1-800-Flowers' Dot-Com Delivery

Budding online revenue gains at florist and gift retailer 1-800-Flowers.com (Nasdaq: FLWS  ) led to sweet-smelling results for the second quarter of fiscal 2004.

Management reported today that sales jumped 8% during the quarter while online orders sprouted 20% from the year-ago period. The company also acquired 1.2 million new customers over the holidays. More than 48% of revenue came from returning customers.

Indeed, 1-800-Flowers.com appears to be the latest Web business success story. What might be most interesting about that is this was never a dot-com superstar like Akamai (Nasdaq: AKAM  ) , Amazon.com (Nasdaq: AMZN  ) , eBay (Nasdaq: EBAY  ) , Priceline.com (Nasdaq: PCLN  ) , or Yahoo! (Nasdaq: YHOO  ) . In fact, the company has been rather pedestrian when compared with its Internet cousins.

Consider that although 1-800-Flowers.com has been around in one form or another for nearly 30 years, it only went public in 1999 at the relatively sane price of $21. Since then, the business has grown but the stock has languished, trading at a little better than $10 per share today.

Certainly debt has been part of the issue, for it had a dramatic impact on the company's available working capital during its formative years as a public entity. CEO Jim McCann admitted as much on The Motley Fool radio show back in February of 2002.

Today, the balance sheet looks much stronger with more than $100 million in cash and investments. The business has also generated free cash flow in excess of $22 million over the past two quarters, double its remaining debt.

So, is this company a rose in bloom? Maybe, but its two other big quarters -- Q3 with Valentine's Day and Q4 with Mother's Day -- account for a huge amount of business. This year Valentine's Day falls on a Saturday, which typically leads to fewer deliveries. Executives said they plan slower growth for the third quarter as a result of the poor timing, but still expect full fiscal 2004 earnings to leap ahead by 75% over last year.

With that kind of growth perhaps investors should stop and smell the flowers.

Getting ready for Valentine's Day? See what romantic ideas other Fools have planned on the He/She discussion board. Only at Fool.com.

Tim Beyers doesn't own shares of any of the companies mentioned. And, yes, before you ask, he will be buying his wife flowers for Valentine's Day. Tim welcomes your comments at TimB@fool.com.


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