1-800-FLOWERS: Will This Company Ever Bloom?

It has been a nuclear winter for e-tailing stocks. One theory is that pure
online companies cannot survive; that is, there needs to be a
brick-and-mortar dimension to the business. Then again, look at
barnesandnoble.com. The stock has been languishing.

Another company that has a brick-and-mortar dimension is 1-800-FLOWERS . The
founder of the company, Jim McCann, started the company more than 20 years
ago. He had a vision to make retailing much more convenient. So, why not
allow people to place orders by simply dialing 1-800-FLOWERS?

Of course, this was no easy feat. He had to build a sophisticated
infrastructure that tied together a huge network of florists (1,500 in all).

But the company also morphed when it had to. For example, it went online in
1992 through AOL. Since then, 1-800-FLOWERS has struck deals with MSN and
Yahoo!

The company has a market capitalization of $344 million. Yet, in the past
quarter, the company had $85 million in sales, which was up from $67.3
million in the same period a year ago. Of course, the online sales are
zooming. These increased 127.3 percent to $30.1 million. Also, the company
has virtually no debt and the cash position is $128 million.

What’s more, the company is diversifying its product line. For example, you
can also purchase greeting cards, candy and even gourmet items.

So why has Wall Street been so harsh? Of course, it has the stigma of an
e-tailer. None of these stocks are doing well.

Also, the company has been incurring substantial losses. However, these
losses should be short-term. After all, the company is building out its
online presence. But once this is done, profitability should resume once
again. And, hopefully, there will be some good news for shareholders.

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