BLUEFLY STOCK REGAINS MUCH OF ITS LOST VALUE
Byline: Vicki M. Young
NEW YORK — Shares of Bluefly Inc. gained back some ground last week, adding 24 percent to close at 5 19/32 in Nasdaq trading, after losing 41 percent of their value in the market’s roller-coaster ride during the week ended April 14.
Bluefly, the Internet off-pricer, reported on April 17 that its first-quarter revenue grew more than elevenfold, totaling $3.6 million, but heavy spending for selling, marketing and fulfillment operations took a toll on the bottom line, as losses in the quarter deepened by 383 percent.
Bluefly logged a $5.9 million loss for the first quarter, ended March 31, versus a loss of $1.2 million in the prior-year period.
The loss in the most recent period includes a $200,000 charge for preferred stock dividends.
Sales in the quarter skyrocketed 1,067 percent to the $3.6 million mark, compared with sales of just $305,000 a year ago.
However, selling, marketing and fulfillment costs ballooned to $5.3 million from $863,000. General and administrative expenses added to the bottom-line erosion, soaring to $1.3 million from $494,000.
Although Bluefly’s first-quarter loss widened, analyst Jeffrey Klinefelter at U.S. Bancorp Piper Jaffray on April 19 reiterated his “strong buy” rating for the company.
According to Klinefelter’s research note, Bluefly’s average order size was $94 in the quarter, with the average order size for new customers coming in at $88 and, for existing customers, at $106. Those numbers, he wrote, provide “evidence of new customer growth, as well as the existence of a loyal customer base.”
In addition, the analyst noted Bluefly’s revenue per repeat customers, as a percent of total sales, was 42 percent in the first quarter, up from 35 percent a year earlier. Repeat customers are far more profitable for Web sites than new shoppers whose loyalty needs to be secured.
Klinefelter noted that the competitive landscape for Bluefly “cleared significantly” because of the exit from the market of two key competitors, Cybershop, and Outletmall, the former a division of Fashionmall.com.
Bluefly’s e-mail notification service is a new site feature the analyst expects will elevate customer service, providing shoppers with recommendations based on prior purchasing patterns. By yearend, the company is expected to begin notifying customers when a specific product is received into inventory.