"After one glance at analyst estimates for tomorrow's earnings report from 1-800-Flowers (NASDAQ:FLWS), an investor's enthusiasm for the stock begins to wilt."

"As a chill, damp autumn descends upon Wall Street, analysts fear an early frost will bite into 1-800-Flowers' profits."

Which of those lead-ins better describes what's in store for the phone-and-Internet flower hawker on Thursday? You be the judge. Analysts expect the company to report a loss for its fiscal first quarter, and that surely won't make investors happy. On the other hand, the news is no surprise -- 1-800-Flowers has reported Q1 losses in each of the past two years, yet it managed to end both years in the black.

What must still be a little disconcerting to investors, though, is the size of the loss that's being predicted. 1-800-Flowers lost $0.08 per share in its 2003 quarter ending in September. One year later, things seemed to be improving, with a loss of just $0.04. Tomorrow, it looks like we'll be back to square one or even worse. The Street thinks that 1-800-Flowers is going to report $109 million in revenues -- an improvement on each of the previous years' September quarters -- but lose $0.10 in the process.

I've gone back and reviewed the earnings report that 1-800-Flowers released last quarter -- the one reporting the year-end results for fiscal 2005 -- to learn what caused these diminished expectations. Back then, the company warned of the increased loss, even if it didn't make the magnitude clear. It seems that expanding its "Food, Wine, and Gift Basket" business has made 1-800-Flowers more seasonal than ever. So while Q1 is just as long as any other quarter in the year, the company expects to book just 14% of its annual sales in that quarter. Meanwhile, fixed costs remain, well, fixed, and sales won't be enough to cover their cost.

The good news is that 1-800-Flowers sees better days ahead. It's projecting that Q2 will fully make up for Q1's skimpy revenues. Moreover, through fiscal year end, 1-800-Flowers expects to book a 15% increase in year-over-year sales, boost margins by 1.5%, and generate about $25 million in free cash flow.

Because of the seasonality issue, however, we won't see much evidence of that good news tomorrow. Instead, we'll focus on a proxy: 1-800-Flowers has noted that it expects much of its growth this year to come in the form of increasing online sales. So whatever the GAAP losses look like, and no matter how bad free cash flow appears, just focus on the company's description of online sales growth. If that's on track, the rest should follow.

Who doesn't like flowers? Get a bouquet of Foolishness here:

  • This tale of FTD's (NYSE:FTD) lawsuit against Provide Commerce (NASDAQ:PRVD).
  • Rick Munarriz's review of Provide Commerce's most recent earnings release.
  • Tim Beyers' coverage of 1-800-Flowers' fiscal 2005 release.

Provide Commerce is a Motley Fool Rule Breakers recommendation.

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Fool contributor Rich Smith has no position in any company named above.