EXHIBIT 99.1
FOR IMMEDIATE RELEASE
INVESTOR CONTACTS: PRESS CONTACTS:
Patrick Barry Stacy Berns/Melissa Jaffin
CFO, Bluefly, Inc. Berns Communications Group
212- 944-8000 ext. 239 212-994-4660
pat@bluefly.com
BLUEFLY REPORTS SECOND QUARTER RESULTS
SECOND QUARTER HIGHLIGHTS
. Achieves Record Gross Margin - 40%
. Increases Gross Profit 64%
. Grows Revenue Over 27%
. Benefits From New Corporate Initiatives Including Upgraded Merchandise
Assortment and New Zoom Technology
New York, NY, August 4, 2004 - Bluefly, Inc. (NASDAQ SmallCap: BFLY), a leading
online retailer of designer brands, fashion trends and superior value
(www.bluefly.com), announced today that its sales increased by over 27% to
$9,495,000 during the second quarter of 2004, from $7,468,000 during the same
period a year ago. Gross margins increased to 40.1% in the second quarter of
2004, from 31% in the second quarter of 2003. That combination of revenue and
gross margin growth generated a 64% increase in gross profits.
"We are extremely pleased with our second quarter results, which reflect a
number of technology and merchandise upgrades," said Ken Seiff, Bluefly's CEO.
"Although we have always earned high customer satisfaction ratings from our
customers, we are focused on making a quantum leap on this front and we believe
that achieving this can be one of the biggest levers in our drive to year round
profitability. The second quarter marked the beginning of a company-wide
initiative to make that quantum leap. And although we are relatively early on in
this effort, we improved the shopping experience for many of our customers which
clearly helped drive our higher gross margins and faster inventory turns."
Other financial results for the second quarter of 2004 were as follows (all
comparisons are to the second quarter of 2003):
. Net loss decreased by over 66% to $708,000 (or $0.12 per share), from
$2,123,000 (or $0.27 per share)./1/
. Cash flow used in operations improved almost 36% to $1,299,000, from
$2,019,000.
. New customers acquired increased by almost 13%, to 25,478, from
22,581.
. New customer acquisition cost decreased by almost 29%, to $10.81, from
$15.16.
. Gross average order size increased over 6%, to $187.52, from $176.70.
"During the quarter we developed a deeper understanding of our customers and
made a number of changes in our organization and culture that will allow us to
provide a better experience for the customer," said Melissa Payner, Bluefly's
President. "Usability testing and site best practice audits identified a number
of opportunities to improve our
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/1/ Net loss per share for the second quarter of 2004 is based on a
weighted average of 14,575,345 shares outstanding, while the net loss per
share for the second quarter of 2003 is based on a weighted average of
11,024,568 shares outstanding. The net loss for the second quarter of 2004
period was partly offset by $303,000 of non-cash other income recognized as
a result of the decrease in value of certain warrants issued by the company
that were treated as derivative securities for accounting purposes.
customers' shopping experience, and we have contracted a software solution to
provide greater insight into customer shopping behavior and conversion."
"As we begin to translate this customer knowledge and insight into improvements
in our shopping experience, we expect to create higher levels of retention,
improved customer acquisition and a more profitable enterprise," Mr. Seiff
added. "But, during the upcoming third quarter, we expect these changes to be
reflected in other economic outcomes as well. Last year at this time, our focus
was very different. We were engaged in a company-wide effort to liquidate
inventory by slashing our prices significantly. This year we are focused on
gross profit and therefore will not make the same type of price cuts that we did
in 2003. As a result, we expect our gross margins to continue to show
significant improvement over last year but believe it will be difficult to
achieve the same levels of revenue growth we saw during the first and second
quarters."
ABOUT BLUEFLY, INC.
