Quarterly Report

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Forward Looking Statements

This "Management's Discussion and Analysis of Financial Condition and Results of Operations" (MD&A) is intended to provide an understanding of our financial condition, change in financial condition, cash flow, liquidity and results of operations. The following MD&A discussion should be read in conjunction with the consolidated financial statements and notes to those statements that appear elsewhere in this Form 10-Q and in the Company's Annual Report on Form 10-K. The following discussion contains forward-looking statements that reflect the Company's plans, estimates and beliefs. The Company's actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to any differences include, but are not limited to, those discussed under the caption "Forward-Looking Information" and under Part II Item 1A -- "Risk Factors".

Overview

1-800-FLOWERS.COM, Inc. is the world's leading florist and gift shop. For more than 30 years, 1-800-FLOWERS.COM, Inc. has been providing customers with fresh flowers and the finest selection of plants, gift baskets, gourmet foods, confections, balloons and plush stuffed animals perfect for every occasion. 1-800-FLOWERS.COM(R) (1-800-356-9377 or www.1800flowers.com) was listed as a Top 50 Online Retailer by Internet Retailer in 2006, as well as 2008 Laureate Honoree by the Computerworld Honors Program and the recipient of ICMI's 2006 Global Call Center of the Year Award. 1-800-FLOWERS.COM offers the best of both worlds: exquisite arrangements created by some of the nation's top floral artists and hand-delivered the same day, and spectacular flowers shipped overnight Fresh From Our Growers(R). As always, 100% satisfaction and and freshness are guaranteed. Also, visit 1-800-Flowers en Espanol (www.1800flowersenespanol.com). The Company's BloomNet(R) international floral wire service provides (www.mybloomnet.net) a broad range of quality products and value-added services designed to help professional florists grow their businesses profitably.

The 1-800-FLOWERS.COM, Inc. "Gift Shop" also includes gourmet gifts such as popcorn and specialty treats from The Popcorn Factory(R) (1-800-541-2676 or www.thepopcornfactory.com); cookies and baked gifts from Cheryl&Co.(R) (1-800-443-8124 or www.cherylandco.com); premium chocolates and confections from Fannie May(R) Confections Brands (www.fanniemay.com and www.harrylondon.com); wine gifts from Ambrosia(R) (www.ambrosia.com) and Geerlings & Wade
(www.Geerwade.com); gift baskets from 1-800-BASKETS.COM(R) (www.1800baskets.com)
and DesignPacTM Gifts (www.designpac.com); Celebrations(R) (www.celebrations.com), a new premier online destination for fabulous party ideas and planning tips; as well as Home Decor and Children's Gifts from Plow & Hearth(R) (1-800-627-1712 or www.plowandhearth.com), Wind & Weather(R)
(www.windandweather.com), HearthSong(R) (www.hearthsong.com) and Magic Cabin(R)
(www.magiccabin.com).

Shares in 1-800-FLOWERS.COM, Inc. are traded on the NASDAQ Global Select Market under ticker symbol FLWS.

                                                  Three Months Ended                             Nine Months Ended
                                       -----------------------------------------   --------------------------------------------
                                         March 29,      March 30,                     March 29,       March 30,
                                           2009           2008        % Change          2009             2008         % Change
                                       -------------- --------------  ----------   --------------   -------------   -----------
                                                                            (in thousands)

Net revenues:
    1-800-Flowers.com Consumer Floral     $105,326       $141,018        (25.3)%     $285,909         $342,687          (16.6)%
    BloomNet Wire Service                   16,957         15,410         10.0%        47,823           38,033           25.7%
    Gourmet Food & Gift Baskets             33,266         39,675        (16.2)%      212,305          173,442           22.4%
    Home & Children's Gifts                 18,492         24,565        (24.7)%      118,844          147,313          (19.3)%
    Corporate (*)                              174            371        (53.1)%          975            2,081          (53.1)%
    Intercompany eliminations               (1,244)        (1,472)        15.5%        (5,524)          (3,977)         (38.9)%
                                       -------------- --------------               --------------   -------------
Total net revenues                        $172,971       $219,567        (21.2)%     $660,332         $699,579           (5.6)%
                                       ============== ==============               ==============   =============

                                                  Three Months Ended                             Nine Months Ended
                                       -----------------------------------------   --------------------------------------------
                                         March 29,      March 30,                     March 29,       March 30,
                                           2009           2008        % Change          2009             2008         % Change
                                       -------------- --------------  ----------   --------------   -------------   -----------
                                                                            (in thousands)

Gross profit:
    1-800-Flowers.com Consumer Floral      $37,291       $53,520         (30.3)%       $104,918         $132,540          (20.8)%
                                              35.4%         38.0%                          36.7%            38.7%

    BloomNet Wire Service                    9,382         8,419          11.4%          26,488           21,301           24.4%
                                              55.3%         54.6%                          55.4%            56.0%

    Gourmet Food & Gift Baskets             15,171        18,221         (16.7)%         83,499           82,002            1.8%
                                              45.6%         45.9%                          39.3%            47.3%

    Home & Children's Gifts                  7,865         9,544         (17.6)%         55,070           66,341          (17.0)%
                                              42.5%         38.9%                          46.3%            45.0%

    Corporate (*)                              (86)           79        (208.9)%            239              842          (71.6)%
                                             (49.4)%        21.3%                          24.5%            40.5%

