UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

                X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
               --
                         SECURITIES EXCHANGE ACT OF 1934

                     For the fiscal year ended June 29, 2008

                                       or

           ___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                           SECURITIES EXCHANGE ACT OF 1934

                           Commission File No. 0-26841

                             1-800-FLOWERS.COM, Inc.
             (Exact name of registrant as specified in its charter)

     DELAWARE                                                    11-3117311
     --------                                                    ----------
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                               Identification No.)

                One Old Country Road, Carle Place, New York 11514
                -------------------------------------------------
               (Address of principal executive offices)(Zip code)

       Registrant's telephone number, including area code: (516) 237-6000

           Securities registered pursuant to Section 12(b) of the Act:
     Title of each class              Name of each Exchange on which registered
Class A common stock, par value       The Nasdaq Stock Market, Inc.
    $0.01 per share

           Securities registered pursuant to Section 12(g) of the Act:
                                      None

Indicate  by check  mark if the  registrant  is a  well-known  seasoned  issuer,
as  defined  in Rule 405 of the Securities Act.                   Yes | | No |X|

Indicate by check  mark if  the  registrant  is not  required  to  file  reports
pursuant to Section 13 or Section 15 (d) of the Act.              Yes | | No |X|

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding  12 months (or for such  shorter period that  the  registrant  was
required  to  file  such reports), and  (2) has  been  subject  to  such  filing
requirements for the past 90 days.
                                                                  Yes |X| No | |

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best  of  the  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. |X|

Indicate by check mark whether the registrant is a large  accelerated  filer, an
accelerated  filer, or a  non-accelerated  filer. See definition of "accelerated
filer and large  accelerated  filer" in Rule 12b-2 of the Exchange Act).  (Check
one):

Large accelerated filer | |    Accelerated filer  |X|
Non-accelerated filer | |(Do not check if a smaller reporting company)
Smaller reporting company | |

Indicate by check mark  whether the  registrant  is a shell  company (as defined
in Rule 12b-2 of the Exchange Act).                               Yes | | No |X|

The  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant,  computed by reference to the closing  price as of the last business
day of the registrant's most recently completed second fiscal quarter,  December
28, 2007,  was  approximately  $227,449,000.  The  registrant  has no non-voting
common stock.

                                   26,671,031
                                   ----------
 (Number of shares of class A common stock outstanding as of September 4, 2008)

                                   36,858,465
                                   ----------
 (Number of shares of class B common stock outstanding as of September 4, 2008)

                      DOCUMENTS INCORPORATED BY REFERENCE:
      Portions of the Registrant's Definitive Proxy Statement for the 2008
         Annual Meeting of Stockholders (the Definitive Proxy Statement)
           are incorporated by reference into Part III of this Report.


                             1-800-FLOWERS.COM, INC.
                                    FORM 10-K
                     For the fiscal year ended June 29, 2008

                                      INDEX


PART I
  Item 1.    Business                                                          1

  Item 1A.   Risk Factors                                                     12

  Item 1B.   Unresolved Staff Comments                                        20

  Item 2.    Properties                                                       21

  Item 3.    Legal Proceedings                                                21

  Item 4.    Submission of Matters to a Vote of Security Holders              21

PART II
  Item 5.    Market for Registrant's Common Equity and Related Stockholder
             Matters and Issuer Purchases of Equity Securities                24

  Item 6.    Selected Financial Data                                          26

  Item 7.    Management's Discussion and Analysis of Financial Condition
             and Results of Operations                                        27

  Item 7A.   Quantitative and Qualitative Disclosures about Market Risk       41

  Item 8.    Financial Statements and Supplementary Data                      41

  Item 9.    Changes in and Disagreements with Accountants on Accounting
             and Financial Disclosure                                         41

  Item 9A.   Controls and Procedures                                          41

  Item 9B.   Other Information                                                44

PART III
  Item 10.   Directors, Executive Officers and Corporate Governance           45

  Item 11.   Executive Compensation                                           45

  Item 12.   Security Ownership of Certain Beneficial Owners and
             Management and Related Stockholder Matters                       45

  Item 13.   Certain Relationships and Related Transactions, and
             Director Independence                                            45

  Item 14.   Principal Accountant Fees and Services                           45

Part IV

  Item 15.   Exhibits and Financial Statement Schedules                       46


  Signatures                                                                  48



                                     PART I

Item 1. BUSINESS

The Company

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.
Named one of the top 50 online retailers by Internet  Retailer,  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(R)  (1-800-356-9377
or www.1800flowers.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  through  our Fresh From Our
Growers(R) program.  As always, 100% satisfaction and freshness are guaranteed.
The Company's BloomNet(R) (www.mybloomnet.net) international floral wire service
provides 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);   exceptional   cookies   and  baked   gifts   from
Cheryl&Co.(R)  (1-800-443-8124 or  www.cherylandco.com);  premium chocolates and
confections   from  Fannie  May  Confections   Brands   (www.fanniemay.com   and
www.harrylondon.com);  gourmet foods from Greatfood.com(R)  (www.greatfood.com);
wine gifts from  Ambrosia(R)  (www.ambrosia.com  or  www.winetasting.com);  gift
baskets from  1-800-BASKETS.COM(R)  (www.1800baskets.com)  and DesignPac Giftssm
(www.designpac.com)  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).

1-800-FLOWERS.COM, Inc. stock is traded on the NASDAQ Global Select Market under
ticker symbol FLWS.

References  in this Annual  Report on Form 10-K to  "1-800-FLOWERS.COM"  and the
"Company" refer to 1-800-FLOWERS.COM,  Inc. and its subsidiaries.  The Company's
principal  offices are located at One Old Country Road,  Suite 500, Carle Place,
NY 11514 and its telephone number at that location is (516) 237-6000.

The Origins of 1-800-FLOWERS.COM

The Company's  operations  began in 1976 when James F. McCann,  its Chairman and
Chief  Executive  Officer,  acquired a single  retail  florist in New York City,
which he  subsequently  expanded to a 14-store  chain.  Thereafter,  the Company
modified  its  business  strategy to take  advantage  of the rapid  emergence of
toll-free calling. The Company acquired the right to use the toll-free telephone
number  1-800-FLOWERS,  adopted  it as  its  corporate  identity  and  began  to
aggressively  build a national brand around it. The Company  believes it was one
of the first companies to embrace this new way of conducting business.

In order to support the growth of its toll-free business and to provide superior
customer  service,  the  Company  developed  an  operating  infrastructure  that
incorporated the best available technologies. Over time, the Company implemented
a sophisticated transaction processing system that facilitated rapid order entry
and fulfillment,  an advanced  telecommunications  system and multiple  customer
service centers to handle increasing call volume.

To enable the Company to deliver products  reliably  nationwide on a same-day or
next-day basis and to market  pre-selected,  high-quality  floral products,  the
Company created  BloomNet(R),  a nationwide network including  independent local
florists selected for their high-quality products, superior customer service and
order fulfillment and delivery capabilities.

The Company's  online  presence has enabled it to expand the number and types of
products it can effectively offer to its customers. As a result, the Company has
developed  relationships  with customers who purchase  products for both a broad
range of celebratory gifting occasions as well as for everyday personal use. The
Company has broadened its product  offering to include  products that a customer
could expect to find in a high-end florist shop,  including a wide assortment of

                                       1



cut flowers and plants, candy,  balloons,  plush toys, giftware and gourmet gift
baskets.  In addition,  the Company has further expanded its product offering to
include home and garden  merchandise  through its April 1998  acquisition of The
Plow & Hearth,  Inc.;  unique  and  educational  children's  gifts  through  its
acquisition  of the  HearthSong  and Magic Cabin product lines in June 2001 and,
more recently,  weather-themed  gifts and instruments through the acquisition of
Wind & Weather in October 2005. The Company has also significantly  expanded its
presence in the gourmet food and gift baskets  category through a combination of
organic  initiatives and strategic  acquisitions  beginning with the purchase of
GreatFood.com, Inc. in November 1999, followed by the purchase of certain assets
of The Popcorn Factory, Inc. in May 2002, the addition of wine gifts through the
acquisition of The WineTasting Network in November 2004, the addition of cookies
and other bakery gift items  through the purchase of Cheryl & Co. in March 2005,
premium   chocolates  and  confections   with  the  acquisition  of  Fannie  May
Confections Brands, Inc. in May 2006, and most recently,  gourmet gift  baskets,
food towers and gift sets through the  acquisition  of  DesignPac  Gifts LLC in
April 2008.

The Company's Strategy

1-800-FLOWERS.COM's  objective is to become the leading  authority on thoughtful
gifting,  to  serve an  expanding  range of our  customers'  celebratory  needs,
thereby helping our customers express  themselves and connect with the important
people  in their  lives.  The  Company  will  continue  to build on the  trusted
relationships with our customers by providing them with ease of access, tasteful
and appropriate gifts, and superior service.

The Company believes that 1-800-FLOWERS.COM is one of the most recognized brands
in the floral and gift  industry.  The  strength  of its brand has  enabled  the
Company  to extend  its  product  offerings  beyond  the  floral  category  into
complementary  products,  which include home and garden merchandise,  children's
toys and  games,  gourmet  popcorn,  cookies  and  related  baked and snack food
products,  premium  chocolate  and  confections,  wine  gifts and  gourmet  gift
baskets.  This extension of gift  offerings  helps our customers in all of their
celebratory  occasions,  and has enabled  the Company to increase  the number of
purchases  and the average  order value by existing  customers  who have come to
trust the 1-800-FLOWERS.COM brand, as well as continue to attract new customers.

The Company believes its brands are characterized by:

       o  Convenience.  All of the Company's  product offerings can be purchased
          either via the web, or via the Company's  toll-free telephone numbers,
          24 hours a day,  seven days a week,  for those  customers who prefer a
          personal gift advisor to assist them.  The Company offers a variety of
          delivery options,  including  same-day or next-day service  throughout
          the world.
       o  Quality. High-quality products are critical to the Company's continued
          brand strength and are integral to the brand loyalty that it has built
          over the years.  The Company offers its customers a 100%  satisfaction
          guarantee on all of its products.
       o  Delivery.  The  Company  has  developed  a  market-proven  fulfillment
          infrastructure  that  allows  delivery  on a  same-day,  next-day  and
          any-day  basis.  Key to the  Company's  fulfillment  capability  is an
          innovative  "hybrid"  model  which  combines  BloomNet  (comprised  of
          independent   florists   operating   retail  flower  shops  and  Local
          Fulfillment or Design Centers ("LFC's"),  Company-owned stores, LFC's,
          and franchise stores), with its eleven distribution centers located in
          California,  Illinois,  New York,  Nevada,  Ohio,  and  Virginia,  and
          third-party  vendors  who ship  directly to the  Company's  customers.
          These  fulfillment  points are connected by the Company's  proprietary
          "BloomLink(R)"  communication  system, a secure  internet-based system
          through which orders and related information are transmitted.
       o  Selection.  Over the course of a year,  the  Company  offers more than
          2,600 varieties of fresh-cut flowers,  floral arrangements and plants,
          more than 7,000 SKUs of gifts, gourmet foods, cookies,  chocolates and
          wines, more than 10,000 different SKUs for the home,  including garden
          accessories, casual lifestyle furnishings,  weather themed instruments
          and gift items, and unique and educational toys and games.
       o  Customer Service. The Company strives to ensure that customer service,
          whether online,  via the telephone,  or in one of its retail stores is
          of the highest  caliber.  The Company  operates four customer  service
          facilities  and employs a network of  home  agents  to provide helpful
          assistance on everything  from  advice on  product  selection  to  the
          monitoring of the fulfillment and delivery process.

                                       2

As part of the Company's continuing effort to serve the thoughtful gifting needs
of its customers,  and leverage its business platform,  where  appropriate,  the
Company  intends  to  market  other  high-quality  brands  in  addition  to  the
1-800-Flowers.com  brand. The Company intends to accomplish this through organic
growth, and where appropriate,  through acquisition of complementary businesses.
In keeping with this  strategy,  in April 2008, the Company  acquired  DesignPac
Gifts LLC, a  designer,  assembler  and  distributor  of gourmet  gift  baskets,
gourmet  food  towers  and gift sets,  including  a broad  range of branded  and
private  label  components.  Subsequent  to year end, in July 2008,  the Company
acquired  selected  assets  of  Napco  Marketing  Corp.  Napco  is  a  wholesale
merchandiser  and  marketer  of  products  designed  primarily  for  the  floral
industry,  and will complement the product line already offered by BloomNet.  In
May  2006,  the  Company  acquired  Fannie  May  Confections   Brands,   Inc.  a
manufacturer and direct retailer of premium chocolates and confections,  through
its Fannie May(R),  Harry London(R) and Fanny Farmer(R)  brands,  while in March
2005, the Company  acquired Cheryl & Co., a manufacturer  and direct marketer of
premium  cookies and  related  baked gift items,  and,  in  November  2004,  The
Winetasting  Network,  a distributor  and  direct-to-consumer  marketer of wine.
These  acquisitions  have enabled the Company to more fully  develop its gourmet
food and gift baskets  product line,  which the Company has identified as having
significant revenue and earnings growth potential. In November 2005, the Company
acquired Wind & Weather,  a direct-marketer  of  weather-themed  instruments and
gift items.  In June 2001 the  Company  acquired  The  Children's  Group,  Inc.,
including its two brands of unique and  educational  children's  toys and games,
HearthSong  and Magic Cabin,  deepening  its product  assortment in the home and
children's  gift category  which the Company first entered in 1998,  through its
acquisition  of The Plow & Hearth,  Inc.,  a direct  marketer  of home decor and
garden  merchandise.  As a complement  to the  Company's  own brands and product
lines, the Company has formed strategic relationships,  including Martha Stewart
for 1-800-FLOWERS.COM,  a co-branded line of fresh, seasonal flower arrangements
and plants which was launched  during the latter part of fiscal 2008, as well as
with Lenox(R),  Waterford(R),  Godiva(R) and Junior's Cheesecake(R). The Company
also  continues to develop  signature  products with renowned  celebrity  floral
artisans  and  celebrity   chefs  in  order  to  provide  its   customers   with
differentiated  products  and further its position as a  destination  for all of
their gifting needs.

Having now  achieved a solid  base of  business,  through  organic  efforts  and
strategic acquisitions, management's current focus is on improving the Company's
earnings  performance  through a combination  of gross margin  improvement  from
expanded  overseas  product  sourcing and expected  manufacturing  efficiencies,
leveraging the Company's  operating platform to reduce operating  expenses,  and
changes in  advertising  and  marketing  strategies  designed  to  increase  its
effectiveness.

Business Category Reorganization

With the addition of Fannie May  Confections  Brands,  Inc. in May 2006, and the
growing importance of BloomNet to the Company's  operating results,  the Company
restructured  its  organization  during fiscal 2007 in order to  strengthen  its
execution and customer focus,  and align resources to better meet the demands of
the consumers that it serves and to deliver improved financial  performance.  To
enhance the visibility of the growth and profit characteristics of its different
business  categories,  the Company has provided results for its Consumer Floral,
Home & Children's  Gifts,  Gourmet  Food and Gift  Baskets,  and  BloomNet  Wire
Service  businesses  (see  Management   Discussion  and  Analysis  of  Financial
Condition and Results of Operations  section for details).  The Consumer  Floral
business  category  includes the  operations  of the Company's  flagship  brand,
1-800-Flowers.com,  while the Home & Children's Gifts business category includes
the Company's Plow & Hearth, Wind & Weather,  HearthSong and Magic Cabin brands.
The Gourmet Food and Gift Baskets category includes the operations of Fannie May
Confections Brands,  Cheryl & Co., The Popcorn Factory,  The Winetasting Network
and  DesignPac.  The BloomNet Wire Service  includes the operations of BloomNet,
BloomNet Technologies, and beginning in fiscal 2009, Napco.

The Company's Products and Service Offerings

The Company offers a wide range of products including fresh-cut flowers,  floral
arrangements  and  plants,  gifts,  popcorn,  gourmet  foods  and gift  baskets,
cookies,  candy and wine, home and garden  merchandise and unique toys and games
for  children.  In order  to  maximize  sales  opportunities,  products  are not
exclusive to certain  brands,  and may be sold across  business  categories.  In
addition to selecting its core products, the Company's  merchandising team works
closely with manufacturers and suppliers to select and design products that meet
the seasonal, holiday and other special needs of its customers.

                                       3

The  Company's  differentiated  and  value-added  product  offerings  create the
opportunity  to have a  relationship  with customers who purchase items not only
for  gift-giving  occasions  but also for everyday  consumption.  The  Company's
merchandising  team works closely with manufacturers and suppliers to select and
design  its  floral,  gourmet  foods  and  gift  baskets,  home and  garden  and
children's  toys, as well as other  gift-related  products that  accommodate our
customers' needs to celebrate a special occasion, convey a sentiment or cater to
a casual lifestyle.  As part of this continuing  effort,  the Company intends to
continue to develop  differentiated  products and signature collections that our
customers have embraced and come to expect from us, while we eliminate  marginal
performers from our product offerings.

Over the course of a year, the Company's product selection consists of:

Flowers & Plants.  The Company  offers more than 2,000  varieties  of  fresh-cut
flowers and floral  arrangements  for all occasions and holidays,  available for
same-day  delivery.  The Company provides its customers with a choice of florist
designed  products,  flowers  delivered  through  its Fresh From Our  Growers(R)
program, and its successful  "celebrity" gift collections,  including the unique
floral creations of Jane Carroll, Julie McCann Mulligan, Jane Packer and Preston
Bailey. The Company also offers approximately 500 varieties of popular plants to
brighten the home and/or office, and accent gardens and landscapes.

Gourmet  Foods and Gift  Baskets.  The Company  offers  more than 1,000  premium
popcorn and specialty  snack products from The Popcorn Factory brand, as well as
approximately  600 carefully  selected  gourmet food and sweet products from the
GreatFood.com  brand.  Additionally,  the  Company  has more than 1,100  premium
cookies and baked gift items from Cheryl & Co., which are delivered in beautiful
and innovative gift baskets and containers,  providing  customers with a variety
of assortments to choose from. Through The Winetasting  Network, the Company now
offers  its  customers  more  than  500  different  wines,  primarily  from  the
prestigious wine regions in California.  Currently,  restrictions  exist in many
states  regarding  interstate  shipment of wine.  As such,  these items are only
available  in selected  states.  Through the  Company's  Fannie May  Confections
Brands,  the  Company  offers  more than 900  different  selections  of  premium
chocolate and candy.  Many of the Company's  gourmet products can be packaged in
seasonal,   occasion  specific  or  decorative  tins,   fitting  the  "giftable"
requirement  of our  individual  customers,  while also adding the capability to
customize the tins with corporate logos and other personalized  features for the
Company's  corporate  customer's gifting needs. The Company offers more than 300
specially  selected gift items,  including  plush toys,  balloons,  bath and spa
items  and  gift  baskets,  candles,  wreaths,  ornaments,   collectibles,  home
accessories and giftware.

Home and  Children's  Gifts.  Through  the  Company's  Plow & Hearth  and Wind &
Weather  brands,  the  Company  offers  approximately  10,000 SKUs for the home,
hearth  and  outdoor  living,  including  casual  lifestyle  furniture  and home
accessories,  clothing, footwear, candles and lighting, vases, kitchen items and
accents and gardening items,  including tools and accessories,  pottery,  nature
and weather-related products, books and related products. Through the HearthSong
and Magic Cabin brands, the Company offers environmentally  friendly toys, plush
stuffed animals,  crafts and books with  educational,  nature and art themes, as
well as,  natural-fiber  soft dolls,  kits and  accessories  for children ages 3
through 12.

BloomNet Products and Services

In order to further  strengthen its florist designed  fulfillment  capabilities,
and to compete in the  profitable  florist-to-florist  business,  during  fiscal
2005,  the  Company  began  expanding  its  network of  BloomNet  florists.  The
Company's  BloomNet  business  provides its members with  products and services,
including:  (i) clearinghouse  services,  consisting of the settlement of orders
between sending florists (including the  1-800-Flowers.com  brand) and receiving
florists,  (ii) advertising,  in the form of member  directories,  including the
industry's  first on-line  directory,  (iii)  communication  services,  by which
BloomNet  florists are able to send and receive orders and  communicate  between
members, using Bloomlink(R),  the Company's proprietary electronic communication
system,  (iv) other  services  including web hosting and point of sale,  and (v)
wholesale  products,  which consist of branded and non-branded  floral supplies,
enabling member florists to reduce their costs through 1-800-Flowers  purchasing
leverage,  while also  ensuring  that  member  florists  will be able to fulfill
1-800-Flowers.com  brand  orders  based on  recipe  specifications.  In order to

                                       4


further enhance the wholesale capability of BloomNet,  in July 2008, the Company
acquired selected assets of Napco Marketing Corp., a wholesale  merchandiser and
marketer  of  products  designed  primarily  for  the  floral  industry.   While
maintaining  industry-high  quality  standards for its  1-800-Flowers.com  brand
customers, the Company offers florists a compelling value proposition,  offering
products  and  services  that its  florists  need to grow their  business and to
enhance profitability.  With the completion of the Company's BloomNet investment
phase in fiscal 2006, and following its strong operating  results in fiscal 2007
and 2008,  the company  expects that its BloomNet  operations  will  continue to
contribute an increasing level of profitability during fiscal 2009.

Marketing and Promotion

The Company's  marketing and  promotion  strategy is designed to strengthen  the
1-800-FLOWERS.COM brands, increase customer acquisition, build customer loyalty,
and  encourage  repeat  purchases.  The  Company's  goal is to make  its  brands
synonymous with thoughtful  gifting. To do this, the Company intends to continue
to invest in its brands and  acquisition  of new  customers  through  the use of
selective  on  and  off-line  media,  direct  marketing,  public  relations  and
strategic internet  relationships,  while  cost-effectively  capitalizing on the
Company's large and loyal customer base.

Enhance  its  Customer   Relationships.   The  Company  intends  to  deepen  its
relationship  with its customers and be their trusted  resource to fulfill their
need for  quality,  tasteful  gifts.  We plan to  encourage  more  frequent  and
extensive use of our branded web sites, by continuing to provide product-related
content  and  interactive  features  which will  enable the Company to reach its
customers during non-holiday periods,  thereby increasing everyday purchases for
birthdays,  anniversaries,   weddings,  and  sympathy.  Through  customer  panel
research,  the  1-800-Flowers.com  brand  recently  introduced  a number  of new
signature products designed to increase everyday  purchases.  From its celebrity
floral  artisan   collection,   including  the  exclusive   Martha  Stewart  for
1-800-FLOWERS.COM,  a co-branded line of fresh, seasonal flower arrangements and
plants  which  was  launched  during  the  latter  part of fiscal  2008,  to the
successful introduction of its "Happy Hour" collection of margarita, martini and
daiquiri  inspired floral  arrangements,  which are advertised  using innovative
outdoor  bus and  billboard  campaigns,  the  Company's  marketing  and  product
offerings  continue to evolve to meet  consumer  needs.  The  Company  will also
continue to improve its  customers'  shopping  experience by  personalizing  the
features of its web site and, in compliance  with the Company's  privacy policy,
utilizing customer information to target product promotions, identify individual
and mass market consumption  trends,  remind customers of upcoming occasions and
convey  other  marketing  messages.  In  addition,  the  Company  plans to drive
purchase  frequency  improvements  through  the use of  loyalty,  thank-you  and
reminder  programs,  as well as targeting  catalog content and mailings based on
consumers changing purchasing habits. For example, the  1-800-Flowers.com  brand
introduced its Fresh  Rewards(R)  loyalty program whereby  customers earn credit
towards future  purchases upon achieving  targeted  spending  levels,  while the
Fannie May  Confections  Brands expanded its bounce back programs during its key
holiday  selling  seasons.  As of June 29, 2008, the Company's total database of
unique customers numbered approximately 34.4 million (14.4 million of which have
transacted business with the Company within the past 36 months).

Through  its  Business  Gift  Services  division,  the  Company  believes it has
significant  opportunity  to expand its  corporate  customer  base and  leverage
existing and/or develop  successful  gifting programs with corporate customers',
many of which are included in the Fortune 1000, such as AT&T,  American Express,
Bank of America, General Electric, Deloitte, IBM, Verizon, Honeywell, Microsoft,
Hewlett  Packard,  Sodexho,  and UPS,  to name a few.  These  programs  focus on
developing and/or strengthening  strategic  partnerships through the coordinated
development  of  customized  and  personalized   gifts  for  their  clients  and
employees,  and are  tailored  to meet the needs of small,  mid-sized  and large
businesses.   The  Company  helps  its  corporate   customers  manage  the  Life
Celebrations at Work(SM) programs, which include occasions such as Sympathy, Get
Well,   Anniversary,   Birthday,   Thank  You  and  other  daily  floral  needs.

Additionally,  through the many brands  supported by the  Company,  the Business
Gift Services division supports corporate  customers'  holiday gifting,  rewards
and recognition programs,  conferences and events, as well as client acquisition
and customer retention programs to support their growth strategies.

Increase  the  Number of Online  Customers.  Online  transactions  are more cost
efficient to process.  Although the Company  expects its customers to choose the
most convenient  channel  available to them at the time of their  purchase,  the
Company expects its trend of online growth to continue. In order to maximize the
value of this trend, the Company intends to continue to:

                                       5


       o  further  build  brand  awareness  to drive  customers  directly to the
          Company's  URLs,  further  reducing  reliance on internet  portals and
          search engines; currently, greater  than 73% of  online revenues comes
          directly to the Company's websites;
       o  cost effectively promote its web site through internet portals, online
          networks and search engines and affiliates;
       o  aggressively market the Company's web site in its marketing campaigns;
       o  facilitate  access  to  the  Company's  web  site  for  its  corporate
          customers by implementing  direct links from their internal  corporate
          networks,  and develop  customized  co-branded  micro-sites for larger
          corporate partners; and
       o  actively  promote  the  Company's  Fresh  Rewards loyalty  program  to
          increase customer frequency and average order value.

In order to attract new customers and to increase purchase frequency and average
order value of existing  customers,  the Company markets and promotes its brands
and products as follows:

Direct Mail and  Catalogs.  The  Company  uses its direct  mail  promotions  and
catalogs  to  increase  the number of new  customers  and to  increase  purchase
frequency of its existing customers.  Through the use of the Plow & Hearth, Wind
& Weather,  HearthSong,  Magic Cabin, Popcorn Factory and Cheryl & Co. catalogs,
the  Company  can  utilize  its  extensive   customer  database  to  effectively
cross-promote  its products.  In addition to providing a direct sale  mechanism,
these catalogs drive on-line sales and will attract additional  customers to the
Company's  web sites.  For the year ended June 29, 2008,  the Company  mailed in
excess of 115 million branded catalogs.

Off-line Media. The Company utilizes off-line media, including television, radio
and print to market its  1-800-Flowers.com  brand and products.  Off-line  media
allows the Company to reach a large number of customers and to target particular
market segments.

The Company's Strategic Online Relationships.  The Company promotes its products
through strategic  relationships  with leading internet portals,  search engines
and online networks.  The Company's online relationships  include, among others,
AOL, Yahoo!, Microsoft, and Google.

Affiliate and Co-Marketing  Promotions.  In addition to securing  alliances with
frequently  visited web sites, the Company  developed an affiliate  network that
includes   thousands  of  web  sites  operated  by  third   parties.   Affiliate
participation may be terminated by them or by the Company at any time. These web
sites earn commissions on purchases made by customers  referred from their sites
to the  Company's  web  site.  In order to  expand  the  reach of its  marketing
programs and stretch its marketing dollars, the Company has established a number
of  co-marketing  relationships  and  promotions to advertise its products.  For
example,  the Company has established  co-marketing  arrangements  with American
Airlines,  Delta Airlines,  Starwood Hotels,  Choice Hotels,  Next Jump, Bank Of
America , SunTrust, American Express, MasterCard, Visa and Paypal, among others.

E-mails.  The  Company  is  able  to  capitalize  on its  customer  database  of
approximately  34.4  million  unique  customers  (14.7  million  of  which  have
transacted business with the Company within the past 36 months), 20.3 million of
which have  transacted  business with the Company on-line (10.5 million of which
have transacted  business with the Company online within the past 36 months), by
utilizing  cost-effective,  targeted  e-mails  to notify  customers  of  product
promotions, remind them of upcoming gifting occasions and convey other marketing
messages.

The Company's Web Sites

The Company offers floral,  plant,  gift baskets,  gourmet foods,  chocolate and
candies,  plush and specialty gift products  through its  1-800-FLOWERS.COM  web
site  (www.1800flowers.com).  Customers  can come to the web site directly or be
linked by one of the Company's  portal  providers,  search engine,  or affiliate
relationships.  These  include  AOL  (keyword:flowers),  Yahoo!,  Microsoft  and
Google,  as well as  thousands  of its online  affiliate  program  members.  The
Company   also  offers  home  and  garden   products   through   Plow  &  Hearth
(www.plowandhearth.com),   weather-themed   gifts   through   Wind   &   Weather
(www.windandweather.com), premium  chocolates  and  confections  from Fannie May

                                       6


Confections Brands,  (www.fanniemay.com and  www.harrylondon.com),  gourmet food
products  through   GreatFood.com   (www.greatfood.com),   premium  popcorn  and
specialty food products through The Popcorn Factory (www.thepopcornfactory.com),
exceptional baked cookies and baked gifts from Cheryl&Co. (www.cherylandco.com),
children's  gifts through its  HearthSong  (www.hearthsong.com)  and Magic Cabin
(www.magiccabin.com),    and   wine   gifts   from   The   Winetasting   Network
(www.ambrosiawine.com  and  www.winetasting.com)  web sites. Greater than 73% of
online revenues are derived from traffic coming directly to one of the Company's
Universal Resource Locators ("URL's").

The  Company's  web sites allow  customers  to easily  browse and  purchase  its
products,  promote brand loyalty and encourage  repeat purchases by providing an
inviting customer  experience.  The Company's web sites offer customers detailed
product information, complete with photographs,  personalized shopping services,
including  search  and  order  tracking,  contests,   sweepstakes,   gift-giving
suggestions  and  reminder   programs,   home  decorating  and  how-to-tips  and
information  about special  events and offers.  The Company has designed its web
sites to be fast,  secure and easy to use and allows customers to order products
with minimal effort.  The Company's web sites include the following key features
in addition to the variety of delivery and shipping  options (same day/next day)
and 24 hour/7 day customer service that are available to all its customers:


Technology Infrastructure

The Company  believes it has been and  continues to be a leader in  implementing
new  technologies  and systems to give its customers the best possible  shopping
experience,  whether online or over the telephone. Through the use of customized
software  applications,  the  Company  is able to  retrieve,  sort  and  analyze
customer  information  to enable it to better serve its customers and target its
product  offerings.  The Company's online and telephonic orders are fed directly
from the Company's  secure web sites,  or with the assistance of a gift advisor,
into a transaction  processing  system which captures the required  customer and
recipient  information.  The system  then  routes  the order to the  appropriate
Company  warehouse,  or for florist fulfilled or drop-shipped  items,  selects a
vendor  to  fulfill  the  customer's  order  and  electronically  transmits  the
necessary   information   using   BloomLink(R),    the   Company's   proprietary
communication system,  assuring timely delivery. In addition, the Company's gift
advisors have electronic access to this system, enabling them to assist in order
fulfillment and subsequently track other customer and/or order information.

In prior  years,  the  Company  has  invested  heavily  in  building  a scalable
technology  platform to support the Company's  order volume growth.  The Company
employs  a  combination  of  in-house   personnel  which   concentrate  on  core
competencies,  including  strategic  direction and system and project management
and  implementation.  However,  more  recently,  the Company  began  outsourcing
certain  of its  programming  and  support  services  in order to  achieve  cost
efficiencies,  allowing the Company to focus its resources on customer  specific
projects to ensure an enjoyable  shopping  experience  while providing  improved
operational flexibility, additional capacity and system redundancy.

The Company's technology  infrastructure,  primarily consisting of the Company's
web sites,  transaction  processing,  manufacturing  and  warehouse  management,
customer databases and  telecommunications  systems, is built and maintained for
reliability,  security,  scalability  and  flexibility.  To minimize the risk of
service interruptions from unexpected component or  telecommunications  failure,
maintenance  and  upgrades,  the  Company  has built  full  back-up  and  system
redundancies  into those  components of its systems that have been identified as
critical.  The Company  plans to continue  to invest in  technologies  that will
improve and expand its e-commerce and telecommunication capabilities and utilize
its informational technology expertise to improve the technology  infrastructure
of its  recently  acquired  businesses  to  accommodate  anticipated  growth and
improve their customers' shopping experiences.

Fulfillment and Manufacturing Operations

The Company's  customers  primarily place their orders either online or over the
telephone.  The  Company's  development  of a hybrid  fulfillment  system  which
enables the Company to offer same-day,  next-day and any-day delivery,  combines
the use of BloomNet  (comprised of independent  florists operating retail flower
shops and LFC's,  Company-owned  stores,  LFC's, and franchise stores), with the
Company-owned  distribution  centers and brand-name vendors who ship directly to
the Company's customers.  While providing a significant competitive advantage in

                                       7


terms of delivery options,  the Company's  fulfillment system also has the added
benefit  of  reducing  the  Company's  capital   investments  in  inventory  and
infrastructure.  All of the Company's products are backed by a 100% satisfaction
guarantee, and the Company's business is not dependent on any single third-party
supplier.

To ensure reliable and efficient  communication of online and telephonic  orders
to its  BloomNet  members and third party gift  vendors,  the Company  developed
BloomLink(R),  a proprietary  and secure  internet-based  communications  system
which is available to all BloomNet  members and  third-party  gift vendors.  The
Company  also has the  ability to arrange for  international  delivery of floral
products through independent wire services and direct relationships.

The  Company  intends  to  improve  its  fulfillment  capabilities  to make  its
operations more efficient by:

       o    strengthening relationships and increasing the number of its vendors
            and BloomNet member florists, as  appropriate, to ensure  geographic
            coverage and shorten delivery times;
       o    continuing to improve warehousing operations and  reduce fulfillment
            times in support of  its floral, gifts, gourmet food  and wines, and
            home product lines; and
       o    expanding the use of cross-dock logistics, and work with additional
            third  party  carriers to increase volume  capability and  utilizing
            cross  brand fulfillment capabilities to mitigate the impact of fuel
            cost increases.


Fulfillment of products is as follows:

Flowers and Plants.  A majority of the Company's  floral orders are fulfilled by
one of the  Company's  BloomNet  members,  allowing  the  Company to deliver its
floral products on a same-day or next-day basis to ensure  freshness and to meet
its customers' need for immediate  gifting.  In addition,  the Company is better
positioned to ensure  consistent  product quality and  presentation  and offer a
greater  variety of  arrangements,  which  creates a better  experience  for its
customers and gift recipients.  The Company selects retail florists for BloomNet
based upon the florist's design staff, facilities, quality of floral processing,
and delivery  capabilities and allocates orders to members within a geographical
area based on historical  performance of the florist in fulfilling  orders,  and
the  number  of  BloomNet  florists  currently  serving  the area.  The  Company
regularly monitors BloomNet florists' performance and adherence to the Company's
quality standards to ensure proper fulfillment.

The Company's  relationships with its BloomNet members are  non-exclusive.  Many
florists,  including  many BloomNet  florists,  also are members of other floral
fulfillment  organizations.  The BloomNet agreements generally are cancelable by
either party with ten days notification and do not guarantee any orders,  dollar
amounts or  exclusive  territories  from the Company to the  florist.  In fiscal
2001, the Company began entering into Order Fulfillment Agreements with selected
BloomNet  members to operate  LFC's in high  volume  markets to  facilitate  the
fulfillment of the Company's floral and gift orders,  improving the economics of
florist fulfilled  transactions,  and improving the Company's ability to control
product quality and branding.  In consideration  of the operator's  satisfactory
performance, the Company agrees to use reasonable efforts to forward orders with
a specified  minimum  merchandise  value during each year of the agreement.  The
Company has not granted an exclusive territory to any operator.

In  certain  instances,  the  Company is  required  to  fulfill  orders  through
non-BloomNet members, and transmits these orders to the fulfilling florist using
the communication system of an independent wire service or via telephone.

In addition to its florist designed product, the Company offers its customers an
alternative to florist  designed  products through its Fresh From Our Growers(R)
program,  and by providing  for a full array of products from bouquets to unique
floral celebrity expert designed products.

As of June 29, 2008, the Company operates 4 floral retail stores located in  New
York and 1  fulfillment  center.  In  addition,  the Company has 104  franchised
stores, located primarily in California, Colorado, Florida, New Jersey, New York
and Texas.  Company-owned stores serve as local points of fulfillment and enable
the Company to test new products and marketing programs.

Gourmet Foods and Gift Baskets.  In order to take advantage of improved margins,
better control  quality and to offer premium branded  signature  products in the

                                       8


Gourmet Food and Gift Baskets  product  category,  which was  identified  by the
Company as one of its fastest  growing and most  profitable  product lines,  the
Company  has  acquired  several  gourmet  food  retailers  with    manufacturing
operations.  The Company's  premium  chocolates are manufactured and distributed
from its  200,000  square  foot  production  facility  in Akron,  Ohio,  and the
Company's  cookie and baked gifts are  fulfilled  from its  176,000  square foot
baking and  distribution  center in Obetz,  Ohio,  while its premium popcorn and
related  snack  products  are shipped  from the  Company's  148,000  square foot
manufacturing  and distribution  center located in Lake Forest,  Illinois.  Most
wine gift and  fulfillment  services are provided  through the Company's  52,000
square  foot  fulfillment  center in Napa,  California  and 42,000  square  foot
fulfillment  center in Albany, New York. The remainder of the Company's wine and
wine-related  items are fulfilled by third-party gift vendors that ship products
directly to the  customer by next-day or other  delivery  options  chosen by the
customer.  In April 2008,  through the  acquisition of DesignPac  Gifts LLC, the
Company  significantly  improved  its  gift  basket  fulfillment   capabilities.
Initially,  DesignPac's  confection and fulfillment,  through its 249,000 square
foot  distribution  center  located in Melrose Park, IL, will focus on wholesale
operations.  During  fiscal  2009,  the  Company  will  begin  to  leverage  the
capabilities   of   DesignPac   to   enable   it   to   handle   its   expanding
direct-to-consumer demand.

Home  and  Children's  Gifts.  The  Company  packages  and  ships  its  home and
children's gift products  primarily from three  locations;  (i) a 300,000 square
foot  distribution  center located in Madison,  Virginia,  (ii) a 200,000 square
foot  distribution  center in  Vandalia,  Ohio and (iii) a 140,000  square  foot
distribution center in Reno, Nevada. A smaller portion of the Company's home and
children's items are shipped by third-party  product suppliers using next-day or
other delivery options selected by the customer.


Seasonality

The Company's quarterly results may experience seasonal fluctuations. Due to the
Company's expansion into non-floral products, the Thanksgiving through Christmas
holiday  season,  which  falls  within  the  Company's  second  fiscal  quarter,
generates the highest proportion of the Company's annual revenues.  In addition,
as the result of a number of major floral gifting occasions,  including Mother's
Day and  Administrative  Professionals  Week,  revenues  also  rise  during  the
Company's  fiscal fourth quarter.  Finally,  results during the Company's fiscal
first quarter are negatively impacted by the lack of major gift-giving holidays,
and the disproportionate amount of overhead incurred during this slow period.

Adjusting for its  most recent  acquisitions,  during fiscal 2009, the Company's
fiscal second quarter, its largest in terms of revenues,  is expected to account
for approximately 38-40% of sales, followed by its fiscal fourth quarter,  which
is expected to account for 23-25% of sales, including the shift in the timing of
the Easter  Holiday from Q3 during  fiscal 2008 to Q4 during  fiscal  2009.  The
Company's fiscal third quarter is expected to account for  approximately  21-23%
of sales,  also  adjusting  for the  timing  of the  Easter  Holiday,  while the
Company's fiscal first quarter is expected to account for  approximately  14-16%
of sales.

Accordingly,  a disproportionate amount of operating cash flows are generated in
the  Company's  fiscal  second  and  fourth  quarters.  In  preparation  for the
Company's second quarter holiday season, the Company significantly increases its
inventories, and therefore, corresponding cash requirements, which traditionally
have been financed by cash flows from  operations and bank lines of credit,  are
highest during the latter part of the Company's  fiscal first  quarter,  peaking
within its second  fiscal  quarter.  The  Company  has  historically  repaid all
revolving bank lines of credit with cash generated from operations, prior to the
end of the Company's fiscal second quarter.

Competition

The growing  popularity and convenience of e-commerce has continued to give rise
to established businesses on the Internet. In addition to selling their products
over the  Internet,  many of these  retailers  sell  their  products  through  a
combination of channels by maintaining a web site, a toll-free  phone number and
physical locations.  Additionally, several of these merchants offer an expanding
variety of products and some are  attracting an increasing  number of customers.
Certain mass  merchants  have  expanded  their  offerings  to include  competing
products and may continue to do so in the future. These mass merchants,  as well
as other potential competitors, may be able to:

                                       9

       o  undertake  more  extensive  marketing  campaigns for their  brands and
          services;
       o  adopt more aggressive pricing policies; and
       o  make more attractive offers  to potential  employees, distributors and
          retailers.

In addition,  the Company faces intense  competition  in each of its  individual
product  categories.  In the floral  industry,  there are various  providers  of
floral  products,  none of which is  dominant  in the  industry.  The  Company's
competitors include:

       o  retail  floral  shops,  some  of which  maintain  toll-free  telephone
          numbers and web sites;
       o  online floral retailers;
       o  catalog companies that offer floral products;
       o  floral telemarketers and wire services; and
       o  supermarkets,  mass  merchants  and specialty  retailers  with  floral
          departments.

Similarly,  the  plant,  gift  basket,  gourmet  foods and wine,  unique  gifts,
children's toys and home and garden categories are highly  competitive.  Each of
these categories  encompasses a wide range of products, is highly fragmented and
is served by a large number of companies, none of which is dominant. Products in
these  categories  may be  purchased  from a number of outlets,  including  mass
merchants,   telemarketers,   retail  specialty  shops,   online  retailers  and
mail-order catalogs.

The Company  believes the strength of its brands,  product  selection,  customer
relationships,  technology  infrastructure and fulfillment capabilities position
it to compete effectively against its current and potential  competitors in each
of its product categories. However, increased competition could result in:

       o  price reductions, decreased revenues and lower profit margins;
       o  loss of market share; and
       o  increased marketing expenditures.

These and other competitive  factors may adversely impact the Company's business
and results of operations.

Government Regulation and Legal Uncertainties

The  Internet  continues to evolve and there are laws and  regulations  directly
applicable to e-commerce. Legislatures are also considering an increasing number
of  laws  and  regulations  pertaining  to  the  Internet,  including  laws  and
regulations addressing:

       o  user privacy;
       o  pricing;
       o  content;
       o  connectivity;
       o  intellectual property;
       o  distribution;
       o  taxation;
       o  liabilities;
       o  antitrust; and
       o  characteristics and quality of products and services.

Further, the growth and development of the market for online services may prompt
more stringent  consumer  protection laws that may impose additional  burdens on
those companies  conducting business online. The adoption of any additional laws
or  regulations  may impair  the growth of the  Internet  or  commercial  online
services. This could decrease the demand for the Company's services and increase
its cost of doing  business.  Moreover,  the  applicability  to the  Internet of
existing  laws  regarding  issues  like  property  ownership,  taxes,  libel and
personal  privacy is uncertain.  Any new  legislation or regulation  that has an
adverse  impact  on the  Internet  or  the  application  of  existing  laws  and
regulations  to  the  Internet  could  have a  material  adverse  effect  on the
Company's business, financial condition and results of operations.

                                       10

States or foreign countries might attempt to regulate the Company's  business or
levy  additional  sales or other taxes relating to its  activities.  Because the
Company's  products and services are available over the Internet anywhere in the
world,  multiple  jurisdictions  may claim that the  Company is  required  to do
business as a foreign corporation in one or more of those jurisdictions. Failure
to qualify  as a foreign  corporation  in a  jurisdiction  where the  Company is
required  to do so could  subject it to taxes and  penalties.  States or foreign
governments may charge the Company with violations of local laws.

Intellectual Property and Proprietary Rights

The Company regards its service marks,  trademarks,  trade secrets, domain names
and similar  intellectual  property as critical to its success.  The Company has
applied for or received  trademark and/or service mark  registration  for, among
others, "1-800-FLOWERS.COM", "1-800-FLOWERS", "Plow & Hearth", "Wind & Weather",
"GreatFood.com",  "The Popcorn  Factory",  "TheGift.com",  "HearthSong",  "Magic
Cabin",  "Winetasting Network",  "Cheryl&Co.",  "Fannie May" and "Harry London".
The   Company   also  has   rights   to   numerous   domain   names,   including
www.1800flowers.com, www.800flowers.com, www.flowers.com, www.plowandhearth.com,
www.windandweather.com,       www.greatfood.com,      www.thepopcornfactory.com,
www.hearthsong.com,          www.magiccabin.com,           www.ambrosiawine.com,
www.winetasting.com, www.cherylandco.com, www.fanniemay.com, www.harrylondon.com
and  www.designpac.com.  In  addition,  the  Company has  developed  transaction
processing  and operating  systems as well as marketing  data,  and customer and
recipient information databases.

The Company  relies on trademark,  unfair  competition  and copyright law, trade
secret protection and contracts such as  confidentiality  and license agreements
with its  employees,  customers,  vendors and others to protect its  proprietary
rights. Despite the Company's precautions, it may be possible for competitors to
obtain and/or use the Company's proprietary information without authorization or
to develop  technologies  similar to the  Company's and  independently  create a
similarly functioning infrastructure. Furthermore, the protection of proprietary
rights in Internet-related  industries is uncertain and still evolving. The laws
of some foreign countries do not protect  proprietary  rights to the same extent
as do the laws of the United  States.  The  Company's  means of  protecting  its
proprietary rights in the United States or abroad may not be adequate.

The  Company  intends to  continue  to license  technology  from third  parties,
including Oracle, Microsoft, Verizon and AT&T, for its communications technology
and the software that underlies its business systems. The market is evolving and
the Company may need to license additional  technologies to remain  competitive.
The  Company  may not be able to  license  these  technologies  on  commercially
reasonable terms or at all.

Third  parties  have in the past  infringed  or  misappropriated  the  Company's
intellectual  property  or similar  proprietary  rights.  The  Company  believes
infringements and  misappropriations  will continue to occur in the future.  The
Company intends to police against  infringement and  misappropriation.  However,
the Company  cannot  guarantee  it will be able to enforce its rights and enjoin
the alleged infringers from their use of confusingly similar trademarks, service
marks, telephone numbers and domain names.

In addition,  third parties may assert  infringement claims against the Company.
The Company cannot be certain that its technologies or its products and services
do not infringe  valid  patents,  trademarks,  copyrights  or other  proprietary
rights held by third  parties.  The Company may be subject to legal  proceedings
and claims  from time to time  relating  to its  intellectual  property  and the
intellectual  property  of  others  in the  ordinary  course  of  its  business.
Intellectual  property  litigation  is expensive  and  time-consuming  and could
divert management resources away from running the Company's business.

Employees

As of June 29,  2008,  the Company had a total of  approximately  4,000 full and
part-time employees.  During peak periods, the Company  substantially  increases
the  number of  customer  service,  manufacturing  and  retail  and  fulfillment
personnel.   The  Company's  personnel  are  not  represented  under  collective
bargaining agreements and the Company considers its relations with its employees
to be good.

                                       11


Item 1A. Risk Factors

Cautionary Statements Under the Private Securities Litigation Reform Act of 1995

Our  disclosures  and analysis in this Form 10-K  contain  some  forward-looking
statements that set forth  anticipated  results based on management's  plans and
assumptions.  From time to time, we also provide  forward-looking  statements in
other  statements  we  release  to the  public  as well as oral  forward-looking
statements. Such statements give our current expectations or forecasts of future
events;  they do not relate  strictly to  historical or current  facts.  We have
tried,  wherever  possible,  to identify such  statements by using words such as
"anticipate,"  "estimate,"  "expect," "project," "intend," "plan,  "believe" and
similar  expressions in connection  with any  discussion of future  operating or
financial  performance.  In  particular,  these include  statements  relating to
future actions; the effectiveness of our marketing programs;  the performance of
our existing products and services;  our ability to attract and retain customers
and  expand  our  customer  base;  our  ability  to enter  into or renew  online
marketing agreements; our ability to respond to competitive pressures; expenses,
including  shipping  costs and the costs of  marketing  our  current  and future
products and services; the outcome of contingencies, including legal proceedings
in the normal course of business; and our ability to integrate acquisitions.

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 risk,  uncertainties and potentially
inaccurate   assumptions.   Should  known  or  unknown  risks  or  uncertainties
materialize,  or should underlying assumptions prove inaccurate,  actual results
could differ  materially from past results and those  anticipated,  estimated or
projected.  You  should  bear  this  in  mind as you  consider  forward  looking
statements.

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 10-Q and 8-K  reports  to the SEC.  Also note we  provide  the  following
cautionary   discussion  of  risks,   uncertainties   and  possibly   inaccurate
assumptions relevant to our business. These are factors that, individually or in
the aggregate, we think could cause our actual results to differ materially from
expected  and  historical  results.  We note  these  factors  for  investors  as
permitted by the Private  Securities  Litigation  Reform Act of 1995. You should
understand  that it is not  possible  to predict or identify  all such  factors.
Consequently,  you should not consider the following to be a complete discussion
of all potential risks and uncertainties.

The Company's operating results may fluctuate,  and this fluctuation could cause
financial results to be below expectations.  The Company's operating results may
fluctuate  from  period to period  for a number of  reasons.  In  budgeting  the
Company's  operating  expenses for the foreseeable  future,  the Company assumes
that revenues will continue to grow;  however,  some of the Company's  operating
expenses  are fixed in the  short  term.  Sales of the  Company's  products  are
seasonal,  concentrated in the fourth calendar quarter,  due to the Thanksgiving
and Christmas-time  holidays,  and the second calendar quarter,  due to Mother's
Day and Administrative  Professionals'  Week. In anticipation of increased sales
activity  during  these  periods,  the  Company  hires a  significant  number of
temporary  employees to supplement its permanent staff and the Company increases
its inventory levels. If revenues during these periods do not meet the Company's
expectations,  it may not generate  sufficient revenue to offset these increased
costs and its operating results may suffer.

The Company's  quarterly  operating results may significantly  fluctuate and you
should not rely on them as an  indication of its future  results.  The Company's
future revenues and results of operations may  significantly  fluctuate due to a
combination of factors,  many of which are outside of management's  control. The
most important of these factors include:

       o  seasonality;
       o  the retail economy;
       o  the timing and effectiveness of marketing programs;
       o  the timing of the introduction of new products and services;
       o  the  Company's ability  to find  and  maintain  reliable  sources  for
          certain of its products;

                                       12


       o  the timing and effectiveness of capital expenditures;
       o  the  Company's  ability  to  enter  into  or  renew  online  marketing
          agreements; and
       o  competition.

The Company may be unable to reduce operating  expenses quickly enough to offset
any  unexpected  revenue  shortfall.  If the Company has a shortfall  in revenue
without a corresponding reduction to its expenses, operating results may suffer.
The Company's operating results for any particular quarter may not be indicative
of  future  operating  results.  You  should  not  rely  on   quarter-to-quarter
comparisons  of results of operations  as an indication of the Company's  future
performance.  It is  possible  that  results  of  operations  may be  below  the
expectations  of public  market  analysts and  investors,  which could cause the
trading price of the Company's Class A common stock to fall.

Consumer  spending on flowers,  gifts and other products sold by the Company may
vary with general economic  conditions.  If general economic conditions continue
to  deteriorate  and  the  Company's  customers  have  less  disposable  income,
consumers may spend less on its products and its quarterly operating results may
suffer.

During peak periods,  the Company  utilizes  temporary  employees and outsourced
staff,  who may not be as  well-trained  or  committed  to its  customers as its
permanent  employees,  and if they fail to provide the Company's  customers with
high quality customer  service the customers may not return,  which could have a
material adverse effect on the Company's business,  financial condition, results
of  operations  and cash flows.  The  Company  depends on its  customer  service
department  to respond to its customers  should they have  questions or problems
with their  orders.  During peak  periods,  the Company  relies on its permanent
employees,  as well as temporary  employees and  outsourced  staff to respond to
customer inquiries.  These temporary employees and outsourced staff may not have
the same level of commitment to the Company's customers or be as well trained as
its permanent  employees.  If the Company's  customers are dissatisfied with the
quality of the customer service they receive, they may not shop with the Company
again,  which could have a material  adverse  effect on its business,  financial
condition, results of operations and cash flows.

If the Company's  customers do not find its expanded  product  lines  appealing,
revenues  may not grow and net  income  may  decrease.  The  Company's  business
historically  has focused on offering floral and  floral-related  gift products.
Although the Company has been successful in its expanded product lines including
plants, gift baskets, popcorn, gourmet food and wine, unique or specialty gifts,
home and garden  accessories,  and children's  gifts,  it expects to continue to
incur significant costs in marketing these products.  If the Company's customers
do not  continue  to find its  product  lines  appealing,  the  Company  may not
generate  sufficient  revenue to offset  its  related  costs and its  results of
operations may be negatively impacted.

If the Company fails to develop and maintain its brands,  it may not increase or
maintain its customer base or its revenues. The Company must continue to develop
and maintain the  1-800-FLOWERS.COM  brands to expand its customer  base and its
revenues.  In addition,  the Company has introduced and acquired other brands in
the past, and may continue to do so in the future. The Company believes that the
importance  of  brand  recognition  will  increase  as it  expands  its  product
offerings.  Many of the  Company's  customers  may not be aware of the Company's
non-floral  products.  If the Company fails to advertise and market its products
effectively,  it may not  succeed  in  establishing  its  brands  and  may  lose
customers leading to a reduction of revenues.

The Company's  success in promoting and enhancing the  1-800-FLOWERS.COM  brands
will also depend on its success in providing its customers high-quality products
and a high level of customer service. If the Company's customers do not perceive
its  products  and   services  to  be  of  high   quality,   the  value  of  the
1-800-FLOWERS.COM  brands would be diminished and the Company may lose customers
and its revenues may decline.

A failure to establish and maintain strategic online relationships that generate
a  significant  amount  of  traffic  could  limit the  growth  of the  Company's
business.  Although  the  Company  expects a  significant  portion of its online
customers  will continue to come  directly to its website,  it will also rely on
third party web sites, search engines and affililates with which the Company has
strategic  relationships  for traffic.  If these  third-parties do not attract a
significant number of visitors, the Company may not receive a significant number
of online  customers  from  these  relationships  and its  revenues  from  these

                                       13


relationships  may  decrease  or  remain  flat.  There  continues  to be  strong
competition  to  establish  or  maintain  relationships  with  leading  Internet
companies,   and  the  Company  may  not  successfully   enter  into  additional
relationships,  or renew existing ones beyond their current  terms.  The Company
may also be required to pay  significant  fees to maintain  and expand  existing
relationships.  The  Company's  online  revenues may suffer if it does not enter
into  new  relationships  or  maintain   existing   relationships  or  if  these
relationships do not result in traffic sufficient to justify their costs.

If local  florists and other  third-party  vendors do not fulfill  orders to the
Company's  customers'  satisfaction,  customers  may not shop  with the  Company
again.  In many cases,  floral  orders  placed by the  Company's  customers  are
fulfilled  by local  independent  florists,  a majority  of which are members of
BloomNet.  The  Company  does not  directly  control any of these  florists.  In
addition,  many of the non-floral  products sold by the Company are manufactured
and delivered to its customers by independent  third-party vendors. If customers
are dissatisfied  with the performance of the local florist or other third-party
vendors,  they may not utilize the Company's services when placing future orders
and its revenues may decrease.

