1-800-FLOWERS.COM(R) Reports Fiscal 2006 Fourth Quarter And Full Year Results

Fiscal 2006 Fourth Quarter Highlights:

-- Total revenues increased by 13.4 percent, or $25 million, to $211.1 million.

-- Online revenues grew 14.6 percent, or $15.9 million, to $124.4 million.

-- GAAP net income for the quarter was $1.0 million, or $0.02 per diluted share. Pro forma net income, excluding the effect of stock-based compensation, was $2.0 million, or $0.03 per share, compared with $3.9 million, or $0.06 per share, in the prior year period.

Fiscal 2006 Full Year Highlights:

-- Total revenues increased 16.6 percent, or $111.1 million, to $781.7 million.

-- Online revenues grew 19.2 percent, or $69.4 million, to $430.3 million.

-- GAAP net income for the full year was $3.2 million, or $0.05 per share. Pro forma net income, excluding the effect of stock-based compensation, was $6.4 million, or $0.10 per share, compared with $7.8 million, or $0.12 per share, in the prior year.

1-800-FLOWERS.COM, Inc. (NASDAQ: FLWS), a leading florist andmulti-channel retailer of thoughtful gifts for all occasions, todayreported record revenues of $211.1 million for its fiscal fourthquarter ended July 2, 2006, representing an increase of 13.4 percentor $25 million, compared with revenues of $186.1 million in theprior-year period. This growth was driven by online revenues, whichincreased 14.6 percent, or $15.9 million, to $124.4 million whiletelephonic revenues during the period increased slightly to $60.7million. Also contributing to the revenue growth for the quarter wasthe Company's retail and fulfillment operations, which increased 51percent to $26.1 million attributed primarily to the acquisition ofFannie May Confections Brands, Inc. and the continued growth of theBloomnet business.

During the fiscal fourth quarter, the Company attracted 887,000new customers, 70 percent of whom, or 624,000, came to the Companyonline. These customers were attracted to the Company's marketleadership in the floral gift category with its "Your Florist ofChoice" marketing message, as well as its expanded specialty brandsbusinesses, including its growing food, wine and gift basketofferings. More than two million customers placed orders during theperiod of which 58 percent were repeat customers. This reflects theCompany's ongoing focus on deepening the relationships it has with itsexisting customers through convenient multi-channel access as well asthe products and services that make it easier for them to connect withthe people who are important in their lives.

During the quarter, gross margin was flat at 40 percent comparedwith the prior-year period. Operating expenses for the period,including the impact of stock-based compensation, increased 200 basispoints to 38.7 percent of total net revenues compared with 36.7percent in the prior year period. The Company attributed the increaseto the aforementioned impact of stock-based compensation, highermarketing spending and the operating losses associated with theseasonality of the Company's recent acquisitions.

As a result of these factors, adjusting to exclude the effect ofstock-based compensation, pro forma net income for the quarter was$2.0 million or $0.03 per diluted share compared with $3.9 million or$0.06 per share in the prior year period. The Company believes proforma earnings provide a meaningful measure of year-to-year periodcomparative performance; however, its use and corresponding per shareresults do not lessen the importance of comparable GAAP results. (Atable reconciling pro forma results to GAAP results is included in thetables attached to this release.) Including the net effect ofstock-based compensation, the Company's GAAP net income for thequarter was $1.0 million or $0.02 per share.

Fiscal 2006 Full-Year Results

Total revenues increased 16.6 percent, or $111.1 million, to$781.7 million compared with $670.7 million in fiscal 2005. Thisincrease was driven primarily by online revenue growth of 19.2percent, or $69.4 million, to $430.3 million compared with $360.9million in the prior year. Telephonic revenues increased 6.1 percentto $275.7 million compared with $259.9 million in the prior year. Inaddition, revenues from the Company's retail and fulfillmentoperations grew 51.9 percent to $75.7 million compared with $49.8million in the prior year. This growth was attributed primarily tocontributions from the Company's recent acquisitions as well ascontinued growth of its Bloomnet business.

During the year, the Company attracted 3.6 million new customerscompared with 3.3 million in fiscal 2005. The Company also continuedto deepen its relationships with its more than 25 million customerswith repeat customers representing more than 46 percent of theapproximately 6.6 million customers who placed orders during the year.

