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Bluefly Woos Repeat Customers, Narrows Losses

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Posted August 2, 2001 By Erin Joyce     Feedback

The upward tick in sales year-over-year, along with bigger orders by repeat customers helped drive the results.

Online discount fashion retailer Bluefly.com (NASDAQ:BLFY) kept slashing costs while wooing repeat customers and narrowed its operating losses for the second quarter.

Bluefly's operating loss was $4.2 million (46 cents per diluted share) on total sales of $5.3 million, compared to its operating loss of $5.2 million ($1.06 per share) on revenues of $4.6 million during the second quarter of last year.

The upward tick in sales year-over-year, along with bigger orders by repeat customers, helped drive the results. Gross profits improved to $1.7 million during the quarter giving the struggling online retailer a 32.6 percent margin. That's an improvement of over 100 percent compared to Bluefly's gross margin of just over 18 percent on total sales during last year's second quarter.

Average order size went from $104.24 from last year to $140.29 during this year's second quarter. Registered users grew to just over one million from 638,269 users during the same time last year. Revenue from repeat customers represented 56 percent of gross sales.

Ken Seiff, CEO, said a weak overall offline retail environment helped Bluefly pick up gads of designer threads on the cheap, which it offered at even bigger discounts.

Looking to the future, he said, "we are optimistic not only because many of the benefits of the cost savings measures we initiated in the second quarter have yet to be realized but also because Bluefly has demonstrated an ability to grow in both strong and weak retail environments."

Customer acquisition costs, which had been a drain on the company's resources throughout its three-year history, were $75.40 per customer, up slightly from the $73.21 it spent to get each customer during last year's second quarter but close to twice where the costs were earlier this year at $41 per.

Shares of Bluefly had inched to about 79 cents during Thursday's morning session on the Nasdaq. Earlier this year, it escaped a delisting from the Nasdaq Stock Market (unlike so many dot-coms whose stock price, cash and market cap slid to depressed levels), largely thanks to its big name investor, billionaire hedge fund manager George Soros.

Earlier this year, the Soros' venture capital arm completed a $20 million debt financing which gave it a 72.2 percent controlling stake in Bluefly.

Reprinted from www.atnewyork.com.

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