If a florist  discontinues  its  relationship  with the Company,  the  Company's
customers  may  experience  delays in service or declines in quality and may not
shop with the  Company  again.  Many of the  Company's  arrangements  with local
florists for order  fulfillment  may be  terminated by either party with 10 days
notice. If a florist discontinues its relationship with the Company, the Company
will be required to obtain a suitable replacement located in the same geographic
area,  which may cause  delays in delivery  or a decline in quality,  leading to
customer dissatisfaction and loss of customers.

If a significant number of customers are not satisfied with their purchase,  the
Company will be required to incur substantial costs to issue refunds, credits or
replacement  products.  The Company  offers its  customers  a 100%  satisfaction
guarantee on its products. If customers are not satisfied with the products they
receive,  the Company will either  replace the product for the customer or issue
the customer a refund or credit.  The Company's  net income would  decrease if a
significant number of customers request replacement products, refunds or credits
and the Company is unable to pass such costs onto the supplier.

Increased  shipping costs and labor stoppages may adversely  affect sales of the
Company's  products.  Many of the Company's  products are delivered to customers
either directly from the manufacturer or from the Company's  fulfillment centers
located in  California,  Illinois,  New York,  Nevada,  Ohio and  Virginia.  The
Company has established relationships with Federal Express, UPS and other common
carriers for the delivery of these products.  If these carriers were to increase
the prices they charge to ship the Company's goods, and the Company passes these
increases on to its  customers,  its  customers  might choose to buy  comparable
products  locally to avoid  shipping  charges.  In addition,  these carriers may
experience labor stoppages,  which could impact the Company's ability to deliver
products on a timely basis to our customers  and  adversely  affect its customer
relationships.

If the Company fails to continuously improve its web site, it may not attract or
retain customers.  If potential or existing  customers do not find the Company's
web site a  convenient  place to shop,  the  Company  may not  attract or retain
customers  and its sales may suffer.  To encourage  the use of the Company's web
site, it must continuously  improve its accessibility,  content and ease of use.
Customer  traffic and the  Company's  business  would be  adversely  affected if
competitors'  web sites are perceived as easier to use or better able to satisfy
customer needs.

Competition in the floral, plant, gift basket,  gourmet food and wine, specialty
gift,  children's toys and games and home and garden industries is intense and a
failure to respond to competitive pressure could result in lost revenues.  There
are many  companies  that  offer  products  in these  categories.  In the floral
category, the Company's competitors include:

       o  retail  floral shops,  some  of  which  maintain  toll-free  telephone
          numbers, and web sites;
       o  online floral retailers;
       o  catalog companies that offer floral products;
       o  floral telemarketers and wire services; and
       o  supermarkets, mass  merchants and specialty gift retailers with floral
          departments.

                                       14

Similarly,  the plant, gift basket, gourmet food, cookie, candy, wine, specialty
gift,  children's  toys and home and garden  categories are highly  competitive.
Each of these  categories  encompasses  a wide range of  products  and is highly
fragmented.  Products  in these  categories  may be  purchased  from a number of
outlets, including mass merchants, retail shops, online retailers and mail-order
catalogs.

Competition  is  intense  and the  Company  expects  it to  increase.  Increased
competition could result in:

       o        price reductions, decreased revenue and lower profit margins;
       o        loss of market share; and
       o        increased marketing expenditures.

These and other  competitive  factors could  materially and adversely affect the
Company's results of operations.


If the Company does not accurately predict customer demand for its products,  it
may lose customers or experience  increased  costs. In the past, the Company did
not need to  maintain a  significant  inventory  of  products.  However,  as the
Company expands the volume of non-floral products offered to its customers,  the
Company will be required to increase inventory levels and the number of products
maintained in its warehouses.  If the Company overestimates  customer demand for
its products, excess inventory and outdated merchandise could accumulate,  tying
up working capital and potentially  resulting in reduced warehouse  capacity and
inventory  losses  due  to  damage,  theft  and  obsolescence.  If  the  Company
underestimates  customer demand, it may disappoint customers who may turn to its
competitors.  Moreover,  the strength of the  1-800-FLOWERS.COM  brands could be
diminished due to misjudgments in merchandise selection.

If the supply of flowers for sale becomes  limited,  the price of flowers  could
rise or flowers may be unavailable and the Company's  revenues and gross margins
could  decline.  A variety of factors affect the supply of flowers in the United
States and the price of the Company's floral products.  If the supply of flowers
available for sale is limited due to weather conditions, farm closures, economic
conditions,  or other factors, prices for flowers could rise and customer demand
for the Company's  floral  products may be reduced,  causing  revenues and gross
margins to  decline.  Alternatively,  the Company may not be able to obtain high
quality  flowers  in an  amount  sufficient  to meet  customer  demand.  Even if
available,  flowers from alternative sources may be of lesser quality and/or may
be more expensive than those currently offered by the Company.

Most of the  flowers  sold in the United  States  are grown by  farmers  located
abroad, primarily in Colombia, Ecuador and Holland, and the Company expects that
this will continue in the future. The availability and price of flowers could be
affected by a number of factors affecting these regions, including:

       o  import duties and quotas;
       o  agricultural limitations and restrictions to manage pests and disease;
       o  changes in trading status;
       o  economic uncertainties and currency fluctuations;
       o  severe weather;
       o  work stoppages;
       o  foreign government regulations and political unrest; and
       o  trade restrictions, including United States retaliation against
          foreign trade practices.

The Company's franchisees may damage its brands or increase its costs by failing
to  comply  with  its  franchise  agreements  or its  operating  standards.  The
Company's  franchise  business is governed  by its  Uniform  Franchise  Offering
Circulars,  franchise  agreements and applicable franchise law. If the Company's
franchisees do not comply with its established  operating standards or the terms
of the franchise agreements,  the  1-800-FLOWERS.COM  brands may be damaged. The
Company may incur significant  additional costs,  including  time-consuming  and
expensive  litigation,  to enforce its rights  under the  franchise  agreements.
Additionally,  the Company is the primary  tenant on certain  leases,  which the
franchisees  sublease  from  the  Company.  If a  franchisee  fails  to meet its
obligations  as subtenant,  the Company could incur  significant  costs to avoid
default under the primary lease. Furthermore,  as a franchiser,  the Company has
obligations to its franchisees. Franchisees may challenge the performance of the

                                       15

Company's  obligations under the franchise agreements and subject it to costs in
defending  these claims and, if the claims are  successful,  costs in connection
with their compliance.

If third parties  acquire rights to use similar domain names or phone numbers or
if the  Company  loses the right to use its phone  numbers,  its  brands  may be
damaged  and it may lose  sales.  The  Company's  Internet  domain  names are an
important  aspect of its  brand  recognition.  The  Company  cannot  practically
acquire rights to all domain names similar to www.1800flowers.com,  or its other
brands,  whether under existing top level domains or those issued in the future.
If third parties obtain rights to similar domain names,  these third parties may
confuse the Company's  customers and cause its customers to inadvertently  place
orders with these  third  parties,  which  could  result in lost sales and could
damage its brands.

Likewise,  the phone  number  that  spells  1-800-FLOWERS  is  important  to the
Company's  brand and its  business.  While the Company has obtained the right to
use the phone numbers 1-800-FLOWERS, 1-888-FLOWERS and 1-877-FLOWERS, as well as
common toll-free "FLOWERS" misdials,  it may not be able to obtain rights to use
the FLOWERS phone number as new toll-free  prefixes are issued, or the rights to
all similar and potentially confusing numbers. If third parties obtain the phone
number  which spells  "FLOWERS"  with a different  prefix or a toll-free  number
similar to FLOWERS,  these parties may also confuse the Company's  customers and
cause  lost  sales  and  potential  damage to its  brands.  In  addition,  under
applicable  FCC rules,  ownership  rights to phone  numbers  cannot be acquired.
Accordingly,  the FCC may  rescind the  Company's  right to use any of its phone
numbers, including 1-800-FLOWERS (1-800-356-9377).

A lack of security  over the  Internet may cause  Internet  usage to decline and
cause the Company to expend  capital and resources to protect  against  security
breaches.  A significant  barrier to  electronic  commerce over the Internet has
been  the  need  for  secure   transmission  of  confidential   information  and
transaction  information.  Internet  usage could decline if any  well-publicized
compromise of security occurred. Additionally,  computer "viruses" may cause the
Company's  systems to incur delays or experience  other  service  interruptions.
Such  interruptions  may materially  impact the Company's ability to operate its
business.  If a  computer  virus  affecting  the  Internet  in general is highly
publicized or  particularly  damaging,  the Company's  customers may not use the
Internet  or may be  prevented  from  using the  Internet,  which  would have an
adverse  effect on its  revenues.  As a result,  the  Company may be required to
expend capital and resources to protect against or to alleviate these problems.

The Company's business could be injured by significant credit card or debit card
fraud.  Customers typically pay for their on-line or telephone orders with debit
or credit cards.  The Company's  revenues and gross margins could decrease if it
experienced  significant credit card or debit card fraud.  Failure to adequately
detect and avoid fraudulent credit card or debit card  transactions  could cause
the Company to lose its ability to accept  credit  cards or debit cards as forms
of payment  and result in  charge-backs  of the  fraudulently  charged  amounts.
Furthermore, widespread credit card or debit card fraud may lessen the Company's
customers'  willingness to purchase  products through the Company's web sites or
toll-free telephone numbers. For this reason, such failure could have a material
adverse  effect on the  Company's  business,  financial  condition,  results  of
operations and cash flows.

Unexpected system  interruptions caused by system failures may result in reduced
revenues and harm to the Company's brand. In the past,  particularly during peak
holiday periods, the Company has experienced significant increases in traffic on
its web  site and in its  toll-free  customer  service  centers.  The  Company's
operations   are   dependent  on  its  ability  to  maintain  its  computer  and
telecommunications systems in effective working order and to protect its systems
against  damage from fire,  natural  disaster,  power  loss,  telecommunications
failure or similar  events.  The Company's  systems have in the past, and may in
the future, experience:

       o        system interruptions;
       o        long response times; and
       o        degradation in service.

The Company's business depends on customers making purchases on its systems. Its
revenues  may  decrease  and its  reputation  could be harmed if it  experiences
frequent or long system delays or interruptions or if a disruption occurs during
a peak holiday season.

                                       16


If AT&T and Verizon do not adequately  maintain the Company's telephone service,
the Company may experience  system  failures and its revenues may decrease.  The
Company is  dependent on AT&T and Verizon to provide  telephone  services to its
customer   service   centers.   Although   the   Company   maintains   redundant
telecommunications  systems,  if AT&T and Verizon  experience system failures or
fail to adequately  maintain the Company's  systems,  the Company may experience
interruptions  and its customers might not continue to utilize its services.  If
the Company loses its telephone service,  it will be unable to generate revenue.
The  Company's  future  success  depends  upon these  third-party  relationships
because it does not have the resources to maintain its telephone service without
these or other third parties. Failure to maintain these relationships or replace
them on  financially  attractive  terms may disrupt the Company's  operations or
require it to incur significant unanticipated costs.

Interruptions  in Teleflora's Dove System or a reduction in the Company's access
to  this   system  may   disrupt   order   fulfillment   and   create   customer
dissatisfaction.  A minimal  portion  of the  Company's  customers'  orders  are
communicated to the fulfilling florist through a third party system. This system
is an order processing and messaging network used to facilitate the transmission
of floral orders between florists.  If this system experiences  interruptions in
the future, the Company could experience  difficulties in fulfilling some of its
customers'  orders  and  those  customers  might not  continue  to shop with the
Company.

The Company's operating results may suffer due to economic, political and social
unrest or disturbances. Like other American businesses, the Company is unable to
predict what  long-term  effect acts of  terrorism,  war, or similar  unforeseen
events  may have on its  business.  The  Company's  results  of  operations  and
financial condition could be adversely impacted if such events cause an economic
slowdown in the United  States,  or other  negative  effects  that cannot now be
anticipated.

If the  Company is unable to hire and retain key  personnel,  its  business  may
suffer.  The Company's  success is dependent on its ability to hire,  retain and
motivate  highly  qualified  personnel.  In  particular,  the Company's  success
depends on the continued  efforts of its Chairman and Chief  Executive  Officer,
James F. McCann, and its President, Christopher G. McCann, as well as its senior
management team which help manage its business.  The loss of the services of any
of the  Company's  executive  management  or key  personnel or its  inability to
attract  qualified  additional  personnel could cause its business to suffer and
force it to expend  time and  resources  in  locating  and  training  additional
personnel.

Many  governmental  regulations may impact the Internet,  which could affect the
Company's  ability  to  conduct  business.  Any  new law or  regulation,  or the
application or  interpretation  of existing laws, may decrease the growth in the
use of the Internet or the Company's web site. The Company expects there will be
an increasing  number of laws and regulations  pertaining to the Internet in the
United States and throughout the world.  These laws or regulations may relate to
liability for information received from or transmitted over the Internet, online
content regulation,  user privacy, taxation and quality of products and services
sold over the Internet.  Moreover, the applicability to the Internet of existing
laws governing  intellectual  property  ownership and  infringement,  copyright,
trademark,  trade secret,  obscenity,  libel,  employment,  personal privacy and
other issues is uncertain and developing. This could decrease the demand for the
Company's  products,  increase  its  costs or  otherwise  adversely  affect  its
business.

Regulations  imposed by the Federal Trade  Commission  may adversely  affect the
growth of the Company's Internet business or its marketing efforts.  The Federal
Trade  Commission has proposed  regulations  regarding the collection and use of
personal  identifying  information  obtained from individuals when accessing web
sites,  with  particular  emphasis on access by minors.  These  regulations  may
include  requirements  that the Company  establish  procedures  to disclose  and
notify users of privacy and  security  policies,  obtain  consent from users for
collection and use of information  and provide users with the ability to access,
correct and delete personal information stored by the Company. These regulations
may also  include  enforcement  and redress  provisions.  Moreover,  even in the
absence  of  those   regulations,   the  Federal  Trade   Commission  has  begun
investigations  into the  privacy  practices  of other  companies  that  collect
information  on the Internet.  One  investigation  resulted in a consent  decree
under which an Internet  company  agreed to establish  programs to implement the
principles   noted  above.   The  Company  may  become  a  party  to  a  similar
investigation,  or the Federal Trade  Commission's  regulatory  and  enforcement
efforts, or those of other governmental bodies, may adversely affect its ability
to  collect  demographic  and  personal  information  from  users,  which  could
adversely affect its marketing efforts.

                                       17

Unauthorized  use of the  Company's  intellectual  property by third parties may
damage its brands.  Unauthorized use of the Company's  intellectual  property by
third parties may damage its brands and its  reputation and may likely result in
a loss of customers.  It may be possible for third parties to obtain and use the
Company's intellectual property without authorization. Third parties have in the
past infringed or misappropriated the Company's intellectual property or similar
proprietary  rights.  The Company believes  infringements and  misappropriations
will continue to occur in the future. Furthermore, the validity,  enforceability
and scope of protection of intellectual property in Internet-related  industries
is uncertain and still evolving. The Company has been unable to register certain
of its intellectual property in some foreign countries and furthermore, the laws
of some foreign countries are uncertain or do not protect intellectual  property
rights to the same extent as do the laws of the United States.

Defending against intellectual  property  infringement claims could be expensive
and,  if the  Company is not  successful,  could  disrupt its ability to conduct
business.  The Company has been unable to register  certain of its  intellectual
property   in   some   foreign   countries,   including,    "1-800-Flowers.com",
"1-800-Flowers" and "800-Flowers". The Company cannot be certain that any of its
intellectual  property and the products it sells, or services it offers,  do not
or will not infringe valid patents, trademarks, copyrights or other intellectual
property  rights  held by third  parties.  The  Company  may be a party to legal
proceedings and claims relating to the intellectual property of others from time
to  time  in the  ordinary  course  of  its  business.  The  Company  may  incur
substantial expense in defending against these third-party  infringement claims,
regardless of their merit.  Successful  infringement  claims against the Company
may result in  substantial  monetary  liability  or may  materially  disrupt its
ability to conduct business.

The  Company  may lose  sales or incur  significant  expenses  should  states be
successful  in imposing  broader  guidelines  to state  sales and use taxes.  In
addition to the Company's retail store operations, the Company collects sales or
other  similar  taxes in  states  where  the  Company's  ecommerce  channel  has
applicable nexus. Our customer service and fulfillment networks, and any further
expansion of those networks,  along with other aspects of our evolving business,
may result in additional sales and use tax obligations.  A successful  assertion
by one or more states that we should collect sales or other taxes on the sale of
merchandise could result in substantial tax liabilities for past sales, decrease
our  ability to compete  with  traditional  retailers,  and  otherwise  harm our
business.

Currently,  decisions  of the U.S.  Supreme  Court  restrict the  imposition  of
obligations to collect state and local sales and use taxes with respect to sales
made  over the  Internet.  However,  a  number  of  states,  as well as the U.S.
Congress,  have been considering and/or  implementing  various  initiatives that
could limit or supersede the Supreme  Court's  position  regarding sales and use
taxes on  Internet  sales.  If any of these  initiatives  addressed  the Supreme
Court's  constitutional  concerns  and  resulted  in a reversal  of its  current
position,  we could be required to collect  additional  sales and use taxes. The
imposition  by state  and local  governments  of  various  taxes  upon  Internet
commerce  could  create  administrative  burdens for us and could  decrease  our
future sales.

A failure to integrate  our  acquisitions  may cause the results of the acquired
company  as well as the  results  of the  Company to suffer .  The  Company  has
opportunistically  acquired a number of companies  over the past several  years.
Additionally the Company may look to acquire additional companies in the future.
As  part  of the  acquisition  process,  the  Company  embarks  upon  a  project
management  effort to integrate the acquisition onto our information  technology
systems and management  processes.  If we are  unsuccessful  in integrating  our
acquisitions, the results of our acquisitions may suffer, management may have to
divert valuable  resources to oversee and manage the  acquisitions,  the Company
may have to expend  additional  investments  in the acquired  company to upgrade
personnel and/or  information  technology systems and the results of the Company
may suffer.

Product liability claims may subject the Company to increased costs.  Several of
the products the Company sells, including perishable food and alcoholic beverage
products,  home and garden products, or children's toys may expose it to product
liability  claims in the event  that the use or  consumption  of these  products
results in personal  injury or  property  damage.  Although  the Company has not
experienced any material losses due to product  liability claims to date, it may
be a party to product liability claims in the future and incur significant costs
in their defense.  Product  liability  claims often create  negative  publicity,
which could materially damage the Company's reputation and its brands.  Although
the Company maintains  insurance against product liability claims,  its coverage
may be inadequate to cover any liabilities it may incur.

                                       18

The wine industry is subject to governmental regulation.  The alcoholic beverage
industry is subject to extensive specialized  regulation under state and federal
laws and regulations, including the following matters: licensing; the payment of
excise taxes; advertising,  trade and pricing practices; product labeling; sales
to minors and intoxicated persons; changes in officers, directors,  ownership or
control; and, relationships among product producers, importers,  wholesalers and
retailers. While the Company believes that it is in material compliance with all
applicable laws and regulations,  in the event that it should be determined that
the Company is not in compliance with any applicable  laws or  regulations,  the
Company could become subject to cease and desist orders, injunctive proceedings,
civil fines, license revocations and other penalties which could have a material
adverse effect on the Company's business and its results of operations.

In addition, the alcoholic beverage industry is subject to potential legislation
and  regulation  on a  continuous  basis  including  in such areas as direct and
Internet  sales of alcohol.  Certain  states still  prohibit the sale of alcohol
into their jurisdictions from out of state wineries and/or retailers.  There can
be no assurance  that new or revised laws or  regulations,  increased  licensing
fees,  specialized  taxes  or  other  regulatory  requirements  will  not have a
material adverse effect on the Company's business and its results of operations.
While,  to date,  the  Company  has been  able to  obtain  and  retain  licenses
necessary  to sell wine at retail,  the failure to obtain  renewals or otherwise
retain such licenses in one or more of the states in which the Company  operates
would have a material  adverse effect on the Company's  business and its results
of  operations.  The Company's  growth  strategy for its wine business  includes
expansion into additional  states;  however,  there can be no assurance that the
Company will be successful in obtaining the required  permits or licenses in any
additional  states.  From time to time,  the Company may introduce new marketing
initiatives,  which may be expected to undergo regulatory scrutiny. There can be
no assurance that such initiatives will not be stymied by regulatory criticism.

The Company is dependent on common carriers to deliver its wine  shipments.  The
company uses UPS and FedEx to deliver its wine  shipments.  If UPS or FedEx were
to terminate delivery services for alcoholic  beverages in certain states, as it
did in 1999 in Florida,  Nevada and Connecticut,  the Company would likely incur
significantly higher shipping rates that would have a material adverse effect on
the Company's business and its results of operations.  If any state prohibits or
limits intrastate shipping of alcoholic  beverages by third party couriers,  the
Company would likely incur significantly higher shipping rates that would have a
material adverse effect on the Company's business and its results of operations.

There are various health issues regarding wine consumption.  Since 1989, federal
law has required  health-warning labels on all alcoholic beverages.  Although an
increasing  number of research  studies  suggest that health benefits may result
from the  moderate  consumption  of wine,  these  suggestions  have been  widely
challenged  and a number of groups  advocate  increased  governmental  action to
restrict  consumption  of  alcoholic  beverages.  Restrictions  on the  sale and
consumption  of wine or  increases  in the taxes  imposed on wine in response to
concerns  regarding  health  issues  may have a material  adverse  effect on the
Company's business and operating  results.  There can be no assurance that there
will not be legal or regulatory  challenges to the industry as a whole,  and any
such legal or  regulatory  challenge may have a material  adverse  effect on the
Company's business and results of operations.

The price at which the  Company's  Class A common stock will trade may be highly
volatile and may fluctuate substantially. The stock market has from time to time
experienced  price and volume  fluctuations that have affected the market prices
of securities, particularly securities of companies with Internet operations. As
a result, investors may experience a material decline in the market price of the
Company's  Class  A  common  stock,   regardless  of  the  Company's   operating
performance. In the past, following periods of volatility in the market price of
a particular company's securities,  securities class action litigation has often
been brought against that company.  The Company may become involved in this type
of  litigation  in the future.  Litigation  of this type is often  expensive and
diverts  management's  attention and resources and could have a material adverse
effect on the Company's business and its results of operations.


Additional Information

The  Company's  internet  address  is  www.1800flowers.com.  We make  available,
through   the   investor    relations    tab   located   on   our   website   at

                                       19


www.1800flowers.com, access to our annual report on Form 10-K, quarterly reports
on Form 10-Q,  current  reports on Form 8-K and any  amendments to those reports
filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange
Act of 1934 as soon as  reasonably  practicable  after  they are  electronically
filed with or furnished to the  Securities  and  Exchange  Commission.  All such
filings on our investor  relations  website are available  free of charge.  (The
information posted on the Company's website is not incorporated into this Annual
Report of Form  10-K.)

A  copy of this  annual  report on Form 10-K is  available
without charge upon written request to: Investor  Relations,  1-800-FLOWERS.COM,
Inc., One Old Country Road,  Suite 500, Carle Place, NY 11514. In addition,  the
SEC maintains a website  (http://www.sec.gov)  that contains reports,  proxy and
information  statements,  and  other  information  regarding  issuers  that file
electronically with the SEC.

Item 1B. Unresolved Staff Comments

We have received no written  comments  regarding our current or periodic reports
from the staff of the SEC that were issued 180 days or more preceding the end of
our fiscal year ended June 29, 2008 that remain unresolved.

                                       20

Item 2.  PROPERTIES

                                                                                                  
                                                                                                        Square
Location                Type                 Principal Use                                             Footage        Ownership
----------------------- -------------------- ------------------------------------------------ ------------------ ----------------
                        Office and           Distribution, administrative and customer
Napa, CA                warehouse            service                                                     68,000        leased
Chicago, IL             Office               Administrative and customer service                         18,000        leased
Lake Forest, IL         Office, plant and    Manufacturing, distribution and administrative
                        warehouse                                                                       148,000        leased
                        Office and
Melrose Park, IL        warehouse            Distribution, administrative and customer                  249,000        leased
                                             service
Reno, NV                Warehouse            Distribution                                               140,000        leased
Alamogordo, NM          Office               Customer service                                            23,000         owned
Albany, NY              Warehouse            Distribution                                                42,000        leased
Carle Place, NY         Office               Headquarters and customer service                           92,000        leased
Akron, OH               Office, plant and    Manufacturing, distribution and administrative
                        warehouse                                                                       200,000        leased
Bethpage, NY            Warehouse            Distribution                                                44,000        leased
Obetz, OH               Warehouse            Distribution                                               176,000        leased
Vandalia, OH            Warehouse            Distribution                                               200,000         owned
                        Office and
Westerville, OH         warehouse            Distribution and customer service                           21,000        leased
Westerville, OH         Office, plant and    Manufacturing, distribution and administrative
                        warehouse                                                                        44,000         owned
Ardmore, OK (*)         Office               Customer service                                            24,000        leased
                        Office and
Madison, VA             warehouse            Distribution, administrative and customer                  300,000         owned
                                             service


(*)   Facility was closed during July 2008.
(**)  In July 2008, the  Company  acquired  selected assets  of Napco  Marketing
      Corp. (Napco), a wholesale merchandiser and  marketer of products designed
      primarily  for the floral  industry. The purchase  price  of approximately
      $9.5   million  included  the  acquisition  of  a   180,000   square  foot
      administrative and fulfillment center located in Jacksonville, FL.

In addition to the above properties,  the Company leases  approximately  315,000
square feet for owned or franchised retail stores and local fulfillment  centers
with  lease  terms  typically  ranging  from 5 to 20 years.  Some of its  leases
provide for a minimum rent plus a percentage rent based upon sales after certain
minimum thresholds are achieved. The leases generally require the Company to pay
insurance,  utilities, real estate taxes and repair and maintenance expenses. In
general,  our  properties are well  maintained,  adequate and suitable for their
purposes.

Item 3.  LEGAL PROCEEDINGS

There are various claims,  lawsuits, and pending actions against the Company and
its subsidiaries incident to the operations of its businesses. It is the opinion
of management,  after consultation with counsel, that the ultimate resolution of
such  claims,  lawsuits  and pending  actions  will not have a material  adverse
effect on the Company's consolidated  financial position,  results of operations
or liquidity.

In the  Company's  Form 10Q for the quarterly  period ended March 30, 2008,  the
Company  disclosed  that  in  October  2007,  1-800-Flowers.Com.,  Inc.  and its
subsidiary,  1-800-Flowers  Retail,  Inc.,  (collectively  "the Company"),  were
served with a purported  nationwide  class  action  lawsuit  filed in the United
States District Court, in and for the Southern  District of Florida  (Grabein v.
1-800-Flowers.Com.,  Inc.,  et al; Case No.  07-22235).  The  Complaint  alleged
violation of the Federal  Fair and Accurate  Credit  Transaction  Act  ("FACTA")
based  upon  the  allegation  that  the  Company  printed/provided  receipts  to
consumers at the point of sale or transaction  on which  receipts  appeared more
than the last five digits of customers'  credit or debit card numbers and/or the
expiration dates of such cards. The Complaint did not specify any actual damages
for any member of the purported class.  However,  the Complaint sought statutory
damages of $100 to $1,000 for each alleged willful violation of the statute,  as
well as,  attorneys' fees, costs,  punitive damages and a permanent  injunction.
The Company  vigorously  defended the action and on June 13, 2008, the presiding
Judge  issued a Final Order of  Dismissal  whereby the case was  dismissed  with
prejudice and no payment of any kind was made by the Company or its  subsidiary.

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters  were  submitted to a vote of our  security  holders  during the last
quarter of our fiscal year ended June 29, 2008.

