Earnings Preview: 1-800-Flowers Should Meet Expectations

Oct.22.08 | About: 1-800 FLOWERS.COM, (FLWS)

1-800-Flowers (NASDAQ:FLWS) is scheduled to report their fiscal first quarter 2009 results before the market opens on Thursday, October 23. Based on our analysis, we at eChristianInvesting are expecting FLWS to report inline results that meet Wall Street’s consensus expectations.

Analyst Expectations

We are forecasting revenues of $150.0 million and EPS of ($.11). This would represent a 3% increase in revenues from last year’s $145.8 million in the same period. The current analyst consensus calls for revenues of $150.0 million and ($.11) EPS.

On August 7, the company gave full year guidance for revenue growth of 10% and EPS growth of 20%. The fiscal first quarter is traditionally the weakest quarter accounting for only 14-16% of full year revenues.

However, our checks show that traffic dropped dramatically over the summer months. With the combination of a seasonally slow quarter along with strong macroeconomic headwinds, we believe that merely meeting analyst’s conservative estimates will be considered a win.

Share Performance

To date, 1-800-Flowers shares are down 44%. Investors have fled the stock all year as difficult economic conditions are expected to weigh heavily on the company’s performance. To date, FLWS has underperformed the S&P 500’s 33% loss.

Valuation

Shares are now trading at a reasonable 11x consensus 2009 EPS estimates. This is below the relative valuations of their peer group. However, we believe the company will be hit very hard by the reduction in consumer spending and anticipate the company will need to reduce guidance as the likelihood of achieving double-digit growth in this environment is practically nil.

Recommendation

Hold with a $5 price target.

Disclosure: none