Bluefly Reports First Quarter 2008 Results

NEW YORK--(BUSINESS WIRE)--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