primarily attributable to the net loss during the period combined with changes in working capital, including increases in inventory, trade receivables and prepaid and other, offset in part by an increase in accounts payable and accrued expenses.
Net cash used in investing activities of $3.7 million from continuing operations for the three months ended September 27, 2026, was primarily attributable to capital expenditures related to the Company's technology initiatives.
Net cash provided by financing activities from continuing operations of $131.7 million for the three months ended September 27, 2026, primarily related to net proceeds from the bank borrowings under the Company's working capital line of credit, partially offset by a payment made on the Company's Term Loan and debt issuance costs.
Free Cash Flow
Free cash flow was negative $129.8 million for the three months ended September 27, 2026, compared with free cash flow of negative $136.5 million for the three months ended September 28, 2025. The improvement of $6.7 million was primarily due to changes in working capital and reduced capital expenditures. Refer to "Definitions of non-GAAP Financial Measures" for reconciliation of non-GAAP results to applicable GAAP results.
Stock Repurchase Program
See Item 2 in Part II below for details.
Contractual Obligations
At September 27, 2026, the Company's contractual obligations from continuing operations consist of:
•Long-term debt obligations - payments due under the Company's credit agreement (see Note 9 - Long-term debt, net in Item 1 for details and payments due by period).
•Operating lease obligations - payments due under the Company's long-term operating leases (see Note 7 - Leases in Item 1 for details).
•Purchase commitments - consisting primarily of inventory and IT-related equipment purchase orders and license agreements made in the ordinary course of business - see below for the contractual payments due by period.
Payments due by period
(in thousands)
Remaining
Fiscal
2027 		Fiscal
2028 		Fiscal
2029 		Fiscal
2030 		Fiscal
2031 		Thereafter Total
Purchase commitments $ 61,623 $ 10,772 $ 4,411 $ 88 $ - $ - $ 76,894
Critical Accounting Estimates
As disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended June 28, 2026, the discussion and analysis of the Company's financial condition and results of operations are based upon the consolidated financial statements, which have been prepared in conformity with U.S. generally accepted accounting principles. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. Management bases its estimates and assumptions on historical experience and on various other factors that are believed to be reasonable under the circumstances, and management evaluates its estimates and assumptions on an ongoing basis. Actual results may differ from these estimates under different assumptions or conditions. The Company's most critical accounting policies relate to goodwill and other intangible assets. There have been no significant changes to the assumptions and estimates related to the Company's critical accounting policies since June 28, 2026.
Recently Issued Accounting Pronouncements
See Note 1 - Accounting Policies in Item 1 for details regarding the impact of accounting standards that were recently issued on our consolidated financial statements.
Forward-Looking Information and Factors that May Affect Future Results
Our disclosure and analysis in this report contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent the Company's current expectations or forecasts concerning future events and can generally be identified by the use of statements that include words such as "anticipate," "estimate," "expects," "project," "intend," "plan," "believe," "foresee," "forecast," "likely," "should," "will," "goal," "target," or similar words or phrases. These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of the Company's control that could cause actual results to differ materially from the results expressed or implied in the forward-looking statements, including, but not limited to:
•the Company's ability:
•to achieve revenue and profitability;
•to leverage its operating platform and reduce its operating expense ratio;
•to manage the seasonality of its business;
•to cost-effectively acquire and retain customers and drive purchase frequency;
•to successfully integrate acquired businesses and assets;
•to reduce working capital requirements and capital expenditures;
•to mitigate the impact of supply chain cost and capacity constraints;
•to compete against existing and new competitors;
•to manage expenses associated with sales and marketing and necessary general and administrative and technology investments;
•to address the effects of changes in accounting policies, practices, or assumptions, including changes that could potentially require future impairment charges;
•to successfully execute its strategic priorities; and
•to reduce promotional activities and achieve more efficient marketing programs;
•the outcome of contingencies, including legal proceedings in the normal course of business; and
•general consumer sentiment and economic conditions that may affect, among other things, the levels of discretionary customer purchases of the Company's products and the costs of shipping, imported products, and labor.
We cannot guarantee that any forward-looking statement will be realized, although we believe we have been prudent in our plans and assumptions. Achievement of future results is subject to risks, uncertainties, and inaccurate assumptions. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could vary materially from past results and those anticipated, estimated, or projected. Investors should bear this in mind as they consider forward-looking statements.
We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our Forms 10-Q, 8-K and 10-K reports to the Securities and Exchange Commission. Our Annual Report on Form 10-K for the fiscal year ended June 28, 2026 listed various important factors that could cause actual results to differ materially from expected and historic results. We note these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995. Readers can find them in Part I, Item 1A, of that filing under the heading "Cautionary Statements Under the Private Securities Litigation Reform Act of 1995". We incorporate that section of that Form 10-K in this filing and investors should refer to it. In addition, please refer to any additional risk factors in Part II, Item 1A in this Form 10-Q.
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