10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

X      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 1, 2018

or

___     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ___

Commission File No. 0-26841

1-800-FLOWERS.COM, Inc.

(Exact name of registrant as specified in its charter)

​DELAWARE	11-3117311
(State of  incorporation)	(I.R.S. Employer Identification No.)

One Old Country Road, Carle Place, New York 11514	(516) 237-6000
(Address of principal executive offices)(Zip code)	(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑  No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files). Yes ☑   No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

☐ Large accelerated filer	☑ Accelerated filer
☐ Non-accelerated filer (Do not check if a smaller reporting company)	☐ Smaller reporting company
	☐ Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  

Yes ☐  No ☑

The number of shares outstanding of each of the Registrant’s classes of common stock as of May 4, 2018:

Class A common stock:	36,036,960
Class B common stock:	28,567,063

TABLE OF CONTENTS

		Page
Part I.	Financial Information
Item 1.	Condensed Consolidated Financial Statements		1
	Condensed Consolidated Balance Sheets – April 1, 2018 (Unaudited) and July 2, 2017		1
	Condensed Consolidated Statements of Income (Unaudited) – Three and Nine Months Ended April 1, 2018 and April 2, 2017		2
	Condensed Consolidated Statements of Comprehensive Income (Unaudited) – Three and Nine Months Ended April 1, 2018 and April 2, 2017		3
	Condensed Consolidated Statements of Cash Flows (Unaudited) – Nine Months Ended April 1, 2018 and April 2, 2017		4
	Notes to Condensed Consolidated Financial Statements (Unaudited)		5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		25
Item 4.	Controls and Procedures		25
Part II.	Other Information
Item 1.	Legal Proceedings		26
Item 1A.	Risk Factors		26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		26
Item 3.	Defaults upon Senior Securities		26
Item 4.	Mine Safety Disclosures		26
Item 5.	Other Information		26
Item 6.	Exhibits		27
Signatures			28

PART I. – FINANCIAL INFORMATION

ITEM 1. – CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1-800-FLOWERS.COM, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except share data)

	April 1, 2018			July 2, 2017
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	173,069		$	149,732
Trade receivables, net		22,514			14,073
Inventories		68,906			75,862
Prepaid and other		17,780			17,735
Total current assets		282,269			257,402
Property, plant and equipment, net		153,737			161,381
Goodwill		62,590			62,590
Other intangibles, net		60,093			61,090
Other assets		11,664			10,007
Total assets	$	570,353		$	552,470
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	19,000		$	27,781
Accrued expenses		91,941			90,206
Current maturities of long-term debt		9,344			7,188
Total current liabilities		120,285			125,175
Long-term debt		94,911			101,377
Deferred tax liabilities		20,864			33,868
Other liabilities		11,946			9,811
Total liabilities		248,006			270,231
Commitments and contingencies (See Note 13)
Stockholders’ equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized, none issued		-			-
Class A common stock, $0.01 par value, 200,000,000 shares authorized, 51,912,721 and 51,227,779 shares issued at April 1, 2018 and July 2, 2017, respectively		519			513
Class B common stock, $0.01 par value, 200,000,000 shares authorized, 33,847,063 and 33,901,603 shares issued at April 1, 2018 and July 2, 2017, respectively		338			339
Additional paid-in-capital		340,901			337,726
Retained earnings		81,652			32,638
Accumulated other comprehensive loss		(198	)		(187	)
Treasury stock, at cost, 15,970,246 and 14,709,731 Class A shares at April 1, 2018 and July 2, 2017, respectively, and 5,280,000 Class B shares at April 1, 2018 and July 2, 2017		(100,865	)		(88,790	)
Total stockholders’ equity		322,347			282,239
Total liabilities and stockholders’ equity	$	570,353		$	552,470

See accompanying Notes to Condensed Consolidated Financial Statements.

1

1-800-FLOWERS.COM, Inc. and Subsidiaries

Condensed Consolidated Statements of Income

(in thousands, except for per share data)

(unaudited)

	Three Months Ended						Nine Months Ended
	April 1, 2018			April 2, 2017			April 1, 2018			April 2, 2017
Net revenues	$	238,545		$	233,715		$	921,987		$	954,097
Cost of revenues		145,090			140,134			525,995			532,135
Gross profit		93,455			93,581			395,992			421,962
Operating expenses:
Marketing and sales		68,215			70,158			231,708			245,112
Technology and development		10,241			10,254			29,086			29,591
General and administrative		19,553			20,962			58,128			64,446
Depreciation and amortization		7,885			8,492			24,646			25,656
Total operating expenses		105,894			109,866			343,568			364,805
Operating income (loss)		(12,439	)		(16,285	)		52,424			57,157
Interest expense, net		662			1,191			2,919			4,796
Other (income) expense, net		31			(421	)		(315	)		(570	)
Income (loss) before income taxes		(13,132	)		(17,055	)		49,820			52,931
Income tax expense (benefit)		(4,669	)		(5,925	)		806			16,903
Net income (loss)	$	(8,463	)	$	(11,130	)	$	49,014		$	36,028
Basic net income (loss) per common share	$	(0.13	)	$	(0.17	)	$	0.76		$	0.55
Diluted net income (loss) per common share	$	(0.13	)	$	(0.17	)	$	0.73		$	0.53
Weighted average shares used in the calculation of net income (loss) per common share:
Basic		64,527			65,199			64,694			65,169
Diluted		64,527			65,199			66,949			67,747

See accompanying Notes to Condensed Consolidated Financial Statements.

2

1-800-FLOWERS.COM, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income

(in thousands)

(unaudited)

	Three Months Ended						Nine Months Ended
	April 1, 2018			April 2, 2017			April 1, 2018			April 2, 2017
Net income (loss)	$	(8,463	)	$	(11,130	)	$	49,014		$	36,028
Other comprehensive income (loss) (currency translation & other miscellaneous items)		(38	)		(100	)		(11	)		(19	)
Comprehensive income (loss)	$	(8,501	)	$	(11,230	)	$	49,003		$	36,009

See accompanying Notes to Condensed Consolidated Financial Statements.

3

1-800-FLOWERS.COM, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

	Nine Months Ended
	April 1, 2018			April 2, 2017
Operating activities:
Net income	$	49,014		$	36,028
Reconciliation of net income to net cash provided by operating activities:
Depreciation and amortization		24,646			25,656
Amortization of deferred financing costs		721			1,285
Deferred income taxes		(13,004	)		(1,889	)
Bad debt expense		906			935
Stock-based compensation		3,002			4,784
Other non-cash items		249			(227	)
Changes in operating items:
Trade receivables		(9,347	)		(13,595	)
Inventories		6,956			892
Prepaid and other		(45	)		(2,030	)
Accounts payable and accrued expenses		1,453			9,670
Other assets		(88	)		(34	)
Other liabilities		110			(267	)
Net cash provided by operating activities		64,573			61,208
Investing activities:
Working capital adjustment related to sale of business		(8,500	)		-
Capital expenditures, net of non-cash expenditures		(15,809	)		(18,753	)
Net cash used in investing activities		(24,309	)		(18,753	)
Financing activities:
Acquisition of treasury stock		(12,075	)		(8,277	)
Proceeds from exercise of employee stock options		179			268
Proceeds from bank borrowings		30,000			181,000
Repayment of bank borrowings		(35,031	)		(185,000	)
Debt issuance costs		-			(1,507	)
Net cash used in financing activities		(16,927	)		(13,516	)
Net change in cash and cash equivalents		23,337			28,939
Cash and cash equivalents:
Beginning of period		149,732			27,826
End of period	$	173,069		$	56,765

See accompanying Notes to Condensed Consolidated Financial Statements.

4

1-800-FLOWERS.COM, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(unaudited)

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 for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. They do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended April 1, 2018 are not necessarily indicative of the results that may be expected for the fiscal year ending July 1, 2018. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the fiscal year ended July 2, 2017.

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 second fiscal quarter, is expected to generate nearly 50% of the Company’s annual revenues, and all of its earnings. Additionally, due to the number of major floral gifting occasions, including Mother's Day, Valentine’s Day and Administrative Professionals Week, revenues also rise during the Company’s fiscal third and fourth quarters in comparison to its fiscal first quarter. In fiscal 2017, Easter was on April 16th, falling within the Company’s fiscal fourth quarter, whereas, in fiscal 2018, Easter was on April 1st, which resulted in the shift of Easter-related revenue and EBITDA into the Company’s third quarter of fiscal 2018.

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.

Recent Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers.” This amended guidance will enhance the comparability of revenue recognition practices and will be applied to all contracts with customers. Expanded disclosures related to the nature, amount, timing, and uncertainty of revenue that is recognized are requirements under the amended guidance. As we continue to evaluate the impact of this ASU, we have determined that the new standard will impact the following areas: the costs of producing and distributing the Company’s catalogs will be expensed upon mailing, instead of being capitalized and amortized in direct proportion to the actual sales; gift card breakage will be recognized over the expected customer redemption period, rather than when redemption is considered remote; the Company will defer revenue at the time the Celebrations Reward loyalty points are earned using a relative fair value approach, rather than accruing a liability equal to the incremental cost of fulfilling its obligations. We have further identified the timing of revenue recognition for e-commerce orders (shipping point versus destination) as a potential issue in our analysis, which is not expected to change the total amount of revenue recognized, but could accelerate the timing of when revenue is recognized. We plan to adopt this guidance beginning with the first quarter in the fiscal year ending June 30, 2019, on a modified retrospective basis, with a cumulative adjustment to retained earnings. We are continuing to evaluate the impact that this ASU, and related amendments and interpretive guidance, will have on our consolidated financial statements, including the related disclosures.

In July 2015, the FASB issued ASU No. 2015-11, “Inventory (Topic 330).” The pronouncement was issued to simplify the measurement of inventory and changes the measurement from lower of cost or market to lower of cost and net realizable value. The Company adopted this standard effective July 3, 2017. The adoption of ASU 2015-11 did not have a significant impact on the Company’s consolidated financial position or results of operations.

In January 2016, the FASB issued ASU No. 2016-01, "Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities." The pronouncement requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income, requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset, and eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. This guidance will become effective for the Company's fiscal year ending June 30, 2019. The adoption is not expected to have a significant impact on the Company’s consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” Under this guidance, an entity is required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. This guidance offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. This guidance is effective for the Company’s fiscal year ending June 28, 2020. We are currently evaluating the impact and expect the ASU will have a material impact on our consolidated financial statements, primarily to the consolidated balance sheets and related disclosures.

5

In March 2016, the FASB issued ASU No. 2016-09, “Improvements to Employee Share-Based Payment Accounting.” ASU No. 2016-09 affects all entities that issue share-based payment awards to their employees. ASU No. 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The Company elected to early adopt the amendments in ASU 2016-09, in fiscal 2017. As a result, stock-based compensation excess tax benefits are reflected in the Consolidated Statements of Income as a component of the provision for income taxes, whereas they were previously recognized in equity. This change resulted in the recognition of excess tax benefits against income tax expenses, rather than additional paid-in capital, of $1.0 million for the year ended July 2, 2017. There was no impact on earnings per share since approximately 700,000 tax benefit shares for the year ended July 2, 2017, previously associated with the APIC pool calculation, are no longer considered in the diluted share computation. Additionally, our Consolidated Statements of Cash Flows now present excess tax benefits as an operating activity. This change has been applied prospectively in accordance with the ASU and prior periods have not been adjusted. Further, the Company has elected to account for forfeitures as they occur, rather than estimate expected forfeitures. The cumulative effect of this change, which was recorded as compensation expense in fiscal 2017, was not material to the financial statements. In addition, this ASU allows entities to withhold an amount up to an employees’ maximum individual statutory tax rate in the relevant jurisdiction, up from the minimum statutory requirement, without resulting in liability classification of the award. We adopted this change on a modified retrospective basis, with no impact to our consolidated financial statements. Finally, this ASU clarified that the cash paid by an employer when directly withholding shares for tax withholding purposes should be classified as a financing activity. This change does not have an impact on the Company’s consolidated financials as it conforms with its current practice.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 introduces a new forward-looking “expected loss” approach, to estimate credit losses on most financial assets and certain other instruments, including trade receivables. The estimate of expected credit losses will require entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts. This ASU also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models and methods for estimating expected credit losses. ASU 2016-13 is effective for the Company’s fiscal year ending July 4, 2021, and the guidance is to be applied using the modified-retrospective approach. The Company is currently evaluating the potential impact of adopting this guidance on our consolidated financial statements.

In June 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230), a consensus of the FASB’s Emerging Issues Task Force.” ASU 2016-15 is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The ASU is effective for the Company’s fiscal year ending June 30, 2019, and interim periods within those fiscal years. Early adoption is permitted, including interim periods within those fiscal years. An entity that elects early adoption must adopt all of the amendments in the same period. The guidance requires application using a retrospective transition method. The adoption is not expected to have a significant impact on the Company’s consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business (ASU 2017-01)," which revises the definition of a business and provides new guidance in evaluating when a set of transferred assets and activities is a business. ASU 2017-01 is effective for the Company's fiscal year ending June 30, 2019, with early adoption permitted, and should be applied prospectively. We do not expect the standard to have a material impact on our consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment," which eliminates step two from the goodwill impairment test. Under ASU 2017-04, an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value up to the amount of goodwill allocated to that reporting unit. This guidance is effective for the Company’s fiscal year ending July 4, 2021, with early adoption permitted, and should be applied prospectively. We do not expect the standard to have a material impact on our consolidated financial statements.

In February 2017, the FASB issued ASU No. 2017-05, “Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets.” This update clarifies the scope of accounting for the derecognition or partial sale of nonfinancial assets to exclude all businesses and nonprofit activities. ASU 2017-05 also provides a definition for in-substance nonfinancial assets and additional guidance on partial sales of nonfinancial assets. This guidance will be effective for the Company’s fiscal year ending June 30, 2019 and may be applied retrospectively. The Company is currently evaluating the potential impact of adopting this guidance on our consolidated financial statements.

In May 2017, the FASB issued ASU No 2017-09, “Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting.” This ASU provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting. An entity would not apply modification accounting if the fair value, vesting conditions, and classification of the awards are the same immediately before and after the modification. ASU 2017-09 is effective for the Company's fiscal year ending June 30, 2019, with early adoption permitted, and should be applied prospectively to an award modified on or after the adoption date. The Company is currently evaluating the potential impact of adopting this guidance on our consolidated financial statements.

U.S. Tax Reform

On December 22, 2017, the U.S. government enacted significant changes to the U.S. tax law following the passage and signing of the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act revises the future ongoing U.S. corporate income tax by, among other things, lowering U. S. corporate income tax rates from 35% to 21%. As the Company’s fiscal year ends on July 1, 2018, the lower corporate income tax rate will be phased in, resulting in a U.S. statutory federal rate of approximately 28% for the current fiscal year and 21% for subsequent fiscal years. The Tax Act also eliminates the domestic production activities deduction and introduces limitations on certain business expenses and executive compensation deductions. See Note 11 – Income taxes for the impact of the Tax Act on the Company’s financial statements.

On December 22, 2017, the SEC issued guidance under Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”) directing taxpayers to consider the impact of the Tax Act as “provisional” when it does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete its accounting for the change in tax law. The changes in the Tax Act are broad and complex. The final impacts of the Tax Act may differ from the Company’s estimates due to, among other things, changes in interpretations of the Tax Act, further legislation related to the Tax Act, changes in accounting standards for income taxes or related interpretations in response to the Tax Act, or any updates to estimates the Company has utilized to calculate the impacts of the Tax Act. The Securities Exchange Commission has issued rules that would allow for a measurement period of up to one year after the enactment date of the Tax Act to finalize the related tax impacts. 

6

Note 2 – Net Income (Loss) Per Common Share

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

	Three Months Ended						Nine Months Ended
	April 1, 2018			April 2, 2017			April 1, 2018		April 2, 2017
	(in thousands, except per share data, unaudited)
Numerator:
Net income (loss)	$	(8,463	)	$	(11,130	)	$	49,014	$	36,028
Denominator:
Weighted average shares outstanding		64,527			65,199			64,694		65,169
Effect of dilutive securities:
Employee stock options (1)		-			-			1,564		1,511
Employee restricted stock awards		-			-			691		1,067
		-			-			2,255		2,578
Adjusted weighted-average shares and assumed conversions		64,527			65,199			66,949		67,747
Net income (loss) per common share attributable to 1-800-FLOWERS.COM, Inc.
Basic	$	(0.13	)	$	(0.17	)	$	0.76	$	0.55
Diluted	$	(0.13	)	$	(0.17	)	$	0.73	$	0.53

Note 3 – Stock-Based Compensation

The Company has a Long Term Incentive and Share Award Plan, which is more fully described in Note 12 and Note 13 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended July 2, 2017, that provides for the grant to eligible employees, consultants and directors of stock options, restricted shares, and other stock-based awards.

The amounts of stock-based compensation expense recognized in the periods presented are as follows:

	Three Months Ended				Nine Months Ended
	April 1, 2018		April 2, 2017		April 1, 2018		April 2, 2017
			(in thousands, unaudited)
Stock options	$	108	$	110	$	323	$	337
Restricted stock		825		1,176		2,679		4,447
Total		933		1,286		3,002		4,784
Deferred income tax benefit		254		387		846		1,528
Stock-based compensation expense, net	$	679	$	899	$	2,156	$	3,256

 Stock-based compensation is recorded within the following line items of operating expenses:

	Three Months Ended				Nine Months Ended
	April 1, 2018		April 2, 2017		April 1, 2018		April 2, 2017
			(in thousands, unaudited)
Marketing and sales	$	248	$	342	$	804	$	1,384
Technology and development		49		71		160		267
General and administrative		636		873		2,038		3,133
Total	$	933	$	1,286	$	3,002	$	4,784

Stock based compensation expense has not been allocated between business segments, but is reflected as part of Corporate overhead. (see Note 12 - Business Segments.)

7

Stock Options

The following table summarizes stock option activity during the nine months ended April 1, 2018:

	Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value (000s)
Outstanding at July 2, 2017		2,127,734		$	2.42
Granted		-		$	-
Exercised		(34,000	)	$	2.67
Forfeited		(17,500	)	$	9.83
Outstanding at April 1, 2018		2,076,234		$	2.35		3.1	$	19,612
Options vested or expected to vest at April 1, 2018		2,076,234		$	2.35		3.1	$	19,612
Exercisable at April 1, 2018		1,682,234		$	2.29		3.1	$	15,997

As of April 1, 2018, the total future compensation cost related to non-vested options, not yet recognized in the statement of income, was $0.5 million and the weighted average period over which these awards are expected to be recognized was 1.3 years.

Restricted Stock

The Company grants shares of Common Stock to its employees that are subject to restrictions on transfer and risk of forfeiture until fulfillment of applicable service and performance conditions and, in certain cases, holding periods (Restricted Stock). The following table summarizes the activity of non-vested restricted stock awards during the nine months ended April 1, 2018:

	Shares			Weighted Average Grant Date Fair Value
Non-vested at July 2, 2017		1,352,873		$	7.44
Granted		921,473		$	9.50
Vested		(596,402	)	$	7.76
Forfeited		(633,404	)	$	9.50
Non-vested at April 1, 2018		1,044,540		$	7.83

The fair value of non-vested shares is determined based on the closing stock price on the grant date. As of April 1, 2018, there was $5.4 million of total unrecognized compensation cost related to non-vested restricted stock-based compensation to be recognized over the weighted-average remaining period of 2.0 years.

