NEW YORK — Bluefly might have found a faster path to profitability. The Web site has hired a top merchant after operating without one for its entire five-year history.
On Monday, Melissa Payner-Gregor joined as president. It’s a new position at Bluefly, an off-price Internet retailer of designer apparel, accessories, shoes and home merchandise, and one of the few survivors of the dot-com blow-up. Ken Seiff, who continues as chief executive, has always served as top merchant, though he never had prior retail experience. Before founding Bluefly, Seiff ran a golf sportswear business called Pivot Rules.
Payner-Gregor was president and ceo of the Spiegel catalog until last March when the parent Spiegel Inc. filed Chapter 11 bankruptcy, but the troubles were pegged to a corporate credit crunch, rather than having anything to do with Spiegel merchandising specifically.
She started her career in the training program at the now-defunct I. Magnin, became a sweater buyer at Ann Taylor, then shifted to Henri Bendel, where, as a divisional merchandise manager, she developed a private label collection. Subsequently, she started up Pastille, a specialty chain owned by Neiman Marcus Group, and intended as a lower-priced version of Ann Taylor, but it was discontinued after about four years. She later joined Chico’s FAS and rose to president before joining Spiegel in 1997.
With the addition of an experienced merchant, Bluefly’s performance could improve. It has been growing in volume and customers, though profitability has been elusive.
“She brings a critical skill set to our executive team,” said Seiff in an exclusive interview Monday with WWD. “The business has grown to the point where inventory is our single largest investment, so we needed to graduate to a higher level of expertise to lead the business forward. I have no retail background. Melissa brings to the table a very strong merchant skill set on the product side and the analytical side, and she has an ability to interact with people and to lead. She’s coming to the company at a time when our product offering and our access to new vendors has never been stronger. But we still have a lot of room for improvement.”The company would not specify the terms of her contract other than saying it runs through March 2007 and that she received an option grant. Seiff said Payner-Gregor reports to him and that her appointment does not signal a succession strategy. “My interest in the company has not waivered at all,” he said.
Asked how quickly her impact would be felt, Seiff replied, “We will see some of it right away because of the lack of retail expertise in the business. There’s probably a lot of low-hanging fruit.”
He also said there could be some noticeable differences this holiday season in terms of inventory management and inventory content, while over the next 12 to 24 months, he expects to see a broader impact on planning, attracting new customers and keeping them through enhancements in the Web site experience. Still, Seiff said customer retention has never been higher, with 74 percent of the Web site users returning at least monthly.
According to the company, the site offers about 350 designers at discounts averaging 60 percent, but ranging from 40 to 75 percent. Seiff said the offering goes from DKNY to Prada, though there are some more moderate brands on the site, such as Levi Strauss at its higher end.
Last year, Bluefly posted a 33 percent gain in net sales to $30.6 million. The net loss decreased 74 percent to $6.5 million from $25 million. Asked why Bluefly survived the Web fallout, Seiff replied: “There are three reasons: We picked a business to be in and stayed focused on that. Second, we found a very good partner [George Soros] with a lot of money who believes in the concept, and we prioritized our investments very well, so there is a sense that we are not throwing away the money.” He said the company operates with “frugality,” adding, “We have weathered these times well.”
Bluefly added about 10 employeesthis year, bringing its workforce to 85. Currently, the vice president of marketing position is open.
On Monday, Payner-Gregor said that through her experiences at such firms as Chico’s and Spiegel, she’s become drawn to turnaround and growth assignments “where you have to understand all the pieces and get very involved.” She characterized Bluefly as “a great concept with great potential.”“Although I haven’t started working in the company yet, from what I can see, there are a lot of things we can do to make a difference in the business. I don’t consider it a turnaround. I consider it a growth opportunity, and we have to bring it to profitability. It’s an entrepreneurial opportunity.” Her first day in the office is today.
She said she sees room to improve the inventory management, both in planning and expenses, and will do an evaluation of the vendor base. “There are probably some real buying and margin opportunities, and ways to build on the customer base — getting people to know that Bluefly is there. When you are a pure play, you’ve got to get people to log onto your site. There is no store that they walk by. And how you communicate with them is critically important to get them to come back to your site.”
However, she added, “Bluefly’s brand awareness is larger than the company itself. That shows there’s great opportunity.”
To raise awareness, from Oct. 1 through Nov. 11, visitors to bluefly.com will have the chance to win a grand prize of 24 pairs of Manolo Blahnik shoes. Thewinner will be drawn on or around Dec. 1. Also, through the 42-day promotion, Bluefly will give away one pair of Blahnik’s classic black slingbacks a day. The giveaway follows Bluefly’s Hermès sweepstakes last fall, in which six Birkin and six Kelly handbags were given away.
Also, Bluefly officially launches a redesign of its Web site on Wednesday. According to the company, it involves a cleaner look with a white background, models, zoom capability and tools that make it easier to navigate. This includes enabling shoppers to view items in their size only, items that have been recently added to the site, and items in a single category, for example, dresses, handbags or suits; or to view items only by designers they are interested in.
There’s also a keyword search, enabling customers to look for items that meet their search criteria, such as“cashmere sweater” or “leather jacket.” ?
The stock closed Monday on the Nasdaq at $1.60 and has a 52-week high of $1.81 and a low of 63 cents.
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