                                       21


EXECUTIVE OFFICERS OF THE REGISTRANT

The following individuals were serving as executive officers of the Company and
certain of its subsidiaries on September 4, 2008:


                                                                 

Name                                              Age       Position with the Company
------------------------------------------------ ------    ----------------------------------------------------------

James F. McCann...........................          57       Chairman of the Board and Chief Executive Officer

Christopher G. McCann.....................          47       Director and President

Gerard M. Gallagher.......................          55       Senior Vice President of Business Affairs,
                                                             General Counsel, and Corporate Secretary

Thomas G. Hartnett........................          45       Chief Operating Officer of Consumer Floral

Tim Hopkins...............................          54       President of Madison Brands

Stephen J. Bozzo..........................          53       Senior Vice President and Chief Information Officer

William E. Shea...........................          49       Senior Vice President, Treasurer, and
                                                             Chief Financial Officer

David Taiclet.............................          45       Chief Executive Officer - Fannie May Confection Brands, Inc.



James F.  McCann has  served as the  Company's  Chairman  of the Board and Chief
Executive  Officer since  inception.  Mr. McCann has been in the floral industry
since  1976  when he  began a  retail  chain  of  flower  shops  in the New York
metropolitan  area.  Mr.  McCann  is a  member  of the  board  of  directors  of
Lottomatica S.p.A and Willis Holdings Group.  James F. McCann is  the brother of
Christopher G. McCann, a Director and the President of the Company.

Christopher G. McCann has been the Company's  President since September 2000 and
prior to that had served as the Company's Senior Vice President.  Mr. McCann has
been a Director of the Company since  inception.  Mr. McCann serves on the board
of directors of Bluefly, Inc. and is a member of the Board of Trustees of Marist
College.  Christopher G. McCann is the brother of James F. McCann, the Company's
Chairman of the Board and Chief Executive Officer.

Gerard M.  Gallagher  has been our Senior Vice  President,  General  Counsel and
Corporate  Secretary  since August 1999 and has been providing legal services to
the Company  since its  inception.  Mr.  Gallagher is the founder and a managing
partner  in the law firm  Gallagher,  Walker,  Bianco  and  Plastaras,  based in
Mineola,  New York,  specializing  in  corporate,  litigation  and  intellectual
property  matters since 1993. Mr.  Gallagher is duly admitted to practice before
the New York  State  Courts and the United  States  District  Courts of both the
Eastern District and Southern District of New York.

Thomas G.  Hartnett has been Chief  Operating  Officer of the  1-800-Flowers.com
Consumer  Floral  brand  since July 2006.  Before  holding  this  position,  Mr.
Hartnett held various  positions within the Company since joining the Company in
1991,  including  Senior Vice President of Retail and  Fulfillment,  Controller,
Director of Store  Operations,  Vice  President  of Retail  Operations  and Vice
President of Strategic Development.

Timothy J.  Hopkins has been  President  of the Madison  Brands  division  since
January 2007 and prior to that served as  President  of  Specialty  Brands since
joining the Company in March 2005.  Immediately before joining the Company,  Mr.
Hopkins  consulted for various retail companies after serving as Chief Executive
Officer and Director of Sur La Table,  Inc., a multi-channel  upscale  specialty
retailer of gourmet  culinary and serveware  products where he was employed from

                                       22


2001-2004. From 2000-2001 he was the CEO at LeGourmet Chef, a specialty retailer
of  housewares  and  from  1995-2000,  Mr.  Hopkins  was  President,   Corporate
Merchandising  and Logistics  Worldwide for BORDERS Group,  Inc, a multi-channel
retailer of books and  multi-media.  Before this position Mr. Hopkins held other
senior level positions in the multi-channel retailing sector.

Stephen J. Bozzo has been our Chief Information Officer since May 2007. Prior to
joining the  Company,  Mr.  Bozzo  served as Chief  Information  Officer for the
International  Division of MetLife  Insurance  Company since 2001.  Mr.  Bozzo's
business  background includes senior executive positions at Bear Stearns Inc. as
Managing Director Principal, AIG as Senior Vice President Telecommunications and
Technical  Services and Chase Manhattan Bank, where he was Senior Vice President
Global Telecommunications.

David Taiclet has been our Chief Executive Officer of the Fannie May Confections
Brands since April 2006, upon our acquisition of the company.  Prior thereto and
commencing  in January  1995,  Mr.  Taiclet was a Co-Founder  of a business that
ultimately became known as Fannie May Confections  Brands, Inc. (formerly Alpine
Confections,  Inc.), a multi-branded and multi-channel  retailer,  manufacturer,
and distributor of confectionery  and specialty food products.  From May 1991 to
January  1995,  Mr.  Taiclet  served in a variety of management  positions  with
Cargill,  Inc. including the Strategy and Business  Development Group.  Cargill,
Inc. is an international marketer,  processor and distributor of food, financial
and  industrial  products.  Mr. Taiclet also served four years of active duty in
the U.S. Army, attaining the rank of Captain.

William E. Shea has been our Senior Vice President of Finance and Administration
and Chief Financial  Officer since  September  2000.  Before holding his current
position,  Mr. Shea was our Vice  President of Finance and Corporate  Controller
after  joining us in April  1996.  From 1980 until  joining  us, Mr.  Shea was a
certified public accountant with Ernst & Young LLP.











                                       23



                                     PART II

Item 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
         AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

1-800-FLOWERS.COM's Class A common stock trades on The Nasdaq Stock Market under
the ticker symbol "FLWS." There is no established  public trading market for the
Company's Class B common stock. The following table sets forth the reported high
and low sales  prices  for the  Company's  Class A common  stock for each of the
fiscal quarters during the fiscal years ended June 29, 2008 and July 1, 2007.

                                                                                    

                                                                            High            Low
                                                                       -------------- --------------
     Year ended June 29, 2008

        July 2, 2007 - September 30, 2007                                  $ 12.38       $ 8.47

        October 1, 2007 - December 30, 2007                                $ 13.42       $ 8.66

        December 31, 2007 - March 30, 2008                                 $  9.00       $ 6.35

        March 31, 2008 - June 29, 2008                                     $  9.26       $ 6.51

     Year ended July 1, 2007

        July 3, 2006 - October 1, 2006                                     $  6.10       $ 4.33

        October 2, 2006 - December 31, 2006                                $  6.35       $ 4.94

        January 1, 2007 - April 1, 2007                                    $  8.00       $ 5.84

        April 2, 2007 - July 1, 2007                                       $  9.47       $ 7.66



Rights of Common Stock

Holders of Class A common stock generally have the same rights as the holders of
Class B common stock,  except that holders of Class A common stock have one vote
per share and  holders  of Class B common  stock  have 10 votes per share on all
matters  submitted to the vote of stockholders.  Holders of Class A common stock
and  Class B common  stock  generally  vote  together  as a single  class on all
matters presented to the stockholders for their vote or approval,  except as may
be required by Delaware law.  Class B common stock may be converted into Class A
common stock at any time on a  one-for-one  share  basis.  Each share of Class B
common stock will  automatically  convert into one share of Class A common stock
upon its transfer, with limited exceptions.

Holders

As of September 4, 2008, there were  approximately 271 stockholders of record of
the Company's Class A common stock,  although the Company believes that there is
a  significantly  larger number of beneficial  owners.  As of September 4, 2008,
there were  approximately  22  stockholders  of record of the Company's  Class B
common stock.

Dividend Policy

Although the Company has never  declared or paid any cash dividends on its Class
A or  Class B  common  stock,  the  Company  anticipates  that it will  generate
increasing  free cash flow in excess  of its  capital  investment  requirements.
Although the Company has no current intent to do so, the Company may choose,  at
some  future  date,  to use some  portion  of its cash for the  purpose  of cash
dividends.

Resales of Securities

36,923,032  shares  of  Class  A  and  Class  B  common  stock  are  "restricted
securities"  as that  term is  defined  in Rule 144 under  the  Securities  Act.
Restricted securities may be sold in the public market from time to time only if
registered or if they qualify for an exemption from registration  under Rule 144
or 701 under the Securities  Act. As of September 4, 2008, all of such shares of

                                       24


the Company's  common stock could be sold in the public  market  pursuant to and
subject to the limits  set forth in Rule 144.  Sales of a large  number of these
shares could have an adverse effect on the market price of the Company's Class A
common stock by increasing the number of shares available on the public market.

Purchases of Equity Securities by the Issuer

On January 21, 2008, the Company's Board of Directors  authorized an increase to
its stock repurchase plan which, when added to the $8.7 million 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. As
of June 29, 2008, $14.0 remains authorized but unused.

Under this program,  as of June 29, 2008, the Company had repurchased  1,660,786
shares  of common  stock  for $12.3  million,  of which  $1.1  million  (133,609
shares),  $0.2 million  (24,627 shares) and $1.3 million  (182,000  shares) were
repurchased  during the fiscal years ending June 29, 2008, July, 1 2007 and July
2, 2006,  respectively.  In a separate  transaction,  during  fiscal  2007,  the
Company's Board of Directors  authorized the repurchase of 3,010,740 shares from
an  affiliate.  The  purchase  price was  $15,689,000  or $5.21 per  share.  The
repurchase was approved by the  disinterested  members of the Company's Board of
Directors  and  was in  addition  to the  Company's  existing  stock  repurchase
authorization.















                                       25




Item 6.  SELECTED FINANCIAL DATA

The selected consolidated  statement of income data for the years ended June 29,
2008, July 1, 2007 and July 2, 2006 and the  consolidated  balance sheet data as
of June 29, 2008 and July 1, 2007, have been derived from the Company's  audited
consolidated  financial  statements  included elsewhere in this Annual Report on
Form 10-K.  The  selected  consolidated  statement  of income data for the years
ended July 3, 2005 and June 27,  2004,  and the  selected  consolidated  balance
sheet data as of July 2, 2006,  July 3, 2005 and June 27, 2004, are derived from
the Company's audited  consolidated  financial statements which are not included
in this Annual Report on Form 10-K.

The following  tables summarize the Company's  consolidated  statement of income
and balance sheet data. The Company acquired  DesignPac Gifts LLC in April 2008,
Fannie May Confections Brands, Inc. in May 2006, Wind & Weather in October 2005,
Cheryl & Co. in March 2005 and The  Winetasting  Network in November  2004.  The
following   financial   data   reflects  the  results  of  operations  of  these
subsidiaries  since their  respective  dates of  acquisition.  This  information
should be read together  with the  discussion in  "Management's  Discussion  and
Analysis of Financial  Condition  and Results of  Operations"  and the Company's
consolidated  financial  statements  and  notes  to  those  statements  included
elsewhere in this Annual Report on Form 10-K.

                                                                                                 
                                                                         Years ended (1),(2)
                                                   ----------------------------------------------------------------------
                                                      June 29,      July 1,        July 2,     July 3,       June 27,
                                                       2008          2007           2006        2005          2004
                                                   ------------- -------------- ------------- ------------ --------------
                                                                (in thousands, except per share data)
Consolidated Statement of Income Data:
Net revenues:
  E-commerce                                        $ 749,857     $ 749,238       $ 706,001     $ 620,831   $ 570,509
  Other                                               169,535       163,360          75,740        49,848      33,469
                                                   ------------- -------------- ------------- ------------ --------------
    Total net revenues                                919,392       912,598         781,741       670,679     603,978
Cost of revenues                                      525,638       520,132         456,097       395,028     351,111
                                                   ------------- -------------- ------------- ------------ --------------
Gross profit                                          393,754       392,466         325,644       275,651     252,867
Operating expenses:
  Marketing and sales                                 256,604       262,303         239,573       198,935     172,251
  Technology and development                           21,539        21,316          19,819        14,757      13,799
  General and administrative                           57,881        56,017          43,978        35,572      30,415
  Depreciation and amortization                        20,363        17,837          15,765        14,489      14,992
                                                   ------------- -------------- ------------- ------------ --------------
    Total operating expenses                          356,387       357,473         319,135       263,753     231,457
                                                   ------------- -------------- ------------- ------------ --------------
Operating income                                       37,367        34,993           6,509        11,898      21,410
Other income (expense), net                            (3,997)       (5,984)           (141)        1,349         320
                                                   ------------- -------------- ------------- ------------ --------------
Income before income taxes                             33,370        29,009           6,368        13,247      21,730
Income tax expense (benefit)                           12,316        11,891           3,181         5,398     (19,174)
                                                   ------------- -------------- ------------- ------------ --------------
Net income                                            $21,054       $17,118         $ 3,187       $ 7,849    $ 40,904
                                                   ============= ============== ============= ============ ==============
Net income per common share:
  Basic                                                 $0.33         $0.27           $0.05         $0.12       $0.62
                                                   ============= ============== ============= ============ ==============
  Diluted                                               $0.32         $0.26           $0.05         $0.12       $0.60
                                                   ============= ============== ============= ============ ==============
Shares used in the calculation of net income
  per common share:
  Basic                                                63,074        63,786          65,100        66,038      65,959
                                                   ============= ============== ============= ============ ==============
  Diluted                                              65,458        65,526          66,429        67,402      68,165
                                                   ============= ============== ============= ============ ==============




Note (1): The  Company's  fiscal year is a 52- or 53-week  period  ending on the
Sunday nearest to June 30. Fiscal years ended June 29, 2008,  July 1, 2007, July
2, 2006 and June 27, 2004  consisted  of 52 weeks,  while the fiscal years ended
July 3, 2005 consisted of 53 weeks.

Note (2): Effective July 4, 2005, the Company adopted the fair value recognition
provisions of SFAS No. 123(R) using the modified prospective application method.


                                       26



                                                                                                               
                                                                                            As of
                                                          -------------- ------------- -------------- --------------- --------------
                                                           June 29, 2008  July 1, 2007  July 2, 2006   July 3, 2005    June 27, 2004
                                                          -------------- ------------- -------------- --------------- --------------
                                                                                       (in thousands)
      Consolidated Balance Sheet Data:
      Cash and equivalents and short-term investments       $ 12,124       $ 16,087        $ 24,599      $ 46,608       $ 103,374
      Working capital                                         33,416         51,419          44,250        44,739          83,704
      Investments-non current                                      -              -               -             -           8,260
      Total assets                                           371,338        352,507         346,634       251,952         261,552
      Long-term liabilities                                   63,739         78,911          79,221         5,281           8,874
      Total stockholders' equity                             231,465        201,031         193,183       186,334         186,390



Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT
OF OPERATIONS

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-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 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 named as one
of the top 50 online  retailers by Internet  Retailer,  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  under  our  Fresh  From  Our  Growers(R) program.   As  always,  100%
satisfaction   and  freshness   are   guaranteed.   The  Company's   BloomNet(R)
international floral wire service (www.mybloomnet.net) provides 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 Confections Brands(R)  (www.fanniemay.com  and  www.harrylondon.com);
gourmet  foods  from  Greatfood.com(R)  (www.greatfood.com);   wine  gifts  from
Ambrosia(R)   (www.ambrosia.com  or  www.winetasting.com);   gift  baskets  from
1-800-BASKETS.COM(R)     (www.1800baskets.com)     and    DesignPac    Gifts(TM)
(www.designpac.com)  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.

Category Information

During the first quarter of fiscal 2007, the Company  segmented its organization
to improve  execution and customer  focus and to align its resources to meet the
demands of the markets it serves.  The following table presents the contribution

                                       27

of net revenues,  gross profit and "EBITDA"  (earnings before  interest,  taxes,
depreciation and amortization) from each of the Company's business categories.

                                                                                               
                                                                             Years Ended
                                                ----------------------------------------------------------------------
                                                   June 29,                     July 1,                     July 2,
    Net revenues                                    2008        % Change         2007        % Change        2006
                                                ------------ --------------- ------------- ------------- -------------
                                                                             (in thousands)
    Net revenues:
        1-800-Flowers.com Consumer Floral         $491,696          0.1%       $491,404           8.7%      $452,188
        BloomNet Wire Service                       53,488         20.5%         44,379          48.5%        29,884
        Gourmet Food & Gift Baskets                196,298          1.9%        192,698          83.5%       105,002
        Home & Children's Gifts                    180,181         (3.6%)       186,948          (5.1%)      196,919
        Corporate (*)                                2,431         47.2%          1,652          19.0%         1,388
        Intercompany eliminations                   (4,702)        (4.9%)        (4,483)        (23.2%)       (3,640)
                                                ------------                 -------------               -------------
    Total net revenues                            $919,392          0.7%       $912,598          16.7%      $781,741
                                                ============                 =============               =============



                                                                                                
                                                                             Years Ended
                                                ----------------------------------------------------------------------
                                                   June 29,                     July 1,                     July 2,
    Gross Profit                                    2008        % Change         2007        % Change        2006
                                                ------------ --------------- ------------- ------------- -------------
                                                                             (in thousands)

    Gross profit:

       1-800-Flowers.com Consumer Floral          $190,259        (1.4%)      $192,921          13.2%      $170,352
                                                      38.7%                       39.3%                        37.7%

       BloomNet Wire Service                        30,080         21.1%        24,844          55.4%        15,989
                                                      56.2%                       56.0%                        53.5%

       Gourmet Food & Gift Baskets                  91,713          4.0%        88,207          85.9%        47,442
                                                      46.7%                       45.8%                        45.2%

       Home & Children's Gifts                      81,459         (5.2%)       85,899          (6.2%)       91,555
                                                      45.2%                       45.9%                        46.5%

       Corporate (*)                                   970         27.0%           764          38.7%           551
                                                      39.9%                       46.2%                        39.7%

       Intercompany eliminations                      (727)                       (169)                        (245)
                                                ------------                 -------------               -------------
    Total gross profit                            $393,754          0.3%      $392,466          20.5%      $325,644
                                                =============                =============               ==============
                                                      42.8%                       43.0%                        41.7%
                                                =============                =============               ==============


                                                                             Years Ended
                                                ----------------------------------------------------------------------
                                                   June 29,                     July 1,                     July 2,
    EBITDA(**)                                      2008        % Change         2007        % Change        2006
                                                ------------ --------------- ------------- ------------- -------------
                                                                             (in thousands)

    Category Contribution Margin:
       1-800-Flowers.com Consumer Floral           $62,967         (3.4%)      $65,166          40.1%       $46,518
       BloomNet Wire Service                        18,509         30.7%        14,162          99.3%         7,106
       Gourmet Food & Gift Baskets                  24,593         (6.8%)       26,377         286.4%         6,827
       Home & Children's Gifts                       3,438        383.0%        (1,215)       (117.0%)        7,134
                                                ------------                 -------------               -------------
    Category Contribution Margin Subtotal          109,507          4.8%       104,490          54.6%        67,585
       Corporate (*)                               (51,777)        (0.2%)      (51,660)        (14.0%)      (45,311)
                                                ------------                 -------------               -------------
     EBITDA                                        $57,730          9.3%       $52,830         137.2%       $22,274
                                                ============                 =============               =============

(*)  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

                                       28

     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
     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,  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 interest  coverage and debt incurrence.  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.

Reconciliation of Net Income to EBITDA:

                                                                                             
                                                                                  Years Ended
                                                                  -------------------------------------------
                                                                    June 29,        July 1,         July 2,
                                                                     2008            2007            2006
                                                                  -------------  -------------  -------------
                                                                                  (in thousands)

         Net income                                                $21,054         $17,118           $3,187
         Add:
          Interest expense                                           5,081           7,390            1,407
          Depreciation and amortization                             20,363          17,837           15,765
          Income tax expense                                        12,316          11,891            3,181
         Less:
          Interest income                                              999           1,381            1,260
          Other income                                                  85              25                6
                                                                  -------------  -------------  -------------
         EBITDA                                                    $57,730         $52,830          $22,274
                                                                  =============  =============  =============


Results of Operations

The  Company's  fiscal  year is a 52- or  53-week  period  ending on the  Sunday
nearest to June 30.  Fiscal years 2008,  2007 and 2006,  which ended on June 29,
2008, July 1, 2007 and July 2, 2006, respectively, consisted of 52 weeks.

Net Revenues

                                                                                              
                                                                             Years Ended
                                                ----------------------------------------------------------------------
                                                   June 29,                     July 1,                     July 2,
                                                    2008        % Change         2007        % Change        2006
                                                ------------ --------------- ------------- ------------- -------------
                                                                             (in thousands)
     Net revenues:
       E-Commerce                                 $749,857        0.1%           $749,238        6.1%      $706,001
       Other                                       169,535        3.8%            163,360      115.7%        75,740
                                                   -------                         ------                    ------
                                                  $919,392        0.7%           $912,598       16.7%      $781,741
                                                  ========                       ========                  ========


Net revenues consist primarily of the selling price of the merchandise, service
or outbound shipping charges, less discounts, returns and credits.

                                       29

The Company's  revenue growth of 0.7% during the fiscal year ended June 29, 2008
was primarily  attributable to the continued expansion of the Company's BloomNet
Wire Service business, which increased 20.5% over the prior fiscal year, as well
as growth from the Gourmet Food & Gift Basket  business,  which  increased  1.9%
over the same  period of the prior  year,  partially  offset by a decline in the
Home and  Children's  Gifts  business  as a  result  of the  discontinuation  of
non-performing  catalog titles in order to improve the overall operating results
within this category.  During this challenging consumer  environment,  which was
characterized by cautious consumer spending and aggressive  promotional activity
by competitors across the gifting industry, the Company made the decision not to
chase revenue growth in its direct-to-consumer  businesses,  instead focusing on
achieving  its  primary  goal of  leveraging  its  business  platform  to  drive
profitable  growth while  reducing its  operating  expense  ratio.  As a result,
despite the difficult retail consumer  environment  experienced during the year,
the Company was able to achieve  EBITDA growth of 9.3%,  on more modest  revenue
growth, and despite the negative  contribution from DesignPac (acquired on April
30, 2008), due to the highly seasonal nature of its business.

The Company's  revenue growth of 16.7% during the fiscal year ended July 1, 2007
was due to a  combination  of organic  growth,  as well as the  acquisitions  of
Fannie May Confections Brands, a manufacturer and retailer of premium chocolates
and other  confections,  acquired  on May 1, 2006 and Wind &  Weather,  a direct
marketer of weather-themed  gifts, acquired on October 31, 2005. Organic revenue
growth,  including post acquisition growth of the  aforementioned  acquisitions,
adjusted for the  disposition  of certain  Company owned floral  retail  stores,
during fiscal 2007 was approximately 8%.

The Company fulfilled  approximately 11.5 million, 11.6 million and 11.3 million
orders through its e-commerce  (combined  online and  telephonic)  sales channel
during  fiscal  2008,  2007 and 2006,  respectively.  The  Company's  e-commerce
(combined  online and  telephonic)  sales channel  average order value increased
1.3% to $65.21  during  fiscal  2008,  and 3.2% to $64.37  during  fiscal  2007,
primarily  as a result of increased  service and shipping  charges (in line with
industry norms) to partially offset the impact of increased fuel costs passed on
from freight carriers.

Other  revenues  for the  fiscal  years  ended  June 29,  2008 and July 1, 2007,
increased in  comparison to the same periods of the prior year due the continued
revenue  growth  of  the  Company's   BloomNet  Wire  Service   category.   Also
contributing  to the  increase  in other  revenues  during  fiscal  2007 was the
increase from the  retail/wholesale  component of Fannie May Confections Brands,
which was acquired in May 2006.

The 1-800-Flowers.com  Consumer Floral category includes the 1-800-Flowers brand
operations  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 and rental
income from its franchise operations. Net revenues during the fiscal years ended
June 29, 2008 and July 1, 2007,  increased by 0.1% and 8.7% over the  respective
prior year  periods,  primarily  from an increased  average order value from its
e-commerce  sales  channel,  offset  in part by  lower  retail  sales  from  its
company-owned  floral stores due to the planned  transition of Company stores to
franchise  ownership.  Fiscal 2007 net revenues were also favorably  affected by
increased order volume from its e-commerce sales channel.

The BloomNet Wire Service  category  includes  revenues from  membership fees as
well as other service and product offerings to florists. Net revenues during the
fiscal  years ended June 29, 2008 and July 1, 2007  increased by 20.5% and 48.5%
over the  respective  prior year  periods,  primarily  as a result of  increased
florists'  membership fees, expanded product and service offerings,  and pricing
initiatives.  During fiscal 2007, net revenues were also  favorably  affected by
the introduction of BloomNet's  Floral Selection Guide,  which is published once
every three years.

The Gourmet Food & Gift Basket category  includes the operations of the Cheryl &
Co., Fannie May Confections Brands, The Popcorn Factory, The Winetasting Network
and DesignPac Gifts brands.  Revenue is derived from the sale of cookies,  baked
gifts,  premium  chocolates and  confections,  gourmet  popcorn,  wine gifts and
gourmet 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  Confections  brands,  as well as wholesale  operations.  Net
revenue for the fiscal year ended June 29, 2008  increased  1.9% compared to the
prior fiscal year as a result of increased  direct-to-consumer order volume from
Cheryl & Co. and Fannie May Confections brands.  Revenues from DesignPac,  which
was acquired on April 30, 2008,  were  immaterial  during fiscal 2008 due to the
highly seasonal nature of its business. Net revenue during the fiscal year ended

                                       30


July 1, 2007  increased by 83.5% over the prior year period,  as a result of the
contribution of Fannie May Confections  Brands,  which was acquired in May 2006,
and strong organic growth from Cheryl & Co.

The Home & Children's Gifts category  includes  revenues from the Plow & Hearth,
Wind & Weather,  Problem  Solvers,  Madison  Place,  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)  or
company-owned and operated retail stores operated under the Plow & Hearth brand.
Net revenue  during the fiscal year ended June 29, 2008  decreased  by 3.6% over
the prior year period due to the planned  elimination  of the Madison  Place and
Problem  Solvers  catalog  titles,  which  were  launched  during  fiscal  2007.
Excluding these titles,  fiscal 2008 net revenue for the Home & Children's Gifts
category  was  relatively  consistent  with the prior year  period.  Net revenue
during the fiscal year ended July 1, 2007  decreased by 5.1% over the prior year
period  due to a lack of new "hit"  products  and an  overall  macro  decline in
customer demand within this category.  During the second quarter of fiscal 2007,
efforts to expand titles outside of the core Plow & Hearth brand did not attract
the level of customer  demand to justify the  increase in  marketing  costs.  In
response  to the  poor  results,  during  the  third  quarter  of  fiscal  2007,
management  implemented  several changes to improve the performance  within this
category:  (i) revised the aforementioned  plans to expand and add titles,  (ii)
strengthened  the management  team, (iii) improved the creative look and feel of
the catalogs and (iv) revised the circulation plans for all titles to place more
focus on the category's existing customer base. As a result, during fiscal 2008,
category contribution margin within this category improved by $4.6 million, from
a loss of $1.2 million, to contribution of $3.4 million.


While the Company does not anticipate any significant improvement in the current
economic environment during fiscal 2009, it expects to achieve revenue growth in
excess of 10 percent  compared  with the prior year  period.  Revenue  growth is
expected to come from a combination  of organic  initiatives  and  contributions
from its recent  acquisitions.  Among the organic  initiatives  that the Company
believes will help drive  profitable  growth are (i) the first year benefit from
the  exclusive  relationship  with  Martha  Stewart  Living  Omnimedia  for both
1-800-FLOWERS.COM  and BloomNet;  (ii) BloomNet's  expanded products and service
offerings, designed to deepen its relationship with florists and increase market
share gains; (iii) Fannie May's continued strong ecommerce channel growth;  (iv)
Cheryl & Co.'s new product introductions,  increased customization  capabilities
and  improved  website  functionality;   as  well  as  (v)  continued  focus  on
cross-marketing and merchandising across all enterprise brands.

Gross Profit

                                                                                         
                                                                      Years Ended
                                         ----------------------------------------------------------------------
                                            June 29,                     July 1,                     July 2,
                                             2008        % Change         2007        % Change        2006
                                         ------------ --------------- ------------- ------------- -------------
                                                                      (in thousands)

     Gross profit                          $393,754          0.3%         $392,466       20.5%      $325,644
     Gross margin %                            42.8%                          43.0%                     41.7%


Gross profit consists of net revenues less cost of revenues,  which is comprised
primarily  of  florist  fulfillment  costs  (primarily  fees  paid  directly  to
florists),  the cost of floral and non-floral merchandise sold from inventory or
through third  parties,  and  associated  costs  including  inbound and outbound
shipping  charges.  Additionally,  cost of revenues  include  labor and facility
costs related to direct-to-consumer and wholesale production operations.

