Bluefly Reports First Quarter 2008 Results

Bluefly, Inc. (NASDAQ SmallCap:BFLY), a leading online retailer of designer brands, fashion trends and superior value (www.bluefly.com), today announced strong growth in revenue for the first quarter 2008. Highlights for the first quarter included: Revenue increased by approximately 14% to $25.2 million from $22.1 million in first quarter 2007; Gross profit increased by approximately 7% to $8.9 million from $8.4 million in the first quarter of 2007; Gross margin decreased by 250 basis points to 35.4% from 37.9% in first quarter 2007; Operating loss decreased to $2.9 million compared to $3.2 million; Average order size increased to $273.65 in 2008 compared to $269.21 in 2007; Net loss decreased to $2.9 million from $3.1 million. Loss per share decreased to $0.22 per share from $0.24 per share (based on 13.3 million weighted average shares outstanding after preferred stock dividends in 2008 and 12.9 million weighted average shares outstanding after preferred stock dividends in 2007, both adjusted for the 1 for 10 reverse stock split). "I am encouraged by the first quarter results, given the softness of the overall retail environment,” said Melissa Payner, Bluefly’s CEO. "Although we made the decision to be somewhat promotional in the early part of the first quarter, we were encouraged by the growth we saw in the margin once we launched our spring collection.” The company will host a conference call webcast to discuss its first quarter results today at 5:00 p.m. EDT. Investors can access the webcast at www.investor.bluefly.com. CONDENSED STATEMENTS OF OPERATIONS – UNAUDITED     Three Months Ended March 31, 2008   March 31, 2007     Net sales $ 25,245,000 $ 22,108,000 Cost of sales   16,309,000     13,734,000   Gross profit 8,936,000 8,374,000 Gross profit percentage 35.4 % 37.9 %   Selling and fulfillment expenses 5,069,000 4,399,000 Marketing expenses 3,522,000 3,611,000 General and administrative expenses   3,247,000     3,586,000   Operating loss (2,902,000 ) (3,222,000 )   Interest and other income 36,000 195,000   Interest expense   (72,000 )   (76,000 )   Net loss $ (2,938,000 ) $ (3,103,000 )   Preferred stock dividends (11,000 ) (11,000 )   Net loss available to common shareholders $ (2,949,000 ) $ (3,114,000 )   Basic and diluted net loss per share (after preferred stock dividends)   $   (0.22   )   $   (0.24   )   Weighted average shares outstanding   13,251,101     12,962,949   SELECTED BALANCE SHEET DATA & KEY METRICS- UNAUDITED     March 31, 2008   December 31, 2007   Cash $ 5,514,000 $ 6,730,000 Inventories, net 26,680,000 28,492,000 Prepaid Inventory 140,000 294,000 Other Current Assets 4,693,000 3,295,000 Property & Equipment, net 6,236,000 6,019,000 Current Liabilities 18,389,000 17,922,000 Shareholders' Equity 25,049,000 27,037,000   Three Months Ended March 31, 2008 Three Months Ended March 31, 2007   Average Order Size (including shipping & handling revenue) $ 273.65 $ 269.21 Customers Added During Period 56,855 49,385 CONDENSED STATEMENTS OF CASH FLOWS   (Unaudited)   Three Months Ended Three Months Ended March 31, 2008 March 31, 2007   Cash flows from operating activities: Net Loss from operations $ (2,938,000 ) $ (3,103,000 ) Adjustments to reconcile loss from operations to net cash used in operating activities: Depreciation and amortization 409,000 423,000 Warrant issued to related party shareholder 173,000 -- Provisions for returns 761,000 (663,000 ) Allowance for doubtful accounts 166,000 155,000 Stock options expense 799,000 1,721,000 Reserve for inventory obsolescence -- 302,000 Changes in operating assets and liabilities: (Increase) decrease in: Inventories 1,812,000 (2,246,000 ) Accounts receivable (1,316,000 ) (1,060,000 ) Prepaid expenses 130,000 (387,000 ) Other current assets (246,000 ) (93,000 ) Other assets (35,000 ) -- (Decrease) increase in: Accounts payable (281,000 ) 509,000 Accrued expenses and other current liabilities 238,000 (224,000 ) Deferred revenue   (256,000 )   (250,000 )   Net cash used in operating activities (584,000 ) (4,916,000 )   Cash flows from investing activities: Purchase of property and equipment     (610,000 )   (850,000 )   Net cash used in investing activities   (610,000 )   (850,000 )   Cash flows from financing activities: Employee taxes settled with stock (22,000 ) (160,000 ) Net proceeds from exercise of stock options -- 6,000 Payment of capital lease obligation   --     (14,000 )   Net cash (used in) provided by financing activities   (22,000 )   (168,000 )   Net increase (decrease) in cash and cash equivalents (1,216,000 ) (5,934,000 )   Cash and cash equivalents - beginning of period   6,730,000     20,188,000     Cash and cash equivalents - end of period $ 5,514,000   $ 14,254,000