EXHIBIT 99.1
FOR IMMEDIATE RELEASE
Investor Contact: Press Contact:
Patrick Barry Janel Alania
CFO, Bluefly, Inc. 212-944-8000 ext. 509
212- 944-8000 ext. 239 janel.alania@bluefly.com
pat@bluefly.com
BLUEFLY.COM REPORTS QUARTERLY NET PROFIT
Record Fourth Quarter and Full Year 2003 Results
New York, NY - February 19, 2004 -- Bluefly, Inc. (NASDAQ SmallCap: BFLY), a
leading Internet retailer of designer brands at discount prices
(www.bluefly.com), announced today that it had achieved its first ever quarterly
net profit. For the fourth quarter of 2003, Bluefly had net income of $111,000
as compared to a net loss of $1,660,000 in the fourth quarter of 2002.
The significant swing from a quarterly net loss to profitability was primarily
the result of: (i) a 42% increase in net sales to $13,993,000 in the fourth
quarter of 2003 from $9,856,000 in the fourth quarter of 2002; (ii) a 760 basis
point increase in gross margin to a record high 38.6% in the fourth quarter of
2003 from 31.0% in the fourth quarter of 2002; and (iii) more efficient
marketing which allowed the company to increase the number of new customers
acquired by 38% while reducing advertising expenses by 23%.
Other financial results for the fourth quarter of 2003 were as follows (all
comparisons are to the fourth quarter of 2002):
. Gross profit increased nearly 77% to $5,405,000 from $3,055,000;
. Selling, marketing and fulfillment expenses as a percentage of
net sales decreased to 27.3% from 35.5 %;
. General and administrative expenses as a percentage of net sales
decreased to 9.5% from 11.6%;
. Net loss per share (which includes preferred stock dividends)
decreased 68% to $0.07 per share (based on 11,613,721 weighted
average shares outstanding), from $0.22 per share (based on
10,391,904 weighted average shares outstanding);
. The cost to acquire a new customer decreased by 44% to $10.53
from $18.79;
. The number of new customers acquired increased by 38% to 45,114
from 32,740;
. Gross average order size increased 5.75% to $189.26 from
$178.97; and
. Net sales attributable to the company's Manhattan holiday
clearance store, which opened in late November, were
approximately $465,000.
For the year, Bluefly announced that its net sales increased 24% to $37,928,000
in 2003 from $30,606,000 in 2002 and that its net loss decreased by 1.7% to
$6,369,000 in 2003 from $6,479,000 in 2002.
Other financial results for the year 2003 were as follows (all comparisons are
to the year 2002):
. Gross profit increased nearly 13% to $11,325,000 from
$10,035,000;
. Selling, marketing and fulfillment expenses as a percentage of
net sales decreased to 32.2% from 37.7 %;
. General and administrative expenses as a percentage of net sales
improved to 13.5% from 15.3%;
. Net loss per share (which includes preferred stock dividends)
decreased 64% to $0.88 per share (based on 11,171,018 weighted
average shares outstanding), from $2.44 per share (based on
9,927,027 weighted average shares outstanding);
. The cost to acquire a new customer decreased 40% to $10.22 from
$17.04;
. The number of new customers acquired increased by 23% to 124,248
from 101,063; and
. Gross average order size increased 4.66% to $174.99 from
$167.20;
"This was an excellent quarter for the company, most significantly because we
were profitable," said Ken Seiff, Chief Executive Officer of Bluefly, Inc.
"Achieving our first ever quarterly profit was the result of tremendous effort
from our team and an important milestone for the business. The broader results
of the quarter surpassed our own expectations. The 42% growth in net sales
coupled with record high gross margin of 38.6% reflect the value we bring to our
customers. In addition, operating margins at our Manhattan holiday clearance
store, which we opened on a short-term basis to test the use of a brick and
mortar strategy to liquidate aged and damaged inventory, were very strong," Mr.
Seiff added.
Melissa Payner, President of Bluefly, Inc., said, "The fact that we acquired
more new customers in the fourth quarter than in any prior quarter, while having
reduced our advertising expenses, suggests to me that Bluefly may have reached
an inflection point in its development. We begin 2004 with what I believe is a
vastly improved merchandise mix and stronger supply relationships than ever
before. In addition, our balance sheet, which ended the year with $7.7 million
in cash was fortified in January by $5 million of new investment. We look
forward to achieving even greater success in 2004."
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: potential adverse effects on gross margin and gross profit
resulting from mark downs and allowances for returns and credit card
chargebacks; the risk that favorable trends in sales, gross margin and customer
acquisition costs will not continue; risks that the Company will be unable to
reduce the levels of losses; recent losses and anticipated future losses; 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 and uncertainties associated with the Company's continuous efforts
to upgrade the performance of its Web site; the Company's limited working
capital, need for additional capital and potential inability to raise such
capital; the successful hiring and retaining of personnel; 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 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; risks related to consumer acceptance of the
Internet as a medium for purchasing designer apparel and accessories; 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.
