A second wave of attacks began midday Friday after much of the eastern United States was affected in the morning. Sites affected included Etsy, ...
Near the end of a year when its net sales were hurt by low inventory levels, web-only fashion apparel retailer Bluefly has received a commitment from investment firm Rho Ventures for a $15 million purchase of newly issued common stock.
Near the end of a year when its net sales were hurt by low inventory levels, web-only fashion apparel retailer Bluefly Inc. has received a commitment from investment firm Rho Ventures for a $15 million purchase of newly issued common stock.
Bluefly said in a recent filing with the U.S. Securities and Exchange Commission that it would need new capital to offset its decline in sales caused by its decreased purchasing of inventory amid a decline in consumer spending.
Under terms of the agreement with Rho Ventures, Rho will become Bluefly’s largest shareholder, owning about 33% of the company’s shares.
Bluefly is No. 132 in the Internet Retailer Top 500 Guide (a PDF version of the company’s financial and operating profile can be ordered by clicking on its name). It sells on the web at Bluefly.com and specializes in designer apparel, accessories, and home furnishings sold at discounts of up to 75%.
“Bluefly has built an impressive market position as the leading, recognized brand in designer online retailing,” says Habib Kairouz, managing partner at Rho Ventures. “Rho Ventures’ investment strategy seeks to fund high-growth companies focused on large markets and Bluefly is no exception. Their success and future potential can be attributed to a seasoned direct-to-consumer management team, deep relationships with top fashion brands, and the fiscal prudence to manage resources in hard economic times. We look forward to working with them to ignite this next phase of growth.”
Melissa Payner-Gregor, Bluefly’s CEO, says the financial support and industry expertise of Rho Ventures will help the retailer return to stronger growth. “Bluefly has created a large and loyal following among those in the know as the place to find in-season, on-trend designer apparel and accessories at a value,” she says. “With Rho`s support and expertise we can accelerate our growth and reach new customers while solidifying our market position.”
Rho Ventures’ other Internet-related portfolio investments include Slacker, a provider of Internet radio services; iVillage, a content portal geared toward women; Yantra, an order management technology provider now a part of Sterling Commerce; and Commerce One, a business-to-business e-commerce technology company.
For the third quarter ended Sept. 30:
- Bluefly’s net sales fell 13.6% to $17.11 million from $19.80 million a year earlier, as its net loss narrowed sharply to $915,000 from $4.99 million.
- Average order size, including shipping and handling, was $274.58, down 6% from $292.03 in the same period in 2008.
- The number of new customers added during the quarter was 34,753, down 11% from 39,055 a year earlier.
For the nine months ended Sept. 30:
- Net sales fell 16.8% year over year to $56.87 million from $68.38 million, as net loss narrowed by more than half to $4.22 million from $9.97 million.
- Average order size was $263.38, down 7% from $282.73 a year earlier.
- The number of new customers was 120,076, down 15% from 141,584 a year earlier.
Bluefly says its improved net loss figures derived from sharp decreases in costs related to areas including inventory, fulfillment, customer service, credit card processing, technology and marketing. Marketing expenses alone fell 65% in the third quarter to $1.5 million from $4.2 million a year earlier. Most of that decrease in marketing expenses, about $1.9 million, stemmed from a reduction in print and TV advertising; online marketing expenses declined by $607,000.
Although Bluefly has not said specifically how it plans to use the new capital from the stock sale, it said in its recent Q3 filing with the SEC that its “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.”
Bluefly’s other financial backers include investment firms Soros Fund Management LLC, Maverick Capital Ltd. and Prentice Capital Management.