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It has been able to expand into other business areas, and the company hopes that its improved product mix will result in greater margin growth.

"My life's in jeopardy...
Murdered in cold blood is what I'm gonna be
I ain't been home since Friday night
And now my wife is coming after me."
- My Wife (The Who)

Tell ya what: I think Pete and the boys must have had the following story in mind when they included this song on their 1971 classic album, "Who's Next".

Leroy Greer, a married man, is suing (FLWS) for $1 mln for basically revealing that he was cheating on his wife. The lawsuit says 1-800-Flowers sent a thank-you note to Greer's house and his wife saw it. She then called the company to get a copy of the receipt, only to find the flowers went to another woman. In the immortal words of Ricky Ricardo, "Leroy, you got some 'splainin to do!"

But there is a real market story going on at 1-800-Flowers. It is no longer just all flowers all the time. It has been able to expand into other business areas, and the company hopes that its improved product mix will result in greater margin growth.

And to a large extent FLWS is seeing that, as 4Q gross profit margins were 42.7%, up from 40% in the comparable quarter in the prior year. 1-800-Flowers also expects EPS growth to be between 30% and 35% for fiscal 2008.

Now for the bad news - this is not an undiscovered story as the stock has more than doubled since August of last year. The good news? - trading around 25 times forward earnings, FLWS is a lot cheaper on a valuation basis than other internet retailers like Blue Nile (NILE), with a forward p/e in the 60's, and everybody's All-American Amazon (AMZN), with a forward p/e of around 50. On top of that, with an enterprise value just south of $700 mln, this could be a Four Season's lunch deal for Barry Diller whose IAC/InterActive Corp. (IACI) has Frontgate, Ticketmaster and among their many holdings.

Chairmen of the Board and Chief Executive Officer since inception, James McCann has been in the floral industry since 1976 and the man sure does seem to know the industry. Along with his brother Christopher, who serves as President, the two have seemed to right the ship. After a rocky five or so years starting in January 2002, they watched the company's share price go from $17 to $4.35, bottoming out this time last year.

Pending lawsuits aside, I think there is still further upside for this "special occasion" retailer: Just don't ask Mrs. Greer!
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