LOS ANGELES — Bluefly Inc.’s new private equity owner, Clearlake Capital Group LP, has put former Buy.com chief executive officer Neel Grover in charge of the beleaguered online discount retailer’s turnaround.
Grover, who’s been an executive operating partner at Santa Monica, Calif.-based Clearlake for roughly a year following his departure from Buy.com and was heavily involved in the due-diligence process evaluating Bluefly, has been named ceo and chairman of Bluefly, and has brought on board Greg Giraudi, previously Buy.com’s chief operating officer, as the Web site’s president.
Grover is putting the experience he gained at Buy.com, which was sold to Japanese online giant Rakuten for $250 million in 2010 while he was ceo, to the test at Bluefly, an e-commerce pioneer that’s suffered under the weight of a deficit that amounted to $187 million at the end of last year and net losses of $56.1 million in the five years through 2012.
Grover believes Bluefly’s core business has stayed strong. “There is a great customer base. The company has tremendous search engine optimization traffic already. It does very well with Google natural search. It has a great team of employees and tremendous relationships with suppliers. There are all the makings of a terrific company. We just need to make some tweaks,” he said. “Nothing is going to be easy, but we think it is in a space that still has room for a strong player, and we have all the core assets, we just need to put them together in a nicer package and improve the overall experience and refresh the brand. If we do all the things we need to do, we know we can make it successful.”
Grover noted that Bluefly has four million active customers and attracted 35 million unique visitors last year. In 2012, revenues fell 2.9 percent to $93.4 million. That same year, the average order size decreased 20 percent to $242.30 due to Bluefly ratcheting up promotional activity. The decrease was partially offset by a 15 percent increase in the volume of customer orders.
Clearlake paid $13 million for Bluefly, including payments to major stakeholders Salus Capital Partners, Rho Ventures and Prentice Consumer Partners, plus debts and liabilities and cash to fund the company’s growth. Bluefly was publicly traded on the Nasdaq until May 22, when its shares closed at 39 cents, down from $1.55 a year ago. The company was founded in 1998 and launched flash-sale offshoot Belle & Clive in 2011.
Before the Clearlake acquisition, Grover explained the cash-strapped Bluefly couldn’t adequately expand its inventory and conversion rates declined as a result. Clearlake has recapitalized Bluefly to help remedy that problem. “Clearlake has added some significant investment capital, so it has allowed the company to lay out a good inventory plan,” said Grover. He continued, “You are going to see more and more new product coming on with much more breadth and depth that will be aggressively priced, but not quite as promotional as it was in the past.”
The ceo foresees Bluefly’s revenues in the future being derived from a combination of traditional e-commerce sales and marketplace commissions. Belle & Clive will remain part of the mix, but it is changing slightly. Grover said, “It has traditionally not been a normal flash-sales site. It’s been really more of a first look, so the new inventory has gone on Belle & Clive. You will see more of that new inventory come on Bluefly first…At the same time, we’ve got some very high-end designers that will come on Belle & Clive that won’t necessarily go on some of the other flash-sale sites.”
Clearlake is keeping Bluefly’s headquarters in New York, although Grover and Giraudi live in Southern California. They are commuting weekly and spending workdays in New York. Grover, who sits on the boards of Buy.com and Rakuten USA, is looking to enlarge Bluefly’s board and management team. He is seeking to fill chief operating officer and chief financial officer positions. “We need to let people know that it is not the old Bluefly. It is something better. We need to add selection and have a clear layout and make it an overall great purchasing experience with great pricing,” said Grover.
Madonna turns 59 today, marking another year of show-stopping, one-of-a-kind bold looks from the singer. To celebrate, we took a look at the superstar's most memorable fashion moments. Here, Madonna sits front row at Versace's spring runway show in 1995. See more exclusive photos from the #wwdarchive on WWD.com. #wwdeye (📷: Cédric Dordevic)
WWD asked a handful of creative directors to evaluate the September covers of leading women's fashion magazines. How do they think the covers this year compare with years gone by, and what do they say about the current status of the publication? Link in bio. (GIF by @hypebreast)
"Stephen King is such a master, but I don't like being scared - there's enough that's really scary. How about the morning's news?" says Holland Taylor in an interview with WWD. See what else the actress said about starring in the TV adaptation of King's thriller "Mr. Mercedes" on WWD.com. #wwdeye (📷: @jgreenery)