Founded in 1998, Bluefly, Inc. (NASDAQ SmallCap: 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-A,
8-K, 10-Q, and 10-K. These risks and uncertainties include, but are not limited
to, the company's history of losses and anticipated future losses; need for
additional capital and potential inability to raise such capital; 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 potential failure to
forecast revenues and/or to make adjustments to our 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 markets; 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 its dependence on its third-party web hosting and
fulfillment centers; online commerce security risks; management of potential
growth; the availability of merchandise; the need to further establish brand
name recognition; risks associated with our ability to handle increased traffic
and/or continued improvements to its Web site; rising return rates; dependence
upon executive personnel; the successful hiring and retaining of new personnel;
risks associated with expanding our operations; and uncertainties relating to
the imposition of sales tax on Internet sales.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
THREE MONTHS ENDED
-----------------------------------
JUNE 30, 2004 JUNE 30, 2003
--------------- ---------------
Net sales $ 9,495,000 $ 7,468,000
Cost of sales 5,688,000 5,153,000
--------------- ---------------
Gross profit 3,807,000 2,315,000
Gross profit percentage 40.1% 31.0%
Selling, marketing and fulfillment expenses 3,210,000 2,982,000
General and administrative expenses 1,394,000 1,406,000
--------------- ---------------
Operating loss (797,000) (2,073,000)
Interest and other income (expense), net 89,000 (50,000)
--------------- ---------------
Net loss $ (708,000) $ (2,123,000)
--------------- ---------------
Preferred stock dividends (1,062,000) (845,000)
--------------- ---------------
Net loss applicable to common shareholders $ (1,770,000) $ (2,968,000)
--------------- ---------------
Basic and diluted net loss per share
(after preferred stock dividends) $ (0.12) $ (0.27)
=============== ===============
Weighted average common shares outstanding 14,575,345 11,024,568
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- more -
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
THREE MONTHS ENDED
JUNE 30,
----------------------------------
2004 2003
--------------- ---------------
Cash flows from operating activities
Net loss $ (708,000) $ (2,123,000)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 378,000 629,000
Non-cash expense related to warrants issued to supplier 62,000 --
Provisions for returns (409,000) (112,000)
Allowance for doubtful accounts 60,000 38,000
Write-down of inventory 100,000 208,000
Change in value of warrants (303,000) --
Options Expense 2,000 --
Changes in operating assets and liabilities:
(Increase) decrease in
Inventories 669,000 (898,000)
Accounts receivable 120,000 (1,000)
Prepaid expenses (93,000) 102,000
Other current assets 193,000 (22,000)
Increase (decrease) in
Accounts payable (1,635,000) (7,000)
Accrued expenses and other current liabilities 124,000 190,000
Interest payable to related party 125,000 6,000
Deferred revenue 16,000 (29,000)
--------------- ---------------
Net cash used in operating activities (1,299,000) (2,019,000)
--------------- ---------------
Cash flows from investing activities
Cash collateral in connection with Rosenthal Pledge Agreement (1,250,000) --
Purchase of property and equipment (375,000) (218,000)
--------------- ---------------
Net cash used in investing activities (1,625,000) (218,000)
--------------- ---------------
Cash flows from financing activities
Net proceeds from exercise of stock options 26,000 --
Proceeds from sale of Series E Preferred Stock -- 1,000,000
Payments of capital lease obligation (81,000) (69,000)
--------------- ---------------
Net cash provided by financing activities (55,000) 931,000
--------------- ---------------
Net increase in cash and cash equivalents (2,979,000) (1,306,000)
Cash and cash equivalents - beginning of period 12,081,000 2,476,000
--------------- ---------------
Cash and cash equivalents - end of period $ 9,102,000 $ 1,170,000
=============== ===============
Supplemental schedule of non-cash investing and financing activities:
Interest paid $ 77,000 $ 28,000
=============== ===============
SELECTED BALANCE SHEET DATA & KEY METRICS-
UNAUDITED
JUNE 30, DECEMBER 31,
2004 2003
--------------- ---------------
Cash, including Restricted Cash of $1,250,000 at June 30, 2004 $ 10,352,000 $ 7,721,000
Inventories, net 9,651,000 11,340,000
Other Current Assets 1,888,000 1,863,000
Property & Equipment, net 1,527,000 1,659,000
Current Liabilities - excluding related party liabilities below 6,621,000 8,243,000
Notes Payable to Related Party Shareholders (including interest payable) 4,625,000 4,375,000
Shareholders' Equity 12,578,000 10,279,000
THREE MONTHS THREE MONTHS
ENDED ENDED
JUNE 30, 2004 JUNE 30, 2003
--------------- ---------------
Average Order Size (including shipping & handling revenue) $ 187.52 $ 176.70
Average Order Per New Customer (including shipping & handling revenue) $ 166.38 $ 165.15
Average Order per Repeat Customer (including shipping & handling revenue) $ 197.49 $ 182.78
Customers Added During Period 25,478 22,581
Revenue from Repeat Customers as % of Total Revenue* 72% 68%
Customer Acquisition Cost ** $ 10.81 $ 15.16
* 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 and related costs) by total new customers added.
Customer numbers are based on unique email addresses.
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