 Note 4 – Disposition

On March 15, 2017, the Company and Ferrero International S.A., a Luxembourg corporation (“Ferrero”), entered into a Stock Purchase Agreement (the “Purchase Agreement”) pursuant to which Ferrero agreed to purchase from the Company all of the outstanding equity of Fannie May Confections Brands, Inc., including its subsidiaries, Fannie May Confections, Inc. and Harry London Candies, Inc. (“Fannie May”) for a total consideration of $115.0 million in cash, subject to adjustment for seasonal working capital. The working capital adjustment was finalized in August 2017, resulting in an $11.4 million reduction to the purchase price. The resulting gain on sale of $14.6 million, is included within “Other (income) expense, net” in the Company’s consolidated statements of income in the fourth quarter of fiscal year 2017.

The Company and Ferrero also entered into a transition services agreement whereby the Company will provide certain post-closing services to Ferrero and Fannie May for a period of approximately 18 months, related to the business of Fannie May, and a commercial agreement with respect to the distribution of certain Ferrero and Fannie May products.

Operating results of Fannie May are reflected in the Company’s consolidated financial statements through May 30, 2017, the date of its disposition, within its Gourmet Food & Gift Baskets segment. During fiscal 2017, Fannie May contributed net revenues of $85.6 million. Operating and pre-tax income during such period were not material.

Note 5 – Inventory

The Company’s inventory, stated at cost, which is not in excess of market, 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:

	April 1, 2018		July 2, 2017
	(in thousands)
Finished goods	$	29,716	$	34,476
Work-in-process		8,784		11,933
Raw materials		30,406		29,453
Total inventory	$	68,906	$	75,862

8

         Note 6 – Goodwill and Intangible Assets

The following table presents goodwill by segment and the related change, if any, in the net carrying amount:

	1-800-Flowers.com Consumer Floral		BloomNet Wire Service		Gourmet Food & Gift Baskets		Total
	(in thousands)
Balance at April 1, 2018 and July 2, 2017	$	17,441	$	-	$	45,149	$	62,590

The Company’s other intangible assets consist of the following:

			April 1, 2018						July 2, 2017
	Amortization Period		Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
	(in years)		(in thousands)
Intangible assets with determinable lives:
Investment in licenses		14-16	$	7,420	$	6,016	$	1,404	$	7,420	$	5,937	$	1,483
Customer lists		3-10		12,184		9,146		3,038		12,184		8,227		3,957
Other		5-14		2,946		2,137		809		2,946		2,045		901
Total intangible assets with determinable lives				22,550		17,299		5,251		22,550		16,209		6,341
Trademarks with indefinite lives				54,842		-		54,842		54,749		-		54,749
Total identifiable intangible assets			$	77,392	$	17,299	$	60,093	$	77,299	$	16,209	$	61,090

Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Future estimated amortization expense is as follows: remainder of fiscal 2018 - $0.3 million, fiscal 2019 - $0.7 million, fiscal 2020 - $0.6 million, fiscal 2021 - $0.6 million, fiscal 2022 - $0.5 million and thereafter - $2.6million.

Note 7 – Investments

The Company has certain investments in non-marketable equity instruments of private companies. The Company accounts for these investments using the equity method if they provide the Company the ability to exercise significant influence, but not control, over the investee. Significant influence is generally deemed to exist if the Company has an ownership interest in the voting stock of the investee between 20% and 50%, although other factors, such as representation on the investee’s Board of Directors, are considered in determining whether the equity method is appropriate. The Company records equity method investments initially at cost, and adjusts the carrying amount to reflect the Company’s share of the earnings or losses of the investee.

The Company’s equity method investment is comprised of an interest in Flores Online, a Sao Paulo, Brazil based internet floral and gift retailer, that the Company originally acquired on May 31, 2012. The Company currently holds 24.9% of the outstanding shares of Flores Online. The book value of this investment was $0.6 million as of April 1, 2018 and $1.0 million as of July 2, 2017, and is included in the “Other assets” line item within the Company’s consolidated balance sheets. The Company’s equity in the net loss of Flores Online for the three and nine months ended April 1, 2018 and April 2, 2017 was less than $0.1 million. During the quarter ended December 31, 2017, Flores Online entered into a share exchange agreement with Isabella Flores, whereby among other changes, the Company exchanged 5% of its interest in Flores Online for a 5% interest in Isabella Flores. This new investment of approximately $0.1 million is currently being accounted as a cost method investment. In conjunction with this share exchange, the Company determined that the fair value of its investment in Flores Online was below its carrying value and that this decline was other-than-temporary. As a result, during the quarter ended December 31, 2017, the Company recorded an impairment charge of $0.2 million, which is included within the “Other (income) expense, net” line item in the Company’s consolidated statement of income.

Investments in non-marketable equity instruments of private companies, where the Company does not possess the ability to exercise significant influence, are accounted for under the cost method. Cost method investments are originally recorded at cost, and are included within “Other assets” in the Company’s consolidated balance sheets. The aggregate carrying amount of the Company’s cost method investments was $1.8 million as of April 1, 2018 and $1.7 million as of July 2, 2017.

The Company also holds certain trading securities associated with its Non-Qualified Deferred Compensation Plan (“NQDC Plan”). These investments are measured using quoted market prices at the reporting date and are included within the “Other assets” line item in the consolidated balance sheets (see Note 10 - Fair Value Measurements).

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Note 8 –Debt

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

	April 1, 2018			July 2, 2017
	(in thousands)
Revolver (1)	$	-		$	-
Term Loan (1)		107,094			112,125
Deferred financing costs		(2,839	)		(3,560	)
Total debt		104,255			108,565
Less: current debt		9,344			7,188
Long-term debt	$	94,911		$	101,377

(1) On December 23, 2016, the Company entered into an Amended and Restated Credit Agreement (the “2016 Amended Credit Agreement”) with JPMorgan Chase Bank as administrative agent, and a group of lenders. The 2016 Amended Credit Agreement amended and restated the Company’s credit agreement dated as of September 30, 2014 (the “2014 Agreement”) to, among other things, extend the maturity date of its $115.0 million outstanding term loan ("Term Loan") and revolving credit facility (the "Revolver") to December 23, 2021. The Term Loan is payable in 19 quarterly installments of principal and interest beginning on April 2, 2017, with escalating principal payments, at the rate of 5% in year one, 7.5% in year two, 10% in year three, 12.5% in year four, and 15% in year five, with the remaining balance of $61.8 million due upon maturity. The Revolver, in the aggregate amount of $200 million, subject to seasonal reduction to an aggregate amount of $100 million for the period from January 1 through August 1, may be used for working capital and general corporate purposes, subject to certain restrictions.

For each borrowing under the 2016 Amended 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 from 0.75% to 1.5%, based on the Company’s consolidated leverage ratio, where the base rate is the highest of (a) the prime rate, (b) the highest of the federal funds rate and the overnight bank funding rate as published by the New York Fed, plus 0.5% and (c) an adjusted LIBO rate, plus 1% or (2) an adjusted LIBO rate plus an applicable margin varying from 1.75% to 2.5%, based on the Company’s consolidated leverage ratio. The 2016 Amended Credit Agreement requires that while any borrowings are outstanding the Company comply with certain financial covenants and affirmative covenants as well as certain negative covenants, that subject to certain exceptions, limit the Company's ability to, among other things, incur additional indebtedness, make certain investments and make certain restricted payments. The Company was in compliance with these covenants as of April 1, 2018. The 2016 Amended Credit Agreement is secured by substantially all of the assets of the Company and the Subsidiary Guarantors.

Future principal payments under the term loan are as follows: $2.2 million – remainder of fiscal 2018, $10.1 million – fiscal 2019, $12.9 million – fiscal 2020, $15.8 million - fiscal 2021, and $66.1 – fiscal 2022.

Note 9 - Property, Plant and Equipment

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

	April 1, 2018			July 2, 2017
	(in thousands)
Land	$	30,789		$	30,789
Orchards in production and land improvements		10,830			9,703
Building and building improvements		58,088			56,791
Leasehold improvements		12,553			11,950
Production equipment and furniture and fixtures		50,160			47,293
Computer and telecommunication equipment		47,559			45,026
Software		126,806			119,177
Capital projects in progress - orchards		9,489			9,971
Property, plant and equipment, gross		346,274			330,700
Accumulated depreciation and amortization		(192,537	)		(169,319	)
Property, plant and equipment, net	$	153,737		$	161,381

10

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. 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 circumstances indicate 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:

Level 1	Valuations based on quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.
Level 2	Valuations based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.
Level 3	Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

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

	Carrying Value		Fair Value Measurements Assets (Liabilities)
			Level 1		Level 2		Level 3
	(in thousands)
Assets (liabilities) as of April 1, 2018:
Trading securities held in a “rabbi trust” (1)	$	8,941	$	8,941	$	-	$	-
	$	8,941	$	8,941	$	-	$	-
Assets (liabilities) as of July 2, 2017:
Trading securities held in a “rabbi trust” (1)	$	6,916	$	6,916	$	-	$	-
	$	6,916	$	6,916	$	-	$	-

(1) The Company has established a Non-qualified Deferred Compensation 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

At the end of each interim reporting period, the Company estimates its effective income tax rate expected to be applicable for the full year. This estimate is used in providing for income taxes on a year-to-date basis and may change in subsequent interim periods. The Company’s effective tax rate from operations for the three and nine months ended April 1, 2018 was 35.6% and 1.6% respectively, compared to 34.7% and 31.9% in the same periods of the prior year. The effective rates for fiscal 2018 were impacted by changes associated with the Tax Act (see Note 1 - Accounting Policies above). During the quarter ended December 31, 2017, in addition to the benefit received as a result of the lower 28.0% transitional federal tax rate in fiscal 2018, the Company recognized a discrete tax benefit of $12.2 million, or $0.18 per diluted share, reflecting a revaluation of its deferred tax liabilities at the lower U.S. federal statutory rate of 21%. In addition, fiscal 2018 effective rates were impacted by state income taxes, which were partially offset by various permanent differences, tax credits and return to provision adjustments related to the filing of the Company’s Fiscal 2017 tax return. The effective rates for fiscal 2017 differed from the U.S. federal statutory rate due to various permanent differences and tax credits, including excess tax benefits on stock based compensation as a result of the Company's early adoption of ASU 2016-09, domestic production deductions and research and development credits, partially offset by state income taxes.

The Company files income tax returns in the U.S. federal jurisdiction, various state jurisdictions, and various foreign countries. The Company completed its audit by the Internal Revenue Service for fiscal year 2014, however, fiscal years 2015 and 2016 remain subject to federal examination. Due to ongoing state examinations and non-conformity with the federal statute of limitations for assessment, certain states remain open from fiscal 2012. The Company commenced operations in foreign jurisdictions in 2012. The Company's foreign income tax filings are open for examination by its respective foreign tax authorities.

The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. At April 1, 2018, the Company has an unrecognized tax benefit, including an immaterial amount of accrued interest and penalties, of approximately $0.5 million. The Company believes that no significant unrecognized tax positions will be resolved over the next twelve months.

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 Note 12 – Business Segments

The Company’s management reviews the results of the Company’s operations by the following three business segments:

•     1-800-Flowers.com Consumer Floral,

•     BloomNet Wire Service, and

•     Gourmet Food and Gift Baskets

Segment performance is measured based on contribution margin, which includes only the direct controllable revenue and operating expenses of the segments. As such, management’s measure of profitability for these segments does not include the effect of corporate overhead (see (a) below), nor does it include depreciation and amortization, other (income) expense, net and income taxes, or stock-based compensation, both of which are included within corporate overhead. Assets and liabilities are reviewed at the consolidated level by management and not accounted for by segment.

	Three Months Ended						Nine Months Ended
	April 1, 2018			April 2, 2017			April 1, 2018			April 2, 2017
	(in thousands, unaudited)
Net revenues:
1-800-Flowers.com Consumer Floral	$	135,782		$	124,684		$	312,456		$	297,707
BloomNet Wire Service		24,498			24,091			64,637			65,557
Gourmet Food & Gift Baskets		78,458			85,611			545,408			592,295
Corporate		264			260			851			839
Intercompany eliminations		(457	)		(931	)		(1,365	)		(2,301	)
Total net revenues	$	238,545		$	233,715		$	921,987		$	954,097
Operating Income (Loss)
Segment Contribution Margin (non-GAAP):
1-800-Flowers.com Consumer Floral	$	16,226		$	15,863		$	33,988		$	37,172
BloomNet Wire Service		8,439			8,245			22,832			23,713
Gourmet Food & Gift Baskets		(8,811	)		(10,776	)		79,698			84,544
Segment Contribution Margin Subtotal		15,854			13,332			136,518			145,429
Corporate (a)		(20,408	)		(21,125	)		(59,448	)		(62,616	)
Depreciation and amortization		(7,885	)		(8,492	)		(24,646	)		(25,656	)
Operating Income (Loss)	$	(12,439	)	$	(16,285	)	$	52,424		$	57,157

(a) Corporate expenses consist of the Company’s enterprise shared service cost centers, and include, among other items, Information Technology, Human Resources, Accounting and Finance, Legal, Executive and Customer Service Center functions, as well as Stock-Based Compensation. In order to leverage the Company’s infrastructure, these functions are operated under a centralized management platform, providing support services throughout the organization. The costs of these functions, other than those of the Customer Service Center, which are allocated directly to the above categories based upon usage, are included within corporate expenses as they are not directly allocable to a specific segment.

Note 13 – Commitments and Contingencies

Litigation

There are various claims, lawsuits, and pending actions against the Company and its subsidiaries incident to the operations of its businesses. It is the opinion of management, after consultation with counsel, that the ultimate resolution of such claims, lawsuits and pending actions will not have a material adverse effect on the Company's consolidated financial position, results of operations or liquidity.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Forward Looking Statements

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. 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” and under Part I, Item 1A, of the Company’s Annual Report on Form 10-K under the heading “Risk Factors.”

Overview

1-800-FLOWERS.COM, Inc. and its subsidiaries (collectively, the “Company”) is a leading provider of gifts for all celebratory occasions. For the past 40 years, 1-800-Flowers.com® has been helping deliver smiles to customers with a 100% Smile Guarantee® backing every gift. In addition to the 1-800-Flowers.com brand, which offers fresh flowers, plants, fruit and gift baskets, as well as balloons, plush and keepsake gifts, the Company’s BloomNet® international floral wire service (www.mybloomnet.net) and Napco floral gifts and décor brands provide a broad range of quality products and value-added services designed to help professional florists grow their businesses profitably. The 1-800-FLOWERS.COM, Inc. family of brands also offers everyday gifting and entertaining products such as premium, gift-quality fruits and other gourmet items from Harry & David® (1-877-322-1200 or www.harryanddavid.com), popcorn and specialty treats from The Popcorn Factory® (1-800-541-2676 or www.thepopcornfactory.com); cookies and baked gifts from Cheryl’s® (1-800-443-8124 or www.cheryls.com); gift baskets and towers from 1-800-Baskets.com® (www.1800baskets.com) and DesignPac Gifts; premium English muffins and other breakfast treats from Wolferman’s (1-800-999-1910 or www.wolfermans.com); artisanal and specialty chocolates from Simply Chocolate^SM (www.simplychocolate.com), carved fresh fruit arrangements from FruitBouquets.com (www.fruitbouquets.com); top quality steaks and chops from Stock Yards® (www.stockyards.com), and personalized gifts from Personalization Universe® (www.personalizationuniverse.com).

Service offerings such as Celebrations Passport®, Celebrations Rewards® and Celebrations Reminders® are designed to deepen relationships with customers across all brands. 1-800-FLOWERS.COM, Inc. was named to the Stores® 2017 Hot 100 Retailers List by the National Retail Federation and also received the Gold award in the “Best Artificial Intelligence” category at the Data & Marketing Association’s 2017 International ECHO Awards.

Shares in 1-800-FLOWERS.COM, Inc. are traded on the NASDAQ Global Select Market, ticker symbol: FLWS.  

On May 30, 2017, the Company completed the sale of the outstanding equity of Fannie May Confections Brands, Inc., including its subsidiaries, Fannie May Confections, Inc. and Harry London Candies, Inc. (“Fannie May”) to Ferrero International S.A., a Luxembourg corporation (“Ferrero”), for a total consideration of $115.0 million in cash, subject to adjustment for seasonal working capital. The working capital adjustment was finalized in August 2017, resulting in an $11.4 million reduction to the purchase price. The resulting gain on sale of $14.6 million, is included within “Other (income) expense, net” in the Company’s consolidated statements of income in the fourth quarter of fiscal year 2017.

The Company and Ferrero also entered into a transition services agreement whereby the Company will provide certain post-closing services to Ferrero and Fannie May for a period of approximately 18 months, related to the business of Fannie May, and a commercial agreement with respect to the distribution of certain Ferrero and Fannie May products.

Operating results of Fannie May are reflected in the Company’s consolidated financial statements through May 30, 2017, the date of its disposition, within its Gourmet Food & Gift Baskets segment. See Segment Information and Results of Operations below for a comparison of fiscal 2018 results to fiscal 2017, adjusted to exclude the operations of Fannie May.

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. Where applicable, see the Segment Information and Results of Operations sections below for reconciliations of these non-GAAP measures to their most directly comparable GAAP financial measures. These non-GAAP financial measures are referred to as “adjusted" or “on a comparable basis” below, as these terms are used interchangeably.

Adjusted revenues

Adjusted revenues measure GAAP revenues adjusted for the effects of acquisitions, dispositions, and other items affecting period to period comparability. See Segment Information for details on how adjusted revenues were calculated for each period presented.

We believe that this measure provides management and investors with a more complete understanding of underlying revenue trends of established, ongoing operations by excluding the effect of activities which are subject to volatility and can obscure underlying trends.

Management recognizes that the term "adjusted revenues" may be interpreted differently by other companies and under different circumstances. Although this may influence comparability of absolute percentage growth from company to company, we believe that these measures are useful in assessing trends of the Company and its segments, and may therefore be a useful tool in assessing period-to-period performance trends.

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Adjusted gross profit and adjusted gross profit percentage

Adjusted gross profit measures GAAP revenues less cost of revenues, adjusted for the effects of acquisitions, dispositions, and other items affecting period to period comparability. Adjusted gross profit percentage measures adjusted gross profit divided by adjusted revenues. See Segment Information for details on how adjusted gross profit and adjusted gross profit percentage were calculated for each period presented.

We believe that this measure provides management and investors with a more complete understanding of underlying gross profit trends of established, ongoing operations by excluding the effect of activities which are subject to volatility and can obscure underlying trends.

Management recognizes that the term "adjusted gross profit" or “adjusted gross profit percentage” may be interpreted differently by other companies and under different circumstances. Although this interpretation may vary from company to company, we believe that these consistently applied measures are useful in assessing trends of the Company and its segments, and may therefore be a useful tool in assessing period-to-period performance trends.

EBITDA and adjusted EBITDA

We define EBITDA as net income (loss) before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted for the impact of stock based compensation, Non-Qualified Plan Investment appreciation/depreciation, and certain items affecting period to period comparability. See Segment Information or details on how EBITDA and adjusted EBITDA were calculated for each period presented.

The Company presents 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 used 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 to measure compliance with covenants such as interest coverage and debt incurrence. 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 significant 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 should only be used on a supplemental basis combined with GAAP results when evaluating the Company's performance. 

Segment contribution margin and adjusted segment contribution margin

We define segment contribution margin as earnings before interest, taxes, depreciation and amortization, before the allocation of corporate overhead expenses. Adjusted segment contribution margin is defined as segment contribution margin adjusted for certain items affecting period to period comparability. See Segment Information for details on how segment contribution margin and comparable segment contribution margin were calculated for each period presented.

When viewed together with our GAAP results, we believe segment contribution margin and comparable segment contribution margin provide management and users of the financial statements information about the performance of our business segments.