Gross profit  increased  during the fiscal years ended June 29, 2008 and July 1,
2007,  in  comparison  to the same  periods of the prior  years,  primarily as a
result of the revenue growth described above. Gross margin percentage during the
fiscal year ended June 29, 2008 decreased 20 basis points, primarily as a result
of increased  promotional  activity and higher fuel  surcharges from third party
shippers.  During fiscal 2007,  gross profit  percentage  increased by 130 basis
points as a result of product mix and pricing initiatives,  as well as continued
improvements  in  customer  service,  and  fulfillment,  as a result of improved
outbound shipping rates, and merchandising programs.

                                       31

The  1-800-Flowers.com  Consumer  Floral  category gross profit and gross profit
margin  percentage  decreased by 1.4% and 60 basis points,  respectively  during
fiscal  2008,  as a result of  increased  promotional  activity  and higher fuel
surcharges from third party shippers. During fiscal 2007, gross profit and gross
margin  percentage  increased  13.2% and 160 basis  points,  respectively,  as a
result of the  aforementioned  increase in net revenue,  as well improvements in
sourcing, reduced outbound shipping rates, and pricing initiatives.

The BloomNet Wire Service  category gross profit for the fiscal years ended June
29,  2008 and July 1, 2007,  increased  by 21.1% and 55.4%  over the  respective
prior year periods as a result of the above mentioned  revenue growth  resulting
from an increase in membership services and pricing initiatives.

The Gourmet Food & Gift Basket  category  gross profit for the fiscal year ended
June 29, 2008 increased by 4.0% over the prior year period as a result of higher
revenues and higher gross margin percentage,  which increased 90 basis points to
46.7%, as a result of manufacturing efficiencies,  and sales channel mix. During
fiscal  2007,  gross  profit  increased  85.9%  primarily  as a  result  of  the
incremental  revenue  generated  by Fannie  May  Confections  Brands  and strong
organic growth within the Cheryl & Co. brand, combined with an increase in gross
margin  percentage of 60 basis points,  to 45.8%, as a result of improvements in
outbound shipping rates and merchandising  programs across all brands within the
category.

The Home & Children's Gift category gross profit for the fiscal years ended June
29, 2008 and July 1, 2007 decreased by 5.2% and 6.2% over the  respective  prior
year periods as a result of the  aforementioned  revenue decline,  combined with
lower gross margin  percentages.  The gross margin percentage during fiscal 2008
declined  70 basis  points to  45.2%,  due to  promotional  offers  designed  to
re-engage  core  customers who had left the brand during fiscal 2007 when it had
unsuccessfully  moved away from its traditional  product  offerings,  as well as
from higher fuel surcharges on its outbound  shipments.  During fiscal 2007, the
gross margin percentage  declined 60 basis points to 45.9%, due to sales mix and
markdowns to move inventory.

During fiscal year 2009, the Company  expects its gross margin  percentage  will
decline  slightly as a result of the  acquisition of DesignPac,  which carries a
lower wholesale gross margin,  but a strong overall  contribution  margin due to
its  efficient  high volume  packaging  and  distribution  operations.  This mix
decline  is  expected  to  be  partially  offset  by  anticipated  gross  margin
improvements in most of its existing businesses through a combination of product
sourcing, fulfillment improvements and pricing initiatives.

Marketing and Sales Expense

                                                                                        
                                                                      Years Ended
                                         ----------------------------------------------------------------------
                                            June 29,                     July 1,                     July 2,
                                             2008        % Change         2007        % Change        2006
                                         ------------ --------------- ------------- ------------- -------------
                                                                      (in thousands)

     Marketing and sales                   $256,604       (2.2%)        $262,303          9.5%      $239,573
     Percentage of sales                       27.9%                        28.7%                      30.6%


Marketing and sales expense  consists  primarily of advertising  and promotional
expenditures,  catalog costs,  online portal and search costs,  retail store and
fulfillment  operations  (other  than costs  included in cost of  revenues)  and
customer  service  center  expenses,  as well as the  operating  expenses of the
Company's   departments   engaged  in  marketing,   selling  and   merchandising
activities.

During  fiscal 2008,  marketing  and sales  expenses  decreased by 2.2% from the
prior year,  and declined from 28.7% of net revenues to 27.9% of net revenues as
a  result  of  improved   operating   leverage  from  a  number  of  cost-saving
initiatives,  including  catalog printing and e-mail pricing  improvements,  and
planned reductions in catalog prospecting and the discontinuation of the Madison
Place and Problem Solvers titles within the Home & Children's category,  as well
as continued growth and operating  improvements within the BloomNet Wire Service
category.

                                       32


During fiscal 2007,  marketing and sales expense  increased  over the prior year
period  by 9.5% as a result  of  several  factors,  including:  (i)  incremental
expenses associated with the acquisition of Fannie May Confections Brands in May
2006, (ii) incremental  variable costs to accommodate higher sales volumes,  and
(iii)  personnel  associated  with the  expansion of the  BloomNet  Wire Service
business. However, marketing and sales expenses decreased from 30.6% to 28.7% of
net  revenues,   reflecting   improved   operating   leverage  from  cost-saving
initiatives  and the completion of the investment  phase of BloomNet,  including
the absorption of incremental  personnel to expand membership,  increase product
and service offerings,  and increased BloomNet  Technologies  penetration.  This
leverage was  achieved  through  significant  improvement  within the  Company's
1-800-Flowers  Consumer  Floral,  BloomNet  Wire Service and Gourmet Food & Gift
Baskets  categories.  As efforts to grow the Home & Children's  Gifts businesses
through the  introduction of titles outside the core Plow & Hearth brand did not
attract the necessary  level of consumer  demand to justify the costs,  as noted
above,  non-productive titles were discontinued during the latter half of fiscal
2007, resulting in improved contribution margin during fiscal 2008.

During the fiscal year ended June 29, 2008 the Company added  approximately  3.4
million  new  e-commerce  customers,  compared to 3.5 million and 3.6 million in
fiscal 2007 and fiscal 2006,  respectively.  Of the 6.8 million total  customers
who placed  e-commerce  orders  during the fiscal 2008,  approximately  50% were
repeat  customers,  compared  to 48% and 46% in  fiscal  2007 and  fiscal  2006,
respectively,   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 fiscal 2009,  the Company  expects that  marketing and sales expense will
continue to decrease as a percentage  of net revenue in  comparison to the prior
years,  in part due to the  acquisition  of  DesignPac  which,  as noted  above,
carries a lower wholesale gross margin, but a strong overall contribution margin
due to its  cost  efficient,  high  volume  product  assembly  and  distribution
operations,  as well as Company  initiatives  which will gain  further  leverage
within existing operations.

Technology and Development Expense

                                                                                       
                                                                      Years Ended
                                         ----------------------------------------------------------------------
                                            June 29,                     July 1,                     July 2,
                                             2008        % Change         2007        % Change        2006
                                         ------------ --------------- ------------- ------------- -------------
                                                                      (in thousands)

     Technology and development            $21,539          1.0%          $21,316         7.6%       $19,819
     Percentage of sales                       2.3%                           2.3%                       2.5%


Technology and development  expense consists  primarily of payroll and operating
expenses of the Company's  information  technology group,  costs associated with
its web sites,  including hosting,  design,  content development and maintenance
and support  costs  related to the  Company's  order  entry,  customer  service,
fulfillment and database systems.

During  fiscal 2008,  technology  and  development  expense  increased  1.0%, in
comparison  to the prior year period as a result of increased  labor costs,  but
was consistent as a percentage of net revenues.  The increased  labor costs were
necessary to support the Company's technology platform,  and were offset in part
by savings derived from renegotiating various technology maintenance and license
agreements.

During fiscal 2007, technology and development expense decreased 20 basis points
to  2.3%  of net  revenue,  reflecting  improved  operating  leverage,  however,
technology and development expense increased by 7.6% over the prior year period,
as a result of the incremental  expenses  associated with Fannie May Confections
Brands,  as  well  as for  increases  in the  cost of  maintenance  and  license
agreements required to support the Company's technology platform.

During the fiscal years ended June 29, 2008,  July 1, 2007, and July 2, 2006 the
Company expended $35.3 million, $32.3 million, and $33.6 million,  respectively,
on technology and development,  of which $13.8 million, $11.0 million, and $13.8
million, respectively, has been capitalized.

                                       33


The Company believes that continued  investment in technology and development is
critical to attaining its strategic objectives, and as such, the Company expects
that its spending for the fiscal 2009 will be consistent, as a percentage of net
revenues, in comparison to the prior year.

General and Administrative Expenses

                                                                                        
                                                                      Years Ended
                                         ----------------------------------------------------------------------
                                            June 29,                     July 1,                     July 2,
                                             2008        % Change         2007        % Change        2006
                                         ------------ --------------- ------------- ------------- -------------
                                                                      (in thousands)


     General and administrative            $57,881           3.3%         $56,017        27.4%       $43,978
     Percentage of sales                       6.3%                           6.1%                       5.6
%

General and  administrative  expense  consists of payroll and other  expenses in
support  of the  Company's  executive,  finance  and  accounting,  legal,  human
resources and other administrative  functions,  as well as professional fees and
other general corporate expenses.

General and  administrative  expense increased 3.3% during the fiscal year ended
June  29,  2008  and by 20 basis  points  as a  percentage  of net  revenues  in
comparison to the prior year, due to increased  professional  fees and corporate
initiatives.  The  benefit  of  these  increased  costs  are  reflected  in  the
improvements   within  the  Company's   overall  operating  expense  ratios,  in
comparison to the same period of the prior year.

During the fiscal  year ended July 1, 2007  general and  administrative  expense
increased  27.4%  and by 50 basis  points as a  percentage  of net  revenues  in
comparison to the prior year period,  primarily as a result of: (i)  incremental
expenses  associated with the  acquisitions of Fannie May Confections  Brands in
May 2006, (ii) increased legal and professional  fees, and (iii) the achievement
of certain  performance  related  bonus  targets  in fiscal  2007 which were not
earned in the prior fiscal year.

Although  the  Company  believes  that its current  general  and  administrative
infrastructure  is  sufficient  to  support  existing   requirements  and  drive
operating  leverage,  the  Company  expects  that its fiscal  2009  general  and
administrative expenses will be consistent, as a percentage of net revenue, with
fiscal 2008.

Depreciation and Amortization

                                                                                        
                                                                      Years Ended
                                         ----------------------------------------------------------------------
                                            June 29,                     July 1,                     July 2,
                                             2008        % Change         2007        % Change        2006
                                         ------------ --------------- ------------- ------------- -------------
                                                                      (in thousands)


     Depreciation and amortization         $20,363          14.2%         $17,837        13.1%       $15,765
     Percentage of sales                       2.2%                           2.0%                       2.0%


Depreciation and amortization  expense increased by 14.2% during the fiscal 2008
in comparison to the prior year as a result of capital  additions for technology
platform  improvements and the incremental  amortization  expense related to the
intangibles  established as a result of the acquisition of DesignPac,  which was
acquired on April 30, 2008.

Depreciation and amortization  expense increased by 13.1% during the fiscal year
ended July 1, 2007 in comparison to the prior year period  primarily as a result
of the  incremental  amortization  expense  as a result of the  acquisitions  of
Fannie May  Confections  Brands and Wind & Weather  in fiscal  2006,  as well as
depreciation  associated with completed  technology projects designed to provide
improved order/warehouse management functionality across the enterprise.

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.  As a
result  of  these  improvements,   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 fiscal 2009 will
increase  slightly as a percentage  of net revenues in  comparison  to the prior
year.

                                       34


Other Income (Expense)

                                                                                      
                                                                     Years Ended
                                         ----------------------------------------------------------------------
                                            June 29,                     July 1,                     July 2,
                                             2008        % Change         2007        % Change        2006
                                         ------------ --------------- ------------- ------------- -------------
                                                                      (in thousands)


     Interest income                        $ 999         (27.7)%         $1,381           9.6%      $1,260
     Interest expense                      (5,081)         31.2%          (7,390)       (425.2)%     (1,407)
     Other, net                                85         240.0%              25         316.7            6
                                         ------------                 -------------               -------------
                                          $(3,997)         33.2%         $(5,984)     (4,144.0)%      $(141)
                                         ============                 =============               =============


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 declined  during fiscal 2008, in comparison to fiscal 2007,
as a result of declining interest rates and a reduction in outstanding debt.

Net borrowing costs increased  during fiscal 2007, in comparison to fiscal 2006,
due to the  interest  expense  incurred in order to finance the  acquisition  of
Fannie May Confections  Brands, Inc. on May 1, 2006. On May 1, 2006, the Company
entered into a $135.0 million  secured credit facility with JPMorgan Chase Bank,
N.A.,  as  administrative  agent,  and a group  of  lenders  (the  "2006  Credit
Facility"). The 2006 credit facility, as amended, included an $85.0 million term
loan and a $75.0 million revolving  facility,  which bear interest at LIBOR plus
0.625% to 1.125%,  with pricing  based upon the  Company's  leverage  ratio.  At
closing,  the Company borrowed $85.0 million of the term facility to acquire all
of the outstanding capital stock of Fannie May Confections Brands, Inc.

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  provides 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 2006 Credit  Facility.  Interest is at LIBOR plus 1.5% to 2.5% for the
Company's existing term loan and revolving credit facility,  and LIBOR plus 2.0%
to 3.0%, for the Company's new term loan,  with pricing based upon the Company's
leverage ratio. At closing of the 2008 Credit Facility, the Company utilized the
proceeds of the new term loan to pay down amounts outstanding under its previous
revolving credit facility.

Income Taxes

During the fiscal years ended June 29, 2008,  July 1, 2007 and July 2, 2006, the
Company  recorded  income tax expense of $12.3  million,  $11.9 million and $3.2
million,  respectively.  The  Company's  effective tax rate for the fiscal years
ended June 29, 2008,  July 1, 2007 and July 2, 2006 was 36.9%,  41.0% and 50.0%,
respectively.  The  decrease  in the  effective  tax rate during the fiscal year
ended June 29,  2008  resulted  primarily  from lower  state  taxes,  as well as
various tax credits programs.  The decrease in the effective tax rate during the
fiscal  year  ended July 1, 2007  resulted  from the  dilution  of the impact of
stock-based  compensation recognized in accordance with SFAS No. 123(R), over an
increased  level of income before taxes in comparison the prior fiscal year. The
Company's  effective tax rate for the fiscal years ended June 29, 2008,  July 1,
2007 and July 2,  2006  differed  from the U.S.  federal  statutory  rate of 35%
primarily due to state income taxes, partially offset by various tax credits.

At June 29, 2008, the Company's  federal net operating loss  carryforwards  were
approximately  $4.5 million,  which,  if not  utilized,  will begin to expire in
fiscal year 2025.

                                       35


Quarterly Results of Operations

The  following  table  provides  unaudited  quarterly  consolidated  results  of
operations for each quarter of fiscal years 2008 and 2007. The Company  believes
this unaudited information has been prepared  substantially on the same basis as
the  annual  audited   consolidated   financial  statements  and  all  necessary
adjustments, consisting of only normal recurring adjustments, have been included
in the  amounts  stated  below  to  present  fairly  the  Company's  results  of
operations. The operating results for any quarter are not necessarily indicative
of the operating results for any future period.

                                                                                            

                                                                    Three months ended
                                     --------------------------------------------------------------------------------------
                                      Jun.29,    Mar.30,   Dec.30,    Sep.30,    Jul. 1,   Apr. 1,    Dec.31,     Oct. 1
                                       2008       2008      2007       2007       2007      2007       2006        2006
                                     --------- --------- ---------- ----------- --------- ---------- ---------- -----------
                                                         (in thousands, except per share data)
Net revenues:
 Ecommerce (telephonic/online)       $183,710  $177,476   $274,168    $114,503  $194,228   $175,592  $270,159   $109,259
 Other                                 36,103    42,091     60,034      31,307    37,593     38,187    59,707     27,873
                                     --------- --------- ---------- ----------- --------- ---------- ---------- ----------

Total net revenues                    219,813   219,567    334,202     145,810   231,821    213,779   329,866    137,132
Cost of revenues                      128,501   130,062    181,146      85,929   132,833    127,092   177,889     82,318
                                     --------- --------- ---------- ----------- --------- ---------- ---------- ----------

Gross profit                           91,312    89,505    153,056      59,881    98,988     86,687   151,977     54,814

Operating expenses:
 Marketing and sales                   59,644    60,587     93,594      42,779    61,873     59,023    99,037     42,370
 Technology and development             5,370     5,515      5,419       5,235     5,485      5,469     5,201      5,161
 General and administrative            14,064    13,151     15,448      15,218    14,545     14,198    13,931     13,343
 Depreciation and amortization          5,515     5,011      4,967       4,870     4,812      4,447     3,834      4,744
                                     --------- --------- ---------- ----------- --------- ---------- ---------- ----------

    Total operating expenses           84,593    84,264    119,428      68,102    86,715     83,137   122,003     65,618
                                     --------- --------- ---------- ----------- --------- ---------- ---------- ----------

Operating income (loss)                 6,719     5,241     33,628      (8,221)   12,273      3,550    29,974    (10,804)

Other income (expense), net              (533)     (685)    (1,430)     (1,349)     (979)    (1,347)   (2,178)    (1,480)
                                     --------- --------- ---------- ----------- --------- ---------- ---------- ----------

Income (loss) before income taxes       6,186     4,556     32,198      (9,570)   11,294      2,203    27,796    (12,284)
Income tax expense (benefit)            1,888     1,266     12,942      (3,780)    4,732      1,150    10,874     (4,865)
                                     --------- --------- ---------- ----------- --------- ---------- ---------- ----------

Net income (loss)                      $4,298    $3,290    $19,256     ($5,790)   $6,562     $1,053   $16,922    ($7,419)
                                     ========= ========= ========== =========== ========= ========== ========== ==========

Net income (loss) per share:
 Basic                                  $0.07     $0.05      $0.31      ($0.09)    $0.10      $0.02     $0.26     ($0.11)
                                     ========= ========= ========== =========== ========= ========== ========== ==========
 Diluted                                $0.07     $0.05      $0.29      ($0.09)    $0.10      $0.02     $0.26     ($0.11)
                                     ========== ======== ========== =========== ========= ========== ========== ==========


The Company's quarterly results may experience seasonal fluctuations. Due to the
Company's expansion into non-floral  products,  including the recent acquisition
of DesignPac  Gifts LLC,  which was acquired in May 2008,  Thanksgiving  through
Christmas  holiday  season,  which  falls  within the  Company's  second  fiscal
quarter,  generates the highest  proportion of the  Company's  annual  revenues.
Additionally,  as the  result of a number  of major  floral  gifting  occasions,
including Mother's Day,  Administrative  Professionals Week and Easter, revenues
also rise during the Company's fiscal fourth quarter.  For fiscal 2008, however,
the Easter holiday occurred in the Company's  fiscal third quarter,  thus moving
revenue from the Company's  fiscal fourth  quarter to its fiscal third  quarter.
For fiscal 2009,  the Easter  Holiday  returns to the  Company's  fiscal  fourth
quarter.

Liquidity and Capital Resources

At June 29, 2008 the Company had  working  capital of $33.4  million,  including
cash and  equivalents  of $12.1  million,  compared to working  capital of $51.4
million, including cash and equivalents of $16.1 million, at July 1, 2007.

                                       36

Net cash  provided by operating  activities of $57.9 million for the fiscal year
ended June 29, 2008 was primarily  attributable  to net income,  adjusted to add
back non-cash charges for depreciation and  amortization,  deferred income taxes
and  stock-based  compensation,  offset in part by increases  in inventory  (due
primarily to the recently acquired DesignPac business).

Net cash used in investing activities of $57.7 million for the fiscal year ended
June  29,  2008  was  primarily  attributable  to  the  payment  of  Fannie  May
Confections  Brands  "earn-out"  incentives  ($4.4 million),  as well as capital
expenditures,  primarily  related to the Company's  technology and  distribution
infrastructure,  and the  acquisition of DesignPac  ($33.3 million) on April 30,
2008.  DesignPac  is a  designer,  assembler  and  distributor  of gourmet  gift
baskets,  gourmet food towers and gift sets,  including a broad range of branded
and private label  components,  based in Melrose Park, IL. The purchase price of
approximately  $33.3  million  in cash,  net of cash  acquired,  is  subject  to
"earn-out"  incentives  which  amount to a maximum of $2.0  million  through the
years ending June 27, 2010, upon achievement of specified performance targets.

Net cash used in financing  activities of $4.2 million for the fiscal year ended
June  29,  2008  was  primarily  due to the  scheduled  repayments  (net) of the
Company's debt and bank  borrowings  against the Company's 2006 Credit  Facility
and the  repurchase  of  133,609  shares of  treasury  stock,  offset in part by
proceeds  from  employee  stock  option  exercises  and the  related  excess tax
benefits.

In order to fund the increase in working  capital  requirements  associated with
DesignPac, and to provide operating flexibility, 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 provides 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.  Interest
is at LIBOR plus 1.5% to 2.5% for the Company's existing term loan and revolving
credit  facility,  and LIBOR plus 2.0% to 3.0%, for the Company's new term loan,
with pricing based upon the  Company's  leverage  ratio.  At closing of the 2008
Credit  Facility,  the Company utilized the proceeds of the new term loan to pay
down amounts  outstanding  under its previous  revolving  credit  facility.  The
repayment terms of the existing term loan remain  unchanged,  while the new term
loan is required to be repaid in equal  quarterly  installments  of $3.0 million
beginning in December 2008, with the final installment payment due on August 28,
2013. The 2008 Credit Facility  contains  various  conditions to borrowing,  and
affirmative and negative financial covenants. The obligations of the Company and
its  subsidiaries  under the 2008  Credit  Facility  are secured by liens on all
personal property of the Company and its subsidiaries.

The Company  expects to borrow against its 2008 Credit  Facility to fund working
capital  requirements   related  to  pre-holiday   manufacturing  and  inventory
purchases.  At June 29, 2008, the Company had no  outstanding  amounts under its
revolving  credit  facility.  However,  it  anticipates  borrowing  against  the
facility prior to the end of its first  quarter.  The Company  anticipates  that
such borrowings will peak during its fiscal second quarter,  before being repaid
prior to the end of that quarter.

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. As
of June 29, 2008, $14.0 million remains authorized but unused.

Under this program,  as of June 29, 2008, the Company had repurchased  1,660,786
shares  of common  stock for $12.3  million,  of which,  $1.1  million  (133,609
shares),  $0.2 million  (24,627 shares) and $1.3 million  (182,000  shares) were
repurchased  during the fiscal years ending June 29, 2008, July 1, 2007 and July
2, 2006,  respectively.  In a separate  transaction,  during  fiscal  2007,  the
Company's  Board of Directors  authorized the repurchase of 3,010,740  shares of
common stock from an affiliate. The purchase price was $15,689,000, or $5.21 per
share. The repurchase was approved by the disinterested members of the Company's
Board of Directors  and was in addition to the  Company's  then  existing  stock
repurchase authorization.

                                       37

At June 29, 2008, the Company's contractual obligations consist of:

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



Long-term debt
(including interest)(*)1              $ 78,498            $16,830       $35,167        $26,501                $ -
Capital lease obligations                   52                 13            21             18                  -
Operating lease obligations             70,217             12,048        18,863         15,121             24,185
Sublease obligations                     8,507              2,814         3,324          1,483                886
Purchase commitments (**)2              82,783             72,783        10,000              -                  -
                                     -----------    --------------    ----------   ------------     -------------
   Total                              $240,057           $104,488       $67,375        $43,123            $25,071
                                     ===========    ===============   ==========   ============     =============


(*)1 On August 28, 2008, the Company entered into a $293.0  million  Amended and
Restated Credit Agreement (the "2008 Credit Facility"). The 2008 Credit Facility
provides 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. The repayment terms of the existing term loan remain unchanged,
while the new term loan is required to be repaid in equal quarterly installments
of $3.0 million beginning in December 2008, with the final  installment  payment
due on August 28, 2013.

(**)2 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

                                       38


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,  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. 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  are  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 matter for which a
liability for an  unrecognized  tax benefit is established or is required to pay
amounts in the excess of the  liability,  the Company's  effective tax rate in a
given financial statement period may be affected.

                                       39


Recent Accounting Pronouncements

In May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally  Accepted
Accounting  Principles"  ("SFAS No.  162").  SFAS No. 162 is intended to improve
financial  reporting by identifying a consistent  framework,  or hierarchy,  for
selecting  accounting  principles to be used in preparing  financial  statements
that are presented in conformity with generally accepted accounting  principles.
SFAS No. 162 will become  effective 60 days  following the SEC's approval of the
Public Company  Accounting  Oversight  Board  amendments to AU Section 411, "The
Meaning of Present  Fairly in  Conformity  With  Generally  Accepted  Accounting
Principles."  The Company does not  anticipate the adoption of SFAS No. 162 will
have a material  impact on its results of  operations,  cash flows or  financial
condition.

In April 2008, the FASB issued FSP FAS 142-3,  "Determination of the Useful Life
of  Intangible  Assets" ("FSP FAS 142-3"). FSP FAS 142-3 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 FASB Statement
No.142,  Goodwill  and  Other  Intangible  Asset.  FSP FAS 142-3  also  requires
expanded  disclosure  related to the  determination  of intangible  asset useful
lives.  FSP FAS 142-3 is effective  for financial  statements  issued for fiscal
years beginning after December 15, 2008, and interim periods within those fiscal
years.  The Company is currently  evaluating the impact that the adoption of FSP
FAS 142-3  will have on its  consolidated  results of  operation,  cash flows or
financial condition.

In March 2008, the FASB issued Statement No.161,  "Disclosures  about Derivative
Instruments and Hedging  Activities"  ("SFAS No. 161").  SFAS No. 161 amends and
expands the  disclosure  requirements  of  Statement  No. 133,  "Accounting  for
Derivative  Instruments  and  Hedging  Activities  and it  requires  qualitative
disclosures   about   objectives  and  strategies  for  using   derivatives  and
quantitative  disclosures  about  credit-risk-related   contingent  features  in
derivative agreements. SFAS No. 161 is effective for financial statements issued
for fiscal years and interim  periods  beginning  after  November 15, 2008.  The
Company  does not  anticipate  the adoption of SFAS No. 161 will have a material
impact on its results of operations, cash flows or financial condition.

In December 2007, the FASB issued  Statement No. 141 (revised  2007),  "Business
Combinations"  ("SFAS No.  141R").  SFAS No.  141R  establishes  principles  and
requirements  for how the  acquirer  in a business  combination  recognizes  and
measures in its financial  statements  the  identifiable  assets  acquired,  the
liabilities  assumed,  any controlling interest in the business and the goodwill
acquired.  SFAS No. 141R further  requires  that  acquisition-related  costs and
costs associated with  restructuring or exiting activities of an acquired entity
will be  expensed  as  incurred.  SFAS  No.  141R  also  establishes  disclosure
requirements that will require disclosure of the nature and financial effects of
the business  combination.  SFAS No. 141R will impact business  combinations for
the Company that may be completed on or after 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  condition  as the impact is solely
dependent  on the terms of any business  combination entered into by the Company
after June 29, 2009 and the terms of such transactions.

In February  2007,  the FASB issued  SFAS No.  159,  "The Fair Value  Option for
Financial Assets and Financial  Liabilities"  ("SFAS No. 159").  SFAS No. 159 is
effective for fiscal years  beginning  after  November 15, 2007.  This statement
provides  companies  with an option to  measure  selected  financial  assets and
liabilities at fair value.  The Company does not expect the adoption of SFAS No.
159 to have a material impact on its  consolidated  results of operations,  cash
flows or financial condition.

In September 2006, the FASB issued Statement No. 157, "Fair Value  Measurements"
("SFAS 157") which  defines fair value,  establishes  a framework  for measuring
fair value, and expands disclosures about fair value  measurements.  In February
2008,  the FASB  issued  FASB  Staff  Position  (FSP) No.  157-2,  delaying  the
effective date of SFAS 157 for nonfinancial assets and nonfinancial liabilities,
except  for  items  that  are  recognized  or  disclosed  at  fair  value  on  a
nonrecurring  basis.  The  delayed  portions  of SFAS 157 will be adopted by the
Company  beginning  in its fiscal  year ending  June 27,  2010,  while all other
portions of the standard will be adopted by the Company  beginning in its fiscal
year ending June 28, 2009,  as  required.  The Company does not expect that SFAS
157 will have a material impact on its consolidated results of operations,  cash
flows or financial condition.

