RealTime IT News

Sowing the Seeds of Profitability

Online retailer 1-800-FLOWERS.COM negotiated a new five-year agreement with America Online Inc. that extends their e-commerce partnership for two additional years, through August 2005.

The new agreement, effective Oct. 1, replaces an existing four-year contract that was announced a year ago.

Financial terms of the new deal were not disclosed, but the flower and gift retailer said the new agreement "provides significant cost savings over the life of the contract," thereby enhancing its ability "to attain its stated goal of returning to positive EBITDA in the fourth quarter of fiscal 2001 and for full-year fiscal 2002."

The company's stock closed yesterday at $4.50, well down from its 52-week high of $19.75. The company reported a net loss applicable to common stock of $66.8 million for its fiscal year ending July 2, 2000.

Under the terms of the new agreement, 1-800-FLOWERS.COM will continue as the exclusive marketer of fresh-cut flowers across six AOL properties, including the proprietary service, AOL.com, CompuServe, Netscape Netcenter, Digital City and ICQ. Promotions will be increased across several AOL properties, and AOL will receive increased cross-promotion in 1-800-FLOWERS.COM marketing channels.

"AOL is clearly one of the most effective partners we have, and we are extremely pleased to be able to cost effectively extend our relationship and enhance it with increased promotions," said Jim McCann, chief executive officer of the flower seller.

1-800-FLOWERS.COM sells gifts including flowers, gourmet foods, candies and gift baskets.