    Intercompany eliminations                  (47)         (278)                          (523)            (584)
                                       -------------  --------------               --------------   --------------
Total gross profit                         $69,576       $89,505         (22.3)%       $269,691         $302,442          (10.8)%
                                       =============  ==============               ==============   ==============
                                              40.2%         40.8%                          40.8%            43.2%
                                       =============  ==============               ==============   ==============


                                                  Three Months Ended                             Nine Months Ended
                                       -----------------------------------------   --------------------------------------------
                                         March 29,      March 30,                     March 29,       March 30,
Adjusted EBITDA(**)                        2009           2008        % Change          2009             2008         % Change
                                       -------------- --------------  ----------   --------------   -------------   -----------
                                                                            (in thousands)
Category Contribution Margin:
    1-800-Flowers.com Consumer Floral       $7,753       $17,221         (55.0)%        $27,346          $42,727          (36.0)%
    BloomNet Wire Service                    5,542         5,561          (0.3)%         14,800           12,583           17.6%
    Gourmet Food & Gift Baskets                918         3,281         (72.0)%         26,134           26,338           (0.8)%
    Home & Children's Gifts                 (2,074)       (3,239)         36.0%          (1,522)           3,212         (147.4)%
                                       -------------  --------------               --------------   --------------
Category Contribution Margin Subtotal       12,139        22,824         (46.8)%         66,758           84,860          (21.3)%
    Corporate (*)                          (13,683)      (12,572)         (8.8)%        (37,696)         (39,364)           4.2%
                                       -------------  --------------               --------------   --------------
Adjusted EBITDA                            $(1,544)      $10,252        (115.0)%        $29,062          $45,496          (36.1)%
                                       =============  ==============               ==============   ==============

(*) Corporate expenses consist of the Company's enterprise shared service cost centers, and include, among other items, Information Technology, Human Resources, Accounting and Finance, Legal, Executive and Customer Service Center functions, as well as Stock-Based Compensation. In order to leverage the Company's infrastructure, these functions are operated under a centralized management platform, providing support services throughout the organization. The costs of these functions, other than those of the Customer Service Center, which are allocated directly to the above categories based upon usage, are included within corporate expenses as they are not directly allocable to a specific category.

(**) Performance is measured based on category contribution margin or category Adjusted EBITDA, reflecting only the direct controllable revenue and operating expenses of the categories. As such, management's measure of profitability for these categories does not include the effect of corporate overhead, described above, nor does it include depreciation and amortization, goodwill and intangible impairment, other income (net), and income taxes. Management utilizes EBITDA as a performance measurement tool because it considers such information a meaningful supplemental measure of its performance and believes it is frequently used by the investment community in the evaluation of companies with comparable market capitalization. The Company also uses EBITDA as one of the factors used to determine the total amount of bonuses available to be awarded to executive officers and other employees. The Company's credit agreement uses EBITDA (with additional adjustments) to measure compliance with covenants such as the interest coverage ratio and consolidated leverage ratio. EBITDA is also used by the Company to evaluate and price potential acquisition candidates. EBITDA has limitations as an analytical tool, and should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP. Some of these limitations are: (a) EBITDA does not reflect changes in, or cash requirements for, the Company's working capital needs; (b) EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on the Company's debts; and (c) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and EBITDA does not reflect any cash requirements for such capital expenditures. Because of these limitations, EBITDA should only be used on a supplemental basis combined with GAAP results when evaluating the Company's performance.

                                                                 Three Months Ended          Nine Months Ended
                                                                ------------------------   -------------------------
                                                                 March 29,    March 30,      March 29,   March 30,
                                                                   2009         2008           2009        2008
                                                                ----------- ------------    ---------- -------------
                                                                                    (in thousands)
                                                                ----------- -------------------------- -------------

       Net (loss) income                                         ($65,775)     $3,290        ($76,190)    $16,756
       Add:
         Interest expense                                           1,103       1,073           4,769       4,355
         Depreciation and amortization                              6,144       5.011          17,629      14,848
         Income tax expense                                       (19,362       1,266         (13,329)     10,428
         Goodwill and intangible impairment                        76,460           -          96,496           -
       Less:
         Interest income                                               56         363             228         836
         Other expense (income)                                        58          25              85          55
                                                                ----------- ------------    ---------- -------------
       Adjusted EBITDA                                            ($1,544)    $10,252         $29,062     $45,496
                                                                =========== ============    ========== =============

Results of Operations


Net Revenues

                                                Three Months Ended                             Nine Months Ended
                                     -----------------------------------------   --------------------------------------------
                                       March 29,      March 30,                     March 29,       March 30,
                                         2009           2008        % Change          2009             2008         % Change
                                     -------------- --------------  ----------   --------------   -------------   -----------
                                                                          (in thousands)

Net revenues:
 E-Commerce                            $131,946         $177,476     (25.7)%        $469,818        $566,147         (17.0)%
 Other                                   41,025           42,091      (2.5)%         190,514         133,432          42.8%
                                     -------------- --------------               --------------   -------------   -----------
Total net revenues                     $172,971         $219,567     (21.2)%        $660,332        $699,579          (5.6)%
                                     ============== ==============               ==============   =============

During the three and nine months ended March 29, 2009, revenues declined by 21.2% and 5.6% in comparison to the respective prior year periods, resulting from continued weakness in the retail economy, and, to a lesser extent, the shift in the Easter holiday, which fell in the third quarter during the prior fiscal year and accounted for approximately $7.0 million in net revenue, as well as the date placement of Valentines Day, which fell on a Saturday this year, rather than a weekday, which is historically much better for the Company's online business. The decline was partially offset by growth in the Company's BloomNet Wire Service category, which increased during the three and nine months ended March 29, 2009 by 10.0% and 25.7% over the respective prior year periods due to the acquisition of Napco, a wholesaler of floral hardgoods, in July 2008. Organic revenue, excluding the revenue associated with the acquisitions of DesignPac, Napco, and Geerlings & Wade, declined approximately 23.2% and 15.5% respectively, during the three and nine months ended March 29, 2009. Geerlings & Wade, acquired on March 25, 2009, contributed an insignificant amount of revenues during the quarter.