                                       40



Item 7A.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

             The Company's earnings  and cash flows  are subject to fluctuations
             due to changes  in interest rates primarily from  its investment of
             available cash balances in money market funds  and investment grade
             corporate  and  U.S.  government   securities,  as  well   as  from
             outstanding debt. As of  June 29, 2008, the  Company's  outstanding
             debt, including current  maturities, approximated $68.1 million, of
             which  $68.0 million  was variable  rate debt. Each  25 basis point
             change  in interest rates would have a  corresponding effect on our
             interest expense of approximately $0.2 million as of June 29, 2008.
             Under its current policies, the  Company does not use interest rate
             derivative instruments to manage exposure to interest rate changes.

Item 8.      FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

             Annual Financial Statements: See Part IV,  Item 15 of  this  Annual
             Report on Form 10-K. Selected  Quarterly Financial  Data: See  Part
             II, Item 7 of this Annual Report on Form 10-K.

Item 9.      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
             ACCOUNTING AND FINANCIAL DISCLOSURE

             None.

Item 9A.     CONTROLS AND PROCEDURES

             Evaluation of Disclosure Controls and Procedures

             The Company's  management, with the participation  of the Company's
             Chief Executive Officer and Chief  Financial Officer, has evaluated
             the   effectiveness  of  the   Company's  disclosure  controls  and
             procedures,  as  defined  in Rules 13a-15(e)  or 15d-15(e)  of  the
             Securities Exchange Act of 1934, as of June 29, 2008. Based on that
             evaluation,  the  Company's   Chief  Executive  Officer  and  Chief
             Financial Officer concluded  that the Company's disclosure controls
             and procedures were effective as of June 29, 2008.






                                       41




          Management's Report on Internal Control Over Financial Reporting

          Management  of  the  Company  is  responsible  for   establishing  and
          maintaining   adequate  internal  control  over  financial  reporting.
          Internal  control  over  financial   reporting  is  defined  in  Rules
          13-a-15(f) and 15d-15(f) under the Exchange Act as a process  designed
          by, or under the supervision of, the Company's principal executive and
          principal financial officers and effectuated by the Company's board of
          directors,  management  and  other  personnel  to  provide  reasonable
          assurance  regarding the  reliability  of financial  reporting and the
          preparation  of  financial   statements   for  external   purposes  in
          accordance  with U.S.  generally  accepted  accounting  principles and
          includes those policies and procedures that:

           o  pertain to the  maintenance of records that, in reasonable detail,
              accurately and fairly reflect the transactions and dispositions of
              the assets of the Company;

           o  provide  reasonable assurance  that  transactions are  recorded as
              necessary  to   permit  preparation  of  financial  statements  in
              accordance  with  generally  accepted accounting  principles,  and
              that  receipts and  expenditures  of  the Company are  being  made
              only  in accordance with authorization of management and directors
              of the Company; and

           o  provide  reasonable  assurance  regarding  prevention  or   timely
              detection  of unauthorized acquisition, use or disposition of  the
              Company's  assets  that  could  have  a  material  effect  on  the
              financial statements.

          Because of its inherent  limitations,  internal control over financial
          reporting may not prevent or detect misstatements.  Also,  projections
          of any  evaluation of  effectiveness  to future periods are subject to
          the risk that  controls  may become  inadequate  because of changes in
          conditions,  or that the degree of  compliance  with the  policies  or
          procedures may deteriorate.

          Management  assessed  the  effectiveness  of  the  Company's  internal
          control over  financial  reporting as of June 29, 2008. In making this
          assessment,  management  used the  criteria  established  in "Internal
          Control-Integrated  Framework,"  issued by the Committee of Sponsoring
          Organizations of the Treadway Commission (COSO).

          Based on this  assessment,  management  believes  that, as of June 29,
          2008 the  Company's  internal  control  over  financial  reporting  is
          effective.

          The Company  acquired  DesignPac  Gifts LLC on April 30, 2008, and has
          excluded the acquired company from its assessment of and conclusion on
          the  effectiveness of internal control over financial  reporting.  The
          acquired business  constituted approximately 10.0% of  total assets as
          of June 29, 2008, and less than one percent of revenues for the fiscal
          year then ended.

          Ernst  &  Young  LLP,  the  Company's  independent  registered  public
          accounting  firm,  has  issued a report  on the  effectiveness  of the
          Company's  internal control over financial  reporting,  as of June 29,
          2008; their report is included below.


                                       42

          Report of Independent Registered Public Accounting Firm

          The Board of Directors and Stockholders of 1-800-FLOWERS.COM, Inc. and
          Subsidiaries

          We  have  audited   1-800-FLOWERS.COM,   Inc.  and  Subsidiaries  (the
          "Company")  internal  control over financial  reporting as of June 29,
          2008,  based on criteria  established in Internal  Control--Integrated
          Framework  issued by the Committee of Sponsoring  Organizations of the
          Treadway Commission (the COSO criteria).  The Company's  management is
          responsible for maintaining  effective internal control over financial
          reporting,  and for its  assessment of the  effectiveness  of internal
          control  over  financial   reporting   included  in  the  accompanying
          Management's Report on Internal Control Over Financial Reporting.  Our
          responsibility  is to express an  opinion  on the  company's  internal
          control over financial reporting based on our audit.

          We conducted our audit in accordance  with the standards of the Public
          Company  Accounting  Oversight Board (United States).  Those standards
          require  that we plan  and  perform  the  audit to  obtain  reasonable
          assurance  about whether  effective  internal  control over  financial
          reporting was maintained in all material respects.  Our audit included
          obtaining  an   understanding   of  internal  control  over  financial
          reporting, assessing the risk that a material weakness exists, testing
          and  evaluating  the design and  operating  effectiveness  of internal
          control  based  on  the  assessed  risk,  and  performing  such  other
          procedures as we considered necessary in the circumstances. We believe
          that our audit provides a reasonable basis for our opinion.

          A company's  internal  control over  financial  reporting is a process
          designed to provide reasonable  assurance regarding the reliability of
          financial  reporting and the  preparation of financial  statements for
          external  purposes in accordance  with generally  accepted  accounting
          principles.  A company's  internal  control over  financial  reporting
          includes  those  policies  and  procedures  that  (1)  pertain  to the
          maintenance  of records  that, in reasonable  detail,  accurately  and
          fairly reflect the  transactions and dispositions of the assets of the
          company;  (2)  provide  reasonable  assurance  that  transactions  are
          recorded as necessary to permit preparation of financial statements in
          accordance with generally  accepted  accounting  principles,  and that
          receipts  and  expenditures  of the  company  are  being  made only in
          accordance  with  authorizations  of  management  and directors of the
          company;  and (3) provide reasonable assurance regarding prevention or
          timely detection of unauthorized  acquisition,  use, or disposition of
          the  company's  assets  that  could  have  a  material  effect  on the
          financial statements.

          Because of its inherent  limitations,  internal control over financial
          reporting may not prevent or detect misstatements.  Also,  projections
          of any  evaluation of  effectiveness  to future periods are subject to
          the risk that  controls  may become  inadequate  because of changes in
          conditions,  or that the degree of  compliance  with the  policies  or
          procedures may deteriorate.

          As  indicated  in the  accompanying  Management's  Report on  Internal
          Control  Over  Financial  Reporting,  management's  assessment  of and
          conclusion on the  effectiveness  of internal  control over  financial
          reporting  did not include the internal  controls of  DesignPac  Gifts
          LLC,  which is  included  in the fiscal  2008  consolidated  financial
          statements of the Company and constituted approximately 10.0% of total
          assets as of June 29, 2008 and less than one  percent of revenues  for
          the  fiscal  year then  ended.  Our  audit of  internal  control  over
          financial  reporting of the Company also did not include an evaluation
          of the internal  control over financial  reporting of DesignPac  Gifts
          LLC.

          In our opinion,  1-800-FLOWERS.COM,  Inc. and Subsidiaries maintained,
          in all material  respects,  effective  internal control over financial
          reporting as of June 29, 2008, based on the COSO criteria.

          We have also audited,  in accordance  with the standards of the Public
          Company Accounting  Oversight Board (United States),  the consolidated
          balance sheets of 1-800-FLOWERS.COM,  Inc. and Subsidiaries as of June
          29, 2008 and July 1, 2007, and the related consolidated  statements of

                                       43

          income,  stockholders'  equity,  and cash  flows for each of the three
          years in the period ended June 29, 2008 and our report dated September
          10, 2008 expressed an unqualified opinion thereon.

                                                          /s/ Ernst & Young LLP

          Melville, New York
          September 10, 2008


          Changes in Internal Control over Financial Reporting

          There were no changes in our internal control over financial reporting
          during the fiscal  quarter  ended June 29,  2008 that have  materially
          affected, or are reasonably likely to materially affect, the Company's
          internal control over financial reporting.

Item 9B.  OTHER INFORMATION

          None.














                                       44




                                    PART III

Item 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

          The  information  set forth in the Proxy Statement for the 2008 annual
          meeting of stockholders is incorporated herein by reference.

          The Company  maintains a Code of Ethics,  which is  applicable  to all
          directors,  officers and employees on the Investor Relations-Corporate
          Governance tab of the Company's  website at  www.1800flowers.com.  Any
          amendment  or  waiver  to the  Code  of  Ethics  that  applies  to our
          directors or executive  officers will be posted on our website or in a
          report filed with the SEC on Form 8-K. A copy of the Code of Ethics is
          available without charge upon written request to: Investor  Relations,
          1-800-FLOWERS.COM, Inc., One Old Country Road, Suite 500, Carle Place,
          New York 11514.

Item 11.  EXECUTIVE COMPENSATION

          The  information  set forth in the Proxy Statement for the 2008 Annual
          Meeting of Stockholders is incorporated herein by reference.

Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
          RELATED STOCKHOLDER MATTERS

          The  information  set forth in the Proxy Statement for the 2008 Annual
          Meeting of Stockholders is incorporated herein by reference.

Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
          INDEPENDENCE

          The  information  set forth in the Proxy Statement for the 2008 Annual
          Meeting of Stockholders is incorporated herein by reference.

Item 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

          The  information  set forth in the Proxy Statement for the 2008 Annual
          Meeting of Stockholders is incorporated herein by reference.










                                       45



                                     PART IV

Item 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

 (a) (1) Index to Consolidated Financial Statements:
                                                                            Page
                                                                            ----
    Report of Independent Registered Public Accounting Firm                  F-1
    Consolidated Balance Sheets as of June 29, 2008 and July 1, 2007         F-2
    Consolidated Statements of Income for the years ended June 29, 2008,
     July 1, 2007 and July 2, 2006                                           F-3
    Consolidated Statements of Stockholders' Equity for the years ended
     June 29, 2008, July 1, 2007 and July 2, 2006                            F-4
    Consolidated Statements of Cash Flows for the years ended June 29, 2008,
     July 1, 2007 and July 2, 2006                                           F-5
    Notes to Consolidated Financial Statements                               F-6

 (a) (2) Index to Financial Statement Schedules:

    Schedule II - Valuation and Qualifying Accounts                          S-1

    All other information and financial statement schedules are omitted because
    they  are   not  applicable,  or  not  required, or  because  the   required
    information is included in the  consolidated financial  statements or  notes
    thereto.

 (a) (3) Index to Exhibits

    Exhibits  marked with  an asterisk (*)  are  incorporated  by  reference  to
    exhibits  or  appendices  previously filed  with the Securities and Exchange
    Commission, as  indicated by the reference  in brackets.  All other exhibits
    are  filed  herewith. Exhibits  10.3, 10.4, 10.5, 10.6, 10.7  and  10.8  are
    management contracts or compensatory plans or arrangements.

Exhibit   Description
-------   -----------
   *3.1   Third   Amended  and   Restated      Certificate   of   Incorporation.
          (Registration Statement on Form S-1/A (No. 333-78985) filed on July 9,
          1999, Exhibit 3.1)
   *3.2   Amendment   No. 1  to  Third  Amended  and   Restated  Certificate  of
          Incorporation.  (Registration  Statement on Form S-1/A (No. 333-78985)
          filed on July 22, 1999, Exhibit 3.2)
   *3.3   Amended and Restated By-laws. (Registration Statement on Form S-1
          (No 333-78985) filed on May 21, 1999, Exhibit 3.3)
   *4.1   Specimen Class A common stock certificate. (Registration Statement on
          Form S-1/A (No. 333-78985 filed on July 9, 1999, Exhibit 4.1)
   *4.2   See  Exhibits 3.1, 3.2 and 3.3 for  provisions of  the  Certificate of
          Incorporation  and  By-laws of  the Registrant  defining the rights of
          holders of Common Stock of the Registrant.
   *10.3  1997 Stock Option Plan, as  amended. (Registration  Statement on  Form
          S-1 (no. 333-78985) filed on May 21, 1999, Exhibit 10.10)

                                       46

   *10.4  1999  Stock  Incentive  Plan. (Registration  Statement  on  Form S-1/A
          (No. 333-78985) filed on July 27, 1999, Exhibit 10.18)
   *10.5  Employment  Agreement, effective as of July 1, 1999, between James  F.
          McCann and 1-800-FLOWERS.COM, Inc. (Form  S-1/A  (No. 333-78985) filed
          on July 9, 1999, Exhibit 10.19)
   *10.6  Employment   Agreement,  effective   as   of   July 1, 1999,   between
          Christopher  G. McCann and  1-800-FLOWERS.COM,  Inc.  (Form S-1/A (No.
          333-78985) filed on July 9, 1999, Exhibit 10.20)
   *10.7  2003  Long  Term  Incentive and  Share Award  Plan. (Definitive  Proxy
          Statement filed on October 27, 2003 (No. 000-26841), Annex D)
   *10.8  Employment   Agreement,  dated  as  of   May 2,  2006,  by  and  among
          1-800-FLOWERS.COM, Inc., Fannie May Confections Brands, Inc. and David
          Taiclet.
   *10.9  Lease,  dated  May 20,  2005,  between  Treeline   Mineola,   LLC  and
          1-800-FLOWERS.COM, Inc. (Annual  Report on  Form 10-K for  the  fiscal
          year ended July 3, 2005 filed on September 15, 2005, Exhibit 10.26)
   10.12  Offer letter to Julie McCann Mulligan
   10.13  Offer letter  to Timothy J. Hopkins  (quarterly report  on  Form  10Q,
          filed on November 8, 2007, Exhibit 10.3)
   10.14  Offer letter  to Stephen Bozzo (quarterly report on Form 10Q, filed on
          November 8, 2007, Exhibit 10.4)
   10.15  Form of Restricted Share Agreement under 2003 Long Term Incentive  and
          Share Award Plan
   10.16  Form  of  Incentive  Stock  Option  Agreement  under  2003  Long  Term
          Incentive and Share Award Plan
   10.17  Form of  Non-Statutory Stock  Option  Agreement under  2003  Long Term
          Incentive and Share Award Plan
   10.18  Amended and Restated  Credit  Agreement dated  as  of  August 28, 2008
          among 1-800-Flowers.com, Inc., The  Subsidiary Borrowers Party Hereto,
          The  Guarantors  Party Hereto, The Lenders  Party Hereto and JP Morgan
          Chase Bank, N.A. as Administrative Agent.
    21.1  Subsidiaries of the Registrant.
    23.1  Consent of Independent Registered Public Accounting Firm.
    24.1  Powers of Attorney (included in the signature page).
    31.1  Certifications  pursuant to  Section 302 of  the Sarbanes-Oxley Act of
          2002.
    32.1  Certifications  pursuant to  Section 906 of  the Sarbanes-Oxley Act of
          2002.
-----------------------------






















                                       47

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this Annual Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Dated: September 12, 2008                  1-800-FLOWERS.COM, Inc.

                                           By:      /s/ James F. McCann
                                           ----------------------------
                                           James F. McCann
                                           Chief Executive Officer
                                           Chairman of the Board of Directors
                                           (Principal Executive Officer)

                                POWER OF ATTORNEY

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the dates indicated below:


Dated: September 12, 2008                  By:   /s/ James F. McCann
                                           -------------------------
                                           James F. McCann
                                           Chief Executive Officer
                                           Chairman of the Board of Directors
                                           (Principal Executive Officer)

Dated: September 12, 2008                  By:   /s/ William E. Shea
                                           --------------------------
                                           William E. Shea
                                           Senior Vice President Finance and
                                           Administration (Principal Financial
                                           and Accounting Officer)
















                                       48





Dated: September 12, 2008                  By:   /s/ Christopher G. McCann
                                           -------------------------------
                                           Christopher G. McCann
                                           Director, President

Dated: September 12, 2008                  By:   /s/ Lawrence Calcano
                                           -------------------------------
                                           Lawrence Calcano
                                           Director

Dated: September 12, 2008                  By:   /s/ James A. Cannavino
                                           -------------------------------
                                           James A. Cannavino
                                           Director

Dated: September 12, 2008                  By:   /s/ John J. Conefry, Jr.
                                           -------------------------------
                                           John J. Conefry, Jr.
                                           Director

Dated: September 12, 2008                  By:   /s/ Leonard J. Elmore
                                           -------------------------------
                                           Leonard J. Elmore
                                           Director

Dated: September 12, 2008                  By:   /s/ Jan L. Murley
                                           -------------------------------
                                           Jan L. Murley
                                           Director

Dated: September 12, 2008                  By:   /s/ Jeffrey C. Walker
                                           -------------------------------
                                           Jeffrey C. Walker
                                           Director















                                       49

Report of Independent Registered Public Accounting Firm



The  Board of Directors and Stockholders of
1-800-FLOWERS.COM, Inc. and Subsidiaries

We   have   audited   the   accompanying    consolidated   balance   sheets   of
1-800-FLOWERS.COM, Inc. and Subsidiaries (the "Company") as of June 29, 2008 and
July 1, 2007, and the related consolidated  statements of income,  stockholders'
equity,  and cash flows for each of the three years in the period ended June 29,
2008. Our audits also included the financial  statement  schedule  listed in the
index  at  Item  15(a).   These  financial   statements  and  schedule  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the consolidated financial position of 1-800-FLOWERS.COM,
Inc. and  Subsidiaries  at June 29, 2008 and July 1, 2007, and the  consolidated
results of their  operations and their cash flows for each of the three years in
the period ended June 29,  2008,  in  conformity  with U.S.  generally  accepted
accounting  principles.  Also, in our opinion,  the related financial  statement
schedule, when considered in relation to the basic financial statements taken as
a whole,  presents  fairly in all material  respects the  information  set forth
therein.

As  discussed in Note 9 to the  consolidated  financial  statements  the Company
adopted FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes -
an interpretation of FASB Statement No. 109," effective July 2, 2007.

We also have  audited,  in accordance  with the standards of the Public  Company
Accounting  Oversight  Board  (United  States),   1-800-FLOWERS.COM,   Inc.  and
Subsidiaries' internal  control  over  financial  reporting as of June 29, 2008,
based on criteria established in Internal Control-Integrated Framework issued by
the Committee of Sponsoring  Organizations  of the Treadway  Commission  and our
report dated September 10, 2008 expressed an unqualified opinion thereon.


                                                  /s/  Ernst  & Young LLP

Melville, New York
September 10, 2008



                                      F-1




                                        1-800-FLOWERS.COM, Inc. and Subsidiaries
                                              Consolidated Balance Sheets
                                           (in thousands, except share data)


                                                                                                   
                                                                                          June, 29      July 1,
                                                                                            2008         2007
                                                                                        ------------- ------------

Assets
Current assets:
 Cash and equivalents                                                                    $ 12,124      $ 16,087
 Receivables, net                                                                          13,443        17,010
 Inventories                                                                               67,283        62,051
 Deferred income taxes                                                                      7,977        19,260
 Prepaid and other                                                                          8,723         9,576
                                                                                        ------------- ------------
      Total current assets                                                                109,550       123,984
Property, plant and equipment, net                                                         65,737        62,561
Goodwill                                                                                  124,164       112,131
Other intangibles, net                                                                     68,760        52,750
Other assets                                                                                3,127         1,081
                                                                                        ------------- ------------
Total assets                                                                             $371,338      $352,507
                                                                                        ============= ============
Liabilities and Stockholders' Equity
Current liabilities:
 Accounts payable and accrued expenses                                                    $63,248       $62,433
 Current maturities of long-term debt and obligations under capital leases                 12,886        10,132
                                                                                        ------------- ------------
      Total current liabilities                                                            76,134        72,565
Long-term debt and obligations under capital leases                                        55,250        68,000
Deferred income taxes                                                                       5,527         8,230
Other liabilities                                                                           2,962         2,681
                                                                                        ------------- ------------
Total liabilities                                                                         139,873       151,476
Commitments and contingencies
Stockholders' equity:
 Preferred stock, $.01 par value, 10,000,000 shares authorized, none issued                     -             -
 Class A common stock, $.01 par value, 200,000,000 shares authorized, 31,368,241
    and 30,298,019 shares issued in 2008 and 2007, respectively                               314           303
 Class B common stock, $.01 par value, 200,000,000 shares authorized, 42,138,465
    shares issued in 2008 and 2007                                                            421           421
 Additional paid-in capital                                                               279,718       269,270
 Retained deficit                                                                         (17,839)      (38,893)
 Treasury stock, at cost,4,724,326 and 4,590,717 Class A shares in 2008 and 2007,
    respectively, and 5,280,000 Class B shares                                            (31,149)      (30,070)
                                                                                        ------------- ------------
      Total stockholders' equity                                                          231,465       201,031
                                                                                        ------------- ------------
Total liabilities and stockholders' equity                                               $371,338      $352,507
                                                                                        ============= ============


See accompanying notes.



                                      F-2



                                        1-800-FLOWERS.COM, Inc. and Subsidiaries
                                            Consolidated Statements of Income
                                          (in thousands, except per share data)

                                                                                                

                                                                                   Years ended
                                                                    --------------------------------------------
                                                                       June 29,       July 1,        July 2,
                                                                        2008           2007            2006
                                                                    -------------- --------------  -------------

Net revenues                                                           919,392       $912,598        $781,741
Cost of revenues                                                       525,638        520,132         456,097
                                                                    -------------- --------------  -------------
Gross profit                                                           393,754        392,466         325,644
Operating expenses:
 Marketing and sales                                                   256,604        262,303         239,573
 Technology and development                                             21,539         21,316          19,819
 General and administrative                                             57,881         56,017          43,978
 Depreciation and amortization                                          20,363         17,837          15,765
                                                                    -------------- --------------  -------------
      Total operating expenses                                         356,387        357,473         319,135
                                                                    -------------- --------------  -------------
Operating income                                                        37,367         34,993           6,509
Other income (expense):
 Interest income                                                           999          1,381           1,260
 Interest expense                                                       (5,081)        (7,390)         (1,407)
 Other, net                                                                 85             25               6
                                                                    -------------- --------------  -------------
       Total other income (expense), net                                (3,997)        (5,984)           (141)
                                                                    -------------- --------------  -------------
Income before income taxes                                              33,370         29,009           6,368
Income tax expense                                                      12,316         11,891           3,181
                                                                    -------------- --------------  -------------
Net income                                                              21,054        $17,118          $3,187
                                                                    ============== ==============  =============
Net income per common share:
 Basic                                                                   $0.33          $0.27           $0.05
                                                                    ============== ==============  =============
 Diluted                                                                 $0.32          $0.26           $0.05
                                                                    ============== ==============  =============


Weighted average shares used in the calculation of net income
 per common share:
 Basic                                                                  63,074         63,786          65,100
                                                                     ============== ==============  =============
 Diluted                                                                65,458         65,526          66,429
                                                                    ============== ==============  =============


See accompanying notes.


                                      F-3






F-4

                                 1-800-FLOWERS.COM, Inc. and Subsidiaries
                             Consolidated Statements of Stockholders' Equity
                        Years ended June 29, 2008, July 1, 2007 and July 2, 2006
                                    (in thousands, except share data)


                                                                                            
                               Common Stock
                     --------------------------------------
                          Class A             Class B         Additional              Unearned     Treasury Stock
                     ------------------- -------------------   Paid-in    Retained   Stock-Based  ------------------   Stockholders'
                      Shares     Amount   Shares      Amount   Capital    Deficit    Compensation   Shares     Amount     Equity
                     ---------- -------- ----------- -------- ---------- ----------- ------------ ----------- --------- ------------
Balance at
 July 3, 2005        29,888,603   $300   42,144,465    $421    $258,848   $(59,198)    $(1,116)    6,660,850  $(12,921)  $186,334
Exercise of
 employee stock
 options and
 vesting of
 resricted stock        133,499      1            -       -         649          -           -             -         -        650
Stock-based
 compensation                 -      -            -       -       4,284          -           -        (7,500)       52      4,336
Reclassification of
 unvested restricted
 stock upon adoption
 of SFAS No. 123R-
 Share Based Payment   (155,919)    (2)           -       -      (1,114)         -       1,116             -         -          -
Stock repurchase
 Program                      -      -            -       -           -          -           -       182,000    (1,324)    (1,324)
Conversion of Class B
 common stock
 into Class A common
 stock                    6,000      -      (6,000)       -           -          -           -             -         -          -
Net Income                    -      -           -        -           -      3,187           -             -         -      3,187
                     ---------- -------- ----------- -------- ---------- ----------- ------------ ---------- ---------- ------------
Balance at July 2,
2006                 29,872,183    299   42,138,465     421     262,667    (56,011)          -     6,835,350   (14,193)   193,183


Exercise of
 employee stock
 options and vesting
 of restricted stock    425,836      4            -       -       2,003          -           -             -         -      2,007
Stock-based
 compensation                 -      -            -       -       4,600          -           -             -         -      4,600
Stock repurchase
 program                      -      -            -       -           -          -           -     3,035,367   (15,877)   (15,877)
Net Income                    -      -            -       -           -     17,118           -             -         -     17,118

                     ---------- -------- ----------- -------- ---------- ----------- ------------ ----------- ---------- -----------
Balance at July 1,
 2007                30,298,019    303   42,138,465     421     269,270    (38,893)          -     9,870,717   (30,070)   201,031

Exercise of
 employee stock
 options and vesting
 of restricted stock  1,070,222     11            -       -       4,718          -           -             -         -      4,729
Stock-based
 compensation                 -      -            -       -       3,534          -           -             -         -      3,534
Excess tax benefit
 from stock based
 compensation                 -      -            -       -       2,196          -           -             -         -      2,196
Stock repurchase
 program                      -      -            -       -           -          -           -       133,609    (1,079)    (1,079)
Net Income                    -      -            -       -           -     21,054           -             -         -     21,054
                     ---------- -------- ----------- -------- ---------- ----------- ------------ ---------- ---------- ------------
Balance at
June 29, 2008        31,368,241   $314   42,138,465    $421    $279,718   $(17,839)          -    10,004,326  $(31,149)  $231,465




See accompanying notes.