Segment contribution margin and comparable segment contribution margin are used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures. The material limitation associated with the use of the segment contribution margin and adjusted segment contribution margin is that it is an incomplete measure of profitability as it does not include all operating expenses or non-operating income and expenses. Management compensates for these limitations when using this measure by looking at other GAAP measures, such as operating income and net income.

Adjusted net income and adjusted net income per common share

We define adjusted net income and adjusted net income per common share as net income and net income per common share adjusted for certain items affecting period to period comparability. See Segment Information below for details on how adjusted net income and adjusted net income per common share were calculated for each period presented.

We believe that adjusted net income and adjusted net income 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 and net income per common share, as indicators of operating performance and they may not be comparable to similarly titled measures employed by other companies.

14

Segment Information

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, Adjusted EBITDA and adjusted net income.

	Three Months Ended
	April 1, 2018			April 2, 2017			Exclude Operating Results of Fannie May			Severance Costs		As Adjusted    (non-GAAP) April 2, 2017			As Adjusted (non-GAAP) % Change
	(in thousands, unaudited)
Net revenues:
1-800-Flowers.com Consumer Floral	$	135,782		$	124,684		$	-		$	-	$	124,684			8.9	%
BloomNet Wire Service		24,498			24,091			-			-		24,091			1.7	%
Gourmet Food & Gift Baskets		78,458			85,611			(17,700	)		-		67,911			15.5	%
Corporate		264			260			-			-		260			1.5	%
Intercompany eliminations		(457	)		(931	)		537			-		(394	)		-16.0	%
Total net revenues	$	238,545		$	233,715		$	(17,163	)	$	-	$	216,552			10.2	%
Gross profit:
1-800-Flowers.com Consumer Floral	$	53,744		$	50,584		$	-		$	-	$	50,584			6.2	%
		39.6	%		40.6	%		-			-		40.6	%
BloomNet Wire Service		12,931			12,915			-			-		12,915			0.1	%
		52.8	%		53.6	%		-			-		53.6	%
Gourmet Food & Gift Baskets		26,532			29,780			(7,134	)		-		22,646			17.2	%
		33.8	%		34.8	%		-			-		33.3	%
Corporate (a)		248			302			-			-		302			-17.9	%
		93.9	%		116.2	%		-			-		116.2	%
Total gross profit	$	93,455		$	93,581		$	(7,134	)	$	-	$	86,447			8.1	%
		39.2	%		40.0	%		-			-		39.9	%
EBITDA (non-GAAP):
Segment Contribution Margin (non-GAAP):
1-800-Flowers.com Consumer Floral	$	16,226		$	15,863		$	-		$	-	$	15,863			2.3	%
BloomNet Wire Service		8,439			8,245			-			-		8,245			2.4	%
Gourmet Food & Gift Baskets		(8,811	)		(10,776	)		225			439		(10,112	)		12.9	%
Segment Contribution Margin Subtotal		15,854			13,332			225			439		13,996			13.3	%
Corporate (a)		(20,408	)		(21,125	)		324			-		(20,801	)		1.9	%
EBITDA (non-GAAP)		(4,554	)		(7,793	)		549			439		(6,805	)		33.1	%
Add: Stock-based compensation		933			1,286			-			-		1,286			27.4	%
Add: Comp charge related to NQ Plan Investment Appreciation		30			404			-			-		404			92.6	%
Adjusted EBITDA (non-GAAP)	$	(3,591	)	$	(6,103	)	$	549		$	439	$	(5,115	)		29.8	%

15

	Nine Months Ended
	April 1, 2018			April 2, 2017			Exclude Operating Results of Fannie May			Severance Costs		As Adjusted (non-GAAP) April 2, 2017			As Adjusted (non-GAAP) % Change
	(in thousands, unaudited)
Net revenues:
1-800-Flowers.com Consumer Floral	$	312,456		$	297,707		$	-		$	-	$	297,707			5.0	%
BloomNet Wire Service		64,637			65,557			-			-		65,557			-1.4	%
Gourmet Food & Gift Baskets		545,408			592,295			(70,273	)		-		522,022			4.5	%
Corporate		851			839			-			-		839			1.4	%
Intercompany eliminations		(1,365	)		(2,301	)		1,051			-		(1,250	)		-9.2	%
Total net revenues	$	921,987		$	954,097		$	(69,222	)	$	-	$	884,875			4.2	%
Gross profit:
1-800-Flowers.com Consumer Floral	$	123,322		$	121,383		$	-		$	-	$	121,383			1.6	%
		39.5	%		40.8	%		-			-		40.8	%
BloomNet Wire Service		35,682			37,019			-			-		37,019			-3.6	%
		55.2	%		56.5	%		-			-		56.5	%
Gourmet Food & Gift Baskets		236,152			262,716			(27,559	)		-		235,157			0.4	%
		43.3	%		44.4	%		-			-		45.0	%
Corporate (a)		836			844			-			-		844			-0.9	%
		98.2	%		100.6	%		-			-		100.6	%
Total gross profit	$	395,992		$	421,962		$	(27,559	)	$	-	$	394,403			0.4	%
		42.9	%		44.2	%		-			-		44.6	%
EBITDA (non-GAAP):
Segment Contribution Margin (non-GAAP):
1-800-Flowers.com Consumer Floral	$	33,988		$	37,172		$	-		$	-	$	37,172			-8.6	%
BloomNet Wire Service		22,832			23,713			-			-		23,713			-3.7	%
Gourmet Food & Gift Baskets		79,698			84,544			(2,793	)		542		82,293			-3.2	%
Segment Contribution Margin Subtotal		136,518			145,429			(2,793	)		542		143,178			-4.7	%
Corporate (a)		(59,448	)		(62,616	)		1,087					(61,529	)		3.4	%
EBITDA (non-GAAP)		77,070			82,813			(1,706	)		542		81,649			-5.6	%
Add: Stock-based compensation		3,002			4,784								4,784			-37.2	%
Add: Comp charge related to NQ Plan Investment Appreciation		669			686			-			-		686			2.5	%
Adjusted EBITDA (non-GAAP)	$	80,741		$	88,283		$	(1,706	)	$	542	$	87,119			-7.3	%

16

Reconciliation of net income (loss) to adjusted net income (loss) (non-GAAP):               

	Three Months Ended						Nine Months Ended
	April 1, 2018			April 2, 2017			April 1, 2018		April 2, 2017
	(in thousands, unaudited)
Net income (loss)	$	(8,463	)	$	(11,130	)	$	49,014	$	36,028
Adjustments to reconcile net income (loss) to adjusted net income (loss) (non-GAAP)
Deduct: Fannie May operating results					(1,361	)				(731	)
Deduct: U.S. tax reform impact on deferred taxes (b)								12,158
Add back: Severance costs					439					542
Add back: Income tax expense impact on Fannie May operating results and severance costs					(625	)				(406	)
Adjusted net income (loss) (non-GAAP)	$	(8,463	)	$	(9,955	)	$	36,856	$	36,895
Basic and diluted net income (loss) per common share
Basic	$	(0.13	)	$	(0.17	)	$	0.76	$	0.55
Diluted	$	(0.13	)	$	(0.17	)	$	0.73	$	0.53
Basic and diluted adjusted net income (loss) per common share (non-GAAP)
Basic	$	(0.13	)	$	(0.15	)	$	0.57	$	0.57
Diluted	$	(0.13	)	$	(0.15	)	$	0.55	$	0.54
Weighted average shares used in the calculation of net income (loss) and adjusted net income (loss) (non-GAAP) per common share
Basic		64,527			65,199			64,694		65,169
Diluted		64,527			65,199			66,949		67,747

 Reconciliation of net income (loss) to adjusted EBITDA (non-GAAP) (c):

	Three Months Ended						Nine Months Ended
	April 1, 2018			April 2, 2017			April 1, 2018		April 2, 2017
	(in thousands, unaudited)
Net income (loss)	$	(8,463	)	$	(11,130	)	$	49,014	$	36,028
Add:
Interest expense and other, net		693			770			2,604		4,226
Depreciation and amortization		7,885			8,492			24,646		25,656
Income tax expense (benefit)		(4,669	)		(5,925	)		806		16,903
EBITDA (non-GAAP)		(4,554	)		(7,793	)		77,070		82,813
Add:
Severance costs		-			439			-		542
Compensation charge related to NQ plan investment appreciation		30			404			669		686
Stock-based compensation		933			1,286			3,002		4,784
Less:
Fannie May EBITDA		-			(549	)		-		1,706
Adjusted EBITDA (non-GAAP)	$	(3,591	)	$	(5,115	)	$	80,741	$	87,119

(a) Corporate expenses consist of the Company’s enterprise shared service cost centers, and include, among other items, Information Technology, Human Resources, Accounting and Finance, Legal, Executive and Customer Service Center functions, as well as Stock-Based Compensation. In order to leverage the Company’s infrastructure, these functions are operated under a centralized management platform, providing support services throughout the organization. The costs of these functions, other than those of the Customer Service Center, which are allocated directly to the above categories based upon usage, are included within corporate expenses as they are not directly allocable to a specific segment.

(b) The adjustment to deduct the impact of the U.S. tax reform from net income, for the nine months ended April 1, 2018, includes the impact of the re-valuation of the Company's deferred tax liability of $12.2mm or $0.18 per diluted share, but does not include the ongoing impact of the lower federal corporate tax rate.

(c) Segment performance is measured based on segment contribution margin or segment Adjusted EBITDA, reflecting only the direct controllable revenue and operating expenses of the segments, both of which are non-GAAP measurements. As such, management’s measure of profitability for these segments does not include the effect of corporate overhead, described above, depreciation and amortization, other income (net), and other items that we do not consider indicative of our core operating performance.

17

Results of Operations

Net Revenues

	Three Months Ended							Nine Months Ended
	April 1, 2018		April 2, 2017		% Change			April 1, 2018		April 2, 2017		% Change
	(dollars in thousands)
Net revenues:
E-Commerce	$	196,866	$	177,729		10.8	%	$	729,769	$	705,407		3.5	%
Other		41,679		55,986		-25.6	%		192,218		248,690		-22.7	%
Total net revenues	$	238,545	$	233,715		2.1	%	$	921,987	$	954,097		-3.4	%

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

Net revenues increased 2.1% during the three months ended April 1, 2018, and decreased 3.4% during the nine months ended April 1, 2018. On a comparable basis, adjusting fiscal 2017 net revenues to reflect the May 30, 2017 disposition of Fannie May, net revenues increased 10.2% and 4.2% during the three and nine months ended April 1, 2018, respectively, compared to the same periods of the prior year. These increases were attributable to growth within the Consumer Floral segment, which accelerated during the Valentine’s Day holiday, as well as the Gourmet Foods & Gift Baskets segments, reflecting year-over-year growth in most of its food gift brands, particularly Harry & David. Comparable revenue growth also benefited from the shift of the Easter holiday from the fourth quarter in fiscal 2017 to the third quarter in fiscal 2018. Adjusting for both the Easter shift, as well as the disposition of Fannie May, revenue growth was approximately 6.1% and 3.3% during the three and nine months ended April 1, 2018, respectively, compared to the same periods of the prior year.

E-commerce revenues (combined online and telephonic) increased by 10.8% and 3.5% during the three and nine months ended April 1, 2018, respectively, compared to the same periods of the prior year, as a result of growth within the Consumer Floral and Gourmet Foods & Gift Baskets segments. On a comparable basis, adjusting fiscal 2017 e-commerce revenues to exclude the revenues of Fannie May, e-commerce revenues increased 11.8% and 5.2% during the three and nine months ended April 1, 2018, respectively, compared to the same periods of the prior year. During the three months ended April 1, 2018, the Company fulfilled approximately 3,107,000 orders through its e-commerce sales channels (online and telephonic sales), at an average order value of $63.31, compared to approximately 2,703,000, at an average order value of $65.75 (2,660,000 orders and $66.22 average order value, adjusted to exclude Fannie May orders in fiscal 2017), during the same period of the prior year. During the nine months ended April 1, 2018, the Company fulfilled approximately 9,754,000 orders, through its e-commerce sales channels (online and telephonic sales), at an average order value of $74.77, compared to approximately 9,395,000 orders, at an average order value of $75.08 (9,097,000 orders and $76.29 average order value, adjusted to exclude Fannie May orders in fiscal 2017), during the same period of the prior year.

Other revenues are derived from the Company’s BloomNet Wire Service segment, as well as the wholesale and retail channels of the 1-800-Flowers.com Consumer Floral and Gourmet Food and Gift Baskets segments. Other revenues decreased by 25.6% and 22.7% during the three and nine months ended April 1, 2018, respectively, compared to the same periods of the prior year, primarily as a result of the Fannie May disposition during May 2017. On a comparable basis, adjusting fiscal 2017 other revenues to exclude the revenues of Fannie May, other revenues increased 4.5% and 1.3% during the three and nine months ended April 1, 2018, respectively, compared to the same periods of the prior year.

The 1-800-Flowers.com Consumer Floral segment includes the operations of the 1-800-Flowers.com brand, which derives revenue from the sale of consumer floral products through its e-commerce sales channels (telephonic and online sales), retail stores, and royalties from its franchise operations. Net revenues increased 8.9% and 5.0%, during the three and nine months ended April 1, 2018, in comparison to the same periods of the prior year, due to increased demand, especially during the key Valentine holiday, driven by merchandising and marketing efforts, an increase in promotional activity in order to expand market share, as well as the impact of the Easter holiday, which shifted approximately $2.2 million of revenues into the Company's fiscal third quarter of Fiscal 2018, compared to Fiscal 2017, when Easter was in the Company's fiscal fourth quarter. Revenues during the nine months ended April 1, 2018 were negatively impacted, by approximately $0.8 million, due to hurricanes Harvey and Irma.

The BloomNet Wire Service segment includes revenues from membership fees as well as other product and service offerings to florists. Net revenues increased 1.7% and decreased 1.4% during the three and nine months ended April 1, 2018, respectively, compared to the same periods of the prior year. The increase during the three months ended April 1, 2018 was primarily due to increased wholesale product sales volume and higher transaction fees due to price increases. The decrease during the nine months ended April 1, 2018 was primarily due to lower membership, transaction fees and ancillary revenues resulting from a decline in network shop count, partially offset by higher wholesale product revenues. During the nine months ended April 1, 2018, these decreases were exacerbated by the impact of hurricanes Harvey and Irma, as BloomNet provided financial aid to florists in the affected areas, and waived approximately $0.2 million of membership fees.

The Gourmet Food & Gift Baskets segment includes the operations of Harry & David, Wolferman’s, Stockyards, Cheryl’s, Fannie May (through the date of its disposition on May 30, 2017), The Popcorn Factory, and 1-800-Baskets/DesignPac Gifts. Revenue is derived from the sale of gourmet fruits, cookies, baked gifts, premium chocolates and confections, gourmet popcorn, gift baskets, and prime steaks and chops through the Company’s e-commerce sales channels (telephonic and online sales) and company-owned and operated retail stores under the Harry & David, Cheryl’s and Fannie May (through the date of its disposition) brand names, as well as wholesale operations. Net revenues decreased 8.4% and 7.9% during the three and nine months ended April 1, 2018, respectively, compared to the same periods of the prior year, due to the disposition of Fannie May on May 30, 2017. On a comparable basis, adjusting fiscal year 2017 revenues to exclude Fannie May, net revenues increased 15.5% and 4.5% during the three and nine months ended April 1, 2018, respectively, compared to the same periods of the prior year due to the shift of approximately $6.6 million of Easter holiday volume into the quarter, as well as growth in everyday gifting, particularly in the the Harry & David, Cheryl’s and 1-800-Baskets.com brands. Comparable segment growth was attributable to several initiatives implemented during the second half of fiscal 2017, including: (i) the Company’s successful efforts to grow the “everyday” volume of its Gourmet Foods & Gift Baskets brands through expanded birthday and sympathy merchandise, (ii) the modernization of the Harry & David brand, which focused on developing merchandising assortments and digital marketing programs that helped to broaden the demographic reach of the brand, and, (ii) the launch of the Simply Chocolates product line, which is managed by 1-800-Baskets. Comparable revenue growth during the nine months ended April 1, 2018 was negatively impacted by a temporary disruption in operations at our Cheryl’s brand, related to the implementation of a new production and warehouse management system, which, in turn, led to the brand’s decision to stop taking orders eight days prior to the Christmas holiday. As a result, the Company estimates that it had to forego approximately $4.0 million in holiday revenues during its second quarter of Fiscal 2018. The operational issues at Cheryl’s have been addressed and business has returned to its normal pace during the current quarter. In addition, revenues during the nine months ended April 1, 2018 were negatively impacted, by approximately $0.2 million, due to hurricanes Harvey and Irma.

18

Gross Profit

	Three Months Ended									Nine Months Ended
	April 1, 2018			April 2, 2017			% Change			April 1, 2018			April 2, 2017			% Change
	(dollars in thousands)
Gross profit	$	93,455		$	93,581			-0.1	%	$	395,992		$	421,962			-6.2	%
Gross margin %		39.2	%		40.0	%					42.9	%		44.2	%

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 include labor and facility costs related to direct-to-consumer and wholesale production operations.

Gross profit decreased 0.1% and 6.2% during the three and nine months ended April 1, 2018, respectively, in comparison to the same periods of the prior year, while gross profit percentage decreased 80 and 130 basis points, during the three and nine months ended April 1, 2018, respectively, in comparison to the same periods of the prior year. On a comparable basis, adjusting prior year gross profit to exclude Fannie May, which was disposed of on May 30, 2017, gross profit increased 8.1% and 0.4% during the three and nine months ended April 1, 2018, respectively, in comparison to the same periods of the prior year, while gross profit percentage decreased 70 and 170 basis points, during the same periods. The higher comparable gross profit is due to the increase in comparable revenues noted above, partially offset by lower gross profit percentages, primarily reflecting the growth of the Company’s Passport free-shipping program, an increase in the promotional nature of the Valentine holiday this year, and continued higher transportation and hourly labor costs. Gross profit during the nine months ended April 1, 2018 was also negatively impacted by the operational issue at Cheryl’s during the Christmas holiday season.

The 1-800-Flowers.com Consumer Floral segment gross profit increased by 6.2% and 1.6% during the three and nine months ended April 1, 2018, respectively, in comparison to the same period of the prior year, due to the aforementioned revenue growth, partially offset by a decrease in gross profit percentage of 100 and 130 basis points to 39.6% and 39.5%, respectively. The lower gross profit percentages reflect increased promotional activity within the Consumer Floral segment in order to increase market share, especially during the critical Valentine holiday, and the growth of the Company’s Passport free-shipping program, which has been driving improved customer loyalty and purchase frequency.

BloomNet Wire Service segment’s gross profit during the three months ended April 1, 2018 was consistent with the same period of the prior year, as the increase in revenues noted above were offset by an 80 basis point decrease in gross profit percentage, to 52.8%, as a result of the aforementioned shift in product mix. Gross profit decreased 3.6% during the nine months ended April 1, 2018, in comparison to the same period of the prior year, due to the decreases in revenues, noted above, and gross profit percentage which declined 130 basis points to 55.2%. The lower gross profit percentages are due to sales mix, with a decline in higher margin membership and related services, offset by an increase in lower margin wholesale product sales.

