Delivery Company Delivering Huge Earnings (FLWS)

Started in 1976, 1-800-FLOWERS.COM FLWS delivers flowers, gift baskets, snacks, and other small gifts for a total of 11,300 total offerings.

Growth Factors

The company plans to grow organically, but notes it will make acquisitions if needed and has done so in the past. Most recently, in 2011 1-800-FLOWERS.COM purchased a florist, stationery company, and bakery.

Along with its own brands, the company offer products from nationally recognized brands, including Yankee Candle and Starbucks SBUX. Relationships with luxury brands will set the company apart from competitors as the economy recovers, especially exclusive licensing agreements.

1-800-FLOWERS.COM almost needs to build relationships with regional partners to expand their distribution range.

Related: UPDATE: Benchmark Raises PT on 1-800-FLOWERS Following Meetings

Industry

Because the internet makes up such a large portion of sales, the company competes not only with its traditional phone competitors, but also with a series of online retailers. Along with 1-800-FLOWERS.COM, some of the biggest players in the space include FTD and Proflowers.

The industry tooks a sharp decline in 2008, and has annualized losses of four percent from 2007 to 2012, according to IBIS. Despite this trend, the company has been building sales since 2011.

Key statistics to look at for an industry like this are Consumer Sentiment, released by the University of Michigan, and Real Disposable Income, released by the Bureau of Economic Analysis. As these figures rise, spending on delivery gifts should follow.

Financials

For the most recent quarter, ended March 31st, year over year revenue grew 7.2 percent and net income grew from an 85 thousand dollar loss to a 2.6 million dollar gain. Along with higher sales, 1-800-FLOWERS.COM was able to decrease costs as a percentage of sales.

The company has also been restructuring its assets and liabilities. Over the past five years total debt has fallen 36 percent while current liabilities are up 13 percent. A primary cause for this trend is the paying down of creditors while expenses rise, causing a spike in accounts payable.

Insiders and Institutions

While there have been numerous non open market acquisitions over the past year, there have been two open market sales for a total of 41,766 shares.
The professionals have bumped up their stake in the company this quarter, with almost six percent added by institutions, and more than twelve percent by mutual funds.

Outperforming the S&P 500 by almost ten percent this year, shares of 1-800-FLOWERS.COM are trading at $6.65.