1-800-Flowers Stays Fresh Amid Big Competition

With e-commerce's juggernaut having entered the garden, many thought 1-800 Flowers was on its way out. Recent results show a different story.

Feb 1, 2014 at 12:05PM

1-800-Flowers.com (NASDAQ:FLWS) jumps out immediately as an appealing business based on its asset-light, cash-generating business model. Working with a network of local florists along with larger shops, the company has recovered from darker days to consistently deliver sales growth, if not quite as appealing as that of other dot-coms. In its niche of the Web-based retailing world, 1-800-Flowers is a dominant force and holds one of the stronger brand names of any national florist. Of course, there remains the looming shadow of Amazon.com, the one-stop kill-the-competition shop. It's doing great at the moment, but can 1-800-Flowers fend off the shark in the water?

Short-term smells sweet
Amazon has been in the flower market for a little while now. Its offering is not nearly as comprehensive as 1-800-Flowers', but it's Amazon -- a click of a few buttons and a couple of extra marketing dollars, and it could become the Internet's florist, in addition to everything else.

At the moment, though, 1-800-Flowers doesn't seem to be feeling the pressure. In its recently reported earnings, the company brought in 637,000 new customers. In its fiscal fourth quarter (two quarters ago), the company added more than 300,000. It's a very promotion-heavy business, and that can certainly weigh on the bottom line if the marketing doesn't translate to sales, but the company appears to be reaching more and more people as the months go by. Sales reflect it, too, as 1-800-Flowers tacked on 6% over the year-ago quarter to $266.3 million. EBITDA grew 7%, while EPS grew the most at 8.2%, equaling $0.27 per share.

The market was charmed by the flower company and sent shares up more than 7% in Thursday's trading.

Wilting future?
The thing about flowers and the gift basket business is that it takes an element of finesse and personalization to create the sense of kindness desired when people purchase these items. Amazon, for all of its glory and world dominance, is not in the business of personalization. A respect for said quality and taste is likely part of the reason that 1-800-Flowers boasts 61% of its orders sourced from repeat customers. There is an element of loyalty here that Amazon likely can't easily shake.

1-800-Flowers' fastest-growing segment is gift baskets and gourmet food. Mass-market channel sales were up in the double digits, while overall the segment grew sales 6.1% and improved its segment contribution margin by 12.5%.

The threat of disruption from an e-commerce giant remains, but the small-cap 1-800-Flowers is proving resilient. Management has guided for steady-as-she-goes growth from the top of the income statement down, along with free cash flow of $20 million for the full current year. The stock isn't quite the bargain it was, and thus there is greater downside risk, but 1-800-Flowers gives investors little reason to fear the Man, at least in the foreseeable future.

The key to a rosy retirement outlook
It's no secret that investors tend to be impatient with the market, but the best investment strategy is to buy shares in solid businesses and keep them for the long term. In the special free report "3 Stocks That Will Help You Retire Rich," The Motley Fool shares investment ideas and strategies that could help you build wealth for years to come. Click here to grab your free copy today.

Michael Lewis has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers