EX-99.1 2 k174795_ex99-1.htm Unassociated Document
 
Exhibit 99.1
FOR IMMEDIATE RELEASE
Investor Contacts:
Press Contact:
 
Kara B. Jenny
Monica Halpert
 
Chief Financial Officer
Director of Content and Creative
 
Bluefly, Inc.
212-944-8000 ext. 297
 
212- 944-8000 ext. 286
monica.halpert@bluefly.com
 
kara.jenny@bluefly.com
 

BLUEFLY REPORTS FULL YEAR AND FOURTH QUARTER 2009 RESULTS

GENERATES POSITIVE FULL YEAR ADJUSTED EBITDA AND CASH FLOW FROM OPERATIONS, AND

GENERATES OPERATING INCOME DURING THE FOURTH QUARTER OF 2009

NEW YORK – February 18, 2010 – Bluefly, Inc. (NASDAQ Capital Market: BFLY), a leading online retailer of designer brands, fashion trends and superior value (www.bluefly.com), today announced increased gross margin percentage, continued reductions in operating expenses, operating and net loss, and an increase in adjusted EBITDA for the full year and fourth quarter of 2009.

“I am very proud of what we have been able to accomplish this year.” said Melissa Payner, Bluefly’s Chief Executive Officer. “In arguably the most difficult of economic times we have emerged stronger. We were profitable in the fourth quarter and were both adjusted EBITDA and cash flow positive from operations for the year.  These results have provided a solid base for growth in 2010.  With the added support of our new investors we believe we are not only positioned for growth in 2010, but we will be able to bring our customers an even greater offering of on-trend designer apparel and accessories and introduce new customers to the deal that is Bluefly.”

Results for the fourth quarter of 2009 included the following:
 
 
·
Net revenue decreased by approximately 11.1% to $24.4 million from $27.4 million in the fourth quarter of 2008, as a result of the Company’s planned decrease in inventory purchases for the quarter in response to the overall decline in consumer spending.

 
·
Gross margin percentage increased to 41.3% from 37.0% in the fourth quarter of 2008 as a result of increases in product margin.

 
·
Operating expenses decreased by approximately 15.2% to $9.6 million from $11.3 million in the fourth quarter of 2008.  The reduction in operating expenses resulted from a decrease of $597,000 in selling and fulfillment expenses, a decrease of $1.7 million in marketing expenses and a reduction in non-cash share-based compensation expense of approximately $304,000, which was offset by an increase in salary and salary related general and administrative expenses of approximately $972,000.

 
·
Operating income of $449,000 as compared to an operating loss of $1.2 million in the fourth quarter of 2008.

 
·
Net loss available to common stockholders decreased to $148,000 from a net loss available to common stockholders of approximately $1.4 million in the fourth quarter of 2008.  Included in net loss is $437,000 of non-cash expense related to the Company’s convertible notes.  Loss per share decreased to $0.01 (based on 14.5 million weighted average shares outstanding) compared to a loss per share of $0.10 per share (based on 13.6 million weighted average shares outstanding) in the fourth quarter of 2008.

 
·
Adjusted EBITDA increased to positive $1.3 million from a positive adjusted EBITDA of $79,000 in the fourth quarter of 2008.

 
·
Average order size increased to $274.83 in the fourth quarter of 2009 compared to $271.98 in the fourth quarter of 2008.

 
·
Cash and cash equivalents increased to $10.0 million at December 31, 2009 compared to $4.0 million at December 31, 2008 primarily as a result of the December 2009 private placement.

·
Inventory decreased to $17.7 million at December 31, 2009 compared to $23.2 million at December 31, 2008.
 
Results for the full year of 2009 included the following:
 
 
·
Net revenue decreased by approximately 15.2% to $81.2 million from $95.8 million in 2008, as a result of the Company’s planned decrease in inventory purchases in response to the overall decline in consumer spending.

 
·
Gross margin percentage increased to 38.9% from 37.1% in 2008 as a result of increases in product margin.

 
·
Operating expenses decreased by approximately 26.2% to $34.2 million from $46.3 million in 2008.  The reduction in operating expenses resulted from a decrease of $2.9 million in selling and fulfillment expenses, a decrease of $6.1 million in
 

 
marketing expenses, a reduction in non-cash share-based compensation expense of approximately $1.9 million, a decrease in salary and salary related general and administrative expenses of approximately $230,000 and a decrease in professional fees of approximately $336,000.
 
 
·
Operating loss decreased by approximately 75.5% to $2.6 million from $10.8 million in 2008.

 
·
Net loss available to common stockholders decreased by approximately 63.9% to $4.4 million from $12.1 million in 2008.  Included in net loss is $1.2 million of non-cash expense related to the Company’s convertible notes.  Loss per share decreased to $0.31 per share (based on 14.0 million weighted average shares outstanding) from $0.90 per share (based on 13.4 million weighted average shares outstanding) in 2008.

 
·
Adjusted EBITDA increased to positive $878,000 from a negative adjusted EBITDA of $5.9 million in 2008.

 
·
Average order size decreased to $266.66 for 2009 compared to $279.72 in 2008.
 
To supplement the financial results for the full year and fourth quarter of 2009 presented in accordance with generally accepted accounting principles (GAAP), the Company is also reporting adjusted EBITDA as a non-GAAP financial measure that the Company believes allows for a better understanding of its operating performance.  The Company defines adjusted EBITDA as net loss excluding interest income, interest expense and interest expense to related parties, income tax provision, depreciation and amortization expenses adjusted for non-cash share-based compensation expenses.  The Company believes that this non-GAAP financial measure, when shown in conjunction with the corresponding GAAP measures, enhance the investor’s and management’s overall understanding of the Company’s current operating performance and provides greater transparency with respect to key operating metrics used by management in its financial and operational decision making process.  The Company considers this non-GAAP financial measure to be useful because it excludes certain non-cash and non-operating charges, which enables investors and management to analyze trends in the Company’s operations.  The presentation of this non-GAAP financial measure is not intended to be considered in isolation, as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.  For more information, please see the table captioned “Reconciliation of Non-GAAP Financial Information”, which provides a full reconciliation of actual results to the non-GAAP financial measures.
 
 
About Bluefly, Inc.

Founded in 1998, Bluefly, Inc. (NASDAQ Capital Market:  BFLY) is a leading online retailer of designer brands, fashion trends and superior value.  Bluefly is headquartered at 42 West 39th Street in New York City, in the heart of the Fashion District.  For more information, please call 212-944-8000 or visit www.bluefly.com.

This press release may include statements that constitute “forward-looking statements,” usually containing the words “believe,” “project,” “expect” or similar expressions.  These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements.  The risks and uncertainties are detailed from time to time in reports filed by the Company with the Securities and Exchange Commission, including Forms 8-K, 10-Q and 10-K.  These risks and uncertainties include, but are not limited to, the Company’s ability to continue the positive trend in operating income;  the Company’s history of losses and anticipated future losses; the Company’s ability to raise additional capital to support the growth of its business; risks related to the Company’s ability to continue positive trends in cash flow;  risks related to the economic downturn; increased online competition; the potential failure to forecast revenues and/or to make adjustments to operating plans necessary as a result of any failure to forecast accurately; unexpected changes in fashion trends; cyclical variations in the apparel and e-commerce market; the availability of merchandise; the Company’s dependence on one supplier for a material portion of its inventory; risks associated with the acquisition of inventory from foreign markets, including currency fluctuations; the need to further establish brand name recognition; management of potential growth; and  risks associated with the Company’s ability to handle increased traffic and/or continued improvements to its Web site.
 
-more-
 

 
STATEMENTS OF OPERATIONS – UNAUDITED
   
Three Months Ended
   
December 31,
   
2009
 
2008
 
2007
                         
Net sales
  $ 24,354,000     $ 27,393,000     $ 29,698,000  
Cost of sales
   
14,295,000
     
17,248,000
     
19,524,000
 
Gross profit
   
10,059,000
     
10,145,000
     
10,174,000
 
Gross margin
   
41.3%
     
37.0%
     
34.3%
 
                         
                         
Selling and fulfillment expenses
   
4,498,000
     
5,095,000
     
5,370,000
 
Marketing expenses
   
2,167,000
     
3,903,000
     
6,933,000
 
General and administrative expenses
   
2,945,000
     
2,333,000
     
3,398,000
 
Total operating expenses
   
9,610,000
     
11,331,000
     
15,701,000
 
                         
 
                       
Operating income (loss)
   
449,000
     
(1,186,000
)
   
(5,527,000
)
                         
                         
Interest expense to related party stockholders
   
(496,000
)
   
(104,000
)
   
--
 
Other interest expense, net
   
(101,000
)
   
(83,000
)
   
(29,000
)
                         
                         
Net loss
   
(148,000
   
(1,373,000
)
   
(5,556,000
)
                         
Preferred stock dividends
   
--
     
(3,000
)
   
(11,000
)
Deemed dividend related to beneficial conversion feature on
                       
Series F Preferred Stock
   
--
     
--
     
--
 
                         
Net loss available to common stockholders
  $ (148,000   $ (1,376,000
)
  $ (5,567,000
)
                         
Basic and diluted net loss per common share
  $ (0.01 )   $ (0.10 )   $ (0.42 )
                         
Weighted average common shares outstanding (basic and diluted)
   
14,517,313
     
13,647,132
     
13,211,812
 
                         
 
-more-
 

 
STATEMENTS OF OPERATIONS
   
Years Ended
   
December 31,
   
2009
 
2008
 
2007
                         
Net sales
 
81,222,000
   
$
95,774,000
   
$
91,493,000
 
Cost of sales
   
49,665,000
     
60,288,000
     
58,754,000
 
Gross profit
   
31,557,000
     
35,486,000
     
32,739,000
 
Gross margin
   
38.9%
     
37.1%
     
35.8%
 
                         
                         
Selling and fulfillment expenses
   
16,675,000
     
19,620,000
     
18,898,000
 
Marketing expenses
   
8,404,000
     
14,523,000
     
16,063,000
 
General and administrative expenses
   
9,139,000
     
12,191,000
     
13,848,000
 
Total operating expenses
   
34,218,000
     
46,334,000
     
48,809,000
 
                         
                         
Operating loss
   
(2,661,000
)
   
(10,848,000
)
   
(16,070,000
)
                         
                         
Interest expense to related party stockholders
   
(1,413,000
)
   
(235,000
)
   
--
 
Other interest (expense) income, net
   
(295,000
)
   
(257,000
)
   
241,000
 
                         
                         
Net loss
   
(4,369,000
)
   
(11,340,000
)
   
(15,829,000
)
                         
                         
Preferred stock dividends
   
--
     
(37,000
)
   
(44,000
)
Deemed dividend related to beneficial conversion feature on
                       
Series F Preferred Stock
   
--
     
(712,000
)
   
--
 
                         
Net loss available to common stockholders
 
(4,369,000
)
 
$
(12,089,000
)
 
$
(15,873,000
)
                         
Basic and diluted net loss per common share
 
(0.31
)
 
$
(0.90
)
 
$
 (1.21
)
                         
Weighted average common shares outstanding (basic and diluted)
   
14,003,534
     
13,369,257
     
13,091,130
 
 
-more-
 


SELECTED BALANCE SHEET DATA & KEY METRICS (UNAUDITED)
 
   
December 31,
 
December 31,
   
2009
 
2008
Cash and cash equivalents
 
$
10,049,000
   
$
4,004,000
 
                 
Inventories, net
   
17,688,000
     
23,157,000
 
                 
Prepaid expenses and other current assets
   
4,278,000
     
4,347,000
 
                 
Property and equipment, net
   
3,506,000
     
6,058,000
 
                 
Current liabilities
   
12,611,000
     
16,250,000
 
                 
Long-term liabilities
   
--
     
3,106,000
 
                 
Stockholders’ equity
   
23,035,000
     
18,394,000
 
 
 
   
Three Months Ended
   
December 31,
   
(Unaudited)
   
2009
 
2008
                 
Average order size (including shipping & handling)
 
$
274.83
   
$
271.98
 
New customers added during the period
   
53,474
     
59,460
 
 
 
   
Years Ended
   
December 31,
   
2009
 
2008
                 
Average order size (including shipping & handling)
 
$
266.66
   
$
279.72
 
New customers added during the period
   
173,550
     
201,044
 
 
-more-


 
STATEMENTS OF CASH FLOWS – UNAUDITED
   
Three Months Ended
   
December 31,
   
2009
 
2008
 
2007
Cash flows from operating activities:
                       
Net loss
 
$
(148,000
)
 
$
(1,373,000
)
 
$
(5,556,000
)
Adjustments to reconcile net loss to net cash provided by operating activities:
                       