Gross profit margin for the year increased 60 basis points to 41.7percent compared with 41.1 percent in fiscal 2005. Operating expensesas a percent of total net revenue, including the impact of stock-basedcompensation, increased 150 basis points to 40.8 percent compared with39.3 percent in the prior year. This increase was related primarily tothe aforementioned impact of stock-based compensation, increasedmarketing and selling spending, investments made in the Company'sfast-growing Bloomnet business and the operating losses associatedwith the seasonality of the Fannie May acquisition.

As a result of these factors, adjusting to exclude the effect ofstock-based compensation, pro forma net income for the year was $6.4million or $0.10 per diluted share compared with $7.8 million or $0.12per share in the prior year. Including stock-based compensation, theCompany's GAAP net income for fiscal 2006 was $3.2 million or $0.05per share.

Jim McCann, CEO of 1-800-FLOWERS.COM, said, "During the fiscalfourth quarter we achieved several important strategic objectives thatposition our business for significant future growth and enhancedprofitability. With that said, our financial results for the periodwere below our expectations due to several factors. Revenue growth ofmore than 13 percent for the quarter, while good, was below the levelthat we targeted with our increased marketing programs. In addition,gross margin did not improve as we had planned and therefore wasinsufficient to offset the increase in marketing spending.

"Also impacting the quarter's results were the costs associatedwith the Fannie May acquisition, including operating losses related tothe seasonality of its business. We are very focused on improving ourbottom-line performance. Toward this end we have put in place a numberof initiatives specifically designed to enhance gross margin andreduce operating costs this year and beyond.

McCann said that among the positive strategic achievements duringthe quarter and full year, the two most important were the acquisitionof the Fannie May Confections business and the continued strong growthof the Bloomnet business. "The Fannie May acquisition significantlyexpands our position in the Food, Wine and Gift Basket category wherewe are rapidly becoming a market leader. Along with its history ofcustomer loyalty, Fannie May offers excellent growth opportunitiesthrough the leveraging of our assets and capabilities in the onlineand direct marketing space as well as into our Bloomnet floristnetwork. Combined with its strong operating margins, we expect FannieMay to contribute significantly to our overall bottom-line results infiscal 2007 and beyond," said McCann.

"With the investment phase of our Bloomnet roll-out behind us now,we are beginning to see a growing contribution from this business.Illustrating the positive response Bloomnet has received within theflorist community, we recently shipped out our fourth and, by far,largest directory including thousands of pages of listings andadvertisements. Bloomnet now includes more than 9,000 florist members.As we've stated in the past, in growing Bloomnet we are committed tomaintaining our industry-highest quality standards for our customerswhile providing our florist members with the products and servicesthat they need to grow their businesses and enhance theirprofitability," he added.

McCann noted that as the Company evolves its business - inparticular reflecting the growth of its Bloomnet and Food, Wine andGift Basket businesses - it is changing the way it will report itsresults. To enhance the visibility of the growth and profitcharacteristics of its different business categories, the Company willprovide results for its Consumer Floral, Bloomnet, Home & Children'sGifts, and Food, Wine and Gift Baskets businesses. For each of thesecategories, the Company will provide revenues, gross profit margin andcontribution margin (excluding corporate allocation). This newreporting format will begin with the release of its fiscal 2007 firstquarter results scheduled for October 2006.

In addition, the Company is changing the way it will provideguidance. Going forward the Company will provide three-year growthobjectives for both revenue and profitability. However, because thecurrent fiscal year will include the first significant contributionsfrom its Bloomnet operations and the Fannie May business, it isproviding the following guidance for fiscal 2007:

Company Guidance:

For fiscal year 2007 the Company anticipates achieving:

-- Revenue growth, including incremental contributions from its recent acquisitions, in a range of 17-to-20 percent.

-- EBITDA (earnings before interest, taxes, depreciation and amortization) and EPS growth of more than 100 percent.

Quarterly revenues will be in the following ranges:

-- Q1 = 13-to-15 percent of total revenues

-- Q2 = 36-to-38 percent of total revenues

-- Q3 = 22-to-24 percent of total revenues

-- Q4 = 24-to-26 percent of total revenues

-- Longer term, for fiscal years 2008 through 2009, the Companyanticipates achieving the following compound annual growth rates:

-- Revenue in a range of 7-10 percent, and

-- EBITDA and EPS in a range of 20-to-25 percent

About 1-800-FLOWERS.COM(R)