The Gourmet Food & Gift Baskets segment gross profit decreased by 10.9% and 10.1% during the three and nine months ended April 1, 2018, respectively, in comparison to the same periods of the prior year, while gross profit percentage decreased 100 and 110 basis points to 33.8% and 43.3%, over the same respective periods. On a comparable basis, adjusting prior year gross profit to exclude Fannie May, which was disposed of on May 30, 2017, gross profit increased 17.2% and 0.4% during the three and nine months ended April 1, 2018, respectively, in comparison to the same periods of the prior year, while gross profit percentage increased 50 and decreased 170 basis points to 33.8% and 43.3%, over the same respective periods. The increase in comparable gross profit during the three months ended April 1, 2018 was primarily due to the increased revenues noted above, combined with an improved gross profit percentage due to product/channel mix and production efficiency gains, partially offset by lower margins at Cheryl’s associated with “win-back” marketing programs and the sale of excess holiday inventory at lower than standard margins, as well as higher transportation and labor costs. While gross profit increased 0.4% on a comparable basis during the nine months ended April 1, 2018, the lower comparable gross profit percentage during this period primarily reflects the impact of the operational issue at the Company’s Cheryl’s Cookies brand, which negatively impacted gross profit by approximately $4.0 million during the second quarter of the current fiscal year, as a result of increased labor and expedited shipping, but also had a lingering effect in the third quarter due to the sale of excess holiday inventory at lower than standard margins and customer “win-back” promotional programs. In addition, although revenue growth provided for improved gross profit at Harry & David, higher transportation costs at Harry & David and our wholesale 1-800-Baskets brand negatively impacted gross profit percentage.

19

Marketing and Sales Expense

	Three Months Ended									Nine Months Ended
	April 1, 2018			April 2, 2017			% Change			April 1, 2018			April 2, 2017			% Change
	(dollars in thousands)
Marketing and sales	$	68,215		$	70,158			-2.8	%	$	231,708		$	245,112			-5.5	%
Percentage of net revenues		28.6	%		30.0	%					25.1	%		25.7	%

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 expense decreased 2.8% and 5.5% during the three and nine months ended April 1, 2018, compared to the same periods of the prior year, due to the disposition of Fannie May on May 30, 2017. On a comparable basis, adjusting prior year marketing and sales expense to exclude Fannie May’s expenditures, marketing and sales expense increased 6.0% and 3.0% during the three and nine months ended April 1, 2018, but decreased, as a percentage of net revenue, to 28.6% and 25.1%, compared to 29.7% and 25.4% during the comparative three and nine months ended April 2, 2017. On a comparable basis, the increase in spend came from the Consumer Floral and Gourmet Foods & Gift Baskets segments, commensurate with revenue growth, as a result of the Company’s incremental marketing efforts designed to accelerate revenue growth and capture market share during a highly competitive and promotional Valentine’s Day holiday. This increased marketing spend was partially offset by a reduction in performance based bonuses, resulting in an overall reduction in total marketing and sales spend ratios, as a percentage of net revenues.

Technology and Development Expense

	Three Months Ended									Nine Months Ended
	April 1, 2018			April 2, 2017			% Change			April 1, 2018			April 2, 2017			% Change
	(dollars in thousands)
Technology and development	$	10,241		$	10,254			-0.1	%	$	29,086		$	29,591			-1.7	%
Percentage of net revenues		4.3	%		4.4	%					3.2	%		3.1	%

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 expenses was unchanged and decreased 1.7% during the three and nine months ended April 1, 2018, compared to the same period of the prior year, primarily due to favorable hosting costs due to closing certain data centers and moving to cloud based solutions, lower labor expenses resulting from a reduction in headcount and performance based bonuses, partially offset by increased license and maintenance costs related to security and order processing platforms.

General and Administrative Expense

	Three Months Ended									Nine Months Ended
	April 1, 2018			April 2, 2017			% Change			April 1, 2018			April 2, 2017			% Change
	(dollars in thousands)
General and administrative	$	19,553		$	20,962			-6.7	%	$	58,128		$	64,446			-9.8	%
Percentage of net revenues		8.2	%		9.0	%					6.3	%		6.8	%

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 expense decreased 6.7% and 9.8% during the three and nine months ended April 1, 2018, compared to the same period of the prior year, primarily due to the disposition of Fannie May on May 30, 2017. On a comparable basis, adjusting prior year general and administrative expense to exclude Fannie May’s expenditures, general and administrative expense increased 2.1% and decreased 1.3% during the respective three and nine months ended April 1, 2018, in comparison to the same periods of the prior year. The increase during the three months ended April 1, 2018 is due primarily to higher health insurance costs due to unfavorable medical claims experience, as well as an increase in legal fees and bad debt expense, due to the bankruptcy of a wholesale customer, partially offset by a larger increase in the value of Non-Qualified Deferred Compensation Plan investments in the prior year (increase offset in Other (income) expense net line item on the financials statement – see below), and lower labor due to a reduction in performance based bonuses. The decrease during the nine months ended April 1, 2018 is due to reductions in travel and labor resulting from a reduction in performance based bonuses, partially offset by higher health insurance costs and increased professional fees.

20

  Depreciation and Amortization Expense

	Three Months Ended									Nine Months Ended
	April 1, 2018			April 2, 2017			% Change			April 1, 2018			April 2, 2017			% Change
	(dollars in thousands)
Depreciation and amortization	$	7,885		$	8,492			-7.1	%	$	24,646		$	25,656			-3.9	%
Percentage of net revenues		3.3	%		3.6	%					2.7	%		2.7	%

Depreciation and amortization expense for the three months ended April 1, 2018 decreased 7.1% and 3.9%, in comparison to the same period of the prior year, due to the disposition of Fannie May. On a comparable basis, adjusting prior year depreciation and amortization expense to exclude Fannie May, depreciation and amortization expense increased 2.7% and 6.2% during the respective three and nine months ended April 1, 2018, in comparison to the same periods of the prior year as a result of recent shorter-lived IT capital expenditures.

Interest Expense, net

	Three Months Ended							Nine Months Ended
	April 1, 2018		April 2, 2017		% Change			April 1, 2018		April 2, 2017		% Change
	(dollars in thousands)
Interest expense, net	$	662	$	1,191		-44.4	%	$	2,919	$	4,796		-39.1	%

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 regarding the 2016 Amended Credit Facility), net of income earned on the Company’s available cash balances.

Interest expense, net decreased 44.4% and 39.1% during the three and nine months ended April 1, 2018 in comparison to the same periods of the prior year, as a result of scheduled repayment of term loan borrowings, as well higher interest income on the Company’s outstanding cash balances (associated with cash received from the sale of Fannie May in the prior year). Interest expense, net during the nine months ended April 1, 2018 also benefited from the funding of Christmas holiday working capital requirements primarily through the use of cash on hand from the sale of Fannie May, in comparison to fiscal 2017, when the Company funded working capital requirements through its revolving credit facility,

  Other (income) expense, net

	Three Months Ended								Nine Months Ended
	April 1, 2018		April 2, 2017			% Change			April 1, 2018			April 2, 2017			% Change
	(dollars in thousands)
Other (income) expense, net	$	31	$	(421	)		-107.4	%	$	(315	)	$	(570	)		-44.7	%

Other (income) expense, net for the three and nine months ended April 1, 2018 consists primarily of investment earnings of the Company’s Non-Qualified Deferred Compensation Plan assets, which for the nine months ended April 1, 2018 was partially offset by a $0.2 million impairment related to the Company’s equity method investment in Flores Online (see Note 7 - Investments above).

Other (income) expense, net for the three and nine months ended April 2, 2017 consists primarily of investment earnings of the Company's Non-Qualified Deferred Compensation Plan investments, partially offset by a decrease in the Company's equity interest in Flores Online.

Income Taxes

The Company recorded an income tax benefit of $4.7 million and $5.9 million, respectively during the three months ended April 1, 2018 and April 2, 2017, and income tax expense of $0.8 million and $16.9 million, respectively during the nine months ended April 1, 2018 and April 2, 2017. The Company’s effective tax rate from operations for the three and nine months ended April 1, 2018 was 35.6% and 1.6% respectively, compared to 34.7% and 31.9% in the same periods of the prior year. The effective rates for fiscal 2018 were impacted by changes associated with the Tax Act (see Note 1 - Accounting Policies in Item 1 above). The Tax Act was enacted on December 22, 2017, however, since the Company has a July 1 fiscal year-end, the lower corporate income tax rate will be phased in, resulting in a U.S. statutory federal rate of approximately 28% for our fiscal year ending on July 1, 2018, and 21% for subsequent fiscal years. While the rate reduction associated with the Tax Act reduced the Company’s tax benefit during the quarter ended April 1, 2018, this impact was offset by various tax credits and return to provision adjustments related to the filing of the Company’s Fiscal 2017 tax return. In addition to the impact of the lower transitional rate, during the quarter ended December 31, 2017, the Company recognized a discrete tax benefit of $12.2 million, or $0.18 per diluted share, reflecting a revaluation of deferred tax liabilities at the lower U.S. federal statutory rate of 21%. The effective rates for fiscal 2017 differed from the U.S. federal statutory rate due to various permanent differences and tax credits, including excess tax benefits on stock based compensation as a result of the Company's early adoption of ASU 2016-09, domestic production deductions and research and development credits, partially offset by state income taxes. At April 1, 2018, the Company has an unrecognized tax benefit, including an immaterial amount of accrued interest and penalties, of approximately $0.5 million. The Company believes that no significant unrecognized tax positions will be resolved over the next twelve months.

21

Liquidity and Capital Resources

Liquidity and borrowings

The Company's principal sources of liquidity are cash on hand, cash flows generated from operations and the borrowings available under the 2016 Credit Facility (see Note 8 - Debt in Item 1 for details). At April 1, 2018, the Company had working capital of $162.0 million, including cash and cash equivalents of $173.1 million, compared to working capital of $132.2 million, including cash and cash equivalents of $149.7 million, at July 2, 2017. As of April 1, 2018, there were no borrowings outstanding under its working capital Revolver. 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 second fiscal quarter, typically generates nearly 50% of the Company’s annual revenues, and all of its earnings. As a result, cash generated during its second quarter is expected to be sufficient to provide for operating needs until the second quarter of fiscal 2019, when the Company expects to borrow against its Revolver to fund pre-holiday manufacturing and inventory purchases.

We believe that our sources of funding will be sufficient to meet our anticipated operating cash needs for at least the next 12 months. However, any projections of future cash needs and cash flows are subject to substantial uncertainty. We continually evaluate opportunities to repurchase common stock and we 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 provided by operating activities of $64.6 million for the nine months ended April 1, 2018, was primarily attributable to the Company’s net income during the period, adjusted by non-cash charges for depreciation/amortization, deferred income taxes (including the impact of the Tax Act – see Note 1 - Accounting Policies and Note 11 – Income taxes in Item 1 above) and stock based compensation, as well as seasonal changes in working capital, including decreases in inventory and accounts payable/accrued expenses, partially offset by increases in receivables.

Net cash used in investing activities of $24.3 million for the nine months ended April 1, 2018, was primarily attributable to the working capital adjustment related to the sale of Fannie May, of which $8.5 million was still due to Ferrero at July 2, 2017, and to capital expenditures related to the Company's technology initiatives and Gourmet Foods & Gift Basket segment manufacturing production and orchard planting equipment.

Net cash used in financing activities of $16.9 million for the nine months ended April 1, 2018 was primarily due to Term Loan repayments of $5.0 million and the acquisition of $12.1 million of treasury stock. All borrowings under the Company's revolving credit facility were repaid by the end of the fiscal second quarter. 

Stock Repurchase Program

The Company has a stock repurchase plan through which purchases can be made from time to time in the open market and through privately negotiated transactions, subject to general market conditions. The repurchase program is financed utilizing available cash. On August 30, 2017, the Company’s Board of Directors authorized an increase to its stock repurchase plan of up to $30.0 million. As of April 1, 2018, $20.1 million remained authorized under the plan.

Contractual Obligations

There have been no material changes outside the ordinary course of business related to the Company’s contractual obligations as discussed in the Annual Report on Form 10-K for the year ended July 2, 2017.

22

Critical Accounting Policies and Estimates

As disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended July 2, 2017, the discussion and analysis of the Company’s financial condition and results of operations are based upon the consolidated financial statements of 1-800-FLOWERS.COM, Inc., 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 revenue recognition, accounts receivable, inventory, goodwill, other intangible assets and long-lived assets and income taxes. There have been no significant changes to the assumptions and estimates related to the Company’s critical accounting policies, since July 2, 2017, except for the enactment of the Tax Act (see Note 1 - Accounting Policies and Note 11 – Income taxes in Item 1 above for details).

Recent Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers.” This amended guidance will enhance the comparability of revenue recognition practices and will be applied to all contracts with customers. Expanded disclosures related to the nature, amount, timing, and uncertainty of revenue that is recognized are requirements under the amended guidance. As we continue to evaluate the impact of this ASU, we have determined that the new standard will impact the following areas: the costs of producing and distributing the Company’s catalogs will be expensed upon mailing, instead of being capitalized and amortized in direct proportion to the actual sales; gift card breakage will be estimated based on the historical pattern of gift card redemption, rather than when redemption is considered remote; the Company will defer revenue at the time the Celebrations Reward loyalty points are earned using a relative fair value approach, rather than accruing a liability equal to the incremental cost of fulfilling its obligations. We have further identified the timing of revenue recognition for e-commerce orders (shipping point versus destination) as a potential issue in our analysis, which is not expected to change the total amount of revenue recognized, but could accelerate the timing of when revenue is recognized. We plan to adopt this guidance beginning with the first quarter in the fiscal year ending June 30, 2019, on a retrospective basis, with a cumulative adjustment to retained earnings. We are continuing to evaluate the impact that this ASU, and related amendments and interpretive guidance, will have on our consolidated financial statements, including the related disclosures.

In July 2015, the FASB issued ASU No. 2015-11, “Inventory (Topic 330).” The pronouncement was issued to simplify the measurement of inventory and changes the measurement from lower of cost or market to lower of cost and net realizable value. The Company adopted this standard effective July 3, 2017. The adoption of ASU 2015-11 did not have a significant impact on the Company’s consolidated financial position or results of operations.

In January 2016, the FASB issued ASU No. 2016-01, "Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities." The pronouncement requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income, requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset, and eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. This guidance will become effective for the Company's fiscal year ending June 30, 2019. The adoption is not expected to have a significant impact on the Company’s consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” Under this guidance, an entity is required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. This guidance offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. This guidance is effective for the Company’s fiscal year ending June 28, 2020. We are currently evaluating the impact and expect the ASU will have a material impact on our consolidated financial statements, primarily to the consolidated balance sheets and related disclosures.

In March 2016, the FASB issued ASU No. 2016-09, “Improvements to Employee Share-Based Payment Accounting.” ASU No. 2016-09 affects all entities that issue share-based payment awards to their employees. ASU No. 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The Company elected to early adopt the amendments in ASU 2016-09, in fiscal 2017. As a result, stock-based compensation excess tax benefits are reflected in the Consolidated Statements of Income as a component of the provision for income taxes, whereas they were previously recognized in equity. This change resulted in the recognition of excess tax benefits against income tax expenses, rather than additional paid-in capital, of $1.0 million for the year ended July 2, 2017. There was no impact on earnings per share since approximately 700,000 tax benefit shares for the year ended July 2, 2017, previously associated with the APIC pool calculation, are no longer considered in the diluted share computation. Additionally, our Consolidated Statements of Cash Flows now present excess tax benefits as an operating activity. This change has been applied prospectively in accordance with the ASU and prior periods have not been adjusted. Further, the Company has elected to account for forfeitures as they occur, rather than estimate expected forfeitures. The cumulative effect of this change, which was recorded as compensation expense in fiscal 2017, was not material to the financial statements. In addition, this ASU allows entities to withhold an amount up to an employees’ maximum individual statutory tax rate in the relevant jurisdiction, up from the minimum statutory requirement, without resulting in liability classification of the award. We adopted this change on a modified retrospective basis, with no impact to our consolidated financial statements. Finally, this ASU clarified that the cash paid by an employer when directly withholding shares for tax withholding purposes should be classified as a financing activity. This change does not have an impact on the Company’s consolidated financials as it conforms with its current practice.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 introduces a new forward-looking “expected loss” approach, to estimate credit losses on most financial assets and certain other instruments, including trade receivables. The estimate of expected credit losses will require entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts. This ASU also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models and methods for estimating expected credit losses. ASU 2016-13 is effective for the Company’s fiscal year ending July 4, 2021, and the guidance is to be applied using the modified-retrospective approach. The Company is currently evaluating the potential impact of adopting this guidance on our consolidated financial statements.

In June 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230), a consensus of the FASB’s Emerging Issues Task Force.” ASU 2016-15 is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The ASU is effective for the Company’s fiscal year ending June 30, 2019, and interim periods within those fiscal years. Early adoption is permitted, including interim periods within those fiscal years. An entity that elects early adoption must adopt all of the amendments in the same period. The guidance requires application using a retrospective transition method. The adoption is not expected to have a significant impact on the Company’s consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business (ASU 2017-01)," which revises the definition of a business and provides new guidance in evaluating when a set of transferred assets and activities is a business. ASU 2017-01 is effective for the Company's fiscal year ending June 30, 2019, with early adoption permitted, and should be applied prospectively. We do not expect the standard to have a material impact on our consolidated financial statements. 

23

In January 2017, the FASB issued ASU No. 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment," which eliminates step two from the goodwill impairment test. Under ASU 2017-04, an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value up to the amount of goodwill allocated to that reporting unit. This guidance is effective for the Company’s fiscal year ending July 4, 2021, with early adoption permitted, and should be applied prospectively. We do not expect the standard to have a material impact on our consolidated financial statements.

In February 2017, the FASB issued ASU No. 2017-05, “Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets.” This update clarifies the scope of accounting for the derecognition or partial sale of nonfinancial assets to exclude all businesses and nonprofit activities. ASU 2017-05 also provides a definition for in-substance nonfinancial assets and additional guidance on partial sales of nonfinancial assets. This guidance will be effective for the Company’s fiscal year ending June 30, 2019 and may be applied retrospectively. The Company is currently evaluating the potential impact of adopting this guidance on our consolidated financial statements.

In May 2017, the FASB issued ASU No 2017-09, “Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting.” This ASU provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting. An entity would not apply modification accounting if the fair value, vesting conditions, and classification of the awards are the same immediately before and after the modification. ASU 2017-09 is effective for the Company's fiscal year ending June 30, 2019, with early adoption permitted, and should be applied prospectively to an award modified on or after the adoption date. The Company is currently evaluating the potential impact of adopting this guidance 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 beliefs concerning future events and can generally be identified by the use of statements that include words such as “estimate,” “project,” “believe,” “anticipate,” “intend,” “plan,” “foresee,” “likely,” “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:

● the Company’s ability:

o to achieve revenue and profitability;

o to leverage its operating platform and reduce operating expenses;

o to manage the increased seasonality of its business;

o to cost effectively acquire and retain customers;

o to effectively integrate and grow acquired companies;

o to reduce working capital requirements and capital expenditures;

o to compete against existing and new competitors;

o to manage expenses associated with sales and marketing and necessary general and administrative and technology investments; and

o to cost efficiently manage inventories;

● the outcome of contingencies, including legal proceedings in the normal course of business; and

● general consumer sentiment and economic conditions that may affect levels of discretionary customer purchases of the Company’s products.

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 filing for the fiscal year ended July 2, 2017 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.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to market risk from the effect of interest rate changes.

Interest Rate Risk

The Company’s exposure to market risk for changes in interest rates relates primarily to the Company’s investment of available cash balances and its long-term debt. The Company generally invests its cash and cash equivalents in investment grade corporate and U.S. government securities. Due to the currently low rates of return the Company is receiving on its cash equivalents, the potential for a significant decrease in short-term interest rates is low and, therefore, a further decrease would not have a material impact on the Company’s interest income. Borrowings under the Company’s credit facility bear interest at a variable rate, plus an applicable margin, and therefore expose the Company to market risk for changes in interest rates. The effect of a 50 basis point increase in current interest rates on the Company’s interest expense would be approximately $0.1 and $0.4 million during the three and nine months ended April 1, 2018, respectively.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as of April 1, 2018. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of April 1, 2018.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the Company’s evaluation required by Rules 13a-15(d) or 15d-15(d) of the Securities Exchange Act of 1934 during the quarter ended April 1, 2018, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Litigation

There are various claims, lawsuits, and pending actions against the Company and its subsidiaries incident to the operations of its businesses. It is the opinion of management, after consultation with counsel, that the ultimate resolution of such claims, lawsuits and pending actions will not have a material adverse effect on the Company's consolidated financial position, results of operations or liquidity.

