1 800 FLOWERS COM INC MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTSOF OPERATIONS. (form 10-Q)

Published: 2022-05-06 08:39:07 ET FLWS

For additional information, see Item 7 of Part II, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Overview" of our

Acquisition of PersonalizationMall

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COVID-19 and Other Macro-Economic Factors

The Company is updating its guidance for fiscal year 2022, reflecting results for the first three quarters of the year, as well as its outlook for the remainder of the year. The updated guidance includes:

? Total revenue growth of 3.0 percent to 5.0 percent, compared with the prior

? The Company anticipates that Free Cash Flow for the year will be down

significantly compared with the prior year based on its updated guidance

The Company's guidance for the year is based on several factors, including:

? The continuing headwinds associated with the ongoing pandemic, increased

costs for labor, inbound and outbound shipping and marketing, as well as

consumer concerns regarding rising price inflation and geopolitical issues,

members to its Celebrations Passport® Loyalty program, which is helping

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Definitions of non-GAAP Financial Measures:

EBITDA and adjusted EBITDA

Segment contribution margin and adjusted segment contribution margin

Adjusted net income (loss) and adjusted or comparable net income (loss) per common share

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.

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The following table presents the net revenues, gross profit and segment contribution margin from each of the Company's business segments, as well as consolidated EBITDA, and adjusted EBITDA.

Adjusted EBITDA (non-GAAP) $ (14,937 ) $ 25 $ 2,900 $ (12,012 ) $ 15,370 -178.2 %

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4,123 -97.3 % Adjusted EBITDA (non-GAAP) $ 112,314 $ 540 $ 2,900 $ 115,754 $ 177,976 $ 5,403 $ (483 ) $ 182,896 -36.7 %

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54,659 $ 109,224

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Net revenues consist primarily of the selling price of the merchandise, service or outbound shipping charges, less discounts, returns and credits.

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Gross profit by segment follows:

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Technology and development expense

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General and administrative expense

General and administrative $ 22,553 $ 30,912 -27.0 % $ 78,491 $ 89,960 -12.7 % Percentage of net revenues

Depreciation and amortization expense

Interest expense, net consists primarily of interest expense and amortization of deferred financing costs attributable to the Company's credit facility (See

Note 8 - Debt, in Item 1 . for details), net of income earned on the Company's available cash balances.

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Other income, net for the three and nine months ended March 27, 2022, consists primarily of investment (gains)/losses on the Company's NQDC Plan assets.

Liquidity and Capital Resources

Part I. Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations" for further information.

Net cash used in financing activities of $49.2 million, for the nine months ended March 27, 2022, related primarily to net repayment of debt of $15.0 million and the acquisition of $34.8 million of treasury stock.

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At March 27, 2022, the Company's contractual obligations consist of:

? Long-term debt obligations - payments due under the Company's 2021 Credit

Agreement ( see Note 8 - Debt in Item 1 for details and payments due by

period).

? Operating lease obligations - payments due under the Company's operating

leases ( see Note 13 - Leases in Item 1 for details and payments due by

equipment purchase orders and license agreements made in the ordinary course

Critical Accounting Policies and Estimates

Recently Issued Accounting Pronouncements

Forward Looking Information and Factors that May Affect Future Results

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o to achieve revenue and profitability;

o to leverage its operating platform and reduce operating expenses;

o to manage the seasonality of its business;

o to cost effectively acquire and retain customers;

o to successfully integrate acquired businesses and assets;

o to mitigate the impact of supply chain cost and capacity constraints;

o to compete against existing and new competitors;

o to manage expenses associated with sales and marketing and necessary general

? the outcome of contingencies, including legal proceedings in the normal course

of business; ? 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 and labor; and ? the impact of the COVID-19 pandemic on our business and financial statements.

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.

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