Summary
FLWS touched a 15-year high ahead of fiscal Q4 results earlier this month - but was undercut by disappointing results and FY19 guidance.
In a booming economy, with rival FTD flailing, the lack of growth is a concern - although external factors have pressured recent results and stepped-up investments are hitting FY19 numbers.
FLWS is pointing to FY20 and FY21 as growth years after investments - but even assuming those targets are hit, the question is whether valuation is cheap enough below $12.
There are some levers to pull, and the story still can work, but I'm on the sidelines for now.
The concern with 1-800-Flowers.com (FLWS) is pretty simple at this point. The economy has strengthened over the past few years, and rival FTD Companies (FTD) has been a downright mess. FLWS' own Harry & David gift basket unit has performed well. And yet even in such a beneficial environment, FLWS simply can't grow profits.
Adjusted EBITDA was $80.7 million in FY15. The figure came in at $78.9 million in FY18 (ending July 1) - after guidance was cut twice and then missed again in Q4. Management is projecting essentially zero growth in FY19, too, with a guided range of $77.5-$80 million basically bracketing FY18 results.
