Bluefly, Inc. Reports Third Quarter Earnings; Results Include Approximately One Month of Launch Sales.

NEW YORK--(BUSINESS WIRE)--Nov. 17, 1998--Bluefly, Inc. (NASDAQ SmallCap:BFLY, BFLYW/ BSE: BFL, BFLW) announced today financial results for the third fiscal quarter ended September 30, 1998, which include approximately one month's worth of sales results for Bluefly.com, the Company's online designer outlet store that offers men's, women's and children's name brand apparel and accessories at 25% to 75% off of retail prices.

For the three months ended September 30, 1998, the net loss from continuing operations was $676,000 as compared to a $165,000 net loss reported in the prior year's fiscal quarter. The $676,000 net loss from continuing operations includes $224,000 of start up costs and $116,000 of research and development costs associated with the launch of the Company's online designer outlet store. The net income from discontinued operations (net of taxes) for the three months ended September 30, 1998 totaled $51,000, compared to net income of $11,000 (net of taxes) for the third quarter of 1997.

The third quarter financial statements include approximately one month's worth of sales results for the online outlet store at a time when the Company was doing relatively little marketing. "In an attempt to limit the number of users of Bluefly.com during those first several weeks of operation and thereby manage the logistical and operational challenges of our newly established Internet business, we chose not to launch any significant marketing initiatives in the month of September," said Ken Seiff, Chief Executive Officer. "Nevertheless, Bluefly.com generated approximately $6,700 in gross revenues from 96 orders with an average order size of $72, and I am pleased to say that a substantial majority of our orders were shipped on the same day they were received," Seiff added.

Though not required, the Company also announced some preliminary fourth quarter results. These results include the following:

(1) for the five week period beginning on October 5, 1998 and ending

on November 8, 1998, the Comp any's number of weekly orders grew

by 100% from approximately 51 to 102;

(2) during this same time period, the number of new registered users

(as measured on a weekly basis) grew by 80% from approximately

716 to 1,294;

(3) between September 30, 1998 and November 8, 1998, the total number

of registered users grew by 270% to 5,818 from 1,573; and

(4) the average Bluefly visitor is spending approximately 13 minutes

in the Web store and viewing approximately 25 pages of

information and product.

In commenting on these results, Ken Seiff said, "I am pleased with our early sales results, traffic to the site and positive feedback from our customers. I think that the recent announcement by Jupiter Communications, a leading Internet analyst firm, that it is increasing its 1998 projection for online apparel sales by 365% to $330 million from $71 million, is a strong indication of the rapid growth of this industry segment. We are now focused on the important holiday shopping season and the challenges and opportunities that lie ahead."

Bluefly, Inc. is a NASDAQ SmallCap public company. Bluefly.com aims to be the most enjoyable way to shop for designer and name brand apparel and accessories at savings of 25 to 75 percent off of retail prices. Its innovative MyCatalog feature eliminates the "hit-or-miss" aspect of outlet shopping. The online merchant offers a meaningful alternative for consumers looking for savings, convenience, selection and customer-friendly service. The Web site provides an innovative shopping experience with interactive content, including fashion tips, trends and advice.

                            Bluefly, Inc.
                     Summary Financial Highlights
                              (Unaudited)

                                             Three Months Ended
                                                September 30,
                                            1998            1997
                                            ----            ----

Loss from Continuing Operations       $  (676,000)   $  (165,000)

Income from Discontinued Operations        51,000         11,000

Net loss                                 (625,000)      (154,000)

Basic and diluted loss per share      $     (0.23)   $     (0.06)

Avg. number shares outstanding          2,717,788      2,700,000


                                               Nine Months Ended
                                                 September 30,
                                             1998          1997
                                             ----          ----
Loss from Continuing Operations        $ (1,270,000)  $  (449,000)
Loss from Discontinued Operations        (1,149,000)     (215,000)
Net loss                                 (2,419,000)     (664,000)
Basic and diluted loss per share       $      (0.89)  $     (0.34)
Avg. number shares outstanding            2,705,994     1,963,736

This press release may include statements that constitute "forward-looking" statements, usually containing the words "believe", "project", "expect", or similar expressions. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. The risks and uncertainties are detailed from time to time in reports filed by the Company with the Securities and Exchange Commission, including Forms 8-A, 8-K, 10-QSB, and 10-KSB, including, but not limited to certain risks relating to the Company's limited working capital and need for additional financing, consumer acceptance of the Internet as a medium for purchasing apparel, the startup nature of the Internet business, the capital intensive nature of such business (taking into account the need for advertising to promote such business), the successful hiring and retaining of personnel, the dependence on third parties and certain relationships for certain services, the dependence on continued growth of online commerce, rapid technological change, year 2000 issues, online commerce security risks, governmental regulation and legal uncertainties, management of potential growth, the Company's lack of experience in such business, unexpected changes in fashion trends and the potential for competitors with greater resources to enter such business.