The Right Way to Invest in Love
Money doesn't love you back like a person can, but it won't break your heart, either. And if you have more money, then your odds of finding love are probably likely to increase. That being the case, it's highly recommended that you invest in growing companies with strong future potential. And what better way to combine the pursuits for both money and love than to invest in a company that caters to the romantically inclined? At least one such company below has strong investment potential.
Still blooming or wilting away?
1-800-Flowers.com has been around for 35 years, and it added 3.2 million customers last year alone. The company's diversified product offerings of fresh flowers, plants, gift baskets, gourmet foods, and more have helped fuel growth. Additionally, 1-800-Flowers has received many awards over the past several years:
2011: E-Tailing Group rated 1-800 Flowers one of nine retailers qualifying for "Excellence in Customer Service."
2011: STELLAService rated 1-800-Flowers No. 1 among its peers for customer service.
2012: Horizon Interactive Awards gave 1-800-Flowers the "Gold Award" in e-commerce/shopping.
2013: Internet Retailers ranked 1-800-Flowers in its "Hot 500 Guide."
1-800-Flowers has taken a conservative approach to its marketing over the past several years because it didn't want to grow too fast considering the economic environment and hesitant consumer. This has kept costs low and aided the bottom line. 1-800-Flowers has focused its ads on wowing its customers with high-value products. This has been effective.
1-800-Flowers has said it believes that its sales bottomed out in the first half of 2011. The company feels that it can build on recent momentum in the second half of this year, with revenue growing in the mid-single digits for the full year. While these optimistic predictions might come to fruition, there's just one big problem...
These roses have many thorns
Unfortunately for 1-800-Flowers, Amazon.com has very quietly made its way into the flower delivery business. Considering Amazon's past successes, it shouldn't have much of a problem stealing market share from 1-800-Flowers. While Amazon doesn't yet have the selection that 1-800-Flowers offers, it offers free shipping. In this economic environment, that's going to lead to many consumers opting for Amazon instead. Amazon also offers customer reviews for all its fresh flower products, which helps consumers choose.
Amazon is already delivering fresh flowers to 48 states. It doesn't offer the option to select a particular delivery date yet, but Amazon is working on it -- not a good sign for 1-800-Flowers, as this indicates Amazon is in it for the long haul.
A better way to invest in love
There's no telling whether or not 1-800-Flowers will be capable of fighting off Amazon, but it's never wise to bet against the dot-com behemoth. A more fortified business with love at its core is XO Group, a company that guides people through the most important times of their lives, with TheKnot.com (its flagship brand), WeddingChannel.com, TheNest, and TheBump. TheKnot.com is especially impressive because it reaches nearly 8 out of 10 brides in the United States. It also has more affluent brides visiting it than any other bridal media site, which translates to more revenue potential.
XO Group also recently appointed Michael Steib as president of the company. Steib has an impressive track record:
Launched NBC Weather Plus
Former General Manager of Strategic Ventures at NBC Universal
4.5 years at Google -- assisting with Google TV and YouTube advertisements
Former CEO of Vente-Privee USA (backed by American Express)
Steib should bring experience and innovative opportunities to the company. Even if he doesn't, consider XO Group's performance versus 1-800-Flowers on the top and bottom lines over the past several years.
FLWS Revenue TTM data by YCharts.
FLWS EPS Diluted TTM data by YCharts.
Hugs and kisses trump flowers
While 1-800-Flowers has demonstrated excellent customer service and offers broad product diversification, the entry of Amazon into its key market is an ominous development. You can invest in the business of love in a much safer way with XO Group.
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The article The Right Way to Invest in Love originally appeared on Fool.com.
Fool contributor Dan Moskowitz has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, American Express, and Google. The Motley Fool owns shares of Amazon.com and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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