Depreciation and amortization
   
663,000
     
852,000
     
434,000
 
Provisions for returns
   
(430,000
)
   
(708,000
)
   
(434,000
)
Bad debt expense
   
100,000
     
155,000
     
176,000
 
Reserve for inventory obsolescence
   
(164,000
)
   
(10,000
)
   
1,483,000
 
Stock based compensation
   
146,000
     
465,000
     
1,459,000
 
Amortization of discount on notes payable to related party stockholders
   
80,000
     
--
     
--
 
Change in fair value of embedded derivative financial liability to related
  party stockholders
   
357,000
     
--
     
--
 
Change in operating assets and liabilities:
                       
(Increase) decrease in:
                       
Accounts receivable
   
335,000
     
(298,000
)
   
485,000
 
Inventories
   
403,000
     
5,194,000
     
370,000
 
Prepaid expenses and other current assets
   
(244,000
)
   
1,929,000
     
3,130,000
 
Other assets
   
--
     
(47,000
)
   
(1,212,000
)
Increase (decrease) in:
                       
Accounts payable
   
(799,000
)
   
(2,115,000
)
   
233,000
 
Accrued expenses and other current liabilities
   
1,215,000
     
(1,077,000
)
   
1,583,000
 
Interest payable to related party stockholders
   
(289,000
)
   
(752,000
)
   
--
 
Deferred revenue
   
702,000
     
56,000
     
(268,000
)
Net cash provided by operating activities
   
1,927,000
     
2,271,000
     
1,883,000
 
                         
Cash flows from investing activities:
                       
Purchases of property and equipment
   
(214,000
)
   
(27,000
)
   
(1,055,000
)
Net cash used in investing activities
   
(214,000
)
   
(27,000
)
   
(1,055,000
)
                         
Cash flows from financing activities:
                       
Purchase of treasury stock
   
(192,000
)
   
(160,000
)
   
(1,270,000
)
Net proceeds from 2009 financing
   
4,467,000
     
--
     
--
 
Net cash provided by (used in) financing activities
   
4,275,000
     
(160,000
)
   
(1,270,000
)
                         
Net increase (decrease) in cash and cash equivalents
   
5,988,000
     
2,084,000
     
(442,000
)
Cash and cash equivalents – beginning of year
   
4,061,000
     
1,920,000
     
7,172,000
 
Cash and cash equivalents – end of year
 
$
10,049,000
   
$
4,004,000
   
$
6,730,000
 
                         
Supplemental disclosure of cash flow information:
                       
Cash paid during the quarter for interest
 
$
58,000
   
$
71,000
   
$
44,000
 
Cash paid during the quarter for interest to related party stockholders
 
$
347,000
     
--
     
--
 
Conversion of notes payable to related party stockholders
 
$
3,348,000
   
$
--
   
$
--
 
 
-more-
 


RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION

   
(Unaudited)
   
Three Months Ended
   
December 31,
   
2009
 
2008
 
2007
                         
Net loss
 
(148,000
)
 
$
(1,373,000
)
 
$
(5,556,000
)
                         
Interest income
   
(7,000
)
   
(5,000
)
   
(3,000
)
Interest expense to related party stockholders
   
496,000
     
103,000
     
--
 
Interest expense
   
108,000
     
89,000
     
32,000
 
Depreciation and amortization expenses
   
661,000
     
800,000
     
419,000
 
Non-cash share-based compensation expenses
   
146,000
     
465,000
     
1,459,000
 
                         
Adjusted EBITDA
 
1,256,000
   
$
79,000
   
$
(3,649,000
)
 
 
   
Years Ended
   
December 31,
   
2009
 
2008
 
2007
                         
Net loss
 
(4,369,000
)
 
$
(11,340,000
)
 
$
(15,829,000
)
                         
Interest income
   
(25,000
)
   
(62,000
)
   
(501,000
)
Interest expense to related party stockholders
   
1,413,000
     
235,000
     
--
 
Interest expense
   
320,000
     
319,000
     
260,000
 
Depreciation and amortization expenses
   
2,927,000
     
2,288,000
     
1,664,000
 
Non-cash share-based compensation expenses
   
612,000
     
2,707,000
     
6,194,000
 
                         
Adjusted EBITDA
 
878,000
   
$
(5,853,000
)
 
$
(8,212,000
)
 
-end-