The Company fulfilled approximately 2,096,000 and 7,413,000 orders through its E-commerce sales channels (online and telephonic sales) during the three and nine months ended March 29, 2009, respectively, decreasing by 23.5% and 15.7%, over the respective prior year periods, reflecting the continued decline in consumer spending, as well as the shift in the timing of the Easter Holiday. The Company's E-commerce average order values during the three and nine months ended March 29, 2009, of $62.96 and $63.38, decreased 2.8% and 1.5% in comparison to the respective prior year periods.

Other revenues for the three months ended March 29, 2009, decreased over the prior year as a result of lower retail store sales, which were negatively impacted by the overall weakness of the economy, whereas other revenues for the nine months ended March 29, 2009 increased in comparison to the same period of the prior year as a result of the Company's recent acquisitions of Napco and DesignPac.

The 1-800-Flowers.com Consumer Floral category includes the operations of the 1-800-Flowers brand which derives revenue from the sale of consumer floral products through its E-Commerce sales channels (telephonic and online sales) and company-owned and operated retail floral stores, as well as royalties from its franchise operations. Net revenues during the three and nine months ended March 29, 2009 decreased 25.3% and 16.6%, respectively, over the prior year periods

due to lower order volume as a result of continued decline in demand throughout the consumer sector, caused by as a result of the weak economy, combined with the shift in the Easter Holiday, and Valentines Day falling on a Saturday this year compared to Thursday of the prior year. 1-800-Flowers e-commerce business has historically performed better when Valentine's Day falls on a weekday, rather than a weekend.

The BloomNet Wire Service category includes revenues from membership fees as well as other product and service offerings to florists. Net revenues during the three and nine months ended March 29, 2009 increased 10.0% and 25.7%, respectively, over the prior year periods, primarily as a result of the incremental revenue generated by the acquisition of Napco in July 2008, and continued growth within the category as a result of market share improvements, as well as expanded service offerings and pricing initiatives, which offset declines in wholesale product sales.

The Gourmet Food & Gift Baskets category includes the revenues of Cheryl & Co., Fannie May (including Harry London), Popcorn Factory, The Winetasting Network (including Geerlings & Wade) and DesignPac brands. Revenue is derived from the sale of cookies, baked gifts, premium chocolates and confections, gourmet popcorn, wine gifts and gift baskets through its E-commerce sales channels (telephonic and online sales) and company-owned and operated retail stores under the Cheryl & Co. and Fannie May brands, as well as wholesale operations. During the three months ended March 29, 2009, net revenue decreased 16.2% compared to the prior year period, reflecting overall weakness in the retail environment and the shift of the Easter holiday into the fourth quarter. Net revenue during the nine months ended March 29, 2009, increased by 22.4% over the prior year period as a result of incremental wholesales revenue generated by DesignPac, acquired in April 2008, but was partially offset by decreased net revenue from the category's E-Commerce and retail stores channels as a result of reduced consumer spending and the shift of the Easter holiday.

The Home & Children's Gifts category includes revenues from Plow & Hearth, Wind & Weather, HearthSong and Magic Cabin brands. Revenue is derived from the sale of home decor and children's gifts through its E-commerce sales channels (telephonic and online sales) and company-owned and operated retail stores under the Plow & Hearth brand. During the three and nine months ended March 29, 2009, net revenue decreased by 24.7% and 19.3%, respectively, over the prior year periods primarily as a result of lower order volume from its E-commerce sales channel, due to a combination of significantly reduced consumer spending, particularly in the home decor product category, and a planned reduction in catalog circulation designed to improve category contribution. Further contributing to the revenue decline were lower retail store sales, compared to the same period of the prior year, due to a decline in customer traffic. As a result of this weak performance, the Company has implemented a plan to downsize the operations of its Home & Children's Gift category, including a reduction in catalog marketing, resizing the business to align its infrastructure with the expectation of continued weakness in the home decor retail sector.

The Company expects economic conditions for consumers will continue to be very challenging. Based on this outlook, and combined with its results for the nine months ended March 29, 2009, the Company anticipates that revenues for the full fiscal year 2009 will be down approximately 5-to-10 percent compared with the prior year. In order to mitigate the impact of the revenue decline, the Company plans to continue its operating expense reduction programs which, from fiscal 2006 through fiscal 2008, reduced its operating expense ratio by 290 basis points.

                                                Three Months Ended                             Nine Months Ended
                                     -----------------------------------------   --------------------------------------------
                                       March 29,      March 30,                     March 29,       March 30,
                                         2009           2008        % Change          2009             2008         % Change
                                     -------------- --------------  ----------   --------------   -------------   -----------
                                                                  (in thousands)

Gross profit                           $69,576          $89,505      (22.3)%        $269,691         $302,442        (10.8)%
Gross margin %                            40.2%            40.8%                        40.8%            43.2%

Gross profit decreased during the three and nine months ended March 29, 2009, primarily as a result of the decline in revenues described above, offset in part by the incremental gross profit generated by the DesignPac and Napco acquisitions. Gross margin percentage during the three and nine months ended March 29, 2009, decreased by 60 and 240 basis points, respectively, primarily reflecting a combination of product mix associated with revenues from the Company's most recent acquisitions, which are primarily wholesale businesses, as well as increased promotional activity to improve sales.

