FLWS

1-800-FLOWERS ($FLWS) Plunges 50%, Yet Major Shareholder Bets $30M on Recovery

05/29/2025 22:01

1-800-FLOWERS.COM ($FLWS), the online gift delivery specialist, has captured investor attention as major shareholder Fund 1 Investments LLC continues aggressive buying, accumulating approximately $30 million worth of shares this year even as the stock has plummeted over 50% in the past year. FLWS shares have declined dramatically from $9.69 in June 2024 to $4.79 as of May 28, 2025. The stock briefly spiked to $11.00 in July 2024 before entering a sustained downtrend, losing approximately 40% year-to-date. However, this steep decline has only intensified buying activity from Fund 1 Investments, which has been systematically accumulating shares. According to SEC filings, Fund 1 Investments executed 68 separate purchase transactions from January through May 2025, acquiring approximately 3 million additional shares. The average purchase prices ranged from $4.42 to $8.85 per share, demonstrating consistent bottom-fishing even during the recent price collapse. As recently as May 28, the fund purchased 30,000 shares at $4.80, showing unwavering commitment to its accumulation strategy. 1-800-FLOWERS.COM, founded in 1976, operates as a leading online gift delivery company specializing in floral arrangements, gift baskets, and gourmet food products nationwide. The company's business model is heavily dependent on seasonal events like Valentine's Day, Mother's Day, and Christmas, competing with players like ProFlowers and FTD. With a market capitalization of $361 million, the small-cap company has struggled with intensifying competition in online retail and reduced consumer discretionary spending. The company's financial performance reflects these challenges. For the quarter ended December 31, 2024, adjusted earnings per share fell 21% year-over-year to $1.00, while revenue declined 5.7% to $775.49 million, missing analyst expectations of $801.64 million. More concerning, the March 31, 2025 quarter showed a loss of $2.80 per share, dramatically worse than the expected 34-cent loss. Amid this performance deterioration, the company announced a major leadership transition. In early May, founder and CEO Jim McCann announced his retirement, marking one of the most significant changes in company history. McCann, who has led the company since 1976, will step down as the company seeks new strategic direction. The broader online gift delivery market faces structural headwinds post-pandemic. Consumer spending patterns have shifted, with inflation pressures reducing discretionary gift purchases. Competition from Amazon and other large platforms has intensified, while rising shipping costs and labor shortages compress industry margins. Seasonal retailers like 1-800-FLOWERS face particular challenges in maintaining profitability outside peak periods. Despite these challenges, Fund 1 Investments' persistent buying suggests several potential catalysts. First, the fund likely views current prices as significantly undervaluing the company's intrinsic worth. Second, the CEO transition may unlock operational efficiencies and strategic restructuring opportunities. Third, the seasonal nature of the business creates potential for stronger second-half performance during peak gift-giving periods. Analyst sentiment remains cautiously optimistic, with a consensus 'buy' rating and median price target of $10.50, implying approximately 120% upside from current levels. However, limited visibility on earnings recovery suggests near-term price appreciation may remain challenging. For investors, the situation presents both significant risk and opportunity. The major shareholder's continued accumulation and deeply discounted valuation provide compelling value arguments. However, ongoing operational challenges and industry headwinds remain substantial obstacles. The new management team's restructuring capabilities and second-half seasonal performance will likely determine the stock's trajectory going forward.

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