EXHIBIT 99.1
Investor Contacts: Press Contact:
Patrick Barry Samanth Kain
CFO, Bluefly, Inc. Paul Wilmot Communications
212- 944-8000 ext. 239 212-206-7447 ext.25
pat@bluefly.com skain@greatpress.com
Budd Zuckerman
Genesis Select
303-415-0200
bzuckerman@genesisselect.com
BLUEFLY REPORTS THIRD QUARTER 2007 RESULTS
NEW YORK - November 13, 2007 - Bluefly, Inc. (NASDAQ Capital Market: BFLY), a
leading online retailer of designer brands, fashion trends and superior value
(www.bluefly.com), today announced growth in revenue for the third quarter 2007.
Highlights for the third quarter included:
o Revenue increased by approximately 11% to $18.1 million from $16.3
million in the third quarter of 2006 despite a 19% decrease in
marketing expenses.
o Gross margin decreased to 31.7% from 37.4% in third quarter 2006.
Gross margin was negatively impacted in the quarter by a $550,000
charge against inventory related to the company's move to a new third
party fulfillment center.
o Operating loss increased to $5,072,000 compared to operating loss of
$3,625,000, primarily as a result of (i) $911,000 incremental
stock-based compensation expense incurred in connection with existing
stock based compensation awards and (ii) incremental expense of
approximately $462,000 directly related to the company's move to a new
third party fulfillment center.
o Net loss increased to $5.0 million from $3.5 million. Loss per share
increased to $0.04 per share (based on 130.5 million weighted average
shares outstanding after preferred stock dividends) from $0.03 per
share (based on 129.0 million weighted average shares outstanding
after preferred stock dividends).
o Inventory increased by $6.2 million since December 2006.
"In an effort to improve the overall customer experience, we began the process
of moving to the new third party fulfillment center late in the second quarter.
During this transition portions of our inventory were not available for sale to
the consumer, which had a significant impact on our revenue growth. To further
complicate matters, during the transition we were unable to fulfill all orders
completely in a timely manner. This transition had a negative impact not only on
our sales, but on our margins and on the overall customer experience. We are
continuing to work through the issues and our efforts to provide an improved
customer experience," said Melissa Payner, Bluefly's CEO. "We are pleased with
the growth in revenue in the quarter given the impact of our move and the
reduction of the marketing spend versus last year."
"I'm really excited about the fourth quarter and early part of next year as new
marketing partnerships expose Bluefly to broader audiences," Ms. Payner went on
to say. "The most exciting is a collaboration with Bravo's three-time
Emmy-nominated hit reality series "Project Runway." In addition to significant
on-air exposure, BravoTV.com and Bluefly.com will work together to create unique
online fashion experiences with access to exclusive content. We are very excited
to be aligned with a pop culture phenomenon such as 'Project Runway.' The show's
audience shares the same obsessive passion for trends and great designer
clothing as our devoted customer base." Project Runway Season 4 premiers
tomorrow night at 10pm on Bravo.
The company will host a conference call webcast to discuss its third quarter
today at 5:00 p.m. Investors can access the webcast at www.investor.bluefly.com.
ABOUT BLUEFLY, INC.
Founded in 1998, Bluefly, Inc. (NASDAQ Capital Market: BFLY) is a leading online
retailer of designer brands, fashion trends and superior value. 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-K,
10-Q and 10-K. These risks and uncertainties include, but are not limited to,
the Company's transition to a new third party fulfillment center and associated
costs, the Company's ability to execute on, and gain additional revenue from,
its marketing initiatives; the Company's history of losses and anticipated
future losses; the potential failure to forecast revenues and/or to make
adjustments to operating plans necessary as a result of any failure to forecast
accurately; unexpected changes in fashion trends; cyclical variations in the
apparel and e-commerce market; the availability of merchandise; the Company's
dependence on one supplier for a material portion of its inventory; risks
associated with the acquisition of inventory from foreign markets, including
currency fluctuations; These risks are not disclosed in the 10-Q. If these are
new risk factors, the Company will need to disclose these risks under Item 1A in
the 10-Q, and add these risks to the forward looking statements in the 10-Q; the
need to further establish brand name recognition; management of potential
growth; and risks associated with the Company's ability to handle increased
traffic and/or continued improvements to its Web site.