For more than 30 years, 1-800-FLOWERS.COM Inc. - "Your Florist ofChoice(SM)" - has been providing customers around the world with thefreshest flowers and finest selection of plants, gift baskets, gourmetfoods and confections, and plush stuffed animals perfect for everyoccasion. 1-800-FLOWERS.COM(R) offers the best of both worlds:exquisite, florist-designed arrangements individually created by someof the nation's top floral artists and hand-delivered the same day,and spectacular flowers shipped from our growers to your door fresh.Customers can shop 1-800-FLOWERS.COM 24 hours a day, 7 days a week viathe phone or Internet (1-800-356-9377 or www.1800flowers.com) or byvisiting a Company-operated or franchised store. Sales and ServiceSpecialists are available 24/7, and fast and reliable delivery isoffered same day, any day. As always, 100 percent satisfaction andfreshness is guaranteed. The 1-800-FLOWERS.COM collection of brandsalso includes home decor and garden merchandise from Plow & Hearth(R)(1-800-627-1712 or www.plowandhearth.com); popcorn and specialtytreats from The Popcorn Factory(R) (1-800-541-2676 orwww.thepopcornfactory.com); exceptional cookies and baked gifts fromCheryl&Co.(R) (1-800-443-8124 or wwwcherylandco.com); premiumchocolates and confections from Fannie May Confections Brands(R)(www.fanniemay.com and www.harrylondon.com); gourmet foods fromGreatFood.com(R) (www.greatfood.com); children's gifts fromHearthSong(R) (www.hearthsong.com) and Magic Cabin(R)(www.magiccabin.com); wine gifts from the WineTasting Network(R)(www.ambrosiawine.com and www.winetasting.com); and gift baskets from1-800-BASKETS.COM(R) (www.1800baskets.com). 1-800-FLOWERS.COM, Inc.stock is traded on the Nasdaq market under ticker symbol FLWS.

Special Note Regarding Forward-Looking Statements:

The statements in this press release regarding current and futureexpectations involve risks and uncertainties that could cause actualresults to differ materially from those expressed or implied in theapplicable statements. These risks and uncertainties include, but arenot limited to: the Company's ability to achieve its revenue andprofitability growth guidance for fiscal years 2007-2009; its abilityto reduce costs and enhance its profit margins; its ability to managethe increased seasonality of its businesses; its ability toeffectively integrate and grow its acquired companies; its ability tocost effectively acquire and retain customers; its ability to competeagainst existing and new competitors; its ability to manage expensesassociated with sales and marketing and necessary general andadministrative and technology investments; its ability to costefficiently manage inventories; its ability to leverage its operatinginfrastructure; and general consumer sentiment and economic conditionsthat may affect levels of discretionary customer purchases of theCompany's products. For a more detailed description of these and otherrisk factors, please refer to the Company's SEC filings including theCompany's Annual Report on Form 10-K and Quarterly Reports on Form10-Q. The Company expressly disclaims any intent or obligation toupdate any of the forward looking statements made in this release orin any of its SEC filings except as may be otherwise stated by theCompany.

Conference Call:

The Company will conduct a conference call to discuss the attachedfinancial results on Thursday, August 10th at 11:00 a.m. ET. The callwill be "web cast" live via the Internet and can be accessed from theInvestor Relations section of the 1-800-FLOWERS.COM web site. Anindexed recording of the call will be posted on the Investor Relationssection of the Company's web site within 2 hours of the call'scompletion. A replay of the call can be accessed via telephone for 24hours beginning at 1:00 p.m. (ET) on 8/10/05 at: 1-888-286-8010(domestic) or 1-617-801-6888 (international). Enter replay pass code#: 86425906.
1-800-FLOWERS.COM, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)

July 2, July 3,
2006 2005
--------- ---------
(unaudited)
Assets
Current assets:
Cash and equivalents $ 24,599 $ 39,961
Short-term investments - 6,647
Receivables, net 13,153 10,619
Inventories 52,954 28,675
Deferred income taxes 17,427 10,219
Prepaid and other 6,063 5,289
--------- ---------
Total current assets 114,196 101,410

Property, plant and equipment, net 59,732 50,474
Goodwill 131,475 63,219
Other intangibles, net 29,822 14,215
Deferred income taxes 6,224 17,161
Other assets 5,519 5,473
--------- ---------
Total assets $346,968 $251,952
========= =========

Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued expenses $ 62,654 $ 57,121
Current maturities of long-term debt and
obligations under capital leases 10,694 2,597
--------- ---------
Total current liabilities 73,348 59,718

Long-term debt and obligations under capital
leases 78,063 3,347
Other liabilities 2,374 2,553
--------- ---------
Total liabilities 153,785 65,618
Total stockholders' equity 193,183 186,334
--------- ---------
Total liabilities and stockholders' equity 346,968 $251,952
========= =========

