What happened

After having spiked by as much as 20% in early trading, shares of 1-800-Flowers.com (FLWS 3.01%) were up by 6.6% as of 1:30 p.m. ET on Thursday following the release of the company's fiscal fourth-quarter earnings results before the market opened.

For the quarter, which ended July 2, revenues fell 18% year over year, but management had positive things to say about the direction of the business that boosted investor confidence.

So what

Inflation has raised the company's transportation costs and eaten into its gross margins over the last year. This has pressured both profits and stock performance.

However, management reported that business conditions are improving. Ocean freight rates and commodity costs have come down. Additionally, the company's investments in automation and logistics should lead to improving profitability over the next few years.

"While it is very difficult to predict precisely when we will see [a] more favorable environment for consumer discretionary spend, we believe that with regard to revenue growth and margin recovery, it's a question of when, not if," CEO James McCann said during the earnings conference call.  

Over the next few years, management expects gross margin to rise back to its 10-year average of 42%, which bodes well for earnings growth and a potential rebound for the stock from its low levels of the past year.

Now what

The stock was already trading well below its previous peak going into the report, and investors were more focused on management's rosy outlook for margins and business recovery than the drop in sales.

With strong brands like Harry & David, Shari's Berries, and The Popcorn Factory that are popular with gift-givers, the company could be a bargain buy for patient investors. 1-800-Flowers.com has a long record of delivering profitable growth, and once the clouds around the U.S. economy lift, it will likely return to that soon enough.