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Bluefly Announces New Funding To Fuel Growth

Bluefly, Inc. (NASDAQ Capital Market: BFLY), a leading online retailer of designer brands, fashion trends and superior value ( www.bluefly.com), today announced it has raised approximately $6.5 million through the sale of newly issued common stock to further accelerate sales growth and improve long term operating performance by more fully capitalizing on the unique advantages and assets of bluefly.com.

Melissa Payner, Chief Executive Officer of Bluefly, commented, “We continue to benefit from the secular growth of both the luxury goods market and more luxury goods shoppers making their purchases online. This additional funding will allow us to further capitalize on some of the exciting opportunities we are seeing as Bluefly continues to deliver incredible value to over 20 million luxury goods shoppers who visit Bluefly each year for the on-trend luxury brands they know and love.”

The Company announced that entities affiliated with Rho Ventures, Soros Fund Management LLC and Prentice Capital Management LLC has purchased, in the aggregate, approximately $6.5 million of newly issued common stock from the Company at a market price of $1.80 per share. Rho Ventures now owns approximately 37% of the Company’s shares, on a fully diluted basis, remaining our largest shareholder.

Melissa Payner, commented: “We believe this additional investment by our largest shareholders demonstrates their confidence in our strategy and our ability to create long term value for all of our stakeholders.”

This press release does not constitute an offer of any securities for sale. The offer and sale of the shares of common stock issued to entities affiliated with Rho Ventures, Soros Fund Management and Prentice Capital Management were not registered under the Securities Act, and such shares may not be offered or sold absent registration under the Securities Act or an applicable exemption therefrom.

About Bluefly, Inc.

Founded in 1998, Bluefly, Inc. (NASDAQ Capital Market: BFLY) is a leading online retailer of designer brands, fashion trends and superior value. Bluefly is headquartered at 42 West 39 th Street in New York City, in the heart of the Fashion District. For more information, please call 212-944-8000 or visit www.bluefly.com.

This press release may include statements that constitute “forward-looking statements,” usually containing the words “believe,” “project,” “expect” or similar expressions. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. The risks and uncertainties are detailed from time to time in reports filed by the Company with the Securities and Exchange Commission, including Forms 8-K, 10-Q and 10-K. These risks and uncertainties include, but are not limited to, the following: the Company’s history of losses and anticipated future losses; the Company’s ability to realize benefits from its increased marketing expenses; risks associated with the economic downturn; risks associated with affiliates of Rho Ventures, LP, affiliates of Soros Fund Management, private funds associated with Maverick Capital Ltd. and affiliates of Prentice Capital Management, LP each owning a significant portion of our stock; the potential failure to forecast revenues and/or to make adjustments to our operating plans necessary as a result of any failure to forecast accurately; unexpected changes in fashion trends; cyclical variations in the apparel and e-commerce markets; risks associated with our dependence on one supplier for a material portion of our inventory; the risk of default by us under our credit facility and the consequences that might arise from us having granted a lien on substantially all of our assets under that agreement; risks of litigation related to the sale of unauthentic or damaged goods and litigation risks related to sales in foreign countries; our potential exposure to product liability claims in the event that products sold by us are defective; the dependence on third parties and certain relationships for certain services, including our dependence on UPS and USPS (and the risks of a mail slowdown due to terrorist activity) and our dependence on our third-party web hosting, fulfillment and customer service centers; online commerce security risks; risks related to brand owners’ efforts to limit our ability to purchase products indirectly; management of potential growth; the competitive nature of our business and the potential for competitors with greater resources to enter the business; the availability of merchandise; the need to further establish brand name recognition; risks associated with our ability to handle increased traffic and/or continued improvements to our Web Site; rising return rates; dependence upon executive personnel who do not have long-term employment agreements; the successful hiring and retaining of new personnel; risks associated with expanding our operations; risks associated with potential infringement of other’s intellectual property; the potential inability to protect our intellectual property; government regulation and legal uncertainties; uncertainties relating to the imposition of sales tax on Internet sales; our ability to utilize our net operating losses; and the effectiveness of our internal controls.

Copyright Business Wire 2010

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