The 1-800-Flowers.com Consumer Floral category gross profit and gross profit margin percentage decreased during the three and nine months ended March 29, 2009 by 30.3% and 260 basis points, and 20.8% and 200 basis points, over the

respective prior year periods, as a result of decreased sales volume and promotional pricing, which characterized the retail sector, including the Valentine's Day holiday.

The BloomNet Wire Service category gross profit increased during the three and nine months ended March 29, 2009, by 11.4% and 24.4%, respectively, compared to the prior year periods, as a result of the aforementioned revenue contribution from the Napco acquisition in July 2008, as well as increased revenue resulting from expanded service offerings and pricing initiatives. Gross profit margins during the three months ended March 29, 2009, increased by 70 basis points in comparison to the prior year as a result of product mix, whereas gross profit margins decreased by 60 basis points during the nine months ended March 29, 2009, reflecting the impact of the wholesale margins associated with the Napco product line during its heavy selling period which falls within the Company's first fiscal quarter.

The Gourmet Food & Gift Baskets category gross margin percentages during the three months ended March 29, 2009 were consistent with the prior year, however, gross profit decreased by 16.7% as a result of the decline in sales volume, due in part to the shift in the Easter holiday, as well as the soft consumer demand associated with the weakened economy. During the nine months ended March 29, 2009, gross profit increased by 1.8% over the prior year period as a result of the incremental gross profit generated by DesignPac, acquired in April 2008, which also had the effect of decreasing the gross margin percentage as DesignPac products carry lower wholesale margins. Further negatively impacting the decreased gross profit margins during the nine months ended March 29, 2009 was the increased promotional activity during the key holiday periods within the category's E-Commerce and retail store sales channels, in comparison to the prior year.

The Home & Children's Gifts category gross profit during the three and nine months ended March 29, 2009, decreased by 17.6% and 17.0%, respectively, over the prior year periods as a result of the aforementioned revenue declines, offset in part by a higher gross margin percentage, which increased 360 basis points to 42.5% and 130 basis points to 46.3%, respectively, benefiting from enhanced product sourcing and shipping initiatives.

During the remainder of fiscal year 2009, the Company expects its gross margin percentage will remain relatively unchanged in comparison to the prior year as a shift in product mix, and anticipated gross margin improvements in most of its existing businesses through a combination of product sourcing, fulfillment improvements, fuel cost reductions and pricing initiatives, will offset the reduced margin percentage in the 1-800-Flowers Consumer Floral Category caused by ongoing promotional activity.

                                                Three Months Ended                             Nine Months Ended
                                     -----------------------------------------   --------------------------------------------
                                       March 29,      March 30,                     March 29,       March 30,
                                         2009           2008        % Change          2009             2008         % Change
                                     -------------- --------------  ----------   --------------   -------------   -----------
                                                                  (in thousands)

Marketing and sales                    $52,469          $60,587      (13.4)%        $183,487         $196,960         (6.8)%
Percentage of net revenues                30.3%            27.6%                        27.8%            28.2%

During the three and nine months ended March 29, 2009, marketing and sales expenses decreased 13.4% and 6.8% respectively, but increased to 30.3% from 27.6% of net revenue. The overall decrease in expense reflects the Company's ongoing cost reduction programs, including accelerated efforts to reduce these costs in the face of continuing revenue declines. However, the lower revenues during the quarter, combined with severance associated with the Company's cost reduction programs recorded within marketing and selling of $1.1 million, unfavorably impacted the Company's leverage during the quarter. During the nine months ended March 29, 2009, marketing and sales expenses declined to 27.8% from 28.2% of net revenues, as a result of brand mix, including the impact of DesignPac, which has low operating costs relative to its revenue and the Company's expense reduction initiatives. These programs, which began in 2006, were designed to improve operating leverage across the Company's brands, reducing the Company's operating expense ratio by 290 basis points through fiscal 2008, and have been expanded and accelerated to mitigate the revenue reductions that have been associated with the current economic decline. Within marketing and sales, the Company has undertaken programs that have reduced or reallocated media, portal spending, and customer prospecting through catalogs, which were not expected to generate sufficient returns in this challenging economic environment. In addition, initiatives such as catalog printing and co-mailing, e-mail pricing reductions and further virtualization of our consumer service platform to reduce fixed facility and labor, have enabled the Company to improve its cost structure.

During the three and nine months ended March 29, 2009, the Company added approximately 651,000 and 2,137,000 new E-commerce customers, respectively. Of the 1,678,000 and 4,685,000 total customers who placed E-commerce orders during the three and nine months ended March 29, 2009, respectively, approximately 61.2% and 54.4%, respectively, were repeat customers, compared to 59.4% and 51.3% during the respective prior year periods, reflecting the Company's ongoing focus on deepening the relationship with its existing customers as their trusted source for gifts and services for all of their celebratory occasions.

During the remainder of fiscal 2009, the Company expects that marketing and sales expense will continue to decrease in comparison to the prior year, but increase slightly as a percentage of net revenues due to the anticipated continued decline in sales. This decline is expected to be mitigated by the aforementioned expense reduction initiatives, as well as reductions in variable labor commensurate with lower order volumes.

