June 8, 2001, 12:00 AM

1-800-Flowers.com acquires The Children`s Group

1-800-Flowers.com will acquire the $30 million-a-year catalogs, web sites and distribution center of The Children’s Group, which markets under the brands HearthSong and Magic Cabin Dolls.

1-800-Flowers.com, a multi-channel retailer of not just flowers but gifts also, has acquired The Children`s Group from Foster & Gallagher Inc., a privately held direct marketer of horticulture products. The Children`s Group is a catalog and Internet retailer of children`s gifts including natural material toys, games, arts and crafts and dolls. It has $30 million in annual revenues. The Children`s Group’s brands are HearthSong, which specializes in wood and natural material toys, crafts and books with educational, nature and art themes, and Magic Cabin Dolls, which primarily sells exclusive, natural-fiber soft dolls, kits and accessories. Both brands market gifts for children ages 3 through 12.

The acquisition provides 1-800-Flowers.com with a database of more than 2 million customers and a state-of-the-art 200,000-square-foot distribution center in Vandalia, OH. Jim McCann, 1-800-Flowers.com CEO, noted that the distribution center fills a need the company had foreseen as part of its growth plan. "As our sales of non-floral gifts continue to grow, we knew that we would need additional distribution capacity,” he said. “This asset, that comes as part of The Children`s Group acquisition, fills that need and saves us from having to expend capital to build a new facility a year or two down the road."

McCann also said the HearthSong and Magic Cabin Dolls brands have "very strong" gross margins, in excess of 50%. "By leveraging our great collection of assets - including our database of 10 million customers, our strong online presence and one of the best-known brands in gift retailing - we believe we can both drive sales growth and gain operating efficiencies for The Children`s Group and thereby enhance overall revenue and profitability for 1-800-Flower.com," he said.

1-800-Flowers.com also operates subsidiaries The Plow & Hearth Inc., a catalog and web site selling home decor and garden merchandise, and GreatFood.com, an online retailer of gourmet food products.


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