Friday, April 25, 2008

1-800 Flowers Needs More Bloom

1-800 (FLWS) announced earnings early Thursday morning and told the world that they increased the net income by 212% and EBITDA by 28%. All this was achieved with only a 2.7% increase in revenues for the quarter. The strong growth was mainly attributable to the company’s BloomNet Wire Service. This all sounds like a gang buster announcement until you realize that the net profit is only $3.3 million. So any change is huge percentage wise.

What is also disconcerting is that BloomNet as a percentage of overall revenues is still relatively modest. It’s great that they are doing well. But management needs to talk more extensively about the core business and where it is going.

There have been changes in receivables and inventories as well as significant changes in deferred income tax which should be commented on. The cash position increased dramatically and the revolving line of credit was not in use. This is all very good news and investors deserve to have more information on what is going on to achieve these results.