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Why Stock Dropped 12% Today

By Rich Smith – Aug 22, 2019 at 6:22PM

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Q4 was no bed of roses for investors.

What happened

Shares of phone and online florist (FLWS -4.01%) closed 11.9% lower on Thursday, even as the company posted Q4 sales and earnings earlier in the morning that beat Wall Street's estimates.

1-800-Flowers' sales of $259.4 million were better than the $255.2 million projected for it. Likewise, the company's $0.13-per-share loss was better than the $0.14-per-share loss that analysts had expected to see.  

A big pile of bright red roses

Image source: Getty Images.

So what

But a loss is a loss, and 1-800-Flowers showed no improvement in its earnings year over year, losing as much money this past quarter as it lost a year ago, even as sales climbed 13% year over year.  

1-800-Flowers' quarter also marked the end of its fiscal 2019. For the year, sales grew 8% to $1.25 billion, and although unprofitable for the quarter, 1-800-Flowers was at least profitable for the year, earning $0.52 per share. However, that was less than the $0.61 per share earned in fiscal 2018.

Now what

The good news is that management says it has momentum heading into fiscal 2020. (Note that sales growth in Q4 was significantly greater than sales growth posted for the year as a whole.) Giving new guidance for the new year, 1-800-Flowers predicts that it will deliver sales growth of 8% to 9% this coming year, translating to sales of at least $1.35 billion, and earnings growth of 8% to 10% -- $0.56 per share or better.

And the bad news: Even if 1-800-Flowers maxes out earnings guidance, it looks as if it's going to fall at least $0.02 short of the $0.59 Wall Street wants to see it earn in fiscal 2020. Long story short -- management warned that it will miss earnings, and now is being punished for it.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

1-800-FLOWERS.COM, Inc. Stock Quote
1-800-FLOWERS.COM, Inc.
$5.98 (-4.01%) $0.25

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