ITEM 1A. RISK FACTORS.

There were no material changes to the Company’s risk factors as discussed in Part 1, Item 1A-Risk Factors in the Company’s Annual Report on Form 10-K for the year ended July 2, 2017.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The Company has a stock repurchase plan through which purchases can be made from time to time in the open market and through privately negotiated transactions, subject to general market conditions. The repurchase program is financed utilizing available cash. On August 30, 2017, the Company’s Board of Directors authorized an increase to its stock repurchase plan of up to $30.0 million. As of April 1, 2018, $20.1 million remained authorized under the plan.

The following table sets forth, for the months indicated, the Company’s purchase of common stock during the first nine months of fiscal 2018, which includes the period July 3, 2017 through April 1, 2018:

Period	Total Number of Shares Purchased		Average Price Paid Per Share (1)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
	(in thousands, except average price paid per share)
07/03/17 - 07/30/17		89.3	$	9.66		89.3	$	16,363
07/31/16 - 08/27/17		99.6	$	9.08		99.6	$	15,456
08/28/17 - 10/01/17		268.7	$	9.43		268.7	$	27,859
10/02/17 - 10/29/17		233.5	$	9.62		233.5	$	25,606
10/30/17 - 12/03/17		414.3	$	9.36		414.3	$	21,719
12/04/17 - 12/31/17		61.9	$	10.16		61.9	$	21,089
01/01/18 - 01/28/18		-	$	-		-	$	21,089
01/29/18 - 02/25/18		93.2	$	10.60		93.2	$	20,098
02/26/18 - 04/01/18		-	$	-		-	$	20,098
Total		1,260.5	$	9.55		1,260.5

(1) Average price per share excludes commissions and other transaction fees.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable. 

ITEM 5. OTHER INFORMATION

None.

26

ITEM 6. EXHIBITS

31.1	Certification of the principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
31.2	Certification of the principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
32.1	Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Document
101.PRE	XBRL Taxonomy Definition Presentation Document

* Filed herewith.

27

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	1-800-FLOWERS.COM, Inc.  (Registrant)
Date:      May 11, 2018	/s/ Christopher G. McCann       Christopher G. McCann Chief Executive Officer,  Director and President (Principal Executive Officer)
Date:      May 11, 2018	/s/ William E. Shea       William E. Shea Senior Vice President, Treasurer and Chief Financial Officer (Principal Financial and Accounting Officer)

EX-31.1

Exhibit 31.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

(RULE 13a-14 (a))

I, Christopher G. McCann, certify that:

(1) I have reviewed this quarterly report on Form 10-Q of 1-800-FLOWERS.COM, Inc.;

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4) The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

(5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 11, 2018	/s/ Christopher G. McCann
	Christopher G. McCann
	Chief Executive Officer,
	Director and President

EX-31.2

Exhibit 31.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

(RULE 13a-14 (a))

I, William E. Shea, certify that:

(1) I have reviewed this quarterly report on Form 10-Q of 1-800-FLOWERS.COM, Inc.;

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4) The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

(5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over the financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 11, 2018	/s/ William E. Shea
	William E. Shea
	Senior Vice President, Treasurer and
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATIONS PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of 1-800-FLOWERS.COM, Inc. (the “Company”) hereby certifies, to the best of such officer's knowledge, that:

(1) the Quarterly Report on Form 10-Q of the Company for the quarter ended April 1, 2018, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934; as amended; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 11, 2018	/s/ Christopher G. McCann
	Chris G. McCann Chief Executive Officer, Director and President
Dated: May 11, 2018	/s/ William E. Shea
	William E. Shea Senior Vice President, Treasurer and Chief Financial Officer

These certifications are furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such certifications will not be deemed to be incorporated by reference in to any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates them by reference.

XML

Document And Entity Information - shares	9 Months Ended
	Apr. 01, 2018	May 04, 2018
Document Information [Line Items]
Entity Registrant Name	1 800 FLOWERS COM INC
Entity Central Index Key	0001084869
Trading Symbol	flws
Current Fiscal Year End Date	--07-01
Entity Filer Category	Accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Type	10-Q
Document Period End Date	Apr. 01, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3
Amendment Flag	false
Common Class A [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding (in shares)		36,036,960
Common Class B [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding (in shares)		28,567,063

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Apr. 01, 2018	Jul. 02, 2017
Assets
Cash and cash equivalents	$ 173,069	$ 149,732
Trade receivables, net	22,514	14,073
Inventories	68,906	75,862
Prepaid and other	17,780	17,735
Total current assets	282,269	257,402
Property, plant and equipment, net	153,737	161,381
Goodwill	62,590	62,590
Other intangibles, net	60,093	61,090
Other assets	11,664	10,007
Total assets	570,353	552,470
Liabilities and Stockholders' Equity
Accounts payable	19,000	27,781
Accrued expenses	91,941	90,206
Current maturities of long-term debt	9,344	7,188
Total current liabilities	120,285	125,175
Long-term debt	94,911	101,377
Deferred tax liabilities	20,864	33,868
Other liabilities	11,946	9,811
Total liabilities	248,006	270,231
Commitments and contingencies (See Note 13)
Stockholders’ equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized, none issued
Additional paid-in-capital	340,901	337,726
Retained earnings	81,652	32,638
Accumulated other comprehensive loss	(198)	(187)
Treasury stock, at cost, 15,970,246 and 14,709,731 Class A shares at April 1, 2018 and July 2, 2017, respectively, and 5,280,000 Class B shares at April 1, 2018 and July 2, 2017	(100,865)	(88,790)
Total stockholders’ equity	322,347	282,239
Total liabilities and stockholders’ equity	570,353	552,470
Common Class A [Member]
Stockholders’ equity:
Common stock	519	513
Common Class B [Member]
Stockholders’ equity:
Common stock	$ 338	$ 339

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares	Apr. 01, 2018	Jul. 02, 2017
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, authorized (in shares)	10,000,000	10,000,000
Preferred stock, issued (in shares)	0	0
Common Class A [Member]
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized (in shares)	200,000,000	200,000,000
Common stock, issued (in shares)	51,912,721	51,227,779
Treasury stock, shares (in shares)	15,970,246	14,709,731
Common Class B [Member]
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized (in shares)	200,000,000	200,000,000
Common stock, issued (in shares)	33,847,063	33,901,603
Treasury stock, shares (in shares)	5,280,000	5,280,000

XML

Condensed Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Apr. 01, 2018	Apr. 02, 2017	Apr. 01, 2018	Apr. 02, 2017
Net revenues	$ 238,545	$ 233,715	$ 921,987	$ 954,097
Cost of revenues	145,090	140,134	525,995	532,135
Gross profit	93,455	93,581	395,992	421,962
Operating expenses:
Marketing and sales	68,215	70,158	231,708	245,112
Technology and development	10,241	10,254	29,086	29,591
General and administrative	19,553	20,962	58,128	64,446
Depreciation and amortization	7,885	8,492	24,646	25,656
Total operating expenses	105,894	109,866	343,568	364,805
Operating income (loss)	(12,439)	(16,285)	52,424	57,157
Interest expense, net	662	1,191	2,919	4,796
Other (income) expense, net	31	(421)	(315)	(570)
Income (loss) before income taxes	(13,132)	(17,055)	49,820	52,931
Income tax expense (benefit)	(4,669)	(5,925)	806	16,903
Net income (loss)	$ (8,463)	$ (11,130)	$ 49,014	$ 36,028
Basic net income (loss) per common share (in dollars per share)	$ (0.13)	$ (0.17)	$ 0.76	$ 0.55
Diluted net income (loss) per common share (in dollars per share)	$ (0.13)	$ (0.17)	$ 0.73	$ 0.53
Weighted average shares used in the calculation of net income (loss) per common share:
Basic (in shares)	64,527	65,199	64,694	65,169
Diluted (in shares)	64,527	65,199	66,949	67,747

XML

Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Apr. 01, 2018	Apr. 02, 2017	Apr. 01, 2018	Apr. 02, 2017
Net income (loss)	$ (8,463)	$ (11,130)	$ 49,014	$ 36,028
Other comprehensive income (loss) (currency translation & other miscellaneous items)	(38)	(100)	(11)	(19)
Comprehensive income (loss)	$ (8,501)	$ (11,230)	$ 49,003	$ 36,009

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Apr. 01, 2018	Apr. 02, 2017
Operating activities:
Net income	$ 49,014	$ 36,028
Reconciliation of net income to net cash provided by operating activities:
Depreciation and amortization	24,646	25,656
Amortization of deferred financing costs	721	1,285
Deferred income taxes	(13,004)	(1,889)
Bad debt expense	906	935
Stock-based compensation	3,002	4,784
Other non-cash items	249	(227)
Changes in operating items:
Trade receivables	(9,347)	(13,595)
Inventories	6,956	892
Prepaid and other	(45)	(2,030)
Accounts payable and accrued expenses	1,453	9,670
Other assets	(88)	(34)
Other liabilities	110	(267)
Net cash provided by operating activities	64,573	61,208
Investing activities:
Working capital adjustment related to sale of business	(8,500)
Capital expenditures, net of non-cash expenditures	(15,809)	(18,753)
Net cash used in investing activities	(24,309)	(18,753)
Financing activities:
Acquisition of treasury stock	(12,075)	(8,277)
Proceeds from exercise of employee stock options	179	268
Proceeds from bank borrowings	30,000	181,000
Repayment of bank borrowings	(35,031)	(185,000)
Debt issuance costs		(1,507)
Net cash used in financing activities	(16,927)	(13,516)
Net change in cash and cash equivalents	23,337	28,939
Cash and cash equivalents:
Beginning of period	149,732	27,826
End of period	$ 173,069	$ 56,765

XML

Note 1 - Accounting Policies

9 Months Ended

Apr. 01, 2018

Notes to Financial Statements

Organization, Consolidation, Basis of Presentation, Business Description and Accounting Policies [Text Block]

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 for interim financial information and with the instructions to Form

10

-Q and Article

10

of Regulation S-

X.

They do

not

include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the

three

and

nine

month periods ended

April 1, 2018

are

not

necessarily indicative of the results that

may

be expected for the fiscal year ending

July 1, 2018.

For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form

10

-K for the fiscal year ended

July 2, 2017.

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

second

fiscal quarter, is expected to generate nearly

50%

of the Company’s annual revenues, and all of its earnings. Additionally, due to the number of major floral gifting occasions, including Mother's Day, Valentine’s Day and Administrative Professionals Week, revenues also rise during the Company’s fiscal

third

and

fourth

quarters in comparison to its fiscal

first

quarter. In fiscal

2017,

Easter was on

April

16th,

falling within the Company’s fiscal

fourth

quarter, whereas, in fiscal

2018,

Easter was on

April

1st,

which resulted in the shift of Easter-related revenue and EBITDA into the Company’s

third

quarter of fiscal

2018.

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.

Recent Accounting Pronouncements

In

May 2014,

the FASB issued ASU

No.

2014

-

09,

“Revenue from Contracts with Customers.” This amended guidance will enhance the comparability of revenue recognition practices and will be applied to all contracts with customers. Expanded disclosures related to the nature, amount, timing, and uncertainty of revenue that is recognized are requirements under the amended guidance. As we continue to evaluate the impact of this ASU, we have determined that the new standard will impact the following areas: the costs of producing and distributing the Company’s catalogs will be expensed upon mailing, instead of being capitalized and amortized in direct proportion to the actual sales; gift card breakage will be recognized over the expected customer redemption period, rather than when redemption is considered remote; the Company will defer revenue at the time the Celebrations Reward loyalty points are earned using a relative fair value approach, rather than accruing a liability equal to the incremental cost of fulfilling its obligations. We have further identified the timing of revenue recognition for e-commerce orders (shipping point versus destination) as a potential issue in our analysis, which is

not

expected to change the total amount of revenue recognized, but could accelerate the timing of when revenue is recognized. We plan to adopt this guidance beginning with the

first

quarter in the fiscal year ending

June 30, 2019,

on a modified retrospective basis, with a cumulative adjustment to retained earnings. We are continuing to evaluate the impact that this ASU, and related amendments and interpretive guidance, will have on our consolidated financial statements, including the related disclosures.

In

July 2015,

the FASB issued ASU

No.

2015

-

11,

“Inventory (Topic

330

).” The pronouncement was issued to simplify the measurement of inventory and changes the measurement from lower of cost or market to lower of cost and net realizable value. The Company adopted this standard effective

July 3, 2017.

The adoption of ASU

2015

-

11

did

not

have a significant impact on the Company’s consolidated financial position or results of operations.

In

January 2016,

the FASB issued ASU

No.

2016

-

01,

"Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities." The pronouncement requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income, requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset, and eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. This guidance will become effective for the Company's fiscal year ending

June 30, 2019.

The adoption is

not

expected to have a significant impact on the Company’s consolidated financial statements.

In

February 2016,

the FASB issued ASU

No.

2016

-

02,

“Leases (Topic

842

).” Under this guidance, an entity is required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. This guidance offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. This guidance is effective for the Company’s fiscal year ending

June 28, 2020. 

We are currently evaluating the impact and expect the ASU will have a material impact on our consolidated financial statements, primarily to the consolidated balance sheets and related disclosures.

In

March 2016,

the FASB issued ASU

No.

2016

-

09,

“Improvements to Employee Share-Based Payment Accounting.” ASU

No.

2016

-

09

affects all entities that issue share-based payment awards to their employees. ASU

No.

2016

-

09

simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The Company elected to early adopt the amendments in ASU

2016

-

09,

in fiscal

2017.

As a result, stock-based compensation excess tax benefits are reflected in the Consolidated Statements of Income as a component of the provision for income taxes, whereas they were previously recognized in equity. This change resulted in the recognition of excess tax benefits against income tax expenses, rather than additional paid-in capital, of

$1.0

million for the year ended

July 2, 2017.

There was

no

impact on earnings per share since approximately

700,000

tax benefit shares for the year ended

July 2, 2017,

previously associated with the APIC pool calculation, are

no

longer considered in the diluted share computation. Additionally, our Consolidated Statements of Cash Flows now present excess tax benefits as an operating activity. This change has been applied prospectively in accordance with the ASU and prior periods have

not

been adjusted. Further, the Company has elected to account for forfeitures as they occur, rather than estimate expected forfeitures. The cumulative effect of this change, which was recorded as compensation expense in fiscal

2017,

was

not

material to the financial statements. In addition, this ASU allows entities to withhold an amount up to an employees’ maximum individual statutory tax rate in the relevant jurisdiction, up from the minimum statutory requirement, without resulting in liability classification of the award. We adopted this change on a modified retrospective basis, with

no

impact to our consolidated financial statements. Finally, this ASU clarified that the cash paid by an employer when directly withholding shares for tax withholding purposes should be classified as a financing activity. This change does

not

have an impact on the Company’s consolidated financials as it conforms with its current practice.

In

June 2016,

the FASB issued ASU

No.

2016

-

13,

“Financial Instruments-Credit Losses (Topic

326

): Measurement of Credit Losses on Financial Instruments.” ASU

2016

-

13

introduces a new forward-looking “expected loss” approach, to estimate credit losses on most financial assets and certain other instruments, including trade receivables. The estimate of expected credit losses will require entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts. This ASU also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models and methods for estimating expected credit losses. ASU

2016

-

13

is effective for the Company’s fiscal year ending

July 4, 2021,

and the guidance is to be applied using the modified-retrospective approach. The Company is currently evaluating the potential impact of adopting this guidance on our consolidated financial statements.

In

June 2016,

the FASB issued ASU

2016

-

15,

“Statement of Cash Flows (Topic

230

), a consensus of the FASB’s Emerging Issues Task Force.” ASU

2016

-

15

is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The ASU is effective for the Company’s fiscal year ending

June 30, 2019,

and interim periods within those fiscal years. Early adoption is permitted, including interim periods within those fiscal years. An entity that elects early adoption must adopt all of the amendments in the same period. The guidance requires application using a retrospective transition method. The adoption is

not

expected to have a significant impact on the Company’s consolidated financial statements.

In

January 2017,

the FASB issued ASU

No.

2017

-

01,

"Business Combinations (Topic

805

): Clarifying the Definition of a Business (ASU

2017

-

01

)," which revises the definition of a business and provides new guidance in evaluating when a set of transferred assets and activities is a business. ASU

2017

-

01

is effective for the Company's fiscal year ending

June 30, 2019,

with early adoption permitted, and should be applied prospectively. We do

not

expect the standard to have a material impact on our consolidated financial statements.

In

January 2017,

the FASB issued ASU

No.

2017

-

04,

"Intangibles - Goodwill and Other (Topic

350

): Simplifying the Test for Goodwill Impairment," which eliminates step

two

from the goodwill impairment test. Under ASU

2017

-

04,

an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value up to the amount of goodwill allocated to that reporting unit. This guidance is effective for the Company’s fiscal year ending

July 4, 2021,

with early adoption permitted, and should be applied prospectively. We do

not

expect the standard to have a material impact on our consolidated financial statements.

In

February 2017,

the FASB issued ASU

No.

2017

-

05,

“Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets.” This update clarifies the scope of accounting for the derecognition or partial sale of nonfinancial assets to exclude all businesses and nonprofit activities. ASU

2017

-

05

also provides a definition for in-substance nonfinancial assets and additional guidance on partial sales of nonfinancial assets. This guidance will be effective for the Company’s fiscal year ending

June 30, 2019

and

may

be applied retrospectively. The Company is currently evaluating the potential impact of adopting this guidance on our consolidated financial statements.

In

May 2017,

the FASB issued ASU

No

2017

-

09,

“Compensation - Stock Compensation (Topic

718

): Scope of Modification Accounting.” This ASU provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting. An entity would

not

apply modification accounting if the fair value, vesting conditions, and classification of the awards are the same immediately before and after the modification. ASU

2017

-

09

is effective for the Company's fiscal year ending

June 30, 2019,

with early adoption permitted, and should be applied prospectively to an award modified on or after the adoption date. The Company is currently evaluating the potential impact of adopting this guidance on our consolidated financial statements.

U.S. Tax Reform

On

December 22, 2017,

the U.S. government enacted significant changes to the U.S. tax law following the passage and signing of the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act revises the future ongoing U.S. corporate income tax by, among other things, lowering U. S. corporate income tax rates from

35%

to

21%.

As the Company’s fiscal year ends on

July 1, 2018,

the lower corporate income tax rate will be phased in, resulting in a U.S. statutory federal rate of approximately

28%

for the current fiscal year and

21%

for subsequent fiscal years. The Tax Act also eliminates the domestic production activities deduction and introduces limitations on certain business expenses and executive compensation deductions. See

Note

11

– Income taxes

for the impact of the Tax Act on the Company’s financial statements.

On

December 22, 2017,

the SEC issued guidance under Staff Accounting Bulletin

No.

118,

Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB

118”

) directing taxpayers to consider the impact of the Tax Act as “provisional” when it does

not

have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete its accounting for the change in tax law. The changes in the Tax Act are broad and complex. The final impacts of the Tax Act

may

differ from the Company’s estimates due to, among other things, changes in interpretations of the Tax Act, further legislation related to the Tax Act, changes in accounting standards for income taxes or related interpretations in response to the Tax Act, or any updates to estimates the Company has utilized to calculate the impacts of the Tax Act. The Securities Exchange Commission has issued rules that would allow for a measurement period of up to

one

year after the enactment date of the Tax Act to finalize the related tax impacts. 

