Bluefly.com Reports Third Quarter 2001 Results.Business Editors/High-Tech Writers NEW YORK--(BUSINESS WIRE)--Oct. 25, 2001 Bluefly Bluefly, Inc.. (NASDAQ: bfly) is an American electronic commerce company based in New York, New York. As one of the leading fashion and lifestyle e-commerce website, Bluefly Inc, has grown rapidly since it’s inception. , Inc.(NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :BFLY BFLY Bluefly Inc. (stock symbol) ): Net Sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight Increase By Nearly 48% and Gross Profit Grows By Over 160% Operating Loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. Declines By Nearly 48%, Marking The Fourth Consecutive Quarter of Narrowing Losses Bluefly, Inc. (NASDAQ SmallCap: BFLY), a leading Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the retailer of designer fashions at outlet store An outlet store or factory outlet is a retail store in which manufacturers sell their stock directly to the public through their own branded stores. The stores can be can be brick and mortar or online. prices (www.bluefly.com), announced today that for the third quarter of 2001 its net sales grew by nearly 48% and its gross profit increased by over 160%, while its operating loss narrowed for the fourth consecutive quarter based on year-over-year comparisons. In the third quarter of 2001, Bluefly's gross profit increased to $1,459,000 from $560,000 in the same period a year ago. The increase in gross profit was the result of both the improvement in gross margin, which increased to 28.5% in the third quarter of 2001 from approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 16.2% in the same period a year ago, and the increase in net sales. Bluefly's net sales in the third quarter of 2001 increased to $5,113,000 from $3,455,000 in the third quarter of 2000, an almost 48% increase. The growth in net sales was driven primarily by the increase in sales to repeat customers, which grew to approximately 64% of gross sales Gross Sales A measure of overall sales that isn't adjusted for customer discounts or returns, calculated simply by adding all sales invoices, and not including operating expenses, cost of goods sold, payment of taxes, or any other charge. in the third quarter of 2001 from approximately 51% of gross sales in the third quarter of 2000, as well as the increase in average order size, which grew by over 33% to nearly $144 from nearly $108 in the same period a year ago. Bluefly's operating loss for the third quarter of 2001 decreased by nearly 48% to $2,412,000 from $4,602,000 in the third quarter of 2000. Bluefly's net loss (before preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. dividends) decreased by over 49% to $2,428,000 in the third quarter of 2001 from $4,781,000 in the same period a year ago. Bluefly's net loss per share decreased to $0.33 per share (based on 9,205,331 shares outstanding) in the third quarter of 2001 from $1.01 per share (based on 4,924,906 shares outstanding) in the third quarter of 2000. The reduction in losses was driven by, among other things, the 59% decrease in new customer acquisition cost, which fell to $23.73 in the third quarter of 2001 from $57.45 in the third quarter of 2000, and the increase in gross profit. Also contributing to the reduction in losses were the nearly 30% reduction in selling, marketing and fulfillment ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. expenses and the nearly 11% reduction in general and administrative expenses. "I am extremely pleased by our results this quarter, especially in light of the fact that many retailers are reporting declining sales and weakening weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak  en·er n. margins," said Ken Seiff, Chief
Executive Officer of Bluefly, Inc. "Better access to merchandise MERCHANDISE. By this term is understood all those things which merchants sell either wholesale or retail, as dry goods, hardware, groceries, drugs, &c. It is usually applied to personal chattels only, and to those which are not required for food or immediate support, but such as remain and strong sales coupled with our diligent dil·i·gent adj. Marked by persevering, painstaking effort. See Synonyms at busy. [Middle English, from Old French, from Latin d approach to reducing expenses produced what I believe to be our strongest quarter ever," Seiff added. About Bluefly, Inc. Bluefly is headquartered in New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. , in the heart of the fashion district. Distinguishing itself with discounts of up to 75%, products from over 300 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 hit-or-miss adj. Marked by a lack of care, accuracy, or organization; random. hit or miss adv. " aspect of off-price off-price adj. 1. Of, relating to, or being a retail store that sells merchandise at prices lower than usual. 2. For sale at prices lower than usual: off-price assortments of women's clothing. 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 (A division of Time Warner, Inc., New York, NY, www.aol.com) The world's largest online information service with access to the Internet, e-mail, chat rooms and a variety of databases and services. , MSN (1) (MicroSoft Network) A family of Internet-based services from Microsoft, which includes a search engine, e-mail (Hotmail), instant messaging (Windows Live Messaging) and a general-purpose portal with news, information and shopping (MSN Directory). and Yahoo! For more information, visit www.bluefly.com.
Bluefly, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
Three Months Ended
September 30, September 30,
2001 2000
---- ----
Net sales(1) $5,113,000 $3,455,000
Cost of sales(1) 3,654,000 2,895,000
------------ ------------
Gross profit (loss)(1) 1,459,000 560,000
Gross margin(1) 28.5% 16.2%
Selling, marketing and
fulfillment expenses 2,731,000 3,884,000
General and administrative expenses 1,140,000 1,278,000
------------- -------------
Operating loss (2,412,000) (4,602,000)
Interest expense, net of
interest income (16,000) (179,000)
Net loss $(2,428,000) $(4,781,000)
============ ============
Preferred stock dividends (622,000) (202,000)
Net loss available to
common shareholders $(3,050,000) $(4,983,000)
============ ============
Basic and diluted net (loss)
income per share
(after preferred stock dividends) $ (0.33) $ (1.01)
========= =========
Weighted average
shares outstanding 9,205,331 4,924,906
========= =========
(1) In accordance with EITF 00-10, shipping and handling charges
collected from customers have been included in net sales. In
connection with that change, the Company has elected to include
outbound shipping costs as part of cost of sales. Prior to the
fourth quarter of 2000, outbound shipping costs net of shipping
and handling revenue had been presented as part of selling,
marketing and fulfillment expenses. All periods presented have
been reclassified for consistent presentation.
SELECTED BALANCE SHEET DATA & KEY METRICS - UNAUDITED
September 30, December 31,
2001 2000
------------- --------------
Cash $4,113,000 $5,350,000
Inventories, net 7,661,000 7,294,000
Other Current Assets 1,564,000 1,704,000
Property & Equipment, net 1,095,000 1,326,000
Total Current Liabilities 4,805,000 25,829,000
Redeemable Preferred Stock
and Shareholders' Equity (Deficit) 9,781,000 (9,961,000)
Three Months Three Months
Ended Ended
September 30, 2001 September 30, 2000
------------------ -------------------
Average Order Size (including
shipping & handling revenue) $143.84 $107.68
Average Order Per New Customer
(including shipping & handling
revenue) $126.74 $95.62
Average Order per Repeat
Customer(2) (including shipping
& handling revenue) $155.69 $122.35
Registered Users 1,050,631 746,726
Registered Users
Added During Period 49,097 108,457
Total Customers 256,598 148,071
Customers Added During Period 21,113 24,497
Revenue from Repeat Customers
as % of Gross Sales 64% 51%
Customer Acquisition Cost(3) $23.73 $57.45
(2) Repeat customer is defined as a person who has bought more than
once from Bluefly during their lifetime.
(3) Customer Acquisition Cost is calculated by dividing total
advertising expenditures (excluding staff and related costs) by
total new customers added. Customer numbers are based on unique
email addresses.
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
such capital; the competitive nature of the business and the potential
for competitors with greater resources to enter such business; adverse
trends 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
risk that favorable trends in 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; 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 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; the successful hiring and retaining of personnel; the
dependence on continued growth of online commerce; 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.
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