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CONDENSED STATEMENTS OF OPERATIONS - UNAUDITED
THREE MONTHS ENDED
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SEPTEMBER 30, SEPTEMBER 30,
2007 2006
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Net sales $ 18,079,000 $ 16,322,000
Cost of sales 12,351,000 10,211,000
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Gross profit 5,728,000 6,111,000
Gross profit percentage 31.7% 37.4%
Selling and fulfillment expenses 4,583,000 3,871,000
Marketing expenses 2,807,000 3,496,000
General and administrative expenses 3,410,000 2,369,000
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Total operating expenses 10,800,000 9,736,000
Operating loss (5,072,000) (3,625,000)
Interest and other income 99,000 199,000
Interest expense (55,000) (59,000)
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Net loss $ (5,028,000) $ (3,485,000)
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Preferred stock dividends (11,000) (16,000)
Net loss available to common shareholders $ (5,039,000) $ (3,501,000)
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Basic and diluted net loss per share
(after preferred stock dividends) $ (0.04) $ (0.03)
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Weighted average shares outstanding 130,513,931 129,007,488
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SELECTED BALANCE SHEET DATA & KEY METRICS- UNAUDITED
SEPTEMBER 30, DECEMBER 31,
2007 2006
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Cash $ 7,172,000 $ 20,188,000
Inventories, net 30,345,000 24,189,000
Prepaid Inventory 422,000 616,000
Other Current Assets 7,016,000 3,613,000
Property & Equipment, net 5,383,000 3,573,000
Current Liabilities 18,290,000 14,603,000
Other Long-term Liabilities 98,000 --
Shareholders' Equity 32,154,000 37,827,000
THREE MONTHS THREE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
2007 2006
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Average Order Size (including shipping & handling revenue) $ 280.22 $ 260.58
Customers Added During Period 37,408 35,970
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CONDENSED STATEMENTS OF CASH FLOWS
THREE MONTHS THREE MONTHS
ENDED ENDED
SEPTEMBER 30, 2007 SEPTEMBER 30, 2006
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(Unaudited) (Unaudited)
Cash flows from operating activities:
Loss from operations $ (5,028,000) $ (3,485,000)
Adjustments to reconcile loss from operations
to net cash used in operating activities:
Depreciation and amortization 456,000 396,000
Non-cash expense related to warrants issued to supplier -- 14,000
Provisions for returns 1,385,000 638,000
Bad debt expense 195,000 85,000
Stock options expense 1,508,000 597,000
Reserve for inventory obsolescence 850,000 275,000
Changes in operating assets and liabilities:
(Increase) decrease in:
Inventories (8,114,000) (5,936,000)
Accounts receivable (608,000) (855,000)
Prepaid inventory 147,000 (496,000)
Prepaid expenses (2,933,000) (1,829,000)
Other current assets 112,000 176,000
(Decrease) increase in:
Accounts payable 3,848,000 3,094,000
Accrued expenses and other liabilities 667,000 386,000
Deferred revenue 942,000 230,000
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NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (6,573,000) (6,710,000)
Cash flows from investing activities:
Purchase of property and equipment (884,000) (255,000)
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NET CASH (USED IN) INVESTING ACTIVITIES (884,000) (255,000)
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Cash flows from financing activities:
Net proceeds from exercise of Stock Options 3,000 36,000
Payment of capital lease obligation -- (13,000)
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NET CASH PROVIDED BY PROVIDED BY FINANCING ACTIVITIES 3,000 23,000
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Net increase in cash and cash equivalents (7,454,000) (6,942,000)
Cash and cash equivalents - beginning of period 14,626,000 23,997,000
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CASH AND CASH EQUIVALENTS - END OF PERIOD 7,172,000 17,055,000
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