                                                Three Months Ended                             Nine Months Ended
                                     -----------------------------------------   --------------------------------------------
                                       March 29,      March 30,                     March 29,       March 30,
                                         2009           2008        % Change          2009             2008         % Change
                                     -------------- --------------  ----------   --------------   -------------   -----------
                                                                  (in thousands)

Technology and development              $5,679           $5,515        3.0%          $16,518          $16,169          2.2%
Percentage of net revenues                 3.3%             2.5%                         2.5%             2.3%

During the three and nine months ended March 29, 2009, technology and development expense increased by 3.0% and 2.2% over the respective prior year periods, as a result of severance associated with the Company's cost reduction programs of $0.1 million, as well as the incremental technology and integration costs associated with the acquisitions of DesignPac and Napco.

During the three and nine months ended March 29, 2009, the Company expended $9.3 million and $30.4 million on technology and development, of which $3.6 million and $13.9 million has been capitalized.

The Company believes that continued investment in technology and development is critical to attaining its strategic objectives, and as a result of the Company's revised revenue expectations for the remainder of the year, the Company expects that its spending for the remainder of fiscal 2009 will increase slightly, as a percentage of net revenues, in comparison to the prior year.

                                                Three Months Ended                             Nine Months Ended
                                     -----------------------------------------   --------------------------------------------
                                       March 29,      March 30,                     March 29,       March 30,
                                         2009           2008        % Change          2009             2008         % Change
                                     -------------- --------------  ----------   --------------   -------------   -----------
                                                                  (in thousands)

General and administrative             $12,972          $13,151       (1.4%)         $40,624          $43,817         (7.3%)
Percentage of net revenues                 7.5%             6.0%                         6.2%             6.3%

General and administrative expense decreased by 1.4% and 7.3% during the three and nine months ended March 29, 2009, respectively, as the prior year periods reflect the achievement of certain cash and equity performance based bonus targets, which are not expected to be earned in fiscal 2009 (refer to Note 3 for further information on equity based compensation), as well as cost reduction initiatives, offset in part by the incremental expenses of DesignPac and Napco.

Although the Company has accelerated its cost reduction initiatives, as a result of the Company's revised revenue expectations, and the incremental expenses associated with DesignPac and Napco, the Company expects that its general and administrative expenses for the remainder of fiscal 2009 will increase as a percentage of net revenues in comparison to the prior year.

                                                Three Months Ended                             Nine Months Ended
                                     -----------------------------------------   --------------------------------------------
                                       March 29,      March 30,                     March 29,       March 30,
                                         2009           2008        % Change          2009             2008         % Change
                                     -------------- --------------  ----------   --------------   -------------   -----------
                                                                  (in thousands)

Depreciation and amortization           $6,144           $5,011       22.6%          $17,629          $14,848         18.7%
Percentage of net revenues                 3.6%             2.3%                         2.7%             2.1%

Depreciation and amortization expense increased by 22.6% and 18.7% during the three and nine months ended March 29, 2009, in comparison to the prior year periods, as a result of capital additions for technology platform improvements and the incremental amortization related to the intangibles established as a result of the acquisition of DesignPac in April 2008.

The Company believes that continued investment in its infrastructure, primarily in the areas of technology and development, including the improvement of the technology platforms, are critical to attaining its strategic objectives. Although the Company has begun reducing its capital expenditure plan for the remainder of fiscal 2009, as a result of the Company's revised revenue expectations and the increase in amortization expense associated with intangibles established as a result of recent acquisitions, the Company expects that depreciation and amortization for the remainder of fiscal 2009 will increase slightly as a percentage of net revenues in comparison to the prior year.

Goodwill and Other Intangibles Impairment

During the second quarter of fiscal 2009 the Company assessed the recent performance of its Home & Children's Gift category businesses and its plans to resize this category based on the expectations of continued weakness in the home decor retail sector. The Plow & Hearth, Wind & Weather, HearthSong and Magic Cabin brands experienced lower revenue growth than anticipated with deteriorating operating margins. This shortfall was primarily attributable to decreased consumer spending as a result of the challenging economic environment. As a result of this analysis, impairment charges related to goodwill and other intangibles totaling $20.0 million were recorded. (Refer to Note 6 for further details).

As a result of a continued decline of the Company's market capitalization, and contraction of public company multiples, as well as further erosion of revenues within certain brands and the overall operating income and cash flows of the Gourmet Food and Gift Basket segment, coupled with a reduction in the outlook of the performance of this segment based upon the expectation of a continuation of the current economic downturn, during the three months ended March 29, 2009, the Company recorded an impairment charge of $76.5 million for the write-down of goodwill and intangibles related to this business segment. (Refer to Note 6 for further details).

                                 Three Months Ended          Nine Months Ended
                              ------------------------   -------------------------
                                March 29,    March 30,      March 29,   March 30,
                                  2009         2008           2009        2008
                              ----------- ------------    ---------- -------------
                                                (in thousands)

Interest income                   $56          $363           $228       $836
Interest expense               (1,103)       (1,073)        (4,769)    (4,355)
Other                              58            25             85         55
                              ----------- ------------    ---------- -------------
                                ($989)        ($685)       ($4,456)   ($3,464)
                              =========== ============    ========== =============

Other income (expense) consists primarily of interest income earned on the Company's investments and available cash balances, offset by interest expense, primarily attributable to the Company's long-term debt and revolving line of credit.

Net borrowing costs increased during the three and nine months ended March 29, 2009, in comparison to the prior year periods, primarily as a result of incremental borrowings and related financing costs associated with the Company's 2008 Credit Facility (as defined below).

