Bluefly.com Increases Inventory Financing Line of Credit; Rosenthal & Rosenthal Provides Company Larger Credit Line Increases Company's Access to Cash and Trade Credit.

Business Editors

NEW YORK--(BUSINESS WIRE)--March 25, 2003

Bluefly, Inc. (NASDAQ SmallCap: BFLY), a leading Internet retailer of designer brands at discounts prices (www.bluefly.com), announced today that it renewed its secured, revolving credit facility with Rosenthal & Rosenthal, Inc., a leading independent financial services and factoring firm, for another year and increased the amount of financing available under this credit facility to approximately $4 million from approximately $2.5 million.

Secured by Bluefly's inventory and a letter of credit procured by an affiliate of Soros Private Equity Partners, this credit facility entitles Bluefly to certain credit accommodations, including the right to obtain loans, factor-to-factor guarantees, and letters of credit issued in favor of Bluefly's suppliers. The amount of cash or credit accommodations available to Bluefly at any point in time is dependent, among other things, on the value of Bluefly's inventory.

In consideration for Soros' agreement to increase the amount of its standby letter of credit to $2 million from $1.5 million and to continue to maintain this standby letter of credit as additional collateral for another year, Bluefly issued to Soros warrants to purchase 25,000 shares of Common Stock at $0.78 per share exercisable any time prior to March 17, 2013.

"We are extremely pleased to have expanded our relationship with Bluefly," said Michael Stanley, Executive Vice President of Rosenthal & Rosenthal, Inc. "Bluefly's high-end retail format does an outstanding job of filling a need for fashion wholesalers and retailers, who may be troubled by the potential of diluting their brand image when their merchandise appears in traditional off-price stores," Stanley added.

"Rosenthal & Rosenthal has been instrumental in helping us to grow Bluefly's business over the past two years," said Ken Seiff, Chief Executive Officer of Bluefly, Inc. "That they are willing to extend even more credit to us this year, at a time when the equity markets are tight and many retailers are struggling for financing, is particularly pleasing," Seiff added.

About Bluefly, Inc.

Bluefly, Inc. (NASDAQ SmallCap: BFLY) operates the world's first full service outlet store for designer fashion, offering products from more than 350 designers at discounts of up to 75% off. With 24/7 access, a 90-day money back guarantee, and technology that displays real-time inventory, Bluefly makes off-price shopping easy and convenient. Bluefly is headquartered at 42 West 39th Street in New York City, in the heart of the Fashion District. For more information, please call 212-944-8000 or 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 has granted liens on substantially all of its assets; a default by the Company under the Rosenthal Credit Facility would have material adverse effects on the Company and could result in dilution to its common stock shareholders; the company may not generate sufficient cash flow to pay its indebtedness or meet its financial covenants under the Rosenthal credit agreement; the Company's limited working capital, need for additional capital and potential inability to raise such capital; recent losses and anticipated future losses; risks and uncertainties associated with the Company's recent launch of a new version of its web site, including new internal procedures that need to be developed to operate the new web site, site instability and download performance issues; the risk that favorable trends in sales, repeat customer sales, gross profit, gross margin and reduced selling, marketing and fulfillment expenses and reductions in operating losses will not continue; risks that the Company will be unable to reduce the levels of losses; potential adverse effects on gross margin resulting from mark downs and allowances; risks of litigation for sale of unauthentic or damaged goods and litigation risks related to sales in foreign countries; the dependence on third parties and certain relationships for certain services, including the Company's dependence on United States Postal Service and U.P.S. (and the risks of a mail slowdown due to terrorist activity) and the Company's dependence on its third-party web hosting and fulfillment centers.