1-800-Flowers Adds Crackle to Offerings With Popcorn Factory Buy

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1-800-Flowers.com Inc. has further diversified its portfolio with the $12 million cash and stock purchase of The Popcorn Factory, one of the nation's more successful purveyors of popcorn-themed gifts.

The acquisition gives 1-800-Flowers.com a database of more than 1 million Popcorn Factory customers encompassing business-to-consumer and business-to-business accounts. The Popcorn Factory claims gross profit margins of 45 percent.

Brands purchased by 1-800-Flowers over the past few years are Plow & Hearth, GreatFood.com, HearthSong and Magic Cabin Dolls.

"1-800-Flowers.com is really [positioned as] the guide to gifting," said Peter Rice, president of Madison, VA-based Plow & Hearth, a home and garden catalog. "So what we're doing is obviously sticking close to our base, which is floral. But this year over 50 percent of the products that we sell will be non-floral gifts. So there's been a great interest in being more than flowers, and this gives us that."

1-800-Flowers named Rice as spokesperson for inquiries on the acquisition.

Besides flowers, items sold by 1-800-Flowers include plants, gourmet foods, sweets, greeting cards, collectibles, home and garden merchandise, jewelry and, now, popcorn. They are sold via company-owned catalogs and stores, partner retailers and via its own site and on AOL, Yahoo and MSN.

"Obviously there's interest in growing the company in terms of top-line sales, but only if it makes sense from a merchandising/marketing point of view," Rice said. "We look at a lot of potential acquisitions, and we're being really picky about what fits in from a merchandise point of view and also things that we can really bring a lot to the table on."

The Popcorn Factory, Lake Forest, IL, was owned by Wand Partners Inc., a private investment company. Items made and sold online and via catalog include premium popcorn, chocolates, cookies and assorted confections. Revenue last year was $30 million.

"A lot of the product is proprietary in the sense that the tins and many of the box towers are designed exclusively for The Popcorn Factory and the combination of the food gifts that go into some of the tins are custom," Rice said.

Another benefit, he said, is the catalog, which "drives quite a bit of the revenue to the Web site. So from a merchandise point of view, it clearly fits in with 1-800-Flowers.com because they're gifts. They're based around occasions like birthdays, anniversaries, holidays, et cetera."

Work has begun to integrate Popcorn Factory's operations into that of 1-800-Flowers, Westbury, NY. All 70 Popcorn Factory employees will keep their jobs, including president Ken Arett. More help will be hired during the holidays since Christmas is its busiest season, Rice said.

The business also soon will acquire its own tab on the 1-800-Flowers.com home page. It will retain The Popcorn Factory name, too. But the jury is out on whether it retains its standalone site.

"It may have its own Web site, but the Web site may eventually reside on 1-800-Flowers.com's Web site," Rice said.

Of major interest to 1-800-Flowers is the cross-promotional and data-mining opportunities.

"What we're able to do," Rice said, "is take these assets that we purchased and really leverage them through our customer database of buyers and fairly recent buyers, [which] is over 10 million names between 1-800-Flowers.com, Plow & Hearth and Magic Cabin."


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