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A Rose By Any Other Name - 1-800-Flowers (FLWS)

I admit that I have called 1-800-FLOWERS.COM in the past.  Usually it is in a panic because I need to buy flowers or a gift for a loved one quickly  (usually my wife) because I left my gift buying to the last minute.  1-800-Flowers is always happy to help me.  I usually overspend because I feel guilty that I left things to the last minute.  Again, 1-800-FLOWERS.COM is only too happy to help me.

1-800-FLOWERS.COM is is a provider of gifts, including flowers and a diverse range of other gift items:  gift baskets, plants, home décor, garden, candy, food and gourmet items.  The company's products can be purchased over the phone, online  through their own website or portal partners like AOL and through their nationwide network company-owned and franchised retail stores. 

There are several things about the 1-800-FLOWERS.COM's stock and its chart that might make it a stock to trade in the near term.  As a recovering CPA, the first place I start are the fundamentals.  Despite revenues being off significantly in the third Q of 2009 ($173 MM, a 21.2 decrease over the prior year period), revenues for the year are expected to come in between 5 to 10% decrease over the prior year.  1-800-FLOWERS.COM did show heavy losses in both the 2nd and 3rd Q's of 2009, but those are attributible to goodwill and intangibles impairment and severance costs.  On an operating basis only (without the effect of non-recurring expenses) , combined operating income would have been in excess of $12MM.   The company reiterates that it is on track to deliver a promised $50MM operating expense savings for FY2010.  The balance sheet is strong and, according to the company, is in compliance with all terms of its loan agreements and have embarked on a program to accelerate the paydown and payoff of existing loans.

Now the chart!  The stock is trading at the lower end of its 52-week range below both the 50 and 200 day moving averages and I believe might be primed to appreciate over the near term.  The stock is trading today at $1.86 which is almost 40% off its most recent high of $3.02 intraday on June 2nd, 2009.  Both the stochastic and RSI indicators are lending credence to the notion that the stock is oversold and could "bounce".

The one fact to remember over the next few weeks and months is that full-year earnings will come out and the effect on the stock is unknown.  The old saying, "Buy on rumor, sell on news" might very well apply here.  While the company and analysts have given positive guidance for the FY 2009 numbers, any negative surprises might make the stock tank.  It isn't fair, but postiive surprises might not move the stock at all.  So, be aware.

While 1-800-FLOWERS.COM's sales are down because the retail economy is weak, the company has brand awareness and strength that makes it one of the strongest players in its niche.  Its strong balance sheet will allow it to implement whatever strategies that are necessary to survive this economic downturn.  With 1.7 MM e-commerce customers placing orders in the third Q alone, 1-800-FLOWERS.COM is in an enviable position of being able to take market share away from its compeititors and consolidating its position as the pre-eminent gift company

 Disclosure: No Positions