What happened

Shares of 1-800-Flowers. com (FLWS 0.77%) closed Thursday's trading session 28.4% higher, following a rather sweet-smelling earnings report.

So what

Second-quarter sales fell 4.8% year over year to $898 million, still exceeding Wall Street's consensus target of $895 million. On the bottom line, adjusted earnings of $1.28 per share crushed your average analyst's estimate of $0.95. The veteran of gifts and gift delivery services saw expanded its gross margins in gourmet foods and gift baskets with "strategic pricing" moves. Moreover, a stabilizing labor market and lower ocean freight costs also supported the company's strengthening profit margins.

Now what

CEO Bill Shea expects macroeconomic pressure points such as rising inflation, shipping service shortages, and tight consumer budgets to fade out fairly soon. So, in the long run, the weak sales of recent quarters should be remembered as a temporary trough rather than a structural deficiency in 1-800-Flowers' business model.

The second-quarter results lend support to Shea's words. The same gourmet foods and gift baskets that saw heavy margin pressure in 2022 were star performers in this quarter. The company is managing its way through this economic crisis, but it'll be a while before the stock can hope to regain the all-time highs from two years ago. Even after a 67% price drop, the stock still looks expensive at 89 times trailing earnings with flat-to-falling top-line growth.