DESPITE RISE IN SALES, BLUEFLY STILL SEES RED
Byline: Dan Burrows
NEW YORK — Mounting sales and significantly lower costs gave Bluefly.com first-quarter momentum, but the off-price Internet retailer still reported a loss in the period.
For the three months ended March 31, the New York-based firm posted a net loss available to common shareholders of $1.7 million, or 18 cents a diluted share. That compares to last year’s net loss of $18.1 million, or $3.57. The net loss before accounting for all common stock was $1.1 million compared to $17 million a year ago.
Sales for the quarter jumped 64.6 percent to $7.7 million from $4.6 million last year.
Bluefly’s increased sales were complemented by major cost reductions. Selling, general and administrative expenses fell 33 percent to $3.5 million from $5.2 million last year, leading to a gross profit surge of 94 percent to $2.5 million from $1.3 million a year ago. Combined, the two accrued to a 75 percent reduction in Bluefly’s operating loss to $998,000 from $3.9 million in the first quarter of fiscal 2001.
“This was a banner quarter for Bluefly in several ways,” said chief executive officer Ken Seiff in a statement. “We achieved record levels of gross margin, average order size, revenue from repeat customers, and we cut our operating loss for a sixth consecutive quarter. We further improved our business by licensing two important pieces of software, one of which will allow us to build the next generation of our Web site and the other will allow customers to zoom in on product images.”
Bluefly also improved its financial position in the quarter by entering into a standby commitment agreement whereby its largest investor, Soros Private Equity Partners, has agreed to come up with an additional $4 million in capital this year if needed. In April 2001 Bluefly completed a deal with Soros that raised approximately $10 million through the issuance of common stock and converted about $31 million of its debt and redeemable preferred equity into permanent equity.
Bluefly acquired 24,873 new customers despite spending 76 percent less on advertising compared to the year-ago quarter. Overall, the company’s number of registered users gained 25.3 percent to 1.2 million from 926,000 last year. Moreover, the average order size increased by 25 percent to $162 from $129.