Bluefly reports first quarterly net profit with help from outlet store

Bluefly, an online retailer of designer apparel at discount prices, posted its first quarterly net profit for the fourth quarter ended Dec. 31, with help from strong margins at its New York holiday outlet store, Bluefly said today. It’s also considering as part of long-term plans having year-round retail stores, CEO Ken Seiff tells Internet Retailer.

“Operating margins at our Manhattan store were very strong,” Seiff says, adding that the store’s performance contributed to Bluefly’s record-high gross margin of 38.6% in the quarter. Bluefly reported fourth-quarter net profit of $111,000 on net sales of $14 million, compared to a net loss of $1.7 million on net sales of $9.9 million in the year-ago period.

For the full year, Bluefly reported a net loss of $6.4 million, a 1.7% improvement from a year-earlier net loss of $6.5 million. Net sales for 2003 came in at $37.9 million, up 24% from $30.6 million in 2002. It also said it gained 124,248 new customers last year, up 23% from the 101,063 new customers gained in 2002. Gross average order size last year was $174.99, up 4.7% from $167.20 in 2002.

Although the holiday outlet store contributed to Bluefly’s improved financial performance, it will not continue to remain open past the end of its lease early next month, Seiff says. The store’s initial purpose, he adds, was to test how well Bluefly could sell through a brick-and-mortar store while also liquidating products, such as items that were out-of-fashion or not suitable for photographing and displaying online, that otherwise probably would’ve been written off its financial books. “We were more successful with the store than just achieving those objectives,” Seiff says.

But because Bluefly has a limited number of products it needs to liquidate, it doesn’t expect to have enough items to stock an outlet store year-round, Seiff says, adding that Bluefly may consider opening a temporary holiday outlet store every year. In addition, he says, “our long-term plans include opening up retail concept stores.”