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Note 2 - Net Income (Loss) Per Common Share

9 Months Ended

Apr. 01, 2018

Notes to Financial Statements

Earnings Per Share [Text Block]

Note

2

– Net Income 

(Loss)

Per Common Share

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

	Three Months Ended						Nine Months Ended
	April 1, 2018			April 2, 2017			April 1, 2018		April 2, 2017
	(in thousands, except per share data, unaudited)
Numerator:
Net income (loss)	$	(8,463	)	$	(11,130	)	$	49,014	$	36,028
Denominator:
Weighted average shares outstanding		64,527			65,199			64,694		65,169
Effect of dilutive securities:
Employee stock options (1)		-			-			1,564		1,511
Employee restricted stock awards		-			-			691		1,067
		-			-			2,255		2,578
Adjusted weighted-average shares and assumed conversions		64,527			65,199			66,949		67,747
Net income (loss) per common share attributable to 1-800-FLOWERS.COM, Inc.
Basic	$	(0.13	)	$	(0.17	)	$	0.76	$	0.55
Diluted	$	(0.13	)	$	(0.17	)	$	0.73	$	0.53

XML

Note 3 - Stock-based Compensation

9 Months Ended

Apr. 01, 2018

Notes to Financial Statements

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

Note

3

– Stock-Based Compensation

The Company has a Long Term Incentive and Share Award Plan, which is more fully described in Note

12

and Note

13

 to the consolidated financial statements included in the Company’s Annual Report on Form

10

-K for the fiscal year ended

July 2, 2017,

that provides for the grant to eligible employees, consultants and directors of stock options, restricted shares, and other stock-based awards.

The amounts of stock-based compensation expense recognized in the periods presented are as follows:

	Three Months Ended				Nine Months Ended
	April 1, 2018		April 2, 2017		April 1, 2018		April 2, 2017
			(in thousands, unaudited)
Stock options	$	108	$	110	$	323	$	337
Restricted stock		825		1,176		2,679		4,447
Total		933		1,286		3,002		4,784
Deferred income tax benefit		254		387		846		1,528
Stock-based compensation expense, net	$	679	$	899	$	2,156	$	3,256

 Stock-based compensation is recorded within the following line items of operating expenses:

	Three Months Ended				Nine Months Ended
	April 1, 2018		April 2, 2017		April 1, 2018		April 2, 2017
			(in thousands, unaudited)
Marketing and sales	$	248	$	342	$	804	$	1,384
Technology and development		49		71		160		267
General and administrative		636		873		2,038		3,133
Total	$	933	$	1,286	$	3,002	$	4,784

Stock based compensation expense has

not

been allocated between business segments, but is reflected as part of Corporate overhead. (see 

Note

12

- Business Segments

.)

Stock Options

The following table summarizes stock option activity during the 

nine

months ended

April 1, 2018:

	Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value (000s)
Outstanding at July 2, 2017		2,127,734		$	2.42
Granted		-		$	-
Exercised		(34,000	)	$	2.67
Forfeited		(17,500	)	$	9.83
Outstanding at April 1, 2018		2,076,234		$	2.35		3.1	$	19,612
Options vested or expected to vest at April 1, 2018		2,076,234		$	2.35		3.1	$	19,612
Exercisable at April 1, 2018		1,682,234		$	2.29		3.1	$	15,997

As of

April 1, 2018,

the total future compensation cost related to non-vested options,

not

yet recognized in the statement of income, was

$0.5

million and the weighted average period over which these awards are expected to be recognized was

1.3

 years.

Restricted Stock

The Company grants shares of Common Stock to its employees that are subject to restrictions on transfer and risk of forfeiture until fulfillment of applicable service and performance conditions and, in certain cases, holding periods (Restricted Stock). The following table summarizes the activity of non-vested restricted stock awards during the

nine

months ended

April 1, 2018:

	Shares			Weighted Average Grant Date Fair Value
Non-vested at July 2, 2017		1,352,873		$	7.44
Granted		921,473		$	9.50
Vested		(596,402	)	$	7.76
Forfeited		(633,404	)	$	9.50
Non-vested at April 1, 2018		1,044,540		$	7.83

The fair value of non-vested shares is determined based on the closing stock price on the grant date. As of

April 1, 2018,

there was

$5.4

 million of total unrecognized compensation cost related to non-vested restricted stock-based compensation to be recognized over the weighted-average remaining period of

2.0

 years.

XML

Note 4 - Disposition

9 Months Ended

Apr. 01, 2018

Notes to Financial Statements

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

 Note

4

– Disposition

On

March 15, 2017,

the Company and Ferrero International S.A., a Luxembourg corporation (“Ferrero”), entered into a Stock Purchase Agreement (the “Purchase Agreement”) pursuant to which Ferrero agreed to purchase from the Company all of the outstanding equity of Fannie

May

Confections Brands, Inc., including its subsidiaries, Fannie

May

Confections, Inc. and Harry London Candies, Inc. (“Fannie

May”)

for a total consideration of

$115.0

million in cash, subject to adjustment for seasonal working capital. The working capital adjustment was finalized in

August 2017,

resulting in an

$11.4

million reduction to the purchase price. The resulting gain on sale of

$14.6

million, is included within “Other (income) expense, net” in the Company’s consolidated statements of income in the

fourth

quarter of fiscal year

2017.

The Company and Ferrero also entered into a transition services agreement whereby the Company will provide certain post-closing services to Ferrero and Fannie

May

for a period of approximately

18

months, related to the business of Fannie

May,

and a commercial agreement with respect to the distribution of certain Ferrero and Fannie

May

products.

Operating results of Fannie

May

are reflected in the Company’s consolidated financial statements through

May 30, 2017,

the date of its disposition, within its Gourmet Food & Gift Baskets segment. During fiscal

2017,

Fannie

May

contributed net revenues of

$85.6

million. Operating and pre-tax income during such period were

not

material.

XML

Note 5 - Inventory

9 Months Ended

Apr. 01, 2018

Notes to Financial Statements

Inventory Disclosure [Text Block]

Note

5

– Inventory

The Company’s inventory, stated at cost, which is

not

in excess of market, 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:

	April 1, 2018		July 2, 2017
	(in thousands)
Finished goods	$	29,716	$	34,476
Work-in-process		8,784		11,933
Raw materials		30,406		29,453
Total inventory	$	68,906	$	75,862

XML

Note 6 - Goodwill and Intangible Assets

9 Months Ended

Apr. 01, 2018

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

         Note

6

– Goodwill and Intangible Assets

The following table presents goodwill by segment and the related change, if any, in the net carrying amount:

	1-800-Flowers.com Consumer Floral		BloomNet Wire Service		Gourmet Food & Gift Baskets		Total
	(in thousands)
Balance at April 1, 2018 and July 2, 2017	$	17,441	$	-	$	45,149	$	62,590

The Company’s other intangible assets consist of the following:

			April 1, 2018						July 2, 2017
	Amortization Period		Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
	(in years)		(in thousands)
Intangible assets with determinable lives:
Investment in licenses		14-16	$	7,420	$	6,016	$	1,404	$	7,420	$	5,937	$	1,483
Customer lists		3-10		12,184		9,146		3,038		12,184		8,227		3,957
Other		5-14		2,946		2,137		809		2,946		2,045		901
Total intangible assets with determinable lives				22,550		17,299		5,251		22,550		16,209		6,341
Trademarks with indefinite lives				54,842		-		54,842		54,749		-		54,749
Total identifiable intangible assets			$	77,392	$	17,299	$	60,093	$	77,299	$	16,209	$	61,090

Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group

may

not

be recoverable. Future estimated amortization expense is as follows: remainder of fiscal

2018

-

$0.3

million, fiscal

2019

-

$0.7

million, fiscal

2020

-

$0.6

million, fiscal

2021

-

$0.6

million, fiscal

2022

-

$0.5

million and thereafter -

$2.6million.

XML

Note 7 - Investments

9 Months Ended

Apr. 01, 2018

Notes to Financial Statements

Equity Method Investments and Joint Ventures Disclosure [Text Block]

Note

7

– Investments

The Company has certain investments in non-marketable equity instruments of private companies. The Company accounts for these investments using the equity method if they provide the Company the ability to exercise significant influence, but

not

control, over the investee. Significant influence is generally deemed to exist if the Company has an ownership interest in the voting stock of the investee between

20%

and

50%,

although other factors, such as representation on the investee’s Board of Directors, are considered in determining whether the equity method is appropriate. The Company records equity method investments initially at cost, and adjusts the carrying amount to reflect the Company’s share of the earnings or losses of the investee.

The Company’s equity method investment is comprised of an interest in Flores Online, a Sao Paulo, Brazil based internet floral and gift retailer, that the Company originally acquired on

May 31, 2012.

The Company currently holds

24.9%

of the outstanding shares of Flores Online. The book value of this investment was

$0.6

million as of

April 1, 2018

and

$1.0

million as of

July 2, 2017,

and is included in the “Other assets” line item within the Company’s consolidated balance sheets. The Company’s equity in the net loss of Flores Online for the

three

and

nine

months ended

April 1, 2018

and

April 2, 2017 

was less than

$0.1

million. During the quarter ended

December 31, 2017,

Flores Online entered into a share exchange agreement with Isabella Flores, whereby among other changes, the Company exchanged

5%

of its interest in Flores Online for a

5%

interest in Isabella Flores. This new investment of approximately

$0.1

million is currently being accounted as a cost method investment. In conjunction with this share exchange, the Company determined that the fair value of its investment in Flores Online was below its carrying value and that this decline was other-than-temporary. As a result, during the quarter ended

December 31, 2017,

the Company recorded an impairment charge of

$0.2

million, which is included within the “Other (income) expense, net” line item in the Company’s consolidated statement of income.

Investments in non-marketable equity instruments of private companies, where the Company does

not

possess the ability to exercise significant influence, are accounted for under the cost method. Cost method investments are originally recorded at cost, and are included within “Other assets” in the Company’s consolidated balance sheets. The aggregate carrying amount of the Company’s cost method investments was

$1.8

million as of

April 1, 2018

and

$1.7

million as of

July 2, 2017.

The Company also holds certain trading securities associated with its Non-Qualified Deferred Compensation Plan (“NQDC Plan”). These investments are measured using quoted market prices at the reporting date and are included within the “Other assets” line item in the consolidated balance sheets (see

Note

10

 - Fair Value Measurements

).

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Note 8 - Debt

9 Months Ended

Apr. 01, 2018

Notes to Financial Statements

Debt Disclosure [Text Block]

Note

8

–Debt

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

	April 1, 2018			July 2, 2017
	(in thousands)
Revolver (1)	$	-		$	-
Term Loan (1)		107,094			112,125
Deferred financing costs		(2,839	)		(3,560	)
Total debt		104,255			108,565
Less: current debt		9,344			7,188
Long-term debt	$	94,911		$	101,377

(

1

) On

December 23, 2016,

the Company entered into an Amended and Restated Credit Agreement (the

“2016

Amended Credit Agreement”) with JPMorgan Chase Bank as administrative agent, and a group of lenders. The

2016

Amended Credit Agreement amended and restated the Company’s credit agreement dated as of

September 30, 2014 (

the

“2014

Agreement”) to, among other things, extend the maturity date of its

$115.0

million outstanding term loan ("Term Loan") and revolving credit facility (the "Revolver") to

December 23, 2021. 

The Term Loan is payable in

19

 quarterly installments of principal and interest beginning on

April 2, 2017,

with escalating principal payments, at the rate of

5%

in year one,

7.5%

in year two,

10%

in year three,

12.5%

in year four, and

15%

 in year five, with the remaining balance of

$61.8

 million due upon maturity. The Revolver, in the aggregate amount of

$200

million, subject to seasonal reduction to an aggregate amount of

$100

million for the period from

January 1

through

August 1,

may

be used for working capital and general corporate purposes, subject to certain restrictions.

For each borrowing under the

2016

Amended 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 from 

0.75%

to

1.5%,

based on the Company’s consolidated leverage ratio, where the base rate is the highest of (a) the prime rate, (b) the highest of the federal funds rate and the overnight bank funding rate as published by the New York Fed, plus

0.5%

and (c) an adjusted LIBO rate, plus

1%

or (

2

) an adjusted LIBO rate plus an applicable margin varying from 

1.75%

to

2.5%,

 based on the Company’s consolidated leverage ratio. The

2016

Amended Credit Agreement requires that while any borrowings are outstanding the Company comply with certain financial covenants and affirmative covenants as well as certain negative covenants, that subject to certain exceptions, limit the Company's ability to, among other things, incur additional indebtedness, make certain investments and make certain restricted payments. The Company was in compliance with these covenants as of

April 1, 2018. 

The

2016

Amended Credit Agreement is secured by substantially all of the assets of the Company and the Subsidiary Guarantors.

Future principal payments under the term loan are as follows:

$2.2

 million – remainder of fiscal

2018,

$10.1

 million – fiscal

2019,

$12.9

 million – fiscal

2020,

$15.8

million - fiscal

2021,

and

$66.1

– fiscal

2022.

XML

Note 9 - Property, Plant and Equipment

9 Months Ended

Apr. 01, 2018

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

Note

9

- Property, Plant and Equipment

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

	April 1, 2018			July 2, 2017
	(in thousands)
Land	$	30,789		$	30,789
Orchards in production and land improvements		10,830			9,703
Building and building improvements		58,088			56,791
Leasehold improvements		12,553			11,950
Production equipment and furniture and fixtures		50,160			47,293
Computer and telecommunication equipment		47,559			45,026
Software		126,806			119,177
Capital projects in progress - orchards		9,489			9,971
Property, plant and equipment, gross		346,274			330,700
Accumulated depreciation and amortization		(192,537	)		(169,319	)
Property, plant and equipment, net	$	153,737		$	161,381

XML

Note 10 - Fair Value Measurements

9 Months Ended

Apr. 01, 2018

Notes to Financial Statements

Fair Value Disclosures [Text Block]

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. 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 circumstances indicate 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:

Level  1	Valuations based on quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.
Level 2	Valuations based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.
Level 3	Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

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

	Carrying Value		Fair Value Measurements Assets (Liabilities)
			Level 1		Level 2		Level 3
	(in thousands)
Assets (liabilities) as of April 1, 2018:
Trading securities held in a “rabbi trust” (1)	$	8,941	$	8,941	$	-	$	-
	$	8,941	$	8,941	$	-	$	-
Assets (liabilities) as of July 2, 2017:
Trading securities held in a “rabbi trust” (1)	$	6,916	$	6,916	$	-	$	-
	$	6,916	$	6,916	$	-	$	-

( 1 ) The Company has established a Non-qualified Deferred Compensation 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. 

XML

Note 11 - Income Taxes

9 Months Ended

Apr. 01, 2018

Notes to Financial Statements

Income Tax Disclosure [Text Block]

Note

11

– Income Taxes

At the end of each interim reporting period, the Company estimates its effective income tax rate expected to be applicable for the full year. This estimate is used in providing for income taxes on a year-to-date basis and

may

change in subsequent interim periods. The Company’s effective tax rate from operations for the

three

and

nine

months ended

April 1, 2018

was

35.6%

and

1.6%

respectively, compared to

34.7%

and

31.9%

in the same periods of the prior year. The effective rates for fiscal

2018

were impacted by changes associated with the Tax Act (see

Note

1

-

Accounting Policie

s

above). During the quarter ended

December 31, 2017,

in addition to the benefit received as a result of the lower

28.0%

transitional federal tax rate in fiscal

2018,

the Company recognized a discrete tax benefit of

$12.2

million, or

$0.18

per diluted share, reflecting a revaluation of its deferred tax liabilities at the lower U.S. federal statutory rate of

21%.

In addition, fiscal

2018

effective rates were impacted by state income taxes, which were partially offset by various permanent differences, tax credits and return to provision adjustments related to the filing of the Company’s Fiscal

2017

tax return. The effective rates for fiscal

2017

differed from the U.S. federal statutory rate due to various permanent differences and tax credits, including excess tax benefits on stock based compensation as a result of the Company's early adoption of ASU

2016

-

09,

domestic production deductions and research and development credits, partially offset by state income taxes.

The Company files income tax returns in the U.S. federal jurisdiction, various state jurisdictions, and various foreign countries. The Company completed its audit by the Internal Revenue Service for fiscal year

2014,

however, fiscal years

2015

and

2016

remain subject to federal examination. Due to ongoing state examinations and non-conformity with the federal statute of limitations for assessment, certain states remain open from fiscal

2012.

The Company commenced operations in foreign jurisdictions in

2012.

The Company's foreign income tax filings are open for examination by its respective foreign tax authorities.

The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. At

April 1, 2018,

the Company has an unrecognized tax benefit, including an immaterial amount of accrued interest and penalties, of approximately

$0.5

million. The Company believes that

no

significant unrecognized tax positions will be resolved over the next

twelve

months.

XML

Note 12 - Business Segments

9 Months Ended

Apr. 01, 2018

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

 

Note

12

– Business Segments

The Company’s management reviews the results of the Company’s operations by the following

three

business segments:

•     

1

-

800

-Flowers.com Consumer Floral,

•     BloomNet Wire Service, and

•     Gourmet Food and Gift Baskets

Segment performance is measured based on contribution margin, which includes only the direct controllable revenue and operating expenses of the segments. As such, management’s measure of profitability for these segments does

not

include the effect of corporate overhead (see (a) below), nor does it include depreciation and amortization, other (income) expense, net and income taxes, or stock-based compensation, both of which are included within corporate overhead. Assets and liabilities are reviewed at the consolidated level by management and

not

accounted for by segment.

	Three Months Ended						Nine Months Ended
	April 1, 2018			April 2, 2017			April 1, 2018			April 2, 2017
	(in thousands, unaudited)
Net revenues:
1-800-Flowers.com Consumer Floral	$	135,782		$	124,684		$	312,456		$	297,707
BloomNet Wire Service		24,498			24,091			64,637			65,557
Gourmet Food & Gift Baskets		78,458			85,611			545,408			592,295
Corporate		264			260			851			839
Intercompany eliminations		(457	)		(931	)		(1,365	)		(2,301	)
Total net revenues	$	238,545		$	233,715		$	921,987		$	954,097
Operating Income (Loss)
Segment Contribution Margin (non-GAAP):
1-800-Flowers.com Consumer Floral	$	16,226		$	15,863		$	33,988		$	37,172
BloomNet Wire Service		8,439			8,245			22,832			23,713
Gourmet Food & Gift Baskets		(8,811	)		(10,776	)		79,698			84,544
Segment Contribution Margin Subtotal		15,854			13,332			136,518			145,429
Corporate (a)		(20,408	)		(21,125	)		(59,448	)		(62,616	)
Depreciation and amortization		(7,885	)		(8,492	)		(24,646	)		(25,656	)
Operating Income (Loss)	$	(12,439	)	$	(16,285	)	$	52,424		$	57,157

(a) Corporate expenses consist of the Company’s enterprise shared service cost centers, and include, among other items, Information Technology, Human Resources, Accounting and Finance, Legal, Executive and Customer Service Center functions, as well as Stock-Based Compensation. In order to leverage the Company’s infrastructure, these functions are operated under a centralized management platform, providing support services throughout the organization. The costs of these functions, other than those of the Customer Service Center, which are allocated directly to the above categories based upon usage, are included within corporate expenses as they are

not

directly allocable to a specific segment.

XML

Note 13 - Commitments and Contingencies

9 Months Ended

Apr. 01, 2018

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

Note

13

– Commitments and Contingencies

Litigation

There are various claims, lawsuits, and pending actions against the Company and its subsidiaries incident to the operations of its businesses. It is the opinion of management, after consultation with counsel, that the ultimate resolution of such claims, lawsuits and pending actions will

not

have a material adverse effect on the Company's consolidated financial position, results of operations or liquidity.

XML

Significant Accounting Policies (Policies)

9 Months Ended

Apr. 01, 2018

Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

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 for interim financial information and with the instructions to Form

10

-Q and Article

10

of Regulation S-

X.

They do

not

include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the

three

and

nine

month periods ended

April 1, 2018

are

not

necessarily indicative of the results that

may

be expected for the fiscal year ending

July 1, 2018.

For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form

10

-K for the fiscal year ended

July 2, 2017.

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

second

fiscal quarter, is expected to generate nearly

50%

of the Company’s annual revenues, and all of its earnings. Additionally, due to the number of major floral gifting occasions, including Mother's Day, Valentine’s Day and Administrative Professionals Week, revenues also rise during the Company’s fiscal

third

and

fourth

quarters in comparison to its fiscal

first

quarter. In fiscal

2017,

Easter was on

April

16th,

falling within the Company’s fiscal

fourth

quarter, whereas, in fiscal

2018,

Easter was on

April

1st,

which resulted in the shift of Easter-related revenue and EBITDA into the Company’s

third

quarter of fiscal

2018.

Use of Estimates, Policy [Policy Text Block]

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.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

In

May 2014,

the FASB issued ASU

No.

2014

-

09,

“Revenue from Contracts with Customers.” This amended guidance will enhance the comparability of revenue recognition practices and will be applied to all contracts with customers. Expanded disclosures related to the nature, amount, timing, and uncertainty of revenue that is recognized are requirements under the amended guidance. As we continue to evaluate the impact of this ASU, we have determined that the new standard will impact the following areas: the costs of producing and distributing the Company’s catalogs will be expensed upon mailing, instead of being capitalized and amortized in direct proportion to the actual sales; gift card breakage will be recognized over the expected customer redemption period, rather than when redemption is considered remote; the Company will defer revenue at the time the Celebrations Reward loyalty points are earned using a relative fair value approach, rather than accruing a liability equal to the incremental cost of fulfilling its obligations. We have further identified the timing of revenue recognition for e-commerce orders (shipping point versus destination) as a potential issue in our analysis, which is

not

expected to change the total amount of revenue recognized, but could accelerate the timing of when revenue is recognized. We plan to adopt this guidance beginning with the

first

quarter in the fiscal year ending

June 30, 2019,

on a modified retrospective basis, with a cumulative adjustment to retained earnings. We are continuing to evaluate the impact that this ASU, and related amendments and interpretive guidance, will have on our consolidated financial statements, including the related disclosures.

In

July 2015,

the FASB issued ASU

No.

2015

-

11,

“Inventory (Topic

330

).” The pronouncement was issued to simplify the measurement of inventory and changes the measurement from lower of cost or market to lower of cost and net realizable value. The Company adopted this standard effective

July 3, 2017.

The adoption of ASU

2015

-

11

did

not

have a significant impact on the Company’s consolidated financial position or results of operations.

In

January 2016,

the FASB issued ASU

No.

2016

-

01,

"Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities." The pronouncement requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income, requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset, and eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. This guidance will become effective for the Company's fiscal year ending

June 30, 2019.

The adoption is

not

expected to have a significant impact on the Company’s consolidated financial statements.

In

February 2016,

the FASB issued ASU

No.

2016

-

02,

“Leases (Topic

842

).” Under this guidance, an entity is required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. This guidance offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. This guidance is effective for the Company’s fiscal year ending

June 28, 2020. 

We are currently evaluating the impact and expect the ASU will have a material impact on our consolidated financial statements, primarily to the consolidated balance sheets and related disclosures.

In

March 2016,

the FASB issued ASU

No.

2016

-

09,

“Improvements to Employee Share-Based Payment Accounting.” ASU

No.

2016

-

09

affects all entities that issue share-based payment awards to their employees. ASU

No.

2016

-

09

simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The Company elected to early adopt the amendments in ASU

2016

-

09,

in fiscal

2017.

As a result, stock-based compensation excess tax benefits are reflected in the Consolidated Statements of Income as a component of the provision for income taxes, whereas they were previously recognized in equity. This change resulted in the recognition of excess tax benefits against income tax expenses, rather than additional paid-in capital, of

$1.0

million for the year ended

July 2, 2017.

There was

no

impact on earnings per share since approximately

700,000

tax benefit shares for the year ended

July 2, 2017,

previously associated with the APIC pool calculation, are

no

longer considered in the diluted share computation. Additionally, our Consolidated Statements of Cash Flows now present excess tax benefits as an operating activity. This change has been applied prospectively in accordance with the ASU and prior periods have

not

been adjusted. Further, the Company has elected to account for forfeitures as they occur, rather than estimate expected forfeitures. The cumulative effect of this change, which was recorded as compensation expense in fiscal

2017,

was

not

material to the financial statements. In addition, this ASU allows entities to withhold an amount up to an employees’ maximum individual statutory tax rate in the relevant jurisdiction, up from the minimum statutory requirement, without resulting in liability classification of the award. We adopted this change on a modified retrospective basis, with

no

impact to our consolidated financial statements. Finally, this ASU clarified that the cash paid by an employer when directly withholding shares for tax withholding purposes should be classified as a financing activity. This change does

not

have an impact on the Company’s consolidated financials as it conforms with its current practice.

In

June 2016,

the FASB issued ASU

No.

2016

-

13,

“Financial Instruments-Credit Losses (Topic

326

): Measurement of Credit Losses on Financial Instruments.” ASU

2016

-

13

introduces a new forward-looking “expected loss” approach, to estimate credit losses on most financial assets and certain other instruments, including trade receivables. The estimate of expected credit losses will require entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts. This ASU also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models and methods for estimating expected credit losses. ASU

2016

-

13

is effective for the Company’s fiscal year ending

July 4, 2021,

and the guidance is to be applied using the modified-retrospective approach. The Company is currently evaluating the potential impact of adopting this guidance on our consolidated financial statements.

In

June 2016,

the FASB issued ASU

2016

-

15,

“Statement of Cash Flows (Topic

230

), a consensus of the FASB’s Emerging Issues Task Force.” ASU

2016

-

15

is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The ASU is effective for the Company’s fiscal year ending

June 30, 2019,

and interim periods within those fiscal years. Early adoption is permitted, including interim periods within those fiscal years. An entity that elects early adoption must adopt all of the amendments in the same period. The guidance requires application using a retrospective transition method. The adoption is

not

expected to have a significant impact on the Company’s consolidated financial statements.

In

January 2017,

the FASB issued ASU

No.

2017

-

01,

"Business Combinations (Topic

805

): Clarifying the Definition of a Business (ASU

2017

-

01

)," which revises the definition of a business and provides new guidance in evaluating when a set of transferred assets and activities is a business. ASU

2017

-

01

is effective for the Company's fiscal year ending

June 30, 2019,

with early adoption permitted, and should be applied prospectively. We do

not

expect the standard to have a material impact on our consolidated financial statements.

In

January 2017,

the FASB issued ASU

No.

2017

-

04,

"Intangibles - Goodwill and Other (Topic

350

): Simplifying the Test for Goodwill Impairment," which eliminates step

two

from the goodwill impairment test. Under ASU

2017

-

04,

an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value up to the amount of goodwill allocated to that reporting unit. This guidance is effective for the Company’s fiscal year ending

July 4, 2021,

with early adoption permitted, and should be applied prospectively. We do

not

expect the standard to have a material impact on our consolidated financial statements.

In

February 2017,

the FASB issued ASU

No.

2017

-

05,

“Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets.” This update clarifies the scope of accounting for the derecognition or partial sale of nonfinancial assets to exclude all businesses and nonprofit activities. ASU

2017

-

05

also provides a definition for in-substance nonfinancial assets and additional guidance on partial sales of nonfinancial assets. This guidance will be effective for the Company’s fiscal year ending

June 30, 2019

and

may

be applied retrospectively. The Company is currently evaluating the potential impact of adopting this guidance on our consolidated financial statements.

In

May 2017,

the FASB issued ASU

No

2017

-

09,

“Compensation - Stock Compensation (Topic

718

): Scope of Modification Accounting.” This ASU provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting. An entity would

not

apply modification accounting if the fair value, vesting conditions, and classification of the awards are the same immediately before and after the modification. ASU

2017

-

09

is effective for the Company's fiscal year ending

June 30, 2019,

with early adoption permitted, and should be applied prospectively to an award modified on or after the adoption date. The Company is currently evaluating the potential impact of adopting this guidance on our consolidated financial statements.

U.S. Tax Reform

On

December 22, 2017,

the U.S. government enacted significant changes to the U.S. tax law following the passage and signing of the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act revises the future ongoing U.S. corporate income tax by, among other things, lowering U. S. corporate income tax rates from

35%

to

21%.

As the Company’s fiscal year ends on

July 1, 2018,

the lower corporate income tax rate will be phased in, resulting in a U.S. statutory federal rate of approximately

28%

for the current fiscal year and

21%

for subsequent fiscal years. The Tax Act also eliminates the domestic production activities deduction and introduces limitations on certain business expenses and executive compensation deductions. See

Note

11

– Income taxes

for the impact of the Tax Act on the Company’s financial statements.

On

December 22, 2017,

the SEC issued guidance under Staff Accounting Bulletin

No.

118,

Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB

118”

) directing taxpayers to consider the impact of the Tax Act as “provisional” when it does

not

have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete its accounting for the change in tax law. The changes in the Tax Act are broad and complex. The final impacts of the Tax Act

may

differ from the Company’s estimates due to, among other things, changes in interpretations of the Tax Act, further legislation related to the Tax Act, changes in accounting standards for income taxes or related interpretations in response to the Tax Act, or any updates to estimates the Company has utilized to calculate the impacts of the Tax Act. The Securities Exchange Commission has issued rules that would allow for a measurement period of up to

one

year after the enactment date of the Tax Act to finalize the related tax impacts. 

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Note 2 - Net Income (Loss) Per Common Share (Tables)

9 Months Ended

Apr. 01, 2018

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended						Nine Months Ended
	April 1, 2018			April 2, 2017			April 1, 2018		April 2, 2017
	(in thousands, except per share data, unaudited)
Numerator:
Net income (loss)	$	(8,463	)	$	(11,130	)	$	49,014	$	36,028
Denominator:
Weighted average shares outstanding		64,527			65,199			64,694		65,169
Effect of dilutive securities:
Employee stock options (1)		-			-			1,564		1,511
Employee restricted stock awards		-			-			691		1,067
		-			-			2,255		2,578
Adjusted weighted-average shares and assumed conversions		64,527			65,199			66,949		67,747
Net income (loss) per common share attributable to 1-800-FLOWERS.COM, Inc.
Basic	$	(0.13	)	$	(0.17	)	$	0.76	$	0.55
Diluted	$	(0.13	)	$	(0.17	)	$	0.73	$	0.53

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Note 3 - Stock-based Compensation (Tables)

9 Months Ended

Apr. 01, 2018

Notes Tables

Schedule of Compensation Cost for Share-based Payment Arrangements, Allocation of Share-based Compensation Costs by Plan [Table Text Block]

	Three Months Ended				Nine Months Ended
	April 1, 2018		April 2, 2017		April 1, 2018		April 2, 2017
			(in thousands, unaudited)
Stock options	$	108	$	110	$	323	$	337
Restricted stock		825		1,176		2,679		4,447
Total		933		1,286		3,002		4,784
Deferred income tax benefit		254		387		846		1,528
Stock-based compensation expense, net	$	679	$	899	$	2,156	$	3,256

Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Table Text Block]

	Three Months Ended				Nine Months Ended
	April 1, 2018		April 2, 2017		April 1, 2018		April 2, 2017
			(in thousands, unaudited)
Marketing and sales	$	248	$	342	$	804	$	1,384
Technology and development		49		71		160		267
General and administrative		636		873		2,038		3,133
Total	$	933	$	1,286	$	3,002	$	4,784

Share-based Compensation, Stock Options, Activity [Table Text Block]

	Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value (000s)
Outstanding at July 2, 2017		2,127,734		$	2.42
Granted		-		$	-
Exercised		(34,000	)	$	2.67
Forfeited		(17,500	)	$	9.83
Outstanding at April 1, 2018		2,076,234		$	2.35		3.1	$	19,612
Options vested or expected to vest at April 1, 2018		2,076,234		$	2.35		3.1	$	19,612
Exercisable at April 1, 2018		1,682,234		$	2.29		3.1	$	15,997

Schedule of Nonvested Share Activity [Table Text Block]

	Shares			Weighted Average Grant Date Fair Value
Non-vested at July 2, 2017		1,352,873		$	7.44
Granted		921,473		$	9.50
Vested		(596,402	)	$	7.76
Forfeited		(633,404	)	$	9.50
Non-vested at April 1, 2018		1,044,540		$	7.83

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Note 5 - Inventory (Tables)

9 Months Ended

Apr. 01, 2018

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	April 1, 2018		July 2, 2017
	(in thousands)
Finished goods	$	29,716	$	34,476
Work-in-process		8,784		11,933
Raw materials		30,406		29,453
Total inventory	$	68,906	$	75,862

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Note 6 - Goodwill and Intangible Assets (Tables)

9 Months Ended

Apr. 01, 2018

Notes Tables

Schedule of Goodwill [Table Text Block]

	1-800-Flowers.com Consumer Floral		BloomNet Wire Service		Gourmet Food & Gift Baskets		Total
	(in thousands)
Balance at April 1, 2018 and July 2, 2017	$	17,441	$	-	$	45,149	$	62,590

Schedule of Finite-Lived and Indefinite-Lived Intangible Assets by Major Class [Table Text Block]

			April 1, 2018						July 2, 2017
	Amortization Period		Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
	(in years)		(in thousands)
Intangible assets with determinable lives:
Investment in licenses		14-16	$	7,420	$	6,016	$	1,404	$	7,420	$	5,937	$	1,483
Customer lists		3-10		12,184		9,146		3,038		12,184		8,227		3,957
Other		5-14		2,946		2,137		809		2,946		2,045		901
Total intangible assets with determinable lives				22,550		17,299		5,251		22,550		16,209		6,341
Trademarks with indefinite lives				54,842		-		54,842		54,749		-		54,749
Total identifiable intangible assets			$	77,392	$	17,299	$	60,093	$	77,299	$	16,209	$	61,090

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Note 8 - Debt (Tables)

9 Months Ended

Apr. 01, 2018

Notes Tables

Schedule of Debt [Table Text Block]

	April 1, 2018			July 2, 2017
	(in thousands)
Revolver (1)	$	-		$	-
Term Loan (1)		107,094			112,125
Deferred financing costs		(2,839	)		(3,560	)
Total debt		104,255			108,565
Less: current debt		9,344			7,188
Long-term debt	$	94,911		$	101,377

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Note 9 - Property, Plant and Equipment (Tables)

9 Months Ended

Apr. 01, 2018

Notes Tables

Property, Plant and Equipment [Table Text Block]

	April 1, 2018			July 2, 2017
	(in thousands)
Land	$	30,789		$	30,789
Orchards in production and land improvements		10,830			9,703
Building and building improvements		58,088			56,791
Leasehold improvements		12,553			11,950
Production equipment and furniture and fixtures		50,160			47,293
Computer and telecommunication equipment		47,559			45,026
Software		126,806			119,177
Capital projects in progress - orchards		9,489			9,971
Property, plant and equipment, gross		346,274			330,700
Accumulated depreciation and amortization		(192,537	)		(169,319	)
Property, plant and equipment, net	$	153,737		$	161,381

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Note 10 - Fair Value Measurements (Tables)

9 Months Ended

Apr. 01, 2018

Notes Tables

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

	Carrying Value		Fair Value Measurements Assets (Liabilities)
			Level 1		Level 2		Level 3
	(in thousands)
Assets (liabilities) as of April 1, 2018:
Trading securities held in a “rabbi trust” (1)	$	8,941	$	8,941	$	-	$	-
	$	8,941	$	8,941	$	-	$	-
Assets (liabilities) as of July 2, 2017:
Trading securities held in a “rabbi trust” (1)	$	6,916	$	6,916	$	-	$	-
	$	6,916	$	6,916	$	-	$	-

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Note 12 - Business Segments (Tables)

9 Months Ended

Apr. 01, 2018

Notes Tables

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	Three Months Ended						Nine Months Ended
	April 1, 2018			April 2, 2017			April 1, 2018			April 2, 2017
	(in thousands, unaudited)
Net revenues:
1-800-Flowers.com Consumer Floral	$	135,782		$	124,684		$	312,456		$	297,707
BloomNet Wire Service		24,498			24,091			64,637			65,557
Gourmet Food & Gift Baskets		78,458			85,611			545,408			592,295
Corporate		264			260			851			839
Intercompany eliminations		(457	)		(931	)		(1,365	)		(2,301	)
Total net revenues	$	238,545		$	233,715		$	921,987		$	954,097
Operating Income (Loss)
Segment Contribution Margin (non-GAAP):
1-800-Flowers.com Consumer Floral	$	16,226		$	15,863		$	33,988		$	37,172
BloomNet Wire Service		8,439			8,245			22,832			23,713
Gourmet Food & Gift Baskets		(8,811	)		(10,776	)		79,698			84,544
Segment Contribution Margin Subtotal		15,854			13,332			136,518			145,429
Corporate (a)		(20,408	)		(21,125	)		(59,448	)		(62,616	)
Depreciation and amortization		(7,885	)		(8,492	)		(24,646	)		(25,656	)
Operating Income (Loss)	$	(12,439	)	$	(16,285	)	$	52,424		$	57,157

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Note 1 - Accounting Policies (Details Textual) - USD ($) $ in Millions		12 Months Ended
	Dec. 22, 2017	Jun. 30, 2019	Jul. 01, 2018	Jul. 02, 2017
Employee Service Share-based Compensation, Excess Tax Benefit, Shares				700,000
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent	21.00%
Scenario, Forecast [Member]
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent		21.00%	28.00%
Accounting Standards Update 2016-09 [Member]
Employee Service Share-based Compensation, Excess Tax Benefit from Compensation Expense				$ 1

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Note 2 - Net Income (Loss) Per Common Share - Computation of Basic and Diluted Net Income (Loss) Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Apr. 01, 2018	Apr. 02, 2017	Apr. 01, 2018	Apr. 02, 2017
Net income (loss)	$ (8,463)	$ (11,130)	$ 49,014	$ 36,028
Weighted average shares outstanding (in shares)	64,527	65,199	64,694	65,169
Effect of dilutive securities (in shares)			2,255	2,578
Adjusted weighted-average shares and assumed conversions (in shares)	64,527	65,199	66,949	67,747
Basic (in dollars per share)	$ (0.13)	$ (0.17)	$ 0.76	$ 0.55
Diluted (in dollars per share)	$ (0.13)	$ (0.17)	$ 0.73	$ 0.53
Employee Stock Option [Member]
Effect of dilutive securities (in shares)			1,564	1,511
Restricted Stock [Member]
Effect of dilutive securities (in shares)			691	1,067

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Note 3 - Stock-based Compensation (Details Textual) $ in Millions	9 Months Ended
	Apr. 01, 2018 USD ($)
Employee Stock Option [Member]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Total	$ 0.5
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition	1 year 109 days
Restricted Stock [Member]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Total	$ 5.4
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition	2 years

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Note 3 - Stock-based Compensation - Stock-based Compensation Expense Recognized (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Apr. 01, 2018	Apr. 02, 2017	Apr. 01, 2018	Apr. 02, 2017
Allocated share-based compensation expense	$ 933	$ 1,286	$ 3,002	$ 4,784
Deferred income tax benefit	254	387	846	1,528
Allocated share-based compensation expense, net	679	899	2,156	3,256
Employee Stock Option [Member]
Allocated share-based compensation expense	108	110	323	337
Restricted Stock [Member]
Allocated share-based compensation expense	$ 825	$ 1,176	$ 2,679	$ 4,447

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Note 3 - Stock-based Compensation - Allocation of Stock-based Compensation to Operating Expenses (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Apr. 01, 2018	Apr. 02, 2017	Apr. 01, 2018	Apr. 02, 2017
Allocated share-based compensation expense	$ 933	$ 1,286	$ 3,002	$ 4,784
Selling and Marketing Expense [Member]
Allocated share-based compensation expense	248	342	804	1,384
Technology and Development [Member]
Allocated share-based compensation expense	49	71	160	267
General and Administrative Expense [Member]
Allocated share-based compensation expense	$ 636	$ 873	$ 2,038	$ 3,133

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Note 3 - Stock-based Compensation - Stock Option Activity (Details) $ / shares in Units, $ in Thousands	9 Months Ended
	Apr. 01, 2018 USD ($) $ / shares shares
Outstanding (in shares) | shares	2,127,734
Outstanding, weighted average exercise price (in dollars per share) | $ / shares	$ 2.42
Granted, options (in shares) | shares
Granted, weighted average exercise price (in dollars per share) | $ / shares
Exercised, options (in shares) | shares	(34,000)
Exercised, weighted average exercise price (in dollars per share) | $ / shares	$ 2.67
Forfeited, oprtions (in shares) | shares	(17,500)
Forfeited, weighted average exercise price (in dollars per share) | $ / shares	$ 9.83
Outstanding (in shares) | shares	2,076,234
Outstanding, weighted average exercise price (in dollars per share) | $ / shares	$ 2.35
Outstanding, weighted average remaining contractual term (Year)	3 years 36 days
Outstanding, aggregate intrinsic value | $	$ 19,612
Options vested or expected to vest (in shares) | shares	2,076,234
Options vested or expected to ves, weighted average exercise price (in dollars per share) | $ / shares	$ 2.35
Options vested or expected to vest, weighted average remaining contractual term (Year)	3 years 36 days
Options vested or expected to vest, aggregate intrinsic value | $	$ 19,612
Exercisable, options (in shares) | shares	1,682,234
Exercisable, weighted average exercise price (in dollars per share) | $ / shares	$ 2.29
Exercisable, weighted average remaining contractual term (Year)	3 years 36 days
Exercisable, aggregate intrinsic value | $	$ 15,997

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Note 3 - Stock-based Compensation - Non-vested Restricted Stock Activity (Details) - Restricted Stock [Member]	9 Months Ended
	Apr. 01, 2018 $ / shares shares
Non-vested, beginning balance (in shares) | shares	1,352,873
Non-vested, Weighted Average Grant Date Fair Value, beginning balance (in dollars per share) | $ / shares	$ 7.44
Granted (in shares) | shares	921,473
Granted, Weighted Average Grant Date Fair Value (in dollars per share) | $ / shares	$ 9.50
Vested (in shares) | shares	(596,402)
Vested, Weighted Average Grant Date Fair Value (in dollars per share) | $ / shares	$ 7.76
Forfeited (in shares) | shares	(633,404)
Forfeited, Weighted Average Grant Date Fair Value (in dollars per share) | $ / shares	$ 9.50
Non-vested, ending balance (in shares) | shares	1,044,540
Non-vested, Weighted Average Grant Date Fair Value, ending balance (in dollars per share) | $ / shares	$ 7.83

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Note 4 - Disposition (Details Textual) - Fannie May [Member] - USD ($) $ in Millions	1 Months Ended	3 Months Ended	12 Months Ended
	Aug. 31, 2017	Jul. 02, 2017	Jul. 02, 2017	Mar. 15, 2017
Disposal Group, Including Discontinued Operation, Period of Post-closing Services			1 year 180 days
Disposal Group, Including Discontinued Operation, Revenue			$ 85.6
Other Nonoperating Income (Expense) [Member]
Gain (Loss) on Disposition of Business		$ 14.6
Ferrero [Member]
Disposal Group, Including Discontinued Operation, Consideration				$ 115.0
Working Capital Adjustment in Disposition of Business	$ (11.4)

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Note 5 - Inventory - Summary of Inventory (Details) - USD ($) $ in Thousands	Apr. 01, 2018	Jul. 02, 2017
Finished goods	$ 29,716	$ 34,476
Work-in-process	8,784	11,933
Raw materials	30,406	29,453
Total inventory	$ 68,906	$ 75,862

XML

Note 6 - Goodwill and Intangible Assets (Details Textual) $ in Millions	Apr. 01, 2018 USD ($)
Finite-Lived Intangible Assets, Amortization Expense, Remainder of Fiscal Year	$ 0.3
Finite-Lived Intangible Assets, Amortization Expense, Year Two	0.7
Finite-Lived Intangible Assets, Amortization Expense, Year Three	0.6
Finite-Lived Intangible Assets, Amortization Expense, Year Four	0.6
Finite-Lived Intangible Assets, Amortization Expense, Year Five	0.5
Finite-Lived Intangible Assets, Amortization Expense, after Year Five	$ 2.6

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Note 6 - Goodwill and Intangible Assets - Goodwill by Segment (Details) - USD ($) $ in Thousands	Apr. 01, 2018	Jul. 02, 2017
Goodwill	$ 62,590	$ 62,590
Consumer Floral [Member]
Goodwill	17,441
BloomNet Wire Service [Member]
Goodwill
Gourmet Food and Gift Baskets [Member]
Goodwill	$ 45,149

XML

Note 6 - Goodwill and Intangible Assets - Other Intangible Assets (Details) - USD ($) $ in Thousands	9 Months Ended
	Apr. 01, 2018	Jul. 02, 2017
Intangible assets with determinable lives, gross	$ 22,550	$ 22,550
Accumulated amortization	17,299	16,209
Intangible assets with determinable lives, net	5,251	6,341
Trademarks with indefinite lives, gross	54,842	54,749
Total identifiable intangible assets, gross	77,392	77,299
Total identifiable intangible assets, net	60,093	61,090
Licensing Agreements [Member]
Intangible assets with determinable lives, gross	7,420	7,420
Accumulated amortization	6,016	5,937
Intangible assets with determinable lives, net	$ 1,404	1,483
Licensing Agreements [Member] | Minimum [Member]
Finite-lived intangible asset, useful life (Year)	14 years
Licensing Agreements [Member] | Maximum [Member]
Finite-lived intangible asset, useful life (Year)	16 years
Customer Lists [Member]
Intangible assets with determinable lives, gross	$ 12,184	12,184
Accumulated amortization	9,146	8,227
Intangible assets with determinable lives, net	$ 3,038	3,957
Customer Lists [Member] | Minimum [Member]
Finite-lived intangible asset, useful life (Year)	3 years
Customer Lists [Member] | Maximum [Member]
Finite-lived intangible asset, useful life (Year)	10 years
Other Intangible Assets [Member]
Intangible assets with determinable lives, gross	$ 2,946	2,946
Accumulated amortization	2,137	2,045
Intangible assets with determinable lives, net	$ 809	$ 901
Other Intangible Assets [Member] | Minimum [Member]
Finite-lived intangible asset, useful life (Year)	5 years
Other Intangible Assets [Member] | Maximum [Member]
Finite-lived intangible asset, useful life (Year)	14 years

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Note 7 - Investments (Details Textual) - USD ($) $ in Millions	3 Months Ended			9 Months Ended
	Apr. 01, 2018	Dec. 31, 2017	Apr. 02, 2017	Apr. 01, 2018	Apr. 02, 2017	Jul. 02, 2017
Cost Method Investments	$ 1.8			$ 1.8		$ 1.7
Flores Online [Member]
Equity Method Investment, Ownership Percentage	24.90%			24.90%
Equity Method Investments	$ 0.6			$ 0.6		$ 1.0
Income (Loss) from Equity Method Investments, Total	(0.1)		$ (0.1)	(0.1)	$ (0.1)
Percentage of Equity Method Investment Transferred to a Cost Method Investment		5.00%
Flores Online [Member] | Other Income (Expense), Net [Member]
Equity Method Investment, Other than Temporary Impairment		$ 0.2
Isabella Flores [Member]
Cost Method Investment, Ownership Percentage		5.00%
Cost Method Investments	$ 0.1			$ 0.1

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Note 8 - Debt (Details Textual) - USD ($) $ in Thousands		9 Months Ended
		Apr. 01, 2018	Jul. 02, 2017	Sep. 30, 2014
Credit Facility 2014 [Member] | Revolving Credit Facility [Member]
Proceeds from Lines of Credit, Total		$ 200,000
Line of Credit Facility, Maximum Borrowing Capacity		100,000
Term Loan [Member]
Long-term Debt, Total	[1]	107,094	$ 112,125
Long-term Debt, Maturities, Repayments of Principal, Remainder of Fiscal Year		2,200
Long-term Debt, Maturities, Repayments of Principal in Year Two		10,100
Long-term Debt, Maturities, Repayments of Principal in Year Three		12,900
Long-term Debt, Maturities, Repayments of Principal in Year Four		15,800
Long-term Debt, Maturities, Repayments of Principal in Year Five		$ 66,100
Term Loan [Member] | Credit Facility 2014 [Member]
Long-term Debt, Total				$ 115,000
Debt Instrument, Number of Installment Payments		19
Debt Instrument, Principal Payment Percentage In Year One		5.00%
Debt Instrument, Principal Payment Percentage In Year Two		7.50%
Debt Instrument, Principal Payment Percentage In Year Three		10.00%
Debt Instrument, Principal Payment Percentage In Year Four		12.50%
Debt Instrument, Principal Payment Percentage in Year Five		15.00%
Debt Instrument, Principal Payment Due Upon Maturity		$ 61,800
Line of Credit and Term Loan [Member] | Base Rate [Member] | Minimum [Member]
Debt Instrument, Basis Spread on Variable Rate		0.75%
Line of Credit and Term Loan [Member] | Base Rate [Member] | Maximum [Member]
Debt Instrument, Basis Spread on Variable Rate		1.50%
Line of Credit and Term Loan [Member] | Federal Funds Effective Swap Rate [Member]
Debt Instrument, Base Rate, Basis Spread on Variable Rate		0.50%
Line of Credit and Term Loan [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Base Rate, Basis Spread on Variable Rate		1.00%
Line of Credit and Term Loan [Member] | London Interbank Offered Rate (LIBOR) [Member] | Minimum [Member]
Debt Instrument, Basis Spread on Variable Rate		1.75%
Line of Credit and Term Loan [Member] | London Interbank Offered Rate (LIBOR) [Member] | Maximum [Member]
Debt Instrument, Basis Spread on Variable Rate		2.50%

[1] On December 23, 2016, the Company entered into an Amended and Restated Credit Agreement (the "2016 Amended Credit Agreement") with JPMorgan Chase Bank as administrative agent, and a group of lenders. The 2016 Amended Credit Agreement amended and restated the Company's credit agreement dated as of September 30, 2014 (the "2014 Agreement") to, among other things, extend the maturity date of its $115.0 million outstanding term loan ("Term Loan") and revolving credit facility (the "Revolver") to December 23, 2021. The Term Loan is payable in 19 quarterly installments of principal and interest beginning on April 2, 2017, with escalating principal payments, at the rate of 5% in year one, 7.5% in year two, 10% in year three, 12.5% in year four, and 15% in year five, with the remaining balance of $61.8 million due upon maturity. The Revolver, in the aggregate amount of $200 million, subject to seasonal reduction to an aggregate amount of $100 million for the period from January 1 through August 1, may be used for working capital and general corporate purposes, subject to certain restrictions. For each borrowing under the 2016 Amended 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 from 0.75% to 1.5%, based on the Company's consolidated leverage ratio, where the base rate is the highest of (a) the prime rate, (b) the highest of the federal funds rate and the overnight bank funding rate as published by the New York Fed, plus 0.5% and (c) an adjusted LIBO rate, plus 1% or (2) an adjusted LIBO rate plus an applicable margin varying from 1.75% to 2.5%, based on the Company's consolidated leverage ratio. The 2016 Amended Credit Agreement requires that while any borrowings are outstanding the Company comply with certain financial covenants and affirmative covenants as well as certain negative covenants, that subject to certain exceptions, limit the Company's ability to, among other things, incur additional indebtedness, make certain investments and make certain restricted payments. The Company was in compliance with these covenants as of April 1, 2018. The 2016 Amended Credit Agreement is secured by substantially all of the assets of the Company and the Subsidiary Guarantors.

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Note 8 - Debt - Summary of Current and Long-term Debt (Details) - USD ($) $ in Thousands		Apr. 01, 2018	Jul. 02, 2017
Deferred financing costs		$ (2,839)	$ (3,560)
Debt instrument, carrying amount		104,255	108,565
Less: current debt		9,344	7,188
Long-term debt		94,911	101,377
Line of Credit [Member]
Revolver	[1]
Term Loan [Member]
Term Loan	[1]	$ 107,094	$ 112,125

[1] On December 23, 2016, the Company entered into an Amended and Restated Credit Agreement (the "2016 Amended Credit Agreement") with JPMorgan Chase Bank as administrative agent, and a group of lenders. The 2016 Amended Credit Agreement amended and restated the Company's credit agreement dated as of September 30, 2014 (the "2014 Agreement") to, among other things, extend the maturity date of its $115.0 million outstanding term loan ("Term Loan") and revolving credit facility (the "Revolver") to December 23, 2021. The Term Loan is payable in 19 quarterly installments of principal and interest beginning on April 2, 2017, with escalating principal payments, at the rate of 5% in year one, 7.5% in year two, 10% in year three, 12.5% in year four, and 15% in year five, with the remaining balance of $61.8 million due upon maturity. The Revolver, in the aggregate amount of $200 million, subject to seasonal reduction to an aggregate amount of $100 million for the period from January 1 through August 1, may be used for working capital and general corporate purposes, subject to certain restrictions. For each borrowing under the 2016 Amended 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 from 0.75% to 1.5%, based on the Company's consolidated leverage ratio, where the base rate is the highest of (a) the prime rate, (b) the highest of the federal funds rate and the overnight bank funding rate as published by the New York Fed, plus 0.5% and (c) an adjusted LIBO rate, plus 1% or (2) an adjusted LIBO rate plus an applicable margin varying from 1.75% to 2.5%, based on the Company's consolidated leverage ratio. The 2016 Amended Credit Agreement requires that while any borrowings are outstanding the Company comply with certain financial covenants and affirmative covenants as well as certain negative covenants, that subject to certain exceptions, limit the Company's ability to, among other things, incur additional indebtedness, make certain investments and make certain restricted payments. The Company was in compliance with these covenants as of April 1, 2018. The 2016 Amended Credit Agreement is secured by substantially all of the assets of the Company and the Subsidiary Guarantors.

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Note 9 - Property, Plant and Equipment - Summary of Property, Plant and Equipment (Details) - USD ($) $ in Thousands	Apr. 01, 2018	Jul. 02, 2017
Property, plant, and equipment, gross	$ 346,274	$ 330,700
Accumulated depreciation and amortization	(192,537)	(169,319)
Property, plant and equipment, net	153,737	161,381
Land [Member]
Property, plant, and equipment, gross	30,789	30,789
Orchards in Production and Land Improvements [Member]
Property, plant, and equipment, gross	10,830	9,703
Building and Building Improvements [Member]
Property, plant, and equipment, gross	58,088	56,791
Leasehold Improvements [Member]
Property, plant, and equipment, gross	12,553	11,950
Furniture and Fixtures [Member]
Property, plant, and equipment, gross	50,160	47,293
Computer and Telecommunication Equipment [Member]
Property, plant, and equipment, gross	47,559	45,026
Software and Software Development Costs [Member]
Property, plant, and equipment, gross	126,806	119,177
Capital Projects in Progress [Member]
Property, plant, and equipment, gross	$ 9,489	$ 9,971

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Note 10 - Fair Value Measurements - Assets and Liabilities Measured at Fair Value (Details) - USD ($) $ in Thousands		Apr. 01, 2018	Jul. 02, 2017
Trading securities held in a “rabbi trust”	[1]	$ 8,941	$ 6,916
Assets (liabilities) measured at fair value		8,941	6,916
Fair Value, Inputs, Level 1 [Member]
Trading securities held in a “rabbi trust”	[1]	8,941	6,916
Assets (liabilities) measured at fair value		8,941	6,916
Fair Value, Inputs, Level 2 [Member]
Trading securities held in a “rabbi trust”	[1]
Assets (liabilities) measured at fair value
Fair Value, Inputs, Level 3 [Member]
Trading securities held in a “rabbi trust”	[1]
Assets (liabilities) measured at fair value

[1] The Company has established a Non-qualified Deferred Compensation 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.

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Note 11 - Income Taxes (Details Textual) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended			9 Months Ended		12 Months Ended
	Dec. 22, 2017	Apr. 01, 2018	Dec. 31, 2017	Apr. 02, 2017	Apr. 01, 2018	Apr. 02, 2017	Jun. 30, 2019	Jul. 01, 2018
Effective Income Tax Rate Reconciliation, Percent, Total		35.60%		34.70%	1.60%	31.90%
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent	21.00%
Income Tax Expense (Benefit), Continuing Operations, Adjustment of Deferred Tax (Asset) Liability			$ (12,200)
Income Tax Expense (Benefit), Continuing Operations, Adjustment of Deferred Tax (Asset) Liability, Per Diluted Share			$ (0.18)
Unrecognized Tax Benefits, Ending Balance		$ 500			$ 500
Significant Change in Unrecognized Tax Benefits is Reasonably Possible, Amount of Unrecorded Benefit		$ 0			$ 0
Scenario, Forecast [Member]
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent							21.00%	28.00%

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Note 12 - Business Segments (Details Textual)	9 Months Ended
	Apr. 01, 2018
Number of Reportable Segments	3

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Note 12 - Business Segments - Segment Performance (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Apr. 01, 2018	Apr. 02, 2017	Apr. 01, 2018	Apr. 02, 2017
Net revenues		$ 238,545	$ 233,715	$ 921,987	$ 954,097
Depreciation and amortization		(7,885)	(8,492)	(24,646)	(25,656)
Operating income (loss)		(12,439)	(16,285)	52,424	57,157
Operating Segments [Member]
Contribution margin		15,854	13,332	136,518	145,429
Corporate, Non-Segment [Member]
Net revenues		264	260	851	839
Corporate	[1]	(20,408)	(21,125)	(59,448)	(62,616)
Intersegment Eliminations [Member]
Net revenues		(457)	(931)	(1,365)	(2,301)
Consumer Floral [Member] | Operating Segments [Member]
Net revenues		135,782	124,684	312,456	297,707
Contribution margin		16,226	15,863	33,988	37,172
BloomNet Wire Service [Member] | Operating Segments [Member]
Net revenues		24,498	24,091	64,637	65,557
Contribution margin		8,439	8,245	22,832	23,713
Gourmet Food and Gift Baskets [Member] | Operating Segments [Member]
Net revenues		78,458	85,611	545,408	592,295
Contribution margin		$ (8,811)	$ (10,776)	$ 79,698	$ 84,544

[1] Corporate expenses consist of the Company's enterprise shared service cost centers, and include, among other items, Information Technology, Human Resources, Accounting and Finance, Legal, Executive and Customer Service Center functions, as well as Stock-Based Compensation. In order to leverage the Company's infrastructure, these functions are operated under a centralized management platform, providing support services throughout the organization. The costs of these functions, other than those of the Customer Service Center, which are allocated directly to the above categories based upon usage, are included within corporate expenses as they are not directly allocable to a specific segment.