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    1-800-Flowers.Com stock surges with growth in personalized gifts and e-commerce

    Victor Lei β€” Head of Research

    Victor Lei β€” Head of Research

    May 6, 2021

    1-800-Flowers.Com stock

    May 6, 2021

    1-800-Flowers.Com has a name you’d expect from the 80s. But don’t let that fool you, there’s no florist as technologically advanced as the 39-year-old retailer. (1-800-Flowers.Com stock)

    How innovation is supposed to be done…

    1-800-Flowers, one of the largest flower retailers, is an example of a company that has successfully pivoted to e-commerce. It’s also excelling at product innovation with AI chat support, virtual shopping assistants and more:

    • BloomNet, a provider of software tools for other florists to run their businesses β€” which made up nearly 5% of 1-800-Flowers’ 2020 sales.
    • Passport, 1-800-Flowers’ Amazon Prime-like service with over 1m subscribers.

    But others haven’t been as lucky with their e-commerce transition, competitors like FTD failed and filed for bankruptcy in 2019 β€” with competition from Amazon and other retailers to blame.

    On April 29, 1-800-Flowers reported a 70% sales growth in the first quarter of 2021:

    • 2021 sales is expected to exceed $2b β€” up from $1.5b in 2020.
    • Its e-commerce business grew 105% as more consumers moved their shopping online.

    Innovation βœ”οΈ Growth βœ”οΈ But there’s just one problem…

    The flower industry is withering away…

    After experiencing rapid growth from 2010-2018, growth in the $5.1b US online flower shops industry stagnated over the past couple of years.

    1-800-Flowers’ solution has been to expand beyond its namesake product, flowers:

    • Acquired Personalization Mall, an e-commerce retailer of personalized gifts, for $252m in 2020.
    • Owns 11+ other sites selling gourmet foods, gift baskets and other niche gift products.

    With new product developments, growth finally picked up in 2019 after several years of flat/declining sales.

    For investors… The greatest gift of all…

    … A reasonably priced stock. While 1-800-Flowers is up 24% in the past month, its stock is still reasonably valued at a 17x P/E multiple and 1x P/S multiple.

    But 1-800-Flowers could also find itself fending off competitors like Amazon, which’s taking on nearly every e-commerce category (except personalized gifts… For now) and Etsy, which has become one of the largest marketplaces for gifting needs.

    To all the investing savvy moms, have a Happy (early) Mothers Day.

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