What happened
Shares of 1-800-FLOWERS.COM (FLWS 1.25%), which sells flowers and other gifts, fell dramatically as trading got underway on Jan. 27, dropping a massive 35% at the open. By roughly 10 a.m. ET the stock was still off by a hefty 31% or so. The company's fiscal second-quarter 2022 earnings release is, without a doubt, the culprit here.
So what
The top line was actually not so bad, with 1-800-FLOWERS.COM increasing revenues by 7.5% year over year in the fiscal second quarter of 2022. That came on top of a pretty impressive increase in the same stanza of fiscal 2021, which witnessed a sales gain of 44.8%. Essentially, the 7.5% increase in the second quarter of 2022 was up against a very tough comparison. The problem is that the company's $943 million in sales this quarter was a little shy of the $976.6 million analysts had been expecting. And that wasn't the only bad news.
Image source: Getty Images.
More notable was that the company reported earnings of $1.34 per share, down from $1.71 in the same quarter of fiscal 2021. Analysts had been looking for $1.79 per share. Investors don't like it when companies miss Wall Street estimates like that. However, the really worrying thing is why the company missed so badly on the bottom line. Summing it up, the company noted that the year-over-year drop was "primarily reflecting significant year-over-year cost increases for inbound and outbound shipping, labor, and digital marketing." In other words, supply chain problems and inflation took a huge toll, and there's no end in sight to these problems just yet. This is a hot-button issue with investors at the moment.
Now what
In addition to the bad news above, 1-800-FLOWERS.COM also dramatically reduced its top and bottom line guidance for fiscal 2022. To put a number on that, it started the fiscal year expecting earnings to be around the $1.71 per share earned in fiscal 2021. It is now calling for fiscal 2022 earnings to be between $0.90 and $1 per share. No wonder investors rushed to sell the stock this morning.
