Should Bluefly - BFLY - get swatted? (4Q04 earnings)

| About: Bluefly, Inc. (BFLY)

Bluefly, an online retailer of designer clothing, reported results for the fourth quarter. Sales rose a measly 3.7%, and the rise in gross margin was more than offset by dividend payments to preferred stock holders. But the stock actually rose by almost 4% in subsequent trading.

Q4 Results
(all percentage changes and comparisons are year on year, unless stated otherwise)

  • Revenue up 3.7% to $14.5 million.
  • Gross margin of 40.3% up from 38.6%.
  • Sales, marketing and fulfillment costs up 13% to $4.28 million.
  • Operating income down to $136,000 from $265,000.
  • Net income of $7,000 down from $111,000; but net income more than wiped out by dividend payments of $1.1 million to preferred stock holders.
  • Net loss per share was $0.07, same as last year.
  • Revenue mix: online sales up 7% to $14.23 million; NY store sales down 46% to $251,000.
  • New customers acquired down 5.6% to 42,572.
  • Customer acquistion cost up 34.1% to $14.12.
  • Average order size up 0.7% to $187.32.
  • Revenue from repeat customes was 68%, up from 63%.
  • Inventories up 14% to $12.96 million from $11.34 million.

Quick comments:

  • The only good numbers here seem to be the rise in gross margin and the repeat customer purchase rate.
  • Looks as though it's better to own preferred stock than common stock in BFLY. Preferred stock dividends rose to $1.099 million from $871,000, more than wiped out the $7,000 of net income generated by the company, and thus came right out of BFLY's balance sheet.
  • Note: sales up 3.7%, but sales, marketing and fulfillment costs up 13% and inventories up over 14%.
  • More evidence of increased online marketing costs? BFLY's customer acquisition costs were up 34.1%.

BFLY chart below.