In order to fund the increase in working capital requirements associated with DesignPac, on August 28, 2008, the Company entered into a $293.0 million Amended and Restated Credit Agreement with JPMorgan Chase Bank N.A., as administrative

agent, and a group of lenders (the "2008 Credit Facility"). The 2008 Credit Facility provided for borrowings of up to $293.0 million, including: (i) a $165.0 million revolving credit commitment, (ii) $60.0 million of new term loan debt, and (iii) $68.0 million of existing term loan debt associated with the Company's previous credit facility.

On April 14, 2009, subsequent to quarter end, the Company entered into an amendment to the 2008 Credit Facility (the "Amended 2008 Credit Facility"). The Amended 2008 Credit Facility includes a prepayment of $20.0 million, reducing the Company's outstanding term loans under the facility to $92.4 million upon closing. In addition, the amendment reduces the Company's revolving credit line from $165.0 million to a seasonally adjusted line ranging from $75.0 to $125.0 million. The Amended 2008 Credit Facility, effective March 29, 2009, also revises certain financial and non-financial covenants, including maintenance of certain financial ratios and eliminates the consolidated net worth covenant that had been included in the previous agreement. Outstanding amounts under the Amended 2008 Credit Facility will bear interest at the Company's option at either: (i) LIBOR plus a defined margin, or (ii) the agent bank's prime rate plus a margin. The applicable margins for the Company's term loans and revolving credit facility will range from 3.00% to 4.50% for LIBOR loans and 2.00% to 3.50% for ABR loans with pricing based upon the Company's leverage ratio. The repayment terms of the existing term loans were reduced, on a pro-rata basis, for the $20.0 million prepayment. The obligations of the Company and its subsidiaries under the Amended 2008 Credit Facility are secured by liens on all personal property of the Company and its subsidiaries.

As a result of the modifications of its credit agreements, during the quarter ended June 28, 2009, the Company will write off financing costs associated with the term debt related to both the 2008 Credit Facility and the Amended 2008 Credit Facility, in the amount of approximately $3.0 million.

During March 2009, the Company obtained a $5.0 million equipment lease line of credit with a bank and a $5.0 million equipment lease line with a vendor. Interest under these lines, which both mature in April 2012, range from 2.99% to 7.48%. Borrowings under the bank line are collateralized by the underlying equipment purchased, while the equipment lease line of credit with the vendor is unsecured. In March 2009, the Company financed $6.0 million of equipment purchases through such lease lines. The borrowings are payable in 36 monthly installments of principal and interest commencing in April 2009.

Income Taxes

During the three and nine months ended March 29, 2009, the Company recorded an income tax benefit of $19.4 million and $13.3 million, respectively, compared to expense of $1.3 million and $10.4 million during the three and nine months ended March 30, 2008. The Company's effective tax rates for the three and nine months ended March 29, 2009 were 22.7% and 14.9%, respectively, compared to 27.7% and 38.3% during the comparative three and nine months ended March 30, 2008. The effective rates reflect the impact of the non-deductible portions of the goodwill and other intangible impairment charges of $76.5 million and $96.5 million, recorded during the three and nine months ended March 29, 2009, respectively. Excluding these charges, the effective rates during the three and nine months ended March 29, 2009 would have been 40.5% and 37.8%, respectively. The adjusted effective rate during the three and nine months ended March 29, 2009, and the effective rate during the three and nine months ended March 30, 2008, differed from the U.S. federal statutory rate of 35% primarily due to state income taxes, partially offset by various tax credits.

Liquidity and Capital Resources

At March 29, 2009, the Company had working capital of $49.9 million, including cash and equivalents of $31.7 million, compared to working capital of $33.4 million, including cash and equivalents of $12.1 million, at June 29, 2008.

Net cash provided by operating activities of $0.8 million for the nine months ended March 29, 2009 was primarily attributable operating income, after adjusting for non-cash charges related to goodwill and other intangible charges (approximately $96.5 million), and depreciation and amortization, offset by an increase in deferred taxes as a result of the non-cash charges related to goodwill and other intangibles, as well as seasonal changes in working capital including lower accounts payable and accrued expenses related to timing of vendor purchases, and increases in receivables, as well as increases in inventory due to acquired businesses and the movement of the Easter holiday into the Company's fiscal fourth quarter.

Net cash used in investing activities of $22.6 million for the nine months ended March 29, 2009 was attributable to capital expenditures, primarily related to the Company's technology and distribution infrastructure, and the acquisition of

Napco in July 2008 and Geerlings & Wade in March 2009. Napco's purchase price of approximately $10.9 million, included an up-front cash payment of $9.3 million, net of cash acquired, and potential "earn-out" incentives, which amount to a maximum of $1.6 million through the years ending July 2, 2012, upon achievement of specified performance targets.

Net cash provided by financing activities of $41.4 million for the nine months ended March 29, 2009 was primarily from bank borrowings related to the Company's 2008 Credit Facility, net of the repayment of bank borrowings on outstanding debt and long-term capital lease obligations, as well as debt issuance costs.

In order to fund the increase in working capital requirements associated with DesignPac, on August 28, 2008, the Company entered into a $293.0 million Amended and Restated Credit Agreement with JPMorgan Chase Bank N.A., as administrative agent, and a group of lenders (the "2008 Credit Facility"). The 2008 Credit Facility provided for borrowings of up to $293.0 million, including: (i) a $165.0 million revolving credit commitment, (ii) $60.0 million of new term loan debt, and (iii) $68.0 million of existing term loan debt associated with the Company's previous credit facility.