1-800-FLOWERS.COM, Inc. and Subsidiaries
Selected Financial Information
Consolidated Statements of Income (Unaudited)
(In thousands, except for per share data)

Three Months Ended Year Ended
------------------- -------------------
July 2, July 3, July 2, July 3,
2006 2005 2006 2005
--------- --------- --------- ---------
Net revenues:
Online $124,372 $108,492 $430,285 $360,902
Telephonic 60,670 60,349 275,716 259,929
Retail/fulfillment 26,088 17,277 75,740 49,848
--------- --------- --------- ---------
Total net revenues 211,130 186,118 781,741 670,679

Cost of revenues 126,778 111,737 456,097 395,028
--------- --------- --------- ---------
Gross profit 84,352 74,381 325,644 275,651

Operating expenses:
Marketing and sales 60,287 50,389 239,573 198,935
Technology and development 5,083 4,201 19,819 14,757
General and administrative 11,804 10,152 43,978 35,572
Depreciation and amortization 4,555 3,473 15,765 14,489
--------- --------- --------- ---------
Total operating expenses 81,729 68,215 319,135 263,753
--------- --------- --------- ---------

Operating income 2,623 6,166 6,509 11,898

Other income (expense):
Interest income 430 463 1,260 1,690
Interest expense (1,114) (100) (1,407) (481)
Other 6 60 6 140
--------- --------- --------- ---------
Total other income (expense),
net (678) 423 (141) 1,349
--------- --------- --------- ---------
Income before income taxes 1,945 6,589 6,368 13,247
Income taxes (928) (2,688) (3,181) (5,398)
--------- --------- --------- ---------
Net income $ 1,017 $ 3,901 $ 3,187 $ 7,849
========= ========= ========= =========

Basic and diluted net income per
common share $ 0.02 $ 0.06 $ 0.05 $ 0.12
========= ========= ========= =========
Weighted average shares used in
the calculation of net income
per common share:
Basic 65,145 65,798 65,100 66,038
========= ========= ========= =========
Diluted 66,535 66,947 66,429 67,402
========= ========= ========= =========

Calculation of Net Income before Share-Based Compensation Expense to
GAAP Net Income:

Net income $ 1,017 $ 3,901 $ 3,187 $ 7,849
Add: Share-based compensation
expense 951 - 3,216 -
--------- --------- --------- ---------
Net (loss) income before share
based compensation expense $ 1,968 $ 3,901 $ 6,403 $ 7,849
========= ========= ========= =========
Basic net (loss) income per
common share before share based
compensation expense $ 0.03 $ 0.06 $ 0.10 $ 0.12
========= ========= ========= =========
Diluted net (loss) income per
common share before share
based compensation expense $ 0.03 $ 0.06 $ 0.10 $ 0.12
========= ========= ========= =========


1-800-FLOWERS.COM, Inc. and Subsidiaries
Selected Financial Information
Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
Years Ended
--------------------
July 2, July 3,
2006 2005
---------- ---------

Operating activities:
Net Income $ 3,187 $ 7,849
Reconciliation of net income to net cash provided
by operations:
Depreciation and amortization 15,765 14,489
Deferred income taxes 2,175 4,702
Bad debt expense 476 270
Stock based compensation 4,336 192
Other non-cash items 125 -
Receivables 1,316 (655)
Inventories (9,106) (6,345)
Prepaid and other 685 (3,445)
Accounts payable and accrued expenses (2,262) (10,953)
Other assets (1,714) 4,584
Other liabilities (579) (259)
---------- ---------

Net cash provided by operating activities 14,404 10,429

Investing activities:
Purchase of investments - (93,946)
Proceeds from sale of investments 6,647 118,109
Acquisitions, net of cash acquired (98,086) (50,965)
Capital expenditures (20,491) (13,334)
Other 2 192
---------- ---------

Net cash used in investing activities (111,928) (39,944)
Financing activities:
Acquisition of treasury stock (1,324) (9,813)
Proceeds from employee stock options/purchase plan 558 1,533
Excess tax benefits from share-base compensation 92 -
Proceeds from bank borrowings 85,000 -
Repayment of notes payable and bank borrowings (936) (1,391)
Repayment of capital lease obligations (1,228) (1,677)
---------- ---------

Net cash provided by (used in) financing activities 82,162 (11,348)
---------- ---------

Net change in cash and equivalents (15,362) (40,863)
Cash and equivalents:
Beginning of period 39,961 80,824
---------- ---------

End of period $ 24,599 $ 39,961
========== =========