FLWS - 1-800-Flowers.com (FLWS) - Puts The Acquisition To Bed

Back on track. The company settles its issues with Bed, Bath & Beyond regarding the acquisition of PersonalizationMall.com and amends the purchase price to $245 million from $252 million. We believe that the new price largely adjusts for legal fees. Closing date is set for August 3rd. Acquisition viewed favorably. The stall in the closing date allowed 1800Flowers to substantially improve its financial position, given strong growth in e-commerce sales, particularly for Harry & David. While PersonalizationMall.com was closed for a period of time due to Covid mitigation efforts, we believe that business is strong and that the company is currently fulfilling back orders. Attractive complement. PersonalizationMall.com sells everyday gifting items, which is an attractive complement to 1800Flowers stable of gifting brands. While we believe that there will be cost synergies with the company's other brands, we do not anticipate that the company will integrate the business this year to avoid potential disruptions in the important upcoming Holiday season.Posting proforma 2021 estimates. We believe that long term e-commerce trends are favorable and should benefit PersonalizationMall.com. Our proforma fiscal 2021 revenue and cash flow estimates are $1.55 billion and $128 million, respectively, to reflect the revenue and earnings power of the PersonalizationMall.com. We note that near term results may be impacted by Covid mitigation efforts and/or general economic disruptions.Raising price target from $25 to $30. Our upwardly revised target reflects an estimated 15.8 times EV to fiscal 2021 cash flow. In our view, the company will have significant fire power to bolt on additional acquisitions, with leverage expected to be well south of 2 times debt to cash flow.Read More >>