On April 14, 2009, subsequent to quarter end, the Company entered into an amendment to the 2008 Credit Facility (the "Amended 2008 Credit Facility"). The Amended 2008 Credit Facility includes a prepayment of $20.0 million (included in current maturities above), reducing the Company's outstanding term loans under the facility to $92.4 million upon closing. In addition, the amendment reduces the Company's revolving credit line from $165.0 million to a seasonally adjusted line ranging from $75.0 to $125.0 million. The Amended 2008 Credit Facility, effective March 29, 2009, also revises certain financial and non-financial covenants, including maintenance of certain financial ratios and eliminates the consolidated net worth covenant that had been included in the previous agreement. Outstanding amounts under the Amended 2008 Credit Facility will bear interest at the Company's option at either: (i) LIBOR plus a defined margin, or
(ii) the agent bank's prime rate plus a margin. The applicable margins for the Company's term loans and revolving credit facility will range from 3.00% to 4.50% for LIBOR loans and 2.00% to 3.50% for ABR loans with pricing based upon the Company's leverage ratio. The repayment terms of the existing term loans were reduced, on a pro-rata basis, for the $20.0 million prepayment. The obligations of the Company and its subsidiaries under the Amended 2008 Credit Facility are secured by liens on all personal property of the Company and its subsidiaries.

As a result of the modifications of its credit agreements, during the quarter ended June 28, 2009, the Company will write off financing costs associated with the term debt related to both the 2008 Credit Facility and the Amended 2008 Credit Facility, in the amount of approximately $3.0 million.

At March 29, 2009, the Company had no outstanding amounts under its revolving credit facility.

During March 2009, the Company obtained a $5.0 million equipment lease line of credit with a bank and a $5.0 million equipment lease line of credit with a vendor. Interest under these lines, which mature in April 2012, range from 2.99% to 7.48%. Borrowings under the bank line are collateralized by the underlying equipment purchased, while the equipment lease line with the vendor is unsecured. In March 2009, the Company financed $6.0 million of equipment purchases through such lease lines. The borrowings are payable in 36 monthly installments of principal and interest commencing in April 2009.

On January 21, 2008, the Company's Board of Directors authorized an increase to its stock repurchase plan which, when added to the funds remaining on its earlier authorization, increased the amount available for repurchase to $15.0 million. Any such purchases could be made from time to time in the open market and through privately negotiated transactions, subject to general market conditions. The repurchase program will be financed utilizing available cash. The Company repurchased $0.4 million and $0.8 million of common stock during the three and nine months ended March 29, 2009, respectively. As of March 29, 2009, $13.2 million remains authorized but unused.

At March 29, 2009, the Company's contractual obligations consist of:

                                                                      Payments due by period
                                        -----------------------------------------------------------------------------------
                                                                          (in thousands)
                                                          Less than 1        1 - 2                            More than 5
                                             Total               year        years        3 - 5 years               years
                                        -----------    ---------------    ------------   -------------     ----------------

Long-term debt, including interest        $126,552            $30,291         $69,487          $26,774                  $-
Capital lease obligations,
 including interest                          6,461              2,124           4,249               88                   -
Operating lease obligations                 69,741             11,696          23,281           18,632              16,132
Sublease obligations                         6,693              2,191           2,732            1,028                 742
Marketing Agreement                         12,254              2,254          10,000
Purchase commitments (*)                    16,237             16,237               -                -                   -
                                        -----------    ---------------    ------------   --------------    ----------------
     Total                                $237,938            $64,793        $109,749          $46,522             $16,874
                                        ===========    ===============    ============   ==============    ================

(*) Purchase commitments consist primarily of inventory, equipment purchase orders and online marketing agreements made in the ordinary course of business.

Critical Accounting Policies and Estimates

The Company's discussion and analysis of its financial position and results of operations are based upon the consolidated financial statements of 1-800-FLOWERS.COM, Inc., which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, inventory and long-lived assets, including goodwill and other intangible assets related to acquisitions. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. Management believes the following critical accounting policies, among others, affect its more significant judgments and estimates used in preparation of its consolidated financial statements.

Revenue Recognition

Net revenues are generated by E-commerce operations from the Company's online and telephonic sales channels as well as other operations (retail/wholesale) and primarily consist of the selling price of merchandise, service or outbound shipping charges, less discounts, returns and credits. Net revenues are recognized upon product shipment. Shipping terms are FOB shipping point. Net revenues generated by the Company's BloomNet Wire Service operations include membership fees as well as other products and service offerings to florists. Membership fees are recognized monthly in the period earned, and products sales are recognized upon product shipment with shipping terms of FOB shipping point.

Accounts Receivable

The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers or franchisees to make required payments. If the financial condition of the Company's customers or franchisees were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

Inventory

The Company states inventory at the lower of cost or market. In assessing the realization of inventories, we are required to make judgments as to future demand requirements and compare that with inventory levels. It is possible that changes in consumer demand could cause a reduction in the net realizable value of inventory.

Goodwill and Other Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of the net assets acquired and is evaluated annually for impairment. The cost of intangible assets with determinable lives is amortized to reflect the pattern of economic benefits consumed, on a straight-line basis, over the estimated periods benefited, ranging from 3 to 16 years.

The Company performs an annual impairment test as of the first day of its fiscal fourth quarter, or earlier if indicators of potential impairment exist (as was the case this year), to evaluate goodwill. Goodwill is considered impaired if the carrying amount of the reporting unit exceeds its estimated fair value. In assessing the recoverability of goodwill, the Company reviews both quantitative as well as qualitative factors to support its assumptions with regard to fair value. Determining the fair value of a reporting unit is judgmental in nature and requires the use of significant estimates and other assumptions, including revenue growth and operating margins, discount rates and future market conditions, among others. Judgment regarding the existence of impairment indicators is based on market conditions and operational performance of the Company. Future events could cause the Company to conclude that impairment indicators exist and that goodwill and other intangible assets associated with our acquired businesses is impaired.