                                      F-4



                                        1-800-FLOWERS.COM, Inc. and Subsidiaries
                                          Consolidated Statements of Cash Flows
                                                      (in thousands)


                                                                                                     
                                                                                          Years ended
                                                                        ------------------------------------------------
                                                                         June 29, 2008    July 1, 2007   July 2, 2006
                                                                        ---------------  --------------- ---------------

Operating activities:
Net income                                                                  $21,054         $17,118         $3,187
Reconciliation of net income to net cash provided by operations:
      Depreciation and amortization                                          20,363          17,837         15,765
      Deferred income taxes                                                   8,581          10,325          2,175
      Bad debt expense                                                        2,203           1,880            476
      Stock-based compensation                                                3,534           4,600          4,336
      Excess tax benefits from stock based compensation                      (2,196)              -              -
      Other non-cash items                                                      810            (791)           125
 Changes in operating items, excluding the effects of
  acquisitions:
      Receivables                                                             1,422          (5,737)         1,316
      Inventories                                                            (4,410)         (9,800)        (9,106)
      Prepaid and other                                                         889             771          5,513
      Accounts payable and accrued expenses                                   7,284          (5,562)        (1,046)
      Other assets                                                           (1,926)            177         (6,208)
      Other liabilities                                                         294           1,523         (1,795)
                                                                        ---------------  --------------- ---------------
 Net cash provided by operating activities                                   57,902          32,341         14,738

Investing activities:
Capital expenditures                                                        (19,942)        (18,043)       (20,491)
Acquisitions, net of cash acquired                                          (37,849)           (347)       (96,874)
Dispositions                                                                    463           1,463              -
Proceeds from sales of investments                                                -               -          6,647
Other                                                                          (387)            242              2
                                                                        ---------------  --------------- ---------------
 Net cash used in investing activities                                      (57,715)        (16,685)      (110,716)

Financing activities:
Acquisition of treasury stock                                                (1,079)        (15,877)        (1,324)
Excess tax benefits from stock based compensation                             2,196               -              -
Proceeds from employee stock options                                          4,729           2,007            558
Proceeds from bank borrowings and revolving line of                         110,000         110,000        105,000
  credit
Repayment of notes payable and bank borrowings                             (119,966)       (119,913)       (22,482)
Repayment of capital lease obligations                                          (30)           (385)        (1,228)
Other                                                                             -               -             92
                                                                        ---------------  --------------- ---------------
 Net cash (used in) provided by financing activities                         (4,150)        (24,168)        80,616
                                                                        ---------------  --------------- ---------------
Net change in cash and equivalents                                           (3,963)         (8,512)       (15,362)
Cash and equivalents:
 Beginning of year                                                           16,087          24,599         39,961
                                                                        ---------------  --------------- ---------------
 End of year                                                                $12,124         $16,087        $24,599
                                                                        ===============  =============== ===============



Supplemental Cash Flow Information:
 - Interest paid amounted to $5,081, $7,390, and $1,407 for the years ended June
    29, 2008, July 1, 2007 and July 2, 2006, respectively.
 - The Company paid income taxes of approximately $2,141, $1,429 and $23, net of
    tax refunds received, for the years ended June 29, 2008, July 1, 2007, and
    July 2, 2006, respectively.

See accompanying notes.





                                      F-5




                   Notes to Consolidated Financial Statements

Note 1. Description of Business

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)  offers  the  best  of  both  worlds:  exquisite
arrangements individually created by some of the nation's top floral artists and
hand-delivered the same day, and spectacular flowers shipped overnight under our
Fresh From Our  Growers(R)  program.  As always,  100 percent  satisfaction  and
freshness  are  guaranteed.   The  Company's  BloomNet(R)   (www.mybloomnet.net)
international floral wire service provides a broad range of quality products and
value-added  services  designed  to help  professional  florists  to 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);  exceptional  cookies and baked
gifts  from  Cheryl&Co.(R)  (1-800-443-8124  or  www.cherylandco.com);   premium
chocolates and confections from Fannie May Confections Brands (www.fanniemay.com
and     www.harrylondon.com);     gourmet     foods    from     Greatfood.com(R)
(www.greatfood.com);   wine  gifts   from   Ambrosia(R)   (www.ambrosia.com   or
www.winetasting.com);      gift      baskets      from      1-800-BASKETS.COM(R)
(www.1800baskets.com) and DesignPac Giftssm  (www.designpac.com) 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).
1-800-FLOWERS.COM, Inc. stock is traded on the NASDAQ Global Select Market under
ticker symbol FLWS.

Note 2. Significant Accounting Policies

Fiscal Year

The  Company's  fiscal  year is a 52- or  53-week  period  ending on the  Sunday
nearest to June 30.  Fiscal years 2008,  2007 and 2006,  which ended on June 29,
2008, July 1, 2007 and July 2, 2006, respectively, consisted of 52 weeks.

Basis of Presentation

The consolidated financial statements include the accounts of 1-800-FLOWERS.COM,
Inc.  and its  wholly-owned  subsidiaries  (collectively,  the  "Company").  All
significant  intercompany  accounts and  transactions  have been  eliminated  in
consolidation.

Use of Estimates

The  preparation  of financial  statements  in  conformity  with U.S.  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that affect the amounts  reported in the financial  statements  and
accompanying notes. Actual results could differ from those estimates.

Cash and Equivalents

Cash and equivalents  consist of demand deposits with banks, highly liquid money
market  funds,  United  States  government   securities,   overnight  repurchase
agreements  and  commercial  paper with  maturities of three months or less when
purchased.

Inventories

Inventories  are  valued  at the lower of cost or  market  using  the  first-in,
first-out method of accounting.

Property, Plant and Equipment

Property,  plant and  equipment  is  recorded  at cost  reduced  by  accumulated
depreciation.  Depreciation  expense is  recognized  over the assets'  estimated
useful  lives  using  the  straight-line   method.   Amortization  of  leasehold
improvements  and capital leases are calculated using the  straight-line  method
over the shorter of the lease terms,  including  renewal options  expected to be
exercised, or estimated useful lives of the improvements. Estimated useful lives
are   periodically   reviewed,   and  where   appropriate,   changes   are  made
prospectively.  The Company's  property plant and equipment is depreciated using
the following estimated lives:


                                      F-6


           Buildings                                           40 years
           Leasehold Improvements                            3-10 years
           Furniture, Fixtures and Equipment                 3-10 years
           Software                                           3-5 years

Goodwill and Other Intangible Assets

Goodwill and indefinite-lived  intangibles are not amortized,  but are evaluated
annually for impairment.  The Company performs its annual  impairment test as of
the  first day of its  fiscal  fourth  quarter,  or  earlier  if  indicators  of
potential  impairment  exist,  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. To date, there has been no impairment of these assets.

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.

Deferred Catalog Costs

The Company  capitalizes the costs of producing and  distributing  its catalogs.
These  costs are  amortized  in direct  proportion  with  actual  sales from the
corresponding  catalog  over a period not to exceed  26-weeks.  Included  within
prepaid and other  current  assets was $3.4 million and $4.3 million at June 29,
2008 and July 1, 2007, respectively, relating to prepaid catalog expenses.

Investments

The Company considers all of its debt and equity securities,  for which there is
a determinable fair market value and no restrictions on the Company's ability to
sell  within  the  next 12  months,  as  available-for-sale.  Available-for-sale
securities are carried at fair value,  with unrealized gains and losses reported
as a separate  component of stockholders'  equity.  For the years ended June 29,
2008, July 1, 2007 and July 2, 2006,  there were no significant unrealized gains
or losses.  Realized  gains and losses are  included in other  income.  The cost
basis  for  realized  gains  and  losses  on  available-for-sale  securities  is
determined on a specific identification basis.

Fair Values of Financial Instruments

The  recorded  amounts  of  the  Company's  cash  and  equivalents,   short-term
investments,  receivables, accounts payable, and accrued liabilities approximate
their fair values  principally  because of the short-term nature of these items.
The fair value of investments, including available-for-sale securities, is based
on  quoted  market  prices  where  available.  The fair  value of the  Company's
long-term  obligations,  the majority of which are carried at a variable rate of
interest,  are  estimated  based on the current rates offered to the Company for
obligations of similar terms and  maturities.  Under this method,  the Company's
fair value of long-term  obligations  was not  significantly  different than the
carrying values at June 29, 2008 and July 1, 2007.

Concentration of Credit Risk


Financial  instruments  that  potentially  subject  the  Company to  significant
concentrations  of credit  risk  consist  principally  of cash and  equivalents,
investments and accounts receivable.  The Company maintains cash and equivalents
and investments with high credit, quality financial institutions.  Concentration
of credit  risk with  respect to  accounts  receivable  are  limited  due to the
Company's large number of customers and their  dispersion  throughout the United
States,  and the fact that a substantial  portion of receivables  are related to
balances owed by major credit card companies.  Allowances  relating to consumer,
corporate and franchise  accounts  receivable ($1.4 million at June 29, 2008 and
July 1, 2007) have been recorded based upon previous experience and management's
evaluation.

                                      F-7


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 and do not include sales tax.  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.

Cost of Revenues

Cost of revenues  consists  primarily  of florist  fulfillment  costs (fees paid
directly to florists),  the cost of floral and non-floral  merchandise sold from
inventory or through third parties,  and associated costs including  inbound and
outbound  shipping  charges.  Additionally,  cost of revenues includes labor and
facility costs related to manufacturing and production operations.

Marketing and Sales

Marketing and sales expense  consists  primarily of advertising  and promotional
expenditures, catalog costs, online portal and search expenses, retail store and
fulfillment  operations  (other than costs  included in cost of  revenues),  and
customer  service  center  expenses,  as well as the  operating  expenses of the
Company's   departments   engaged  in  marketing,   selling  and   merchandising
activities.

The Company expenses all advertising  costs, with the exception of catalog costs
(see Deferred Catalog Costs above) at the time the advertisement is first shown.
Advertising  expense was $127.2  million,  $133.2 million and $127.4 million for
the years ended June 29, 2008, July 1, 2007 and July 2, 2006, respectively.

Technology and Development

Technology and development  expense consists  primarily of payroll and operating
expenses of the Company's  information  technology group,  costs associated with
its web sites,  including  hosting,  content  development  and  maintenance  and
support  costs  related  to  the  Company's  order  entry,   customer   service,
fulfillment  and database  systems.  Costs  associated  with the  acquisition or
development  of software  for internal  use are  capitalized  if the software is
expected to have a useful life beyond one year and amortized over the software's
useful  life,  typically  three to five years.  Costs  associated  with  repair,
maintenance  or the  development of web site content are expensed as incurred as
the useful lives of such software modifications are less than one year.

Stock-Based Compensation

The Company records compensation expense associated with stock options and other
forms of equity  compensation in accordance  with SFAS No. 123(R),  "Share-Based
Payment."  The  Company  adopted the  modified  prospective  application  method
provided for under SFAS 123(R) and  consequently did  not  retroactively  adjust
results from prior periods.  Under this  transition  method,  compensation  cost
associated  with stock  options and awards  recognized in the fiscal years ended
June 29, 2008, July 1, 2007 and July 2, 2006, includes: (a) compensation cost of
all  stock-based  payments  granted  prior to, but not yet vested as of, July 4,
2005 (based on grant-date  fair value  estimated in accordance with the original
provisions  of SFAS No.  123),  and (b)  compensation  cost for all  stock-based
payments granted  subsequent to July 3, 2005 (based on the grant-date fair value
estimated in accordance with the new provision of SFAS No. 123(R)).

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  liabilites  are realized or settled.  During  fiscal
2008, the Company adopted the provisions of Financial Accounting Standards Board
Interpretation   No.  48  "Accounting  for   Uncertainty  in  Income  Taxes - an
interpretation  of FASB  Statement No. 109" ("FIN 48")  prescribes a recognition
and  measurement of tax positions taken or expected to be taken in a tax return.
For those benefits to be recognized, a tax position must be more-likely-than-not
to be sustained upon  examination by taxing  authorities.  There was no material
impact on the Company's consolidated financial position or results of operations
as a result of the adoption of the provisions of FIN 48.

Comprehensive Income

For the years ended June 29, 2008,  July 1, 2007 and July 2, 2006, the Company's
comprehensive  income  was equal to the  respective  net  income for each of the
periods presented.

                                      F-8

Net Income Per Share

Basic net income per common share is computed using the weighted-average  number
of common shares outstanding during the period.  Diluted net income per share is
computed  using  the  weighted-average  number  of common  and  dilutive  common
equivalent shares (consisting primarily of employee stock options and restricted
stock awards) outstanding during the period.

Recent Accounting Pronouncements

In May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally  Accepted
Accounting  Principles"  ("SFAS No.  162").  SFAS No. 162 is intended to improve
financial  reporting by identifying a consistent  framework,  or hierarchy,  for
selecting  accounting  principles to be used in preparing  financial  statements
that are presented in conformity with generally accepted accounting  principles.
SFAS No. 162 will become  effective 60 days  following the SEC's approval of the
Public Company  Accounting  Oversight  Board  amendments to AU Section 411, "The
Meaning of Present  Fairly in  Conformity  With  Generally  Accepted  Accounting
Principles."  The Company does not  anticipate the adoption of SFAS No. 162 will
have a material  impact on its results of  operations,  cash flows or  financial
condition.

In April 2008, the FASB issued FSP FAS 142-3,  "Determination of the Useful Life
of  Intangible  Assets" ("FSP FAS 142-3"). FSP FAS 142-3 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 FASB Statement
No.142,  Goodwill  and  Other  Intangible  Asset.  FSP FAS 142-3  also  requires
expanded  disclosure  related to the  determination  of intangible  asset useful
lives.  FSP FAS 142-3 is effective  for financial  statements  issued for fiscal
years beginning after December 15, 2008, and interim periods within those fiscal
years.  The Company is currently  evaluating the impact that the adoption of FSP
FAS 142-3  will have on its  consolidated  results of  operation,  cash flows or
financial condition.

In March 2008, the FASB issued Statement No.161,  "Disclosures  about Derivative
Instruments and Hedging  Activities"  ("SFAS No. 161").  SFAS No. 161 amends and
expands the  disclosure  requirements  of  Statement  No. 133,  "Accounting  for
Derivative   Instruments  and  Hedging  Activities"  and  requires   qualitative
disclosures   about   objectives  and  strategies  for  using   derivatives  and
quantitative  disclosures  about  credit-risk-related   contingent  features  in
derivative agreements. SFAS No. 161 is effective for financial statements issued
for fiscal years and interim  periods  beginning  after  November 15, 2008.  The
Company  does not  anticipate  the adoption of SFAS No. 161 will have a material
impact on its results of operations, cash flows or financial condition.

In December 2007, the FASB issued  Statement No. 141 (revised  2007),  "Business
Combinations"  ("SFAS No.  141R").  SFAS No.  141R  establishes  principles  and
requirements  for how the  acquirer  in a business  combination  recognizes  and
measures in its financial  statements  the  identifiable  assets  acquired,  the
liabilities  assumed,  any controlling interest in the business and the goodwill
acquired.  SFAS No. 141R further  requires  that  acquisition-related  costs and
costs associated with  restructuring or exiting activities of an acquired entity
will be  expensed  as  incurred.  SFAS  No.  141R  also  establishes  disclosure
requirements that will require disclosure of the nature and financial effects of
the business  combination.  SFAS No. 141R will impact business  combinations for
the Company that may be completed on or after 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  condition  as the impact is solely
dependent on the terms of any business  combination  entered into by the Company
after June 29, 2009.

In February  2007,  the FASB issued  SFAS No.  159,  "The Fair Value  Option for
Financial Assets and Financial  Liabilities"  ("SFAS No. 159").  SFAS No. 159 is
effective for fiscal years  beginning  after  November 15, 2007.  This statement
provides  companies  with an option to  measure  selected  financial  assets and
liabilities at fair value.  The Company does not expect the adoption of SFAS No.
159 to have a material impact on its  consolidated  results of operations,  cash
flows or financial condition.

In September 2006, the FASB issued Statement No. 157, "Fair Value  Measurements"
("SFAS 157") which  defines fair value,  establishes  a framework  for measuring
fair value, and expands disclosures about fair value  measurements.  In February

                                      F-9


2008,  the FASB  issued  FASB  Staff  Position  (FSP) No.  157-2,  delaying  the
effective date of SFAS 157 for nonfinancial assets and nonfinancial liabilities,
except  for  items  that  are  recognized  or  disclosed  at  fair  value  on  a
nonrecurring  basis.  The  delayed  portions  of SFAS 157 will be adopted by the
Company  beginning  in its fiscal  year ending  June 27,  2010,  while all other
portions of the standard will be adopted by the Company  beginning in its fiscal
year ending June 28, 2009,  as  required.  The Company does not expect that SFAS
157 will have a material impact on its consolidated results of operations,  cash
flows or financial condition.

Reclassifications

Certain  balances in the prior  fiscal years have been  reclassified  to conform
with the presentation in the current fiscal year.

Note 3 - Net Income Per Common Share

The following table sets forth  the computation of basic and  diluted net income
per common share:


                                                                                                     
                                                                                         Years Ended
                                                                 ----------------------------------------------------------
                                                                   June 29, 2008        July 1, 2007       July 2, 2006
                                                                 ----------------- ------------------ ---------------------
                                                                            (in thousands, except per share data)
            Numerator:
               Net income                                            $21,054              $17,118            $ 3,187
                                                                 ================= ================== =====================
            Denominator:
               Weighted average shares outstanding                    63,074               63,786             65,100
               Effect of dilutive securities:

                   Employee stock options (1)                          1,808                1,282              1,282
                   Employee restricted stock awards                      576                  458                 47
                                                                ------------------  -----------------  -------------------
                                                                       2,384                1,740              1,329
                                                                ------------------  -----------------  -------------------
          Adjusted weighted-average shares and assumed
               conversions                                            65,458               65,526             66,429
                                                                ==================  =================  ===================

          Net income per common share:
               Basic                                                   $0.33                $0.27              $0.05
                                                                ==================  =================  ===================
               Diluted                                                 $0.32                $0.26              $0.05
                                                                ==================  =================  ===================



              Note (1): The effect  of options  to purchase 3.2 million,  5.8
              million and 5.9 million  shares for the years ended June 29, 2008,
              July 1, 2007, and July 2, 2006,  respectively, were  excluded from
              the  calculation of  net income per  share on a  diluted  basis as
              their effect is anti-dilutive.


Note 4. Acquisitions

The Company  accounts for its business  combinations in accordance with SFAS No.
141, "Business Combinations," which addresses financial accounting and reporting
for business  combinations and requires that all such  transactions be accounted
for using the purchase  method.  Under the  purchase  method of  accounting  for
business combinations, the aggregate purchase price for the acquired business is
allocated  to the  assets  acquired  and  liabilities  assumed  based  on  their
estimated fair values at the acquisition date.

Acquisition of DesignPac Gifts LLC

On April 30,  2008,  the  Company  acquired  all of the  membership  interest in
DesignPac  Gifts LLC  (DesignPac),  a designer,  assembler  and  distributor  of
gourmet gift baskets, gourmet food towers and gift sets, including a broad range
of  branded  and  private  label  components,  based in  Melrose  Park,  IL. The
acquisition,  for approximately $33.3 million in cash, net of cash acquired, was
financed utilizing a combination of available cash generated from operations and
through borrowings against the Company's revolving credit facility. The purchase
price is  subject to  "earn-out"  incentives  which  amount to a maximum of $2.0
million  through the years ending June 27, 2010,  upon  achievement of specified
performance  targets.  In its most recently  completed  year ended  December 31,
2007, prior to the acquisition,  DesignPac  generated  revenues of approximately
$53.3 million.

                                      F-10

As described further under "Subsequent  Events" in order to fund the increase in
working  capital  requirements  associated  with  DesignPac,  and to provide for
additional operational flexibility, 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  provides 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.  Interest is at
LIBOR  plus 1.5% to 2.5% for the  Company's  existing  term  loan and  revolving
credit  facility,  and LIBOR plus 2.0% to 3.0%, for the Company's new term loan,
with pricing based upon the Company's leverage ratio.


The Company is in the process of finalizing its allocation of the purchase price
to  individual  assets  acquired  and  liabilities  assumed  as a result  of the
acquisition  of  DesignPac.  This will result in  potential  adjustments  to the
carrying value of DesignPac's recorded assets and liabilities, the establishment
of certain additional intangible assets, revisions of useful lives of intangible
assets,  some of which will have indefinite  lives not subject to  amortization,
and the determination of any residual amount that will be allocated to goodwill.
The preliminary  allocation of the purchase price included in the current period
balance  sheet is based on the best  estimates of  management  and is subject to
revision based on final determination of asset fair values and useful lives. The
following  table  summarizes  the  allocation of purchase price to the estimated
fair  values of  assets  acquired  and  liabilities  assumed  at the date of the
acquisition of DesignPac:

                                                           DesignPac
                                                           Purchase
                                                            Price
                                                          Allocation
                                                     --------------------
                                                        (in thousands)
  Current assets                                            $1,287
  Property, plant and equipment                              1,172
  Intangible assets                                         18,908
  Goodwill                                                  12,085
  Other                                                         81
                                                     --------------------
       Total assets acquired                                33,533
                                                     --------------------
  Current liabilities                                          184
                                                     --------------------
       Total liabilities assumed                               184
                                                     --------------------
       Net assets acquired                                 $33,349
                                                     ====================


Although  not  finalized,  of the $18.9  million of acquired  intangible  assets
related to the  DesignPac  acquisition,  $6.4 million was assigned to trademarks
that are not subject to amortization,  while the remaining acquired  intangibles
of $12.5 million were allocated  primarily to customer related intangibles which
are being  amortized  over the  assets'  determinable  useful  life of 10 years.
Approximately $12.1 million of goodwill is deductible for tax purposes.

Acquisition of Fannie May Confections Brands, Inc.

On May 1, 2006,  the Company  acquired  all of the  outstanding  common stock of
Fannie May  Confections  Brands,  Inc.  (hereafter  referred  to as "Fannie  May
Confections  Brands"), a manufacturer and multi-channel  retailer and wholesaler
of premium  chocolate and other  confections  under the  well-known  Fannie May,
Harry London and Fanny Farmer brands.  The acquisition,  for a purchase price of
approximately  $96.6  million  in cash,  including  the  achievement  of certain
"earn-out"  incentives and transaction  costs,  included a  200,000-square  foot
manufacturing  facility in North Canton, Ohio and 52 Fannie May retail stores in
the Chicago area, where the chocolate brand has been a tradition since 1920. The
purchase price was subject to "earn-out"  incentives which amounted to a maximum
of $6.0  million  (of which $4.4  million was  achieved),  upon  achievement  of
specified earnings targets.

                                      F-11

In order to finance the Fannie May  Confections  Brands  acquisition,  on May 1,
2006,  the Company  entered into a $135.0 million  secured credit  facility with
JPMorgan Chase Bank, N.A., as administrative  agent, and a group of lenders (the
"2006  Credit  Facility").  The 2006  Credit  Facility,  as  amended,  which was
subsequently  amended and  restated  on August 28,  2008  (refer to  "Subsequent
Events"),  included an $85.0  million  term loan and a $75.0  million  revolving
facility,  which carried  interest at LIBOR plus 0.625% to 1.125%,  with pricing
based upon the Company's leverage ratio. At closing,  the Company borrowed $85.0
million of the term facility to acquire all of the outstanding  capital stock of
Fannie May Confections Brands.

Acquisition of Wind & Weather

On October 31, 2005, the Company acquired all of the outstanding common stock of
Wind & Weather, a Fort Bragg, California based direct marketer of weather-themed
gifts, with annual revenues of approximately  $14.4 million during its then most
recently  completed  fiscal year ended March 31,  2005.  The  purchase  price of
approximately  $5.2 million,  including  acquisition costs, was funded utilizing
the Company's then existing line of credit which was repaid during the Company's
second quarter of fiscal 2006 utilizing  cash  generated  from  operations,  and
excludes the assumption of Wind & Weather's $1.2 million balance on its seasonal
working  capital line. The Company has since  relocated the operations of Wind &
Weather  to  its  Madison,  Virginia  facility,  and  terminated  operations  in
California.

Pro forma Results of Operation

The following  unaudited pro forma consolidated  financial  information has been
prepared as if the acquisitions of DesignPac,  Fannie May Confections Brands and
Wind & Weather  had  taken  place at the  beginning  of fiscal  year  2006.  The
following  unaudited pro forma information is not necessarily  indicative of the
results of operations in future periods or results that would have been achieved
had the acquisitions taken place at the beginning of the periods presented.


                                                                                    
                                                                                      Years Ended
                                                                     ---------------------------------------------
                                                                      June 29, 2008   July 1, 2007  July 2, 2006
                                                                     --------------- ------------- ---------------
                                                                        (in thousands, except per  share data)

     Net revenues                                                        $973,140       $963,620     $900,321

     Operating income                                                    $ 44,227       $ 39,608     $ 18,601

     Net income                                                          $ 24,250       $ 18,751     $  5,734

     Net income per common share
      Basic                                                              $   0.38       $   0.29     $   0.09
      Diluted                                                            $   0.37       $   0.29     $   0.09





                                      F-12


Note 5. Inventory

The  Company's  inventory,  stated at cost,  which is not in  excess of  market,
includes purchased and manufactured finish goods for resale, packaging supplies,
raw material ingredients for manufactured products and associated  manufacturing
labor, and is classified as follows:

                                                                                     
                                                                      June 29, 2008   July 2, 2007
                                                                     --------------- --------------
                                                                             (in thousands)

     Finished goods                                                      $48,986        $43,113
     Work-in-process                                                       3,442          3,911
     Raw materials                                                        14,855         15,027
                                                                     --------------- --------------
                                                                         $67,283        $62,051
                                                                     =============== ==============


Note 6. Goodwill and Intangible Assets

The change in the net carrying amount of goodwill is as follows (in thousands):

                                                                                                     
                                                1-800-
                                             Flowers.com        BloomNet       Gourmet           Home and
                                               Consumer           Wire         Food and         Children's
                                                Floral           Service      Gift Baskets         Gifts             Total
                                            ---------------------------------------------------------------------------------
Balance at July 2, 2006                        $6,652                $-        $105,935            $18,554         $131,141
 Acquisition of
  Wind & Weather                                    -                 -               -                (54)             (54)
 Acquisition of Fannie May
  Confections Brands                                -                 -           6,023                  -            6,023
 Purchase Price Allocation of
  Fannie May Confections-
  Reclassification of goodwill to
  intangible assets                                 -                 -         (24,679)                 -          (24,679)
 Other                                           (300)                -               -                  -             (300)
                                            --------------    -------------    -------------     -------------    --------------
Balance at July 1, 2007                         6,352                 -          87,279             18,500          112,131

 Acquisition of DesignPac                           -                 -          12,085                  -           12,085
 Other                                           (187)                -             373               (238)             (52)
                                            --------------    -------------    -------------     -------------    --------------
Balance at June 29, 2008                       $6,165                $-         $99,737            $18,262         $124,164
                                            ==============    =============    =============     =============    ==============



The Company's intangible assets consist of the following:

                                                                                                   
                                                         June 29, 2008                             July 1, 2007
                                            -----------------------------------------------------------------------------
                                               Gross                                   Gross
                              Amortization   Carrying     Accumulated                 Carrying    Accumulated
                                 Period       Amount      Amortization      Net        Amount     Amortization      Net
                             -------------- ----------- ---------------- ---------- ------------ -------------- ---------
                                                                              (in thousands)

Intangible assets with
determinable lives:
  Investment in licenses     14 - 16 years   $ 4,927           $4,408        $519      $ 4,927       $4,085        $842
  Customer lists              3 - 10 years    25,570            6,042      19,528       14,260        3,919      10,341
  Other                        5 - 8 years     3,868            1,208       2,660        2,639          748       1,891
                                            ------------ -----------------------------------------------------------------------
                                              34,365           11,658      22,707       21,826        8,752      13,074

Trademarks with
indefinite lives                              46,053                -      46,053       39,676            -      39,676
                                            ------------ -----------------------------------------------------------------------
Total intangible
assets                                       $80,418          $11,658     $68,760      $61,502       $8,752     $52,750
                                            ============ =======================================================================

                                      F-13


The amortization of intangible assets for the years ended June 29, 2008, July 1,
2007  and July 2,  2006  was  $2.9  million,  $2.5  million,  and $1.6  million,
respectively.  Future estimated  amortization expense is as follows: 2009 - $4.0
million, 2010 - $3.9 million, 2011 - $3.4 million, 2012 - $2.2 million, and 2013
- $2.0 million, and thereafter - $7.2 million.

