Byline: Peter Braunstein

NEW YORK — Internet off-pricer has shot back at a Barron’s Online article appearing Monday that ranked the e-tailer at number two in its list of “Burn Victims” — companies with high cash burn rates that, according to Barron’s staffer Jack Willoughby, “seem to be destined to run out of cash by yearend.”
In the article Willoughby contended that Bluefly was “due to run out of cash [last] October,” but was saved from ruin by an infusion of $15 million from financier George Soros in November. In the accompanying chart, Barron’s alleged that the value of Bluefly’s stock had dropped 80.7 percent since September 26, 2000 to amount to roughly $3 million as of Dec. 28. On Tuesday, Bluefly closed near its 52-week low at 65 cents, unchanged, in light trading on the Nasdaq as 18,500 shares changed hands compared with average daily volume of 52,100. During the past 52 weeks, the issue has traded as high as $14.25 and as low as 38 cents.
In an interview with WWD, an adamant Ken Seiff, chairman and chief executive officer of, contested Barron’s allegations. “They have misrepresented us twice now,” Seiff contended. “In June [2000], Barron’s ran an article that suggested we had three days of cash left and therefore implied that we would be out of business by July. Monday, they came out with a follow-up article that we have -2.8 months till burnout. What does that mean?” Seiff said. “The last three months we saw our sales increase by 90 percent, we acquired more new customers than ever before, generated record business from our repeat customers and set a new record for efficient customer acquisitions. We did all this by generating strong growth margins in what has generally been described as a sluggish retail environment. That’s not bad for a company that was supposedly dead in June and then again supposedly ‘burned out’ -2.8 months ago. Barron’s has written our obituary twice already.”
Jack Willoughby, the Barron’s staffer who compiled the cash burn index and wrote the accompanying feature, defended the numbers, said: “I think Ken Seiff doesn’t like the presentation and implication of the statistics, but our chart has been unfailingly accurate.
“We’re not projecting bankruptcy; we’re depicting the intensity of the search for cash. That’s what the chart is: a gauge of financial pressure. The fact is that Bluefly is under financial pressure right now,” Willoughby continued. “The $15 million they received last year will run out in three months.”
As to the utility of a statistic predicting that Bluefly would burn out in -2.8 months, Willoughby acknowledged: “On the face of it, it doesn’t make sense, but if we varied it, we’d ruin the methodology.”

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