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 approximately 12% in net sales and a reduction in its overall return rate of approximately 3%.
Joseph C. Park, Bluefly’s Chief Executive Officer stated: “We advanced our strategic priorities in the quarter focused on increasing net sales and improving our inventory turns. While we were pleased to achieve a 12% increase in net sales in the quarter and the number of our new members increased six times over the prior period, the increase in promotional activity, as well as the previously announced separation agreement expense associated with our previous CEO, negatively impacted profitability in the quarter. As we look ahead, we expect the continued implementation of our inventory turn strategy to pressure gross margin. That said, we remain confident in our strategies and expect our efforts to result in continued sales growth and importantly improve long-term operating performance.”
Results for the first quarter of 2012 included the following highlights:
- Net sales increased by approximately 12% to $24.3 million, from $21.7 million in the first quarter of 2011, as a result of an increase in customer orders and a reduction of approximately 3% in the return rate.
- Gross profit margin decreased to 15.4%, from 37.8% in the first quarter of 2011 primarily as a result of a significant increase in promotional activity driven by an acceleration of our inventory turns for the purpose of using our capital more efficiently. As a result, gross margins may be lower than they have been historically, although it is not expected that our margins will be as low as they were during the first quarter of 2012.
- Total operating expenses increased by approximately 23% to $11.6 million, from $9.4 million in the first quarter of 2011. Included in total operating expenses is $1.3 million in separation costs of which $0.7 million was in non-cash stock-based compensation expense related to the departure of the Company’s previous CEO.
- Operating loss increased to $7.8 million, from $1.2 million in the first quarter of 2011.
- Net loss attributable to stockholders was $7.9 million, or $0.28 per share (based on 28.5 million weighted average shares outstanding), and included $1.3 million, or $0.05 per share, in CEO separation costs. This compares to a net loss attributable to stockholders of $1.3 million, or $0.05 per share (based on 24.6 million weighted average shares outstanding), in the first quarter of 2011.
- Adjusted negative EBITDA increased to $6.2 million, from an adjusted negative EBITDA of $0.3 million in the first quarter of 2011.
- Cash and cash equivalents decreased to $2.5 million at March 31, 2012, compared to $4.4 million at December 31, 2011.
- Inventory decreased to $27.5 million at March 31, 2012, compared to $32.1 million at December 31, 2011.
To supplement the consolidated financial results for the first quarter of 2012 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.