Note 7. Property, Plant and Equipment

                                                                                          
                                                                                June 29,      July 1,
                                                                                 2008          2007
                                                                              ------------ ------------
                                                                                   (in thousands)

     Land                                                                         $2,516        $2,516
     Building and building improvements                                           15,944        16,209
     Leasehold improvements                                                       21,051        19,087
     Furniture and fixtures                                                        6,032         5,637
     Equipment                                                                    26,258        21,278
     Computer equipment                                                           57,832        54,942
     Telecommunication equipment                                                   9,331         9,106
     Software                                                                     69,158        57,763
                                                                             -------------- -------------
                                                                                 208,122       186,538
     Accumulated depreciation and amortization                                   142,385       123,977
                                                                             -------------- -------------
                                                                                $ 65,737       $62,561
                                                                             ============== =============

Note 8. Long-Term Debt

                                                                                June 29,      July 1,
                                                                                 2008          2007
                                                                              -------------- ------------
                                                                                   (in thousands)

     Term loan and revolving credit line (1)                                     $68,000       $76,500
     Commercial note (2)                                                              84         1,553
     Obligations under capital leases (see Note 14)                                   52            79
                                                                              -------------- ------------
                                                                                  68,136        78,132
     Less current maturities of long-term debt and obligations under
      capital leases                                                              12,886        10,132
                                                                              -------------- ------------
                                                                                 $55,250       $68,000
                                                                              ============== ============




(1)  Term loan and revolving  credit line - In order to finance the  acquisition
     of Fannie May Confections  Brands, Inc. on May 1, 2006, the Company entered
     into  a  secured  credit  facility  with  JPMorgan  Chase  Bank,  N.A.,  as
     administrative agent, and a group of lenders (the "2006 Credit Facility").
     The 2006 Credit Facility,  as  amended,  includes  an $85.0  million  term
     loan and a $75.0 million revolving facility, which  bear  interest at LIBOR
     (2.4% at June 29, 2008) plus 0.625% to 1.125%, with pricing based upon the
     Company's leverage ratio (3.2% at  June 29, 2008). At closing, the  Company
     borrowed  $85.0 million  of  the  term  facility  to  acquire  all  of  the
     outstanding  capital stock of Fannie May Confections Brands. The Company is
     required  to  pay  the  outstanding  term  loan  in  escalating   quarterly
     installments, with the  final  installment  payment due on May 1, 2012. The
     2006   Credit  Facility  contains various  conditions   to  borrowing,  and
     affirmative   and   negative   financial  covenants.  Concurrent  with  the
     establishment of  the  2006 Credit Facility,  the Company's  previous $25.0
     million revolving credit facilities were terminated. The obligations of the
     Company and its subsidiaries under the 2006 Credit  Facility are secured by
     liens on all personal  property of  the Company  and its  subsidiaries.  No
     amounts  were  outstanding  under the revolving credit facility at June 29,
     2008.

     As  described  further  under  "Subsequent  Events"  in  order  to fund the

                                      F-14

     increase in working capital requirements associated with DesignPac,  and to
     provide for  additional  operational  flexibility,  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 provides 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.  Interest is at LIBOR plus 1.5% to 2.5%
     for the Company's  existing term loan and revolving  credit  facility,  and
     LIBOR plus 2.0% to 3.0%,  for the  Company's  new term loan,  with  pricing
     based upon the Company's leverage ratio.

(2)  Commercial  note - Bank note  relating to  obligations  arising  from,  and
     collateralized  by, the  underlying  assets of the Company's  Plow & Hearth
     facility in Madison, Virginia. The note, dated June 27, 2003, in the amount
     of $6.6 million,  bears interest at 5.44% per annum,  and resulted from the
     consolidation  and  refinancing  of a series  of fixed  and  variable  rate
     mortgage  and  equipment  notes.  The note is payable  in 60 equal  monthly
     installments of principal and interest  commencing August 1, 2003, of which
     $0.1 million is outstanding at June 29, 2008.

As of June 29, 2008, long-term  debt maturities, excluding  amounts  relating to
capital leases, are as follows:

                                                                               
                                                                               Debt
                Year                                                         Maturities
                ----                                                       --------------
                                                                           (in thousands)

                2009                                                           $12,886
                2010                                                            12,750
                2011                                                            17,000
                2012                                                            25,500

                                                                               $68,136
                                                                           ==============

Note 9.  Income Taxes

The Company adopted the provisions of FASB Interpretation No. 48, Accounting for
Uncertainty  in Income Taxes - an  interpretation  of FASB Statement No. 109, or
FIN 48, on July 2, 2007. The Company did not have any  significant  unrecognized
tax  benefits  and there was no material  effect on its  financial  condition or
results of operations as a result of implementing FIN 48.

The  Company  files  income tax  returns in the U.S.  federal  jurisdiction  and
various state  jurisdictions.  The tax years that remain  subject to examination
are fiscal 2003 through  fiscal 2006. The Company does not believe there will be
any material  changes in its  unrecognized  tax  positions  over the next twelve
months.

The  Company's  policy is to  recognize  interest and  penalties  accrued on any
unrecognized  tax benefits as a component of income tax expense.  As of the date
of adoption of FIN 48, the Company did not have any material accrued interest or
penalties  associated with any unrecognized  tax benefits,  nor was any material
interest expense recognized during the year.

Significant components of the income tax provision are as follows:

                                                                                          
                                                                                Years ended
                                                                 ------------------------------------------
                                                                    June 29,      July 1,        July 2,
                                                                      2008         2007           2006
                                                                 ------------- -------------- -------------
                                                                               (in thousands)
      Current provision:
       Federal                                                     $2,207          $(275)         $351
       State                                                        1,528          1,841           655
                                                                 ------------- -------------- -------------
                                                                    3,735          1,566         1,006
      Deferred provision:
       Federal                                                      8,767          9,082         2,120
       State                                                         (186)         1,243            55
                                                                 ------------- -------------- -------------
                                                                    8,581         10,325         2,175
                                                                 ------------- -------------- -------------
      Income tax provision                                         $12,316       $11,891        $3,181
                                                                 ============= ============== =============


                                      F-15


A reconciliation of the U.S. federal statutory tax rate to the Company's
effective tax rate is as follows:


                                                                                          
                                                                                Years ended
                                                                 ------------------------------------------
                                                                    June 29,      July 1,        July 2,
                                                                      2008         2007           2006
                                                                 ------------- -------------- -------------
                                                                               (in thousands)

      Tax at U.S. statutory rates                                  35.0%          35.0%          35.0%
      State income taxes, net of federal tax benefit                3.1            6.9            7.3
      Non-deductible stock-based compensation                       0.1            1.7            8.5
      Non-deductible goodwill amortization                          0.3            0.4            2.2
      Tax credits                                                  (0.8)          (0.4)          (5.0)
      Tax settlements                                              (0.4)          (3.1)           -
      Other, net                                                   (0.4)           0.5            2.0
                                                                 ------------- -------------- --------------
                                                                   36.9%          41.0%          50.0%
                                                                 ============= ============== ==============

     Deferred income taxes reflect the net tax effects of temporary  differences
     between  the  carrying  amounts of assets  and  liabilities  for  financial
     reporting  purposes  and the  amounts  used for  income tax  purposes.  The
     significant   components  of  the  Company's  deferred  income  tax  assets
     (liabilities) are as follows:

                                                                                Years ended
                                                                 ------------------------------------------
                                                                    June 29,      July 1,        July 2,
                                                                      2008         2007           2006
                                                                 ------------- -------------- -------------
                                                                               (in thousands)

      Deferred income tax assets:
       Net operating loss carryforwards                            $3,483        $12,944          $25,963
       Accrued expenses and reserves                                5,876          6,318            6,325
       Stock-based compensation                                     3,407          2,529            1,098
      Deferred income tax liabilities:
       Other intangibles                                           (8,834)        (9,112)          (9,285)
       Installment sales                                                -              -              (25)
       Tax in excess of book depreciation                          (1,482)        (1,649)            (425)
                                                                 ------------- -------------- -------------
      Net deferred income tax assets                               $2,450        $11,030          $23,651
                                                                 ============= ============== =============


At June 29, 2008, the Company's  federal net operating loss  carryforwards  were
approximately  $4.5 million,  which,  if not  utilized,  will begin to expire in
fiscal year 2025.


Note 10. Capital Stock

Holders of Class A common stock generally have the same rights as the holders of
Class B common stock,  except that holders of Class A common stock have one vote
per share and  holders  of Class B common  stock  have 10 votes per share on all
matters  submitted to the vote of stockholders.  Holders of Class A common stock
and  Class B common  stock  generally  vote  together  as a single  class on all
matters presented to the stockholders for their vote or approval,  except as may
be required by Delaware law.  Class B common stock may be converted into Class A
common stock at any time on a  one-for-one  share  basis.  Each share of Class B
common stock will  automatically  convert into one share of Class A common stock
upon its transfer, with limited exceptions.

On January 21, 2008, the Company's Board of Directors  authorized an increase to
its stock repurchase plan which, when added to the $8.7 million 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. As
of June 29, 2008, $14.0 remains authorized but unused.

Under this program,  as of June 29, 2008, the Company had repurchased  1,660,786
shares  of common  stock  for $12.3  million,  of which  $1.1  million  (133,609
shares),  $0.2 million  (24,627 shares) and $1.3 million  (182,000  shares) were

                                      F-16


repurchased  during the fiscal years ending June 29, 2008, July, 1 2007 and July
2, 2006,  respectively.  In a separate  transaction,  during  fiscal  2007,  the
Company's Board of Directors  authorized the repurchase of 3,010,740 shares from
an  affiliate.  The  purchase  price was  $15,689,000  or $5.21 per  share.  The
repurchase was approved by the  disinterested  members of the Company's Board of
Directors  and  was in  addition  to the  Company's  existing  stock  repurchase
authorization.

Note 11. Stock Based Compensation

The Company  has stock  options  and  restricted  stock  awards  outstanding  to
participants  under the  1-800-FLOWERS.COM  2003 Long Term  Incentive  and Share
Award Plan (the "Plan").  Options are also outstanding  under the Company's 1999
Stock Incentive Plan, but no further options may be granted under this plan. The
Plan is a broad-based,  long-term incentive program that is intended to attract,
retain  and  motivate  employees,  consultants  and  directors  to  achieve  the
Company's  long-term growth and  profitability  objectives,  and therefore align
stockholder and employee interests.  The Plan provides for the grant to eligible
employees, consultants and directors of stock options, share appreciation rights
("SARs"),   restricted  shares,  restricted  share  units,  performance  shares,
performance   units,   dividend   equivalents,   and  other  share-based  awards
(collectively "Awards").

The Plan is  administered  by the  Compensation  Committee  or such other  Board
committee  (or  the  entire  Board)  as may be  designated  by  the  Board  (the
"Committee").  Unless  otherwise  determined by the Board,  the  Committee  will
consist  of two or more  members  of the  Board who are  non-employee  directors
within  the  meaning of Rule 16b-3 of the  Securities  Exchange  Act of 1934 and
"outside directors" within the meaning of Section 162(m) of the Internal Revenue
Code of 1986, as amended. The Committee will determine which eligible employees,
consultants and directors receive awards, the types of awards to be received and
the terms and conditions  thereof.  The Chief  Executive  Officer shall have the
power and authority to make Awards under the Plan to employees  and  consultants
not subject to Section 16 of the Exchange Act, subject to limitations imposed by
the Committee.

At June 29, 2008, the Company has reserved approximately 14.2 million shares of
common stock for issuance, including options previously authorized for issuance
under the 1999 Stock Incentive Plan.


The  amounts of  stock-based  compensation  expense  recognized  in the  periods
presented are as follows:

                                                                                         
                                                                                  Years Ended
                                                                     -------------------------------------
                                                                      June 29,     July 1,      July 2,
                                                                        2008        2007         2006
                                                                     ----------  -------------------------
                                                                     (in thousands, except per share data)


     Stock options                                                      $1,416      $2,736       $3,710
     Restricted stock awards                                             2,118       1,864          626
                                                                     ----------  -------------------------
         Total                                                           3,534       4,600        4,336
     Deferred income tax benefit                                         1,333       1,353        1,120
                                                                     ----------  -------------------------
     Stock-based compensation expense, net                              $2,201      $3,247       $3,216
                                                                     ==========  =========================




                                      F-17



Stock based compensation expense is recorded within the following line items of
operating expenses:

                                                                                         
                                                                                  Years Ended
                                                                     -------------------------------------
                                                                      June 29,     July 1,      July 2,
                                                                        2008        2007         2006
                                                                     ---------- ------------ -------------
                                                                               (in thousands)


     Marketing and sales                                                $1,051       $1,605        $1,504
     Technology and development                                            546          690           642
     General and administrative                                          1,937        2,305         2,190
                                                                     ---------- ------------- ------------
         Total                                                           3,534       $4,600        $4,336
                                                                     ========== ============= ============


Stock-based  compensation  expense  has  not  been  allocated  between  business
segments, but is reflected in Corporate. (Refer to Note 13 - Business Segments.)

Stock Options Plans

The weighted  average fair value of stock options on the date of grant,  and the
assumptions  used to  estimate  the fair  value of the stock  options  using the
Black-Scholes option valuation model, were as follows:

                                                                                         
                                                                             Years Ended
                                                                 -------------------------------------
                                                                  June 29,     July 1,      July 2,
                                                                    2008        2007         2006
                                                                 ---------- ------------ -------------
     Weighted average fair value of options granted                $4.36        $3.29        $3.16
     Expected volatility                                              45%          46%          46%
     Expected life (in years)                                        5.3          5.3          5.3
     Risk-free interest rate                                         4.1%         4.6%         4.6%
     Expected dividend yield                                         0.0%         0.0%         0.0%


The  expected   volatility  of  the  option  is  determined   using   historical
volatilities  based on  historical  stock  prices.  The  Company  estimated  the
expected life of options  granted to be the average of the Company's  historical
expected term from vest date and the midpoint  between the average  vesting term
and the contractual  term. The risk-free  interest rate is determined  using the
yield available for  zero-coupon  U.S.  government  issues with a remaining term
equal to the expected life of the option. The Company has never paid a dividend,
and as such the dividend yield is 0.0%.

The following table summarizes stock option activity during  the year ended June
29, 2008:

                                                                                           
                                                                                      Weighted
                                                                                      Average
                                                                        Weighted      Remaining     Aggregate
                                                                        Average      Contractual    Intrinsic
                                                         Options     Exercise Price     Term       Value (000s)
                                                        ---------------------------------------------------------
Outstanding - beginning of period                         9,152,665       $8.10
Granted                                                     201,000       $9.50
Exercised                                                (1,049,839)      $4.50
Forfeited/Expired                                          (431,482)      $9.65
                                                        -------------
Outstanding - end of period                               7,872,344       $8.47       4.0 years       $5,364
                                                        =============

Options vested or expected to vest at end of period       7,669,842       $8.49       3.9 years       $5,336
Exercisable at end of period                              6,731,372       $8.63       3.5 years       $5,208


The aggregate  intrinsic  value in the table above  represents the total pre-tax
intrinsic value (the difference between the company's closing stock price on the
last trading day of fiscal 2008 and the exercise price, multiplied by the number

                                      F-18


of in-the-money options) that would have been received by the option holders had
all option holders exercised their options on June 29, 2008. This amount changes
based on the fair market value of the company's stock. The total intrinsic value
of options exercised for the years ended June 29, 2008, July 1, 2007 and July 2,
2006 was $5.9 million, $1.0 million, and $0.3 million, respectively.

The following table summarizes information about stock options outstanding at
June 29, 2008:

                                                                      
                                   Options Outstanding                      Options Exercisable
                    ------------------------------------------------- -------------------------------
                                       Weighted-        Weighted-                       Weighted-
                                        Average          Average                         Average
                       Options         Remaining         Exercise        Options         Exercise
    Exercise Price   Outstanding   Contractual Life       Price        Exercisable        Price
------------------- -------------- ------------------ --------------- --------------- ---------------
     $2.00 - 4.50      1,722,735       2.1 years           $4.03        1,722,735         $4.03
     $5.25 - 6.52      1,940,662       5.2 years           $6.39        1,537,162         $6.40
     $6.58 - 8.45      1,713,463       6.0 years           $7.42        1,118,451         $7.26
    $8.56 - 12.87      1,947,438       3.5 years          $12.04        1,804,978        $12.21
   $13.05 - 21.00        548,046       1.2 years          $20.33          548,046        $20.33
                    --------------                                    ---------------
                       7,872,344       4.0 years           $8.47        6,731,372         $8.63
                    ==============                                    ===============


As of June 29,  2008,  the total future  compensation  cost related to nonvested
options not yet  recognized  in the statement of income was $2.4 million and the
weighted  average  period over which these awards are expected to be  recognized
was 1.6 years.

The Company  grants shares of Common Stock to its employees  that are subject to
restrictions on transfer and risk of forfeiture until  fulfillment of applicable
service conditions and, in certain cases, holding periods (Restricted Stock). In
fiscal 2005, the Company  recorded the grant date fair value of unvested  shares
of   Restricted   Stock  as   unearned   stock-based   compensation   ("Deferred
Compensation").  In accordance with SFAS No. 123(R), in fiscal 2006, the Company
reclassified the balance of Deferred  Compensation  against  additional  paid-in
capital, and reduced its shares of Class A Common Stock issued accordingly.

The  following  table  summarizes  the activity of non-vested  restricted  stock
during the year ended June 29, 2008:

                                                                         
                                                                             Weighted
                                                                           Average Grant
                                                                            Date Fair
                                                               Shares          Value
                                                            -------------  ---------------

         Non-vested - beginning of period                     1,101,982        $5.70
         Granted                                                665,399       $11.40
         Vested                                                 (18,677)       $7.44
         Forfeited                                             (473,551)       $8.57
                                                             -------------
         Non-vested - end of period                           1,275,153        $7.58
                                                             =============


The fair value of  nonvested  shares is  determined  based on the closing  stock
price on the grant date.  As of June 29,  2008,  there was $4.4 million of total
unrecognized  compensation  cost related to  non-vested  restricted  stock-based
compensation to be recognized over a weighted-average period of 1.7 years.

Note 12. Profit Sharing Plan

The Company has a 401(k) Profit Sharing Plan covering  substantially  all of its
eligible employees.  All full-time employees who have attained the age of 21 are
eligible to participate upon completion of one year of service. Participants may
elect  to  make  voluntary  contributions  to the  401(k)  plan in  amounts  not
exceeding federal  guidelines.  On an annual basis the Company, as determined by
its board of directors, may make certain discretionary contributions.  Employees
are vested in the  Company's  contributions  based upon  years of  service.  The
Company made contributions of $0.7 million,  $0.5 million, and $0.4 million, for
the years ended June 29, 2008, July 1, 2007 and July 2, 2006, respectively.

During fiscal 2008,  the Company  adopted a nonqualified  supplemental  deffered
compensation  plan  for  certain  executives  pursuant  to  Section  409A of the
Internal Revenue Code. Participants can defer from 1% up to a maximum of 100% of
salary and performance and  non-performance  based bonus. The Company will match
50% of the deferrals made by each paricipant during the applicable period, up to
a maximum of $2,500.  Employees are vested in the Company's  contributions based
upon  years  of  participation  in the  plan.  Distributions  will  be  made  to
Participants  upon  termination  of  employment  or death in a lump sum,  unless
installments are selected.

                                      F-19

Note 13. Business Segments

During the first quarter of fiscal 2007, the Company  segmented its organization
to improve  execution and customer  focus and to align its resources to meet the
demands of the markets it serves.  The Company's  management reviews the results
of the Company's operations by the following four business categories:

    o        1-800-Flowers.com Consumer Floral;
    o        BloomNet Wire Service;
    o        Gourmet Food and Gift Baskets; and
    o        Home and Children's Gifts.

Category  performance is measured based on contribution  margin,  which includes
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 (see * below), which are operated under
a  centralized   management   platform,   providing   services   throughout  the
organization,  nor does it include  stock-based  compensation,  depreciation and
amortization,  other income (net), and income taxes.  Assets and liabilities are
reviewed  at the  consolidated  level by  management  and not  accounted  for by
category.

                                                                                    
                                                                         Years ended
                                                          -------------------------------------------
                                                              June 29,      July 1,        July 2,
     Net revenues                                              2008          2007           2006
                                                          ------------- -------------- --------------
                                                                        (in thousands)

      Net revenues:
          1-800-Flowers.com Consumer Floral                 $491,696       $491,404         $452,188
          BloomNet Wire Service                               53,488         44,379           29,884
          Gourmet Food & Gift Baskets                        196,298        192,698          105,002
          Home & Children's Gifts                            180,181        186,948          196,919
          Corporate (*)                                        2,431          1,652            1,388
          Intercompany eliminations                           (4,702)        (4,483)          (3,640)
                                                          ------------- -------------- --------------
      Total net revenues                                    $919,392       $912,598         $781,741
                                                          ============= ============== ==============



                                                                                    
                                                                         Years ended
                                                          -------------------------------------------
                                                              June 29,      July 1,        July 2,
     Operating Income                                          2008          2008           2006
                                                          ------------- -------------- --------------
                                                                        (in thousands)

      Category Contribution Margin:
          1-800-Flowers.com Consumer Floral                  $62,967        $64,580          $46,518
          BloomNet Wire Service                               18,509         14,169            7,106
          Gourmet Food & Gift Baskets                         24,593         26,377            6,827
          Home & Children's Gifts                              3,438         (1,215)           7,134
                                                          ------------- -------------- --------------
      Category Contribution Margin Subtotal                  109,507        103,911           67,585
          Corporate (*)                                      (51,777)       (51,081)         (45,311)
          Depreciation and amortization                      (20,363)       (17,837)         (15,765)
                                                          ------------- -------------- --------------
      Operating income (loss)                                $37,367        $34,993           $6,509
                                                          ============= ============== ==============



 (*) Corporate expenses consist of the Company's  enterprise shared service cost
     centers,  and  include,  among  others,   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.

                                      F-20


Note 14. Commitments and Contingencies

Leases

The Company  currently  leases office,  store  facilities,  and equipment  under
various  operating leases through fiscal 2019. As these leases expire, it can be
expected that in the normal course of business they will be renewed or replaced.
Most lease  agreements  contain renewal options and rent escalation  clauses and
require the Company to pay real estate taxes, insurance, common area maintenance
and operating expenses applicable to the leased properties. The Company has also
entered into leases that are on a month-to-month basis. All leases and subleases
with an initial term of greater than one year are  accounted  for under SFAS No.
13, Accounting for Leases. These leases are classified as either capital leases,
operating leases or subleases, as appropriate.

As of June 29, 2008 future minimum payments under  non-cancelable  capital lease
obligations and operating  leases with initial terms of one year or more consist
of the following:


                                                                                  
                                                                     Obligations
                                                                        Under
                                                                       Capital      Operating
                                                                        Leases        Leases
                                                                     ------------ -------------
                                                                           (in thousands)

          2009                                                          $14          $14,863
          2010                                                           13           11,906
          2011                                                           13           10,279
          2012                                                           13            8,938
          2013                                                            6            7,666
          Thereafter                                                      -           25,070
                                                                     ------------ -------------
          Total minimum lease payments                                  $59          $78,722
                                                                                  =============
          Less amounts representing interest                             (7)
                                                                     ------------
          Present value of net minimum lease payments                   $52
                                                                     ============



At June 29, 2008, the aggregate  future  sublease  rental income under long-term
operating  sub-leases  for land and buildings and  corresponding  rental expense
under long-term operating leases were as follows:

                                                                                            
                                                                                Sublease       Sublease
                                                                                 Income         Expense
                                                                              -------------- --------------
                                                                                     (in thousands)

      2009                                                                       $2,814         $2,814
      2010                                                                        1,940          1,940
      2011                                                                        1,384          1,384
      2012                                                                          933            933
      2013                                                                          550            550
      Thereafter                                                                    886            886
                                                                              -------------- --------------
                                                                                 $8,507         $8,507
                                                                              ============== ==============

Rent expense was approximately $19.8 million,  $18.9 million,  and $13.7 million
for the years ended June 29, 2008, July 1, 2007 and July 2, 2006, respectively.





                                      F-21

Litigation

There are various claims,  lawsuits, and pending actions against the Company and
its subsidiaries incident to the operations of its businesses. It is the opinion
of management,  after consultation with counsel, that the ultimate resolution of
such  claims,  lawsuits  and pending  actions  will not have a material  adverse
effect on the Company's consolidated  financial position,  results of operations
or liquidity.

In the  Company's  Form 10Q for the quarterly  period ended March 30, 2008,  the
Company  disclosed  that  in  October  2007,  1-800-Flowers.Com.,  Inc.  and its
subsidiary,  1-800-Flowers  Retail,  Inc.,  (collectively  "the Company"),  were
served with a purported  nationwide  class  action  lawsuit  filed in the United
States District Court, in and for the Southern  District of Florida  (Grabein v.
1-800-Flowers.Com.,  Inc.,  et al; Case No.  07-22235).  The  Complaint  alleged
violation of the Federal  Fair and Accurate  Credit  Transaction  Act  ("FACTA")
based  upon  the  allegation  that  the  Company  printed/provided  receipts  to
consumers at the point of sale or transaction  on which  receipts  appeared more
than the last five digits of customers'  credit or debit card numbers and/or the
expiration dates of such cards. The Complaint did not specify any actual damages
for any member of the purported class.  However,  the Complaint sought statutory
damages of $100 to $1,000 for each alleged willful violation of the statute,  as
well as,  attorneys' fees, costs,  punitive damages and a permanent  injunction.
The Company  vigorously  defended the action and on June 13, 2008, the presiding
Judge  issued a Final Order of  Dismissal  whereby the case was  dismissed  with
prejudice and no payment of any kind was made by the Company or its  subsidiary.

Note 15. Subsequent Events

Acquisition of Napco Marketing Corp.

On July 21, 2008, the Company acquired  selected assets of Napco Marketing Corp.
(Napco),  a wholesale  merchandiser and marketer of products designed  primarily
for the floral  industry.  The  purchase  price of  approximately  $9.5  million
included the acquisition of a fulfillment  center located in  Jacksonville,  FL,
inventory,  and  certain  other  assets,  as well as the  assumption  of certain
related  liabilities,  including their seasonal line of credit of  approximately
$4.0 million.  The acquisition was financed utilizing a combination of available
cash generated  from  operations  and through  borrowings  against the Company's
revolving credit facility, which as described below, was subsequently amended by
the Company's 2008 Credit Facility.  The purchase price is subject to "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.

2008 Credit Facility

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  provides 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.  Interest is at LIBOR plus 1.5% to 2.5% for
the Company's  existing term loan and revolving credit facility,  and LIBOR plus
2.0% to 3.0%,  for the  Company's  new term loan,  with  pricing  based upon the
Company's  leverage ratio. At closing of the 2008 Credit  Facility,  the Company
utilized the proceeds of the new term loan to pay down amounts outstanding under
its previous revolving credit facility. The repayment terms of the existing term
loan remain unchanged, while the new term loan is required to be repaid in equal
quarterly  installments  of $3.0 million  beginning in December  2008,  with the
final  installment  payment due on August 28,  2013.  The 2008  Credit  Facility
contains various conditions to borrowing, and affirmative and negative financial
covenants.  The obligations of the Company and its  subsidiaries  under the 2008
Credit Facility are secured by liens on all personal property of the Company and
its subsidiaries.

                                      F-22


1-800-FLOWERS.COM, INC.

                             Schedule II - Valuation and Qualifying Accounts

                                                                       
                                               Additions
                                           ---------------------------
Description                   Balance at    Charged to    Charged to                   Balance at
                              Beginning       Costs        Other        Deductions-      End of
                              of Period        and        Accounts-     Describe (a)     Period
                                             Expenses     Describe (b)
--------------------------- -------------- ------------ --------------- ------------- --------------

Reserves and allowances
  deducted from asset
  accounts:

Reserve for estimated
  doubtful accounts-
  accounts/notes
  receivable

Year Ended June 29, 2008

                              $1,113,000    $1,000,000       $   -       $(727,000)    $1,386,000

Year Ended July 1, 2007

                              $2,090,000    $1,040,000       $   -     $(2,017,000)    $1,113,000

Year Ended July 2, 2006
                              $1,537,000      $537,000    $694,000       $(678,000)    $2,090,000





(a) Reduction in reserve due to write-off of accounts/notes receivable balances.
(b) Amount represents opening balances from acquired businesses.


                                      S-1