BLUEFLY, INC. (BFLY, Financial) filed Quarterly Report for the period ended 2009-06-30.
Bluefly Inc. is a leading Internet retailer of designer fashion brands atdiscounted prices. They sell over 450 brands of designer apparel fashionaccessories and home products at discounts that typically range between 25% and 75% off comparable retail prices. BLUEFLY, INC. has a market cap of $17.3 million; its shares were traded at around $1.25 with and P/S ratio of 0.2.
Marketing expenses (excluding staff related costs) decreased to $1,578,000 for the second quarter of 2009 from $2,664,000 for the second quarter of 2008, primarily as a result of a reduction in our national print and advertising campaign expenses of approximately $697,000 and a reduction in online marketing program expenses of approximately $390,000. Marketing expenses (including staff related costs) as a percentage of net sales decreased to 8.9% for the three months ended June 30, 2009 compared to 12.5% for the three months ended June 30, 2008. As offline advertising expenses for the season decrease, the mix of marketing expenditures will continue to shift toward online media as we believe that online marketing programs are more efficient because they are more easily measurable and can be optimized to achieve certain sales goals. General and administrative expenses decreased to $1,929,000 from $3,590,000 for the second quarter of 2008, primarily as a result of a reduction in salary and salary related expenses as well as a decrease in overall professional and consulting fees.
Net sales: Gross sales for the three months ended June 30, 2009 decreased by approximately 16% to $32,684,000 from $38,892,000 for the three months ended June 30, 2008. For the three months ended June 30, 2009, we recorded a provision for returns and credit card chargebacks and other discounts of $12,826,000 or approximately 39.2% of gross sales. For the three months ended June 30, 2008, the provision for returns and credit card chargebacks and other discounts was $15,558,000, or approximately 40.0% of gross sales. The decrease in this provision as a percentage of gross sales resulted from a reduction in the return rate, which was primarily caused by a shift in our merchandise mix. Historically, our merchandise mix had been shifting towards higher end products which tend to have higher rates. As part of our streamlined business plan, we refined our merchandising mix to shift to more contemporary merchandise. Accordingly, we believe we experienced a corresponding decrease in the return rate. In addition, we believe that the reduction in return rate is partially caused by customers making fewer impulse purchases, which are more likely to be returned.
After the necessary provisions for returns, credit card chargebacks and adjustments for sales taxes, our net sales for the three months ended June 30, 2009 was $19,858,000. This represents a decrease of approximately 15% compared to the three months ended June 30, 2008, in which net sales totaled $23,334,000. The decrease in net sales resulted primarily from a 15% decrease in the number of new customers acquired as well as a 6% decrease in average order size. We believe that the decrease in both of these measures was primarily attributable to our deliberate decrease in inventory purchases and the decline in consumer spending. For the three months ended June 30, 2009, revenue from shipping and handling (which is included in net sales) decreased approximately 12% to $1,187,000 from $1,344,000 for the three months ended June 30, 2008. Shipping and handling revenue decreased at a smaller percentage than revenue as a whole as a result of a decrease in the average order size as compared to the decrease in overall product sales, which resulted in additional orders being shipped.
Cost of sales: Cost of sales consists of the cost of product sold to customers, in-bound and out-bound shipping costs, inventory reserves, commissions and packing materials. Cost of sales for the three months ended June 30, 2009 totaled $11,974,000 resulting in a gross margin percentage of approximately 39.7%. Cost of sales for the three months ended June 30, 2008 totaled $14,236,000, resulting in a gross margin of 39.0%. Gross profit dollars decreased by approximately 13%, to $7,884,000 for the three months ended June 30, 2009 compared to $9,098,000 for the three months ended June 30, 2008. The decrease in gross profit dollars resulted from the related decrease in sales and increased freight costs in connection with customer shipments. The slight increase in gross margin percentage was attributable to improved product margins resulting from a shift to contemporary merchandise and decreases in our inventory reserves, which were offset slightly by higher freight costs.
General and administrative expenses: General and administrative expenses include merchandising, finance and administrative salaries and related expenses, insurance costs, accounting and legal fees, depreciation and other office related expenses. General and administrative expenses for the three months ended June 30, 2009 decreased by approximately 46% to $1,929,000 as compared to $3,590,000 for the three months ended June 30, 2008. The decrease in general and administrative expenses was primarily the result of a decrease in equity based compensation of approximately $642,000, a decrease in salary and salary related expenses of approximately $558,000 and a decrease in overall professional fees of approximately $158,000.
Read the The complete ReportBFLY is in the portfolios of George Soros of Soros Fund Management LLC, Lee Ainslie of Maverick Capital.
Bluefly Inc. is a leading Internet retailer of designer fashion brands atdiscounted prices. They sell over 450 brands of designer apparel fashionaccessories and home products at discounts that typically range between 25% and 75% off comparable retail prices. BLUEFLY, INC. has a market cap of $17.3 million; its shares were traded at around $1.25 with and P/S ratio of 0.2.
