Will 1-800-Flowers.com Find Love Today?

David Gardner: Jim McCann is the CEO of 1-800-Flowers (Nasdaq: FLWS  ) . Jim, Valentine's (is) just around the corner. You told us a couple of years ago that Valentine's Day was a little under 10% of your business. Now is that still about right?

Jim McCann: That is about right.

David Gardner: You know, when we did talk with you three years ago, you said there are three big holidays -- Christmas season, Valentine's Day and Mother's Day. You said that Mother's Day is the biggest day of the year.

Jim McCann: Mother's Day is the biggest holiday for us in the flower business, so that spring quarter is very big for our company. For 26 years it was the biggest quarter for us. But now with the advent of our specialty brands, all the other branded gift products that we sell, the Christmas holiday quarter is now our biggest quarter. But those are still the three big holidays for us.

David Gardner: What non-flower products do you sell? I am aware of a few of them, but can you paint the picture a little bit of that side of the business?

Jim McCann: Absolutely, David. It is what you'd expect to find in a great high-end flower shop in any town across America, so it is nothing that would really surprise you. I will give you one asterisk at the end; it is of course your flowers, your plants, your balloons, your stuffed animals, your candy, your giftware related to your floral product, your gift baskets, and your gift food products. The big, fast-growth areas for us, flowers (are) still a good growth engine for us, but we are seeing really wild growth in our gift food products.

We own a little company called The Popcorn Factory, our candy company, our gift food companies. We just made an acquisition of a small wine company out in Napa Valley that will be one of several things we will build around the gift wine space that we are pretty excited about. Just a small company we acquired in December, but that gift food, wine, and gift basket business is where we are seeing growth.

David Gardner: Jim, what percentage of your Valentine's Day business is roses?

Jim McCann: Well, you look at it two ways. Roses are the single most requested flower item, but they are not the most of the flowers we sell. We will sell about 5 million roses this Valentine's Day. We will do about a million orders in total for that holiday period, so it is a very big and very important holiday for us, but we sell a lot more of other flowers. Tulips are a fast-growing item, so while we will sell 5 million roses, we will sell this year probably over a million tulips, but it is our range of other products, our lilies and all the other products.

The good news is, where we get our product from heavily this time of year, our rose product will be coming from South America, particularly Ecuador and Colombia, and the weather has been terrific. I spoke just 45 minutes or so ago with our people down on the farms there, and they are telling us the weather has been good. You always worry about -- there is always an outside possibility of -- a frost in January, in Colombia particularly, but this year it has been terrific weather, so the crop looks great.

David Gardner: Let's talk Valentine's Day some more, Jim. How about one flower that I should not give on Valentine's Day?

Jim McCann: Well you don't want to give a calla lily on Valentine's Day. Although pretty, I wouldn't want to give a single calla lily. It is too often depicted in old-time Western movies as the flower of death. I wouldn't recommend that for you. You might spend a lot more time on the couch than you have been ordinarily.

David Gardner:(Laughs.) OK, so I will cross that one off my list. How much for a dozen long-stemmed roses?

Jim McCann: Well, we have long-stemmed roses. They will range in price from $34.99 to $1,000.

David Gardner: No bells and whistles, just the roses.

Jim McCann: Well, I will tell you that with our thousand-dollar-a-dozen roses, because we have the best range in prices for roses from the least expensive to the marketably fashionable priced thousand dollars a dozen, we do throw in a couple of things for free, like a Waterford vase and a bottle of Dom Perignon champagne and a couple of Waterford flutes and a diamond pendant, but those things are free. The roses are a thousand dollars.

David Gardner:(Laughs.) Jim, I am a happily married guy, at least I think I am, and I think my wife and I appreciate some frugality, given all the places that our dollars go. So with all that in mind, how much am I saving on roses if I buy them the day after Valentine's Day? Now I want you to be honest with me.

Jim McCann: Truth be told, roses aren't any cheaper the day after because there is just none left. Even at 5 million roses, we will sell out sometime on the afternoon of the 14th. It is just almost unavoidable. Demand far outstrips supply, particularly in a quality product. So frankly, there is a shortage of roses right through the end of February. It is an eight-week growing cycle, eight- to 12-week growing cycle, so everything is timed to peak for that Valentine week.

Stay tuned for Part 2 tomorrow.

David Gardner is co-founder of The Motley Fool and is the advisor of Motley Fool Rule Breakers. The Motley Fool isinvestors writing forinvestors.


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