Chairman Tim Trotter said trading had been mixed with Flying Flowers having a disappointing Christmas campaign because of "weak external advertising response" along with a lack of customer faith in postal deliveries following last year's Royal Mail strike.
While the company's other divisions had good trading and positive growth through internet sales, they were not enough to offset the gardening division's poor performance.
Trotter said the current market environment was challenging and the board remained cautious on the outlook for 2008, he said.
The priority would be to focus on investing for growth with £2m to be injected into its core businesses, especially Flying Flowers and Gardening Direct.
The company was confident that the introduction of a more dynamic web operation next month would increase the volume of new customers from the internet.
Group chief executive Mark Dugdale has told the board he plans to leave by April to pursue other interests.