Highlight of Business Operations:
Our net sales decreased by approximately 15% to $19,858,000 for the three months ended June 30, 2009 from $23,334,000 for the three months ended June 30, 2008. Our gross margin percentage slightly increased to 39.7% for the three months ended June 30, 2009 from 39.0% for the three months ended June 30, 2008. Our gross profit dollars decreased by 13% to $7,884,000 for the three months ended June 30, 2009 from $9,098,000 for the three months ended June 30, 2008. We had operating income of $161,000 for the three months ended June 30, 2009 as compared to an operating loss of $1,941,000 for the three months ended June 30, 2008. This improvement was primarily a result of a decrease in variable operating fulfillment expenses, a reduction in our marketing expenses and general and administrative expenses. We believe that the decrease in net sales was primarily attributable to our deliberate decrease in inventory purchases and the decline in consumer spending.Marketing expenses (excluding staff related costs) decreased to $1,578,000 for the second quarter of 2009 from $2,664,000 for the second quarter of 2008, primarily as a result of a reduction in our national print and advertising campaign expenses of approximately $697,000 and a reduction in online marketing program expenses of approximately $390,000. Marketing expenses (including staff related costs) as a percentage of net sales decreased to 8.9% for the three months ended June 30, 2009 compared to 12.5% for the three months ended June 30, 2008. As offline advertising expenses for the season decrease, the mix of marketing expenditures will continue to shift toward online media as we believe that online marketing programs are more efficient because they are more easily measurable and can be optimized to achieve certain sales goals. General and administrative expenses decreased to $1,929,000 from $3,590,000 for the second quarter of 2008, primarily as a result of a reduction in salary and salary related expenses as well as a decrease in overall professional and consulting fees.
Net sales: Gross sales for the three months ended June 30, 2009 decreased by approximately 16% to $32,684,000 from $38,892,000 for the three months ended June 30, 2008. For the three months ended June 30, 2009, we recorded a provision for returns and credit card chargebacks and other discounts of $12,826,000 or approximately 39.2% of gross sales. For the three months ended June 30, 2008, the provision for returns and credit card chargebacks and other discounts was $15,558,000, or approximately 40.0% of gross sales. The decrease in this provision as a percentage of gross sales resulted from a reduction in the return rate, which was primarily caused by a shift in our merchandise mix. Historically, our merchandise mix had been shifting towards higher end products which tend to have higher rates. As part of our streamlined business plan, we refined our merchandising mix to shift to more contemporary merchandise. Accordingly, we believe we experienced a corresponding decrease in the return rate. In addition, we believe that the reduction in return rate is partially caused by customers making fewer impulse purchases, which are more likely to be returned.
After the necessary provisions for returns, credit card chargebacks and adjustments for sales taxes, our net sales for the three months ended June 30, 2009 was $19,858,000. This represents a decrease of approximately 15% compared to the three months ended June 30, 2008, in which net sales totaled $23,334,000. The decrease in net sales resulted primarily from a 15% decrease in the number of new customers acquired as well as a 6% decrease in average order size. We believe that the decrease in both of these measures was primarily attributable to our deliberate decrease in inventory purchases and the decline in consumer spending. For the three months ended June 30, 2009, revenue from shipping and handling (which is included in net sales) decreased approximately 12% to $1,187,000 from $1,344,000 for the three months ended June 30, 2008. Shipping and handling revenue decreased at a smaller percentage than revenue as a whole as a result of a decrease in the average order size as compared to the decrease in overall product sales, which resulted in additional orders being shipped.
Cost of sales: Cost of sales consists of the cost of product sold to customers, in-bound and out-bound shipping costs, inventory reserves, commissions and packing materials. Cost of sales for the three months ended June 30, 2009 totaled $11,974,000 resulting in a gross margin percentage of approximately 39.7%. Cost of sales for the three months ended June 30, 2008 totaled $14,236,000, resulting in a gross margin of 39.0%. Gross profit dollars decreased by approximately 13%, to $7,884,000 for the three months ended June 30, 2009 compared to $9,098,000 for the three months ended June 30, 2008. The decrease in gross profit dollars resulted from the related decrease in sales and increased freight costs in connection with customer shipments. The slight increase in gross margin percentage was attributable to improved product margins resulting from a shift to contemporary merchandise and decreases in our inventory reserves, which were offset slightly by higher freight costs.
General and administrative expenses: General and administrative expenses include merchandising, finance and administrative salaries and related expenses, insurance costs, accounting and legal fees, depreciation and other office related expenses. General and administrative expenses for the three months ended June 30, 2009 decreased by approximately 46% to $1,929,000 as compared to $3,590,000 for the three months ended June 30, 2008. The decrease in general and administrative expenses was primarily the result of a decrease in equity based compensation of approximately $642,000, a decrease in salary and salary related expenses of approximately $558,000 and a decrease in overall professional fees of approximately $158,000.
Read the The complete ReportBFLY is in the portfolios of George Soros of Soros Fund Management LLC, Lee Ainslie of Maverick Capital.
