EXHIBIT 99.1
FOR IMMEDIATE RELEASE
INVESTOR CONTACTS: PRESS CONTACTS:
Pat Barry Stacy Berns/Melissa Jaffin
CFO, Bluefly, Inc. Berns Communications Group
212- 944-8000 ext. 239 212-994-4660
pat@bluefly.com
BLUEFLY REPORTS THIRD QUARTER RESULTS
THIRD QUARTER HIGHLIGHTS
.. 69% Increase in Gross Profit
.. Approximately 13 Percentage Point Increase in Gross Margin
.. 6% Increase in Revenue
.. Improved Results Fueled by New Merchandise Strategy
New York, NY, November 10, 2004 - Bluefly, Inc. (NASDAQ SmallCap: BFLY), a
leading online retailer of designer brands, fashion trends and superior value
(www.bluefly.com), announced its third quarter results today. Sales increased by
approximately 6% to $8,675,000 during the third quarter of 2004, from $8,210,000
during the same period a year ago. Gross margins increased to 34.2% in the third
quarter of 2004, from 21.3% in the third quarter of 2003. That combination of
revenue growth and gross margin growth generated a 69% increase in gross profit.
Other financial results for the third quarter of 2004 were as follows (all
comparisons are to the third quarter of 2003):
. Net loss decreased by over 22% to $1,960,000 (or $0.21 per share),
from $2,517,000 (or $0.31 per share)./1/
. Cash flow used in operations increased by approximately 190% to
$1,397,000 from $481,000.
. New customers acquired decreased by approximately 12.6%, to 25,792,
from 29,522.
. New customer acquisition cost decreased by over 20%, to $8.41, from
$10.52.
. Gross average order size increased by almost 11%, to $179.48, from
$161.87.
"Our results in the third quarter - and particularly the increases in gross
margin and gross profit - were driven by our new merchandise strategy, which is
primarily focused on offering the latest fashion trends and designer brands,"
said Melissa Payner, Bluefly's CEO. "This strategy, along with more disciplined
buying and a trend towards decreasing return rates, has allowed us to increase
gross profit by 69%. We believe that the foundation that we have built in
merchandising will provide a strong base as we become more aggressive in our
marketing efforts in 2005."
- ----------
/1/ Net loss per share for the third quarter of 2004 is based on a weighted
average of 14,634,625 shares outstanding, while the net loss per share for the
third quarter of 2003 is based on a weighted average of 11,057,700 shares
outstanding.
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,
fulfillment and customer service centers; the availability of merchandise; the
need to further establish brand name recognition; online commerce security
risks; management of potential growth; 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
-------------------------------
SEPTEMBER 30, SEPTEMBER 30,
2004 2003
-------------- --------------
Net sales $ 8,675,000 $ 8,210,000
Cost of sales 5,709,000 6,462,000
-------------- --------------
Gross profit 2,966,000 1,748,000
Gross profit percentage 34.2% 21.3%
Selling, marketing and fulfillment expenses 3,059,000 2,883,000
General and administrative expenses 1,743,000 1,274,000
-------------- --------------
Operating loss (1,836,000) (2,409,000)
Interest and other income (expense), net (124,000) (108,000)
-------------- --------------
Net loss $ (1,960,000) $ (2,517,000)
============== ==============
Preferred stock dividends (1,090,000) (871,000)
-------------- --------------
Net loss applicable to common shareholders $ (3,050,000) $ (3,388,000)
============== ==============
Basic and diluted net loss per share
(after preferred stock dividends) $ (0.21) $ (0.31)
============== ==============
Weighted average common shares outstanding 14,634,625 11,057,700
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- more -
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
THREE MONTHS ENDED
SEPTEMBER 30,
-------------------------------
2004 2003
-------------- --------------
Cash flows from operating activities
Net loss $ (1,960,000) $ (2,517,000)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 379,000 359,000
Non-cash expense related to warrants issued to supplier 99,000 --
Provisions for returns 29,000 522,000
Allowance for doubtful accounts 64,000 17,000
Reserve for inventory obsolescence (100,000) 339,000
Options Expense 121,000 --
Changes in operating assets and liabilities:
(Increase) decrease in
Inventories (1,014,000) (1,448,000)
Accounts receivable 20,000 (273,000)
Prepaid expenses (4,000) (52,000)
Other current assets (231,000) (70,000)
Increase (decrease) in
Accounts payable 847,000 2,188,000
Accrued expenses and other current liabilities 138,000 5,000
Interest payable to related party 131,000 53,000
Deferred revenue 84,000 396,000
-------------- --------------
Net cash used in operating activities (1,397,000) (481,000)
-------------- --------------
Cash flows from investing activities
Cash collateral in connection with Rosenthal Pledge Agreement (6,000) --
Purchase of property and equipment (292,000) (129,000)
-------------- --------------
Net cash used in investing activities (298,000) (129,000)
-------------- --------------
Cash flows from financing activities
Net proceeds from exercise of stock options 70,000 77,000
Proceeds from issuance of Notes Payable (July 2003 Financing) -- 2,000,000
Payments of capital lease obligation (107,000) (70,000)
-------------- --------------
Net cash provided by financing activities (37,000) 2,007,000
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Net increase in cash and cash equivalents (1,732,000) 1,397,000
Cash and cash equivalents - beginning of period 9,102,000 1,170,000
-------------- --------------
Cash and cash equivalents - end of period $ 7,370,000 $ 2,567,000
============== ==============
Supplemental schedule of non-cash investing and financing activities:
Interest paid $ 37,000 $ 3,000
============== ==============
SELECTED BALANCE SHEET DATA & KEY METRICS-UNAUDITED
SEPTEMBER 30, DECEMBER 31,
2004 2003
-------------- --------------
Cash, including Restricted Cash of $1,256,000 at September 30, 2004 $ 8,626,000 $ 7,721,000
Inventories, net 10,666,000 11,340,000
Other Current Assets 2,039,000 1,863,000
Property & Equipment, net 1,596,000 1,659,000
Current Liabilities - excluding related party liabilities below 7,698,000 8,243,000
Notes Payable to Related Party Shareholders (including interest payable) 4,756,000 4,375,000
Shareholders' Equity 10,809,000 10,279,000
THREE MONTHS THREE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
2004 2003
-------------- --------------
Average Order Size (including shipping & handling revenue) $ 179.48 $ 161.87
Average Order Per New Customer (including shipping & handling revenue) $ 151.40 $ 144.69
Average Order per Repeat Customer (including shipping & handling revenue) $ 194.31 $ 171.51
Customers Added During Period 25,792 29,522
Revenue from Repeat Customers as % of Total Revenue* 71% 68%
Customer Acquisition Cost ** $ 8.41 $ 10.52
* 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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