Bluefly.com Announces Streamlined Operating Plan; Company Also Announces Addition of Former Morgan Stanley Equity Analyst to Board of Directors.

Business Editors

NEW YORK--(BUSINESS WIRE)--June 19, 2001

Bluefly, Inc. (NASDAQ SmallCap: BFLY), a leading Internet retailer of designer fashions at outlet store prices (www.bluefly.com), announced today a streamlined operating plan designed to achieve profitability in the fourth quarter of 2002, improve efficiency and reduce its need for additional capital.

As part of the plan, the company intends to eliminate approximately 32 jobs, or, approximately 34% of its workforce, as well as reduce marketing and other operating expenses. The company expects to record a pre-tax charge of approximately $600,000 in the second quarter of 2001 in connection with the cutbacks.

As a result, based on current plans and assumptions, the company believes that:

-- it will reach profitability in the fourth quarter of 2002;

-- its current cash on hand will be sufficient to fund operations for
approximately the next 12 months; and

-- less than $5 million of additional investment capital will be required to
fund the company's operations until it reaches profitability.

Of course, these projections are based on a number of assumptions, including consumer demand and the company's ability to execute upon its plan, and there can be no assurance that the assumptions will prove to be accurate.

"The decision to reduce overhead and streamline our operations was not an easy one but it clearly was required if Bluefly is to become profitable before the end of 2002," said Ken Seiff, Chief Executive Officer of Bluefly, Inc. "The company has benefited greatly from the participation of many of the individuals who are being let go in this process. Their contribution helped build a foundation upon which we plan to expand the business in a more efficient manner. On behalf of all of our shareholders, I would like to express my gratitude to these employees," Seiff added.

"We are proud of how Bluefly has consistently delivered value and quality to its customers and suppliers while at the same time performing well in a challenging retail environment," said Neal Moszkowski, a partner at Soros Private Equity Partners. "Achieving profitability, while maintaining the value and quality Bluefly offers its customers and suppliers, is clearly the appropriate next step and we will continue to be supportive in this regard," Moszkowski added.

The Company also announced the addition of Josephine Esquivel to its Board of Directors. Ms. Esquivel is a former senior apparel, textiles, footwear and luxury goods equity analyst with Morgan Stanley Dean Witter. Among her many accomplishments, Ms. Esquivel was ranked as one of the top apparel analysts 13 out of 14 years by Institutional Investor's All-Star Research Poll magazine, three years receiving the #1 ranking.

"Bluefly's record of sustaining growth and increasing efficiencies in this difficult retail market is impressive," said Ms. Esquivel. "I look forward to serving on Bluefly's board and working with management to grow this business," Ms. Esquivel added.

About Bluefly, Inc.

Bluefly is headquartered in New York City, in the heart of the fashion district. Distinguishing itself with discounts of up to 75%, products from over 450 designers and a 90-day money back guarantee, Bluefly.com aims to be the world's first full service outlet store for designer fashions. Its innovative Web site is designed to eliminate the "hit-or-miss" aspect of off-price shopping by allowing shoppers to see only those products that are available for sale and match their interests. The online merchant has established strategic alliances with many of the most visited Web Sites and portals including AOL, MSN, and Yahoo! For more information, visit www.bluefly.com.

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-Q, and 10-K. These risks and uncertainties include, but are not limited to, the following: the Company's limited working capital, need for additional capital and potential inability to raise capital when needed; availability of anticipated funds under the Rosenthal credit facility which contain formulas that limit the amount of funds available for borrowing; the impact of recent difficulties in the retail apparel market and general business and financial conditions; the possible adverse impact on the business of the Company resulting from reductions in head count and in marketing expenditures, including its impact on planned growth and the Company's relationship with its third-party fulfillment center and other key suppliers of certain services; the competitive nature of the business and the potential for competitors with greater resources to enter such business; risks of litigation for sale of unauthentic or damaged goods and litigation risks related to sales in foreign countries; consumer acceptance of the Internet as a medium for purchasing apparel; the likely reduction of one or more of the Company's strategic marketing relationships and the impact this will have on retaining existing customers and obtaining new customers; the dependence on third parties and certain relationships for certain services, including uncertainty arising from the reduction in headcount and planned growth; the successful retaining of personnel; rapid technological change; online commerce security risks; the startup nature of the Internet business; governmental regulation and legal uncertainties; management of potential growth; and unexpected changes in fashion trends.