Bluefly.com reports rises in net sales, profit margins

Bluefly Inc. says large second-quarter increases in both net sales and gross profit margins helped to narrow the company`s operating loss for the seventh straight quarter, to $1.46 million from $4.198 million a year ago.

New York-based Bluefly, an online outlet for designer fashions at www.bluefly.com, said Q2 net sales rose to $6.8 million, up 28.6% from $5.28 million Q2 2001. It said gross profit margin increased to its highest-ever level, 35.4%, up from 32.6%. It also reported a 77% decrease in the cost of acquiring new customers, to $16.92 per customer from $75.40. Despite slashing its Q2 advertising budget by 82% over last year’s second quarter, it acquired 21,057 new customers, 19% fewer than Q2 of last year.

"Achieving a record gross margin of 35.4% is particularly satisfying, especially in light of the fact that many retailers have been forced to reduce their gross margin in an effort to maintain sales revenue," said CEO Ken Seiff.

In further evidence of its stronger market position, Bluefly said that its average order size increased 15% in Q2 to $161.65, up from $140.29, and that repeat customers contributed a record 70% share of gross sales, up from 56%.

In Nasdaq trading today, Bluefly was up 28.6% in afternoon trading, to $0.90 from yesterday1s close at $0.70.

In other news, Bluefly said it received $2.1 million from affiliates of Soros Private Equity Partners for Series 2002 Convertible Preferred Stock. This follows a $1.9 million investment made by Soros in June, completing a $4 million commitment established in March.