Bluefly, Inc. (NASDAQ Capital Market: BFLY), a leading online retailer of designer brands, fashion trends and superior value ( www.bluefly.com), today announced an increase of over 17% in net sales for the second quarter of 2011.
Melissa Payner, Bluefly’s Chief Executive Officer stated: “Our second quarter results included double digit sales growth driven by our ability to excite consumers with compelling luxury brands at great value in an online easy to shop environment and, excluding our investment in Eyefly, positive adjusted EBITDA results. While our gross profit margin declined in the quarter, going forward we believe our strategies position us to drive sales and therefore increase gross profit dollars.”
Results for the second quarter of 2011 included the following highlights:
- Net sales increased by approximately 17.0% to $24.0 million, from $20.5 million in the second quarter of 2010, as a result of an 11% increase in new customers acquired during the second quarter of 2011 and an increase in average order size to $315.45, compared to $310.39 in the second quarter of 2010. In addition, net sales for the quarter included an opportunistic sale of inventory to a third-party for $1.3 million.
- Gross profit margin decreased to 31.2%, from 38.8% in the second quarter of 2010 as a result of both a decrease in product margins related to the increase in sales of luxury designer merchandise, which historically have lower gross margins compared to contemporary merchandise, and an increase in promotional incentives during the quarter. Furthermore, gross profit margin was also negatively impacted by currency fluctuations between the U.S. dollar and the Euro.
- Total operating expenses remained relatively unchanged at approximately $8.6 million in the second quarter of 2011. As a percentage of sales, total operating expenses decreased to 35.9%, compared to 42.1% in the second quarter of 2010. Excluding $358,000 of costs related to the Eyefly Web site, which was launched in June 2011, total operating expenses decreased by over 4% compared to the second quarter of 2010.
- Operating loss was $1.1 million, as compared to $669,000 in the second quarter of 2010. Excluding the operating loss related to Eyefly of $341,000, total operating loss increased by approximately 20% compared to the second quarter of 2010.
- Adjusted EBITDA decreased to negative $33,000, from an adjusted EBITDA of $143,000 in the second quarter of 2010. Excluding Eyefly’s net loss of $342,000 for the quarter, the Company’s adjusted EBITDA decreased to positive $141,000.
- Net loss attributable to stockholders was $1.0 million, as compared to net loss of $724,000 in the second quarter of 2010. Loss per share attributable to stockholders increased to $0.04 per share, from a net loss of $0.03 per share in the second quarter of 2010.
- Cash and cash equivalents decreased to $3.5 million at June 30, 2011, compared to $10.4 million at December 31, 2010.
- Inventory increased to $30.6 million at June 30, 2011, compared to $25.1 million at December 31, 2010. The increase in inventory includes $1.6 million of goods in transit, and reflects an increase in the receipt of designer goods in part to meet the increased demand for luxury.
To supplement the consolidated financial results for the second quarter of 2011, of which Eyefly represents less than 1% of total consolidated net sales, presented in accordance with generally accepted accounting principles (GAAP), the Company is also reporting adjusted EBITDA as a non-GAAP financial measure that the Company believes allows for a better understanding of its operating performance. The Company defines adjusted EBITDA as net loss attributable to Bluefly, Inc. stockholders excluding interest income, interest expense, income tax provision, depreciation and amortization expenses adjusted for non-cash stock-based compensation expenses. The Company believes that this non-GAAP financial measure, when shown in conjunction with the corresponding GAAP measures, enhances the investor’s and management’s overall understanding of the Company’s current operating performance and provides greater transparency with respect to key operating metrics used by management in its financial and operational decision making process. The Company considers this non-GAAP financial measure to be useful because it excludes certain non-cash and non-operating charges, which enables investors and management to analyze trends in the Company’s operations. The presentation of this non-GAAP financial measure is not intended to be considered in isolation, as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. For more information, please see the table captioned “Reconciliation of Non-GAAP Financial Information,” which provides a full reconciliation of actual results to the non-GAAP financial measures.