Bluefly.com Completes Equity Offering and Secures Inventory Financing; Rights Offering Raises $10 Million Through Common Stock Offering.

Business Editors

NEW YORK--(BUSINESS WIRE)--April 3, 2001

New Credit Line Increases Access to Cash and Trade Credit

Bluefly, Inc. (NASDAQ SmallCap: BFLY), a leading Internet retailer of designer fashions at outlet store prices (www.bluefly.com), announced today that it completed two separate financings, one through the issuance of $10 million of common stock to affiliates of Soros Private Equity Partners and the other through the establishment of a secured, revolving credit facility that provides Bluefly with access to additional cash or trade credit.

In exchange for its payment of the $10 million purchase price, affiliates of Soros Private Equity Partners were issued 4,273,504 shares of common stock at a per share price of $2.34, an 87% premium to the closing price of Bluefly's common stock on March 30, 2001. The purchase of common stock by affiliates of Soros Private Equity Partners represented its standby commitment in connection with Bluefly's rights offering, which closed on March 26, 2001. The public stockholders subscribed for 6,921 shares of common stock in the offering. Including its $10 million purchase of common stock, affiliates of Soros Private Equity Partners now own approximately 78% of Bluefly's outstanding equity.

Separately, in a move that should help improve Bluefly's payment terms with its suppliers, Bluefly entered into a one-year agreement with Rosenthal & Rosenthal, Inc., a leading independent financial services and factoring firm with more than 60 years' of domestic and international operations. Under its agreement with Rosenthal, Bluefly has the right to obtain certain credit accommodations from Rosenthal, including cash borrowings. While the amount of cash or credit accommodations available to Bluefly is dependent, among other things, on the value of Bluefly's inventory, the total line of credit that is available at any one time will not exceed $10 million. The initial availability under the credit line is approximately $3.5 million.

"Having completed these two transactions, Bluefly is in an even stronger position to capitalize on its growth strategy and the recent weakness in the e-tailing sector which has eliminated many competitors," said Ken Seiff, Chief Executive Officer of Bluefly, Inc. "We are pleased to have raised an additional $10 million from the Soros organization, and glad to have effectively increased our purchasing capacity through the establishment of the Rosenthal credit facility," Seiff added.

"By offering top designer brands an opportunity to liquidate their excess inventory in a high-end retail environment, Bluefly has a unique and compelling value proposition for the fashion industry," said Michael Stanley, Executive Vice President of Rosenthal & Rosenthal, Inc. "We look forward to helping Bluefly establish better credit terms in the trade so that they can more rapidly grow their business," Michael Stanley 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-KSB. These risks and uncertainties include, but are not limited to, the following: availability formulas under the Rosenthal credit facility which limit the amount of funds available for borrowing; the Company's potential inability to make repayments under the Rosenthal credit facility and the possible shareholder dilution that could result if the Soros standby letter of credit is drawn upon; the risk of default by the Company under the Rosenthal financing agreement and the consequences that might arise from the Company having granted a lien on substantially all of its assets under that agreement; the Company's limited working capital, need for additional capital and potential inability to raise such capital; the competitive nature of the business and the potential for competitors with greater resources to enter such business; recent difficulties in the retail apparel market; 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; recent losses and anticipated future losses; the capital intensive nature of such business (taking into account the need for advertising to promote such business); the dependence on third parties and certain relationships for certain services, including uncertainty arising from a lack of operating history with the company's new fulfillment center; the successful hiring and 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.