Bluefly said Monday it will receive $15 million from Rho Ventures, giving the troubled company more working capital with which to buy inventory and acquire customers.
The 10-year-old online purveyor of off-price goods has never turned a profit. In its most recent statement, filed in November for the quarter ended Sept. 30, the company had an accumulated deficit of $147 million and said it was working under a “streamlined” business plan intended to help Bluefly meet its expenses. The plan called for reductions in marketing, hiring and buying new inventory. The company said in the filing it believed it had enough cash and credit to continue operating for at least 12 months. However, the filing was not audited.
Net sales decreased by 14 percent to $17.1 million for the three months ended Sept. 30 compared with the same period in 2008, the filing said.
Bluefly attributed the decline to planned decreases in inventory in response to the overall decline in consumer spending. “We anticipate that this planned decrease in inventory purchases will continue to adversely impact revenues for future quarters unless we are successful in our efforts to raise additional capital for the business,” the filing said.
The investment, expected to close in early 2010, will make Rho the company’s largest shareholder with approximately 33 percent of Bluefly’s stock. The deal valued the common stock at $1.70 per share. Rho will have two seats on the board.
“The investment will allow us to expand our role as the leader in the space,” said Bluefly ceo Melissa Payner. “We plan to increase our marketing presence and adjust the inventory levels appropriately to support that growth.”