FLWS

1-800-Flowers ($FLWS) Major Shareholder Buys 4.5M Shares Despite Shocking $2.80 Per Share Loss

06/17/2025 20:47

An intriguing contrarian investment story is unfolding around 1-800-Flowers.Com Inc ($FLWS). While shares of the leading online flower delivery service have plummeted nearly 50% over the past year, major shareholder Fund 1 Investments has been aggressively accumulating shares, drawing significant attention. 1-800-Flowers, established in 1976, is America's largest online flower delivery service, specializing in gift delivery for special occasions. As a small-cap company with approximately $1.5 billion in annual revenue, it operates in a highly seasonal business tied to Valentine's Day, Mother's Day, and other holidays. However, the company has struggled with poor performance in recent years due to changing consumer patterns after the pandemic and economic slowdown. The most notable development is Fund 1 Investments' consistent buying pattern. After selling 40,000 shares on November 4, 2024, the fund began aggressive accumulation later that month. From January to June 2025, transaction records show approximately 70 separate purchases totaling about 4.5 million shares. Particularly noteworthy is their continued buying as shares declined from the $7-8 range to the $4-5 range. Fund 1 Investments' behavior appears to be strategic rather than opportunistic. In April 2025 SEC filings, they disclosed cash-settled total return swaps providing economic exposure to approximately 3.83 million notional shares. This indicates additional leveraged positions beyond their actual share holdings. However, the company's fundamentals remain concerning. Q1 2025 results showed a massive loss of $2.80 per share, with revenue declining 12.6% year-over-year to $331.45 million, significantly missing analyst expectations. Moreover, founder and CEO Jim McCann's planned departure signals upcoming management changes. Investors should focus on several key indicators. First, whether Fund 1 Investments continues accumulating shares despite price declines, which could signal undervaluation relative to intrinsic value. Second, the new CEO's specific restructuring plans after appointment, particularly strategies for stabilizing seasonal business operations and improving profitability. Third, upcoming holiday season performance, as Q4 traditionally represents peak season and could signal turnaround momentum. Conversely, clear risks warrant caution. Continued decline in consumer discretionary spending could shrink the entire gift market. Additionally, intensifying competition from major platforms like Amazon's enhanced gift services threatens market share defense. Furthermore, even the current $5 per share price level faces potential further decline. In an optimistic scenario, new management leadership could successfully implement cost structure improvements and digital transformation, restoring profitability. Continued support from sophisticated investors like Fund 1 Investments could facilitate necessary capital access, offering significant upside potential from current price levels. The most likely base case scenario involves continued near-term underperformance but gradual recovery beginning in H2 2025. While the new CEO's restructuring effects will take time to materialize, active shareholder support should help avoid worst-case scenarios. In a risk scenario, accelerating revenue decline from consumption weakness and competitive pressure could create funding difficulties, potentially driving shares toward the $3-4 range. Overall, $FLWS represents a classic turnaround situation. While the major shareholder's persistent accumulation provides positive signals, share price recovery remains limited without fundamental business improvements. This could present interesting opportunities for risk-tolerant investors, though cautious approach remains essential.

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