Capitalized Software

The carrying value of capitalized software, both purchased and internally developed, is periodically reviewed for potential impairment indicators. Future events could cause the Company to conclude that impairment indicators exist and that capitalized software is impaired.

Stock-based Compensation

SFAS No. 123R requires the measurement of stock-based compensation expense based on the fair value of the award on the date of grant. The Company determines the fair value of stock options issued by using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model considers a range of assumptions related to volatility, dividend yield, risk-free interest rate and employee exercise behavior. Expected volatilities are based on historical volatility of the Company's stock price. The dividend yield is based on historical experience and future expectations. The risk-free interest rate is derived from the US Treasury yield curve in effect at the time of grant. The Black-Scholes model also incorporates expected forfeiture rates, based on historical behavior. Determining these assumptions is subjective and complex, and therefore, a change in the assumptions utilized could impact the calculation of the fair value of the Company's stock options.

Income Taxes

The Company has established deferred income tax assets and liabilities for temporary differences between the financial reporting bases and the income tax bases of its assets and liabilities at enacted tax rates expected to be in effect when such assets or liabilities are realized or settled. The Company has recognized as a deferred tax asset the tax benefits associated with losses related to operations, which are expected to result in a future tax benefit. Realization of this deferred tax asset assumes that we will be able to generate sufficient future taxable income so that these assets will be realized. The factors that we consider in assessing the likelihood of realization include the forecast of future taxable income and available tax planning strategies that could be implemented to realize the deferred tax assets.

It is the Company's policy to provide for uncertain tax positions and the related interest and penalties based upon management's assessment of whether a tax benefit is more-likely-than-not to be sustained upon examination by taxing authorities. To the extent that the Company prevails in matters for which a liability for an unrecognized tax benefit is established or is required to pay amounts in excess of the liability, the Company's effective tax rate in a given financial statement period may be affected.

Recent Accounting Pronouncements

In December 2007, the FASB issued Statement No. 141 (Revised), "Business Combinations" ("SFAS No. 141R") and SFAS 160, "Non-controlling Interests in Consolidated Financial Statements" ("SFAS 160"). SFAS No. 141R and SFAS 160 revise the method of accounting for a number of aspects of business combinations and non-controlling interests, including acquisition costs, contingencies (including contingent assets, contingent liabilities and contingent purchase price), the impacts of partial and step-acquisitions (including the valuation of net assets attributable to non-acquired minority interests), and post acquisition exit activities of acquired businesses. SFAS 141R and SFAS 160 will be effective for the Company during the fiscal year beginning June 29, 2009. The

Company cannot anticipate whether the adoption of SFAS No. 141R will have a material impact on its results of operations and financial conditions as the impact is solely dependent on the terms of any business combination entered into by the Company after June 29, 2009.

On April 25, 2008, the FASB issued FASB Staff Position (FSP) FAS 142-3, "Determination of the Useful Life of Intangible Assets." This FSP amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, "Goodwill and Other Intangible Assets," or SFAS 142. The intent of this FSP is to improve the consistency between the useful life of a recognized intangible asset under SFAS 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS 141R and other generally accepted accounting principles. This FSP is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Early adoption is prohibited. The Company is currently evaluating the impact, if any, that this FSP will have on its results of operations, financial position or cash flows.

Forward- Looking Information and Factors that May Affect Future Results

Our disclosure and analysis in this report contain forward-looking information about the Company's financial results and estimates, and business prospects that involve substantial risks and uncertainties. From time to time, we also may provide oral or written forward-looking statements in other materials we release to the public. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historic or current facts. They use words such as "will," "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "target," "forecast" and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. In particular, these include statements relating to future actions, future performance, new products and product categories, the outcome of contingencies, such as legal proceedings, and financial results. Among the factors that could cause actual results to differ materially are the following:

o the Company's ability:
o to achieve revenue and profitability;
o to reduce costs and enhance its profit margins;
o to manage the increased seasonality of its business;
o to effectively integrate and grow acquired companies;
o to cost effectively acquire and retain customers;
o to compete against existing and new competitors;
o to manage expenses associated with sales and marketing and necessary general and administrative and technology investments;
o to cost efficiently manage inventories; and
o leverage its operating infrastructure;
o general consumer sentiment and economic conditions that may affect levels of discretionary customer purchases of the Company's products; and
o competition from existing and potential new competitors.

We cannot guarantee that any forward-looking statement will be realized, although we believe we have been prudent in our plans and assumptions. Achievement of future results is subject to risks, uncertainties and inaccurate assumptions. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could vary materially from past results and those anticipated, estimated or projected. Investors should bear this in mind as they consider forward-looking statements. We caution readers not to place undue reliance on forward looking statements, which speak only as of the date of this report.

We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our Forms 10-Q, 8-K and 10-K reports to the Securities and Exchange Commission. Our Annual Report on Form 10-K filing for the fiscal year ended June 29, 2008 listed various important factors that could cause actual results to differ materially from expected and historic results. We note these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995. Readers can find them in Part I, Item 1A, of that filing under the heading

"Cautionary Statements Under the Private Securities Litigation Reform Act of 1995". We incorporate that section of that Form 10-K in this filing and investors should refer to it. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties.