FLWS

1-800-Flowers($FLWS) Stock Plunges on CEO Resignation and Earnings Miss, Yet Major Shareholder Buys 350,000 Shares

05/13/2025 21:19

Despite a significant drop in 1-800-Flowers.Com's ($FLWS) stock price on May 9 following disappointing earnings and news of the CEO's resignation, major shareholder Fund 1 Investments made a substantial purchase of over 350,000 shares on the same day. $FLWS shares plummeted 14.3% on May 9, falling from $5.67 to $4.86. This steep decline came after the company reported quarterly results that fell significantly short of market expectations. The company posted a surprising loss of $2.80 per share for the quarter ended March 31, far worse than the 34-cent loss analysts had anticipated. Revenue also declined by 12.6% to $331.45 million, below the expected $365.02 million. On the same day, The Wall Street Journal reported that longtime CEO Jim McCann would be stepping down amid declining sales. This double whammy of negative news prompted many investors to sell their holdings. However, amid this negative trend, there was a notable development. According to SEC filings, major shareholder Fund 1 Investments, LLC purchased 350,863 shares for approximately $1.55 million on May 9 alone. This was at an average price of $4.42 per share, seemingly taking advantage of the stock's sharp decline. More remarkably, this fund has been consistently acquiring $FLWS shares over the past several months. In fact, Fund 1 Investments has been steadily buying 1-800-Flowers stock since January 2025. Starting in mid-January when shares were trading in the $7 range, the fund has intensified its purchasing activity as the company's financial performance deteriorated and the stock price declined. Particularly concentrated buying occurred in late February to early March when the price fell below $7, and again after mid-March when it dropped below $6. 1-800-Flowers.Com is an e-commerce company providing flower and gift delivery services, also operating brands such as Harry & David, The Popcorn Factory, and Cheryl's Cookies. The company has experienced consistent revenue declines and profitability challenges over recent quarters. In earnings announced on August 29, 2024, for the June quarter, the company reported a 31-cent per share loss; on November 1, it posted a 53-cent per share loss for the September quarter; and on January 30 this year, it reported decreased earnings compared to the previous year for the December quarter. The company's persistent underperformance appears to stem from several factors, including reduced consumer spending, intensified competition in the e-commerce sector, and increased costs due to inflation. In particular, the expansion of major e-commerce platforms like Amazon and heightened competition in the flower delivery market have constrained the company's growth prospects. Nevertheless, Fund 1 Investments' continuous purchasing activity may reflect long-term confidence in the company. Notably, CEO replacements often mark the beginning of strategic directional shifts and the pursuit of new growth opportunities. Meanwhile, CIO Leap Arnold P's small-scale selling (3,000 shares) in November 2024 suggests there were concerns about the company's short-term outlook within the executive team at that time. However, Fund 1 Investments' recent large-scale purchasing sends a strong signal that could counterbalance these internal concerns. Investors should now pay attention to the appointment of a new CEO and the company's strategic redirection. It's also worth monitoring whether Fund 1 Investments is simply purchasing undervalued stock or expanding its stake to play a more active role. 1-800-Flowers.Com currently has a market capitalization of approximately $360 million. Despite its ongoing performance issues, the company's brand value and customer base remain significant assets. If the company can improve its digital strategy and optimize its cost structure, it may be able to overcome its current difficulties. The $FLWS stock price is expected to remain volatile in the near term, but Fund 1 Investments' continued purchasing could provide support for the stock's downside. Investors should keep an eye on upcoming earnings announcements and news about the new CEO appointment while evaluating the company's turnaround potential.

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