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Key Takeaways
- 1-800-Flowers.com is projected to report a 6% decline in sales this quarter, but a D.A. Davidson analyst believes the real figure will be worse.
- The firm downgraded the company’s stock to “underperform” from “neutral” and lowered its price target to $8 from $9.
- 1-800-Flowers.com’s year-over-year sales have declined every quarter for the past two years due to sluggish “everyday gifting.”
1-800-Flowers.com ( FLWS ) shares sank in intraday trading Wednesday after D.A. Davidson downgraded the company’s stock to “underperform” from “neutral” and lowered its price target.
The company is expected to post a year-over-year sales drop of 6%, but D.A. Davidson Senior Research Analyst Linda Bolton Weiser believes we’ll see an even larger decline, according to a note published Wednesday.
D.A. Davidson, which lowered its price target to $8 from $9, pointed to Bloomberg debit card data—which is 94% correlated to sales, according to the note—indicating a 15% year-over-year drop in the fourth quarter.
1-800-Flowers typically sees an uptick in sales around holidays, but day-to-day gifting has taken a significant hit, the note said.
“Consumers have tended to show up more on the big gift-giving holidays like Mother’s Day, but FLWS’ everyday gifting business (which is the majority of sales) has been very anemic,” Bolton Weiser wrote.
Year-Over-Year Sales Have Declined for Past 2 Years
In fact, 1-800-Flowers has seen year-over-year sales decline every quarter for the past two years, and the future isn’t looking rosy, either.
“We also think FLWS could issue fiscal 2025 guidance below the Street: consumer sentiment remains at recession levels, everyday gifting is still anemic, and FLWS could face some cost inflation,” Bolton Weiser wrote.
Shares of 1-800-Flowers dropped 7% to $10.23 as of 1 p.m. ET Wednesday to move into negative territory for 2024.