1-800-FLOWERS Files For $150 Million IPO

1-800-FLOWERS took its online flower shop public Friday, filing an initial public offering with the U.S. Securities and Exchange Commission to raise $150 million (US$).

The money would augment a private placement offering of preferred stock that closed this month, netting the company $102.6 million. Investors in that stock include Internet-focused investment firms Benchmark Capital Partners, SOFTBANK America Inc. and Forum Holding BV, an affiliate of LVMH Moet Hennessey Louis Vuitton S.A. The company, which plans to use the symbol FLWS and trade on the Nasdaq exchange, also officially changed its name to 1-800-FLOWERS.COM, Inc. Goldman, Sachs & Co., Credit Suisse First Boston Corp. and Wit Capital Corp. are underwriting the public offering, with Wit also providing a copy of 1-800-FLOWERS.COM’s prospectus online. The total number of shares to be offered had not been specified at press time this morning. Cashing in On a Name Noting it has established a strong brand name and Internet presence, 1-800-FLOWERS.COM told the SEC in its prospectus it believes its online flower sales over the past four years has helped establish a substantial repeat-customer base that will keep the company growing. The flower retailer takes orders over the Internet, via its toll-free phone line and at a handful of owned and operated retail shops in the United States. 1-800-FLOWERS.COM also has promotional relationships with the Microsoft Network and America Online. The company’s Web site has proven its most powerful sales channel, bringing in $30.2 million in revenues in the nine months ended March 28, 1999. That is an 85 percent increase over the same period in the previous year, the company said. By the end of 1998, 6.7 million customers had made purchases from 1-800-FLOWERS.COM, and 2.7 million were repeat customers in the prior 12-month period. Expect Losses to Continue Despite such sunny revenue and customer figures, 1-800-FLOWERS.COM says it expects to continue posting net losses for the foreseeable future. That is the case with most new online ventures that go public, with many arguing the full potential of the Internet for e-commerce has not been realized and companies must invest heavily in development of that sales channel. 1-800-FLOWERS.COM posted a net loss of $8.7 million, or about $1.97 per share, in the nine months ended March 28, based on an assumption of about 4.4 million shares. For the same nine-month period the prior year, the company reported net income of $1.2 million, or 27 cents per share. 1-800-FLOWERS.COM said it plans to use the proceeds of the offering to repay existing debt, redeem outstanding stock and stock options and improve its service. To build revenues and eventually put its net earnings in the black, the company pledged to get more aggressive building its brand, increase its gift and home and garden product lines, improve its Web site to retain more customers and upgrade its technology and fulfillment capabilities. “Although we have been profitable in the past, we expect to incur losses for the foreseeable future as a result of these expenditures. In order to achieve and maintain profitability, we will need to generate revenues significantly above historical levels,” the company said in its prospectus. About 1-800-FLOWERS.COM 1-800-FLOWERS.COM offers more than 1,500 varieties of fresh-cut and seasonal flowers, plants and floral arrangements and more than 6,000 gifts and home and garden products, including gift baskets, gourmet foods, garden accessories and casual lifestyle furnishings. The company recently bought The Plow & Hearth, Inc. to add home and garden merchandise to its flower and plant lineup. 1-800-FLOWERS.COM uses a network of 1,500 local florists, its own stores and third party suppliers to fulfill orders.

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