-more-
BLUEFLY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
THREE MONTHS ENDED
DECEMBER 31,
----------------------------------------------------
2003 2002 2001
-------------- -------------- --------------
Net sales $ 13,993,000 $ 9,856,000 $ 7,906,000
Cost of sales 8,588,000 6,801,000 5,376,000
-------------- -------------- --------------
Gross profit 5,405,000 3,055,000 2,530,000
Gross margin 38.6% 31.0% 32.0%
Selling, marketing and fulfillment
expenses 3,815,000 3,500,000 2,958,000
General and administrative expenses 1,325,000 1,140,000 920,000
-------------- -------------- --------------
Operating income (loss) 265,000 (1,585,000) (1,348,000)
Interest (expense) and other income (154,000) (75,000) (31,000)
Net income (loss) $ 111,000 $ (1,660,000) $ (1,379,000)
============== ============== ==============
Deemed dividend related to beneficial
conversion feature on Series B and C
Preferred Stock -- -- --
Preferred Stock Dividends (871,000) (643,000) (622,000)
============== ============== ==============
Basic and diluted net loss per share
(which includes preferred stock
dividends)
Net loss per share $ (0 07) $ (0 22) $ (0 22)
============== ============== ==============
Weighted average shares outstanding 11,613,721 10,391,904 9,205,331
============== ============== ==============
YEAR ENDED
DECEMBER 31,
----------------------------------------------------
2003 2002 2001
-------------- -------------- --------------
Net sales $ 37,928,000 $ 30,606,000 $ 22,950,000
Cost of sales 26,603,000 20,571,000 15,954,000
-------------- -------------- --------------
Gross profit 11,325,000 10,035,000 6,996,000
Gross margin 29.9% 32.8% 30.5%
Selling, marketing and fulfillment
expenses 12,197,000 11,547,000 13,765,000
General and administrative expenses 5,103,000 4,686,000 5,098,000
-------------- -------------- --------------
Operating income (loss) (5,975,000) (6,198,000) (11,867,000)
Interest (expense) and other income (394,000) (281,000) (13,139,000)
Net income (loss) $ (6,369,000) $ (6,479,000) $ (25,006,000)
============== ============== ==============
Deemed dividend related to beneficial
conversion feature on Series B and C
Preferred Stock (225,000) (15,295,000) --
Preferred Stock Dividends (3,225,000) (2,489,000) (2,926,000)
============== ============== ==============
Basic and diluted net loss per share
(which includes preferred stock
dividends)
Net loss per share $ (0 88) $ (2 44) $ (3 41)
============== ============== ==============
Weighted average shares outstanding 11,171,018 9,927,027 8,185,065
============== ============== ==============
-more-
SELECTED BALANCE SHEET DATA & KEY METRICS (Unaudited)
DECEMBER 31, DECEMBER 31, DECEMBER 31,
2003 2002 2001
-------------- -------------- --------------
Cash $ 7,721,000 $ 1,749,000 $ 5,419,000
Inventories, net 11,340,000 10,868,000 6,388,000
Other Current Assets 1,863,000 1,159,000 1,671,000
Property & Equipment, net 1,659,000 2,604,000 1,155,000
Current Liabilities 8,459,000 7,072,000 6,242,000
Short Term Convertible Notes Payable to Shareholders, net -- 2,000,000 --
Long Term Notes Payable to Shareholders 4,000,000 182,000 182,000
Shareholders' Equity 10,279,000 7,084,000 8,402,000
THREE MONTHS THREE MONTHS
ENDED ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2003 2002 2003 2002
-------------- -------------- -------------- --------------
Gross Average Order Size (including shipping & handling) $ 189.26 $ 178.97 $ 174.99 $ 167.20
Gross Average Order Per New Customer (including
shipping & handling) $ 167.16 $ 157.91 $ 158.38 $ 149.74
Gross Average Order per Repeat Customer (including
shipping & handling)* $ 204.93 $ 193.35 $ 184.95 $ 177.31
Customers Added During Period 45,114 32,740 124,248 101,063
Revenue from Repeat Customers as % of Total Revenue 63% 64% 66% 67%
Customer Acquisition Cost ** $ 10.53 $ 18.79 $ 10.22 $ 17.04
* Repeat customer is defined as a person who has bought more than once from
Bluefly during their lifetime.
** Customer Acquisition Cost is calculated by dividing total advertising
expenditures (excluding staff related costs) by total new customers added. New
customer number is based on unique email addresses.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
THREE MONTHS THREE MONTHS
ENDED ENDED
DECEMBER 31, DECEMBER 31,
2003 2002
-------------- --------------
Cash flows from operating activities:
Net income (loss) from operations $ 111,000 $ (1,660,000)
Adjustments to reconcile income (loss)
to net cash provided by (used in) operating activities:
Depreciation and amortization 353,000 381,000
Provisions for inventory reserves (75,000) 110,000
Issuance of warrants for services rendered -- 17,000
Provisions for returns 814,000 634,000
Bad debt expense 26,000 64,000
Changes in operating assets and liabilities:
(Increase) decrease in:
Inventories 1,199,000 (65,000)
Accounts receivable 188,000 (373,000)
Other current assets (17,000) 96,000
Prepaid expenses (56,000) 667,000
Other assets -- 40,000
(Decrease) increase in:
Accounts payable (2,503,000) (1,862,000)
Accrued expenses 435,000 269,000
Deferred revenue (160,000) 276,000
Long term interest payable on notes to shareholders 110,000
-------------- --------------
Net cash provided by (used in) operating activities 425,000 (1,406,000)
Cash flows from investing activities:
Purchase of property and equipment (89,000) (146,000)
-------------- --------------
Net cash (used in) investing activities (89,000) (146,000)
-------------- --------------
Cash flows from financing activities:
Net proceeds from exercise of stock options 2,889,000 --
Proceeds from issuance of notes payable to shareholders 2,000,000 --
Payment of capital lease obligation (71,000) (71,000)
-------------- --------------
Net cash provided by (used in) financing activities 4,818,000 (71,000)
-------------- --------------
Net increase in cash and cash equivalents 5,154,000 (1,623,000)
Cash and cash equivalents - beginning of period 2,567,000 3,372,000
-------------- --------------
Cash and cash equivalents - end of period $ 7,721,000 $ 1,749,000
============== ==============