BFLY-Excellent article on Bluefly in Saturdays Individual Investor-(see below)
SATURDAY GROUP: My Favorite E-tailer
editor-in-chief
Jonathan Steinberg 12/4/99
Online shopping, my has it grown!
Coming into this holiday shopping season, Wall Street expectations are high, and it seems like leading e-tailers will not disappoint. They better not.
Afterall, the Internet sector in general and e-tailing companies in particular have seen major share price moves over the past few weeks. Is this sustainable?
Well, for the short term, yes. According to the most recently released Media Metrix numbers, in the monthly Trend Report for the month of October unique visitors to shopping sites grew by 7.1% over September versus a 0.8% increase in overall Web usage--a good harbinger for the holiday season.
On the heels of this excitement, shares of marquee e-tailing companies Amazon.com (NASDAQ: AMZN - Quotes, News, Boards), eToys (NASDAQ: ETYS - Quotes, News, Boards), Ashford (NASDAQ: ASFD - Quotes, News, Boards) and eBay (NASDAQ: EBAY - Quotes, News, Boards) have been on a tear. Ashford surged by several hundred percent over holiday excitement before pulling back a bit and Amazon, eToys and eBay have all enjoyed solid advances.
So, will e-tailing holiday sales be robust enough to enable these companies to hold their gains? Only time will tell.
What I am trying to do is find the undiscovered e-tailing gem, the company that has yet to be noticed by the herds on Wall Street. I am looking for a company that has the ability to grow significantly and currently enjoys a strong position in its niche.
So, here's what I am going to do. I have researched a ton, and I mean a ton of e-tailers--but one alone can never uncover every gem.
So I will share with you a company that I believe is well positioned to prosper over the longer term and ask that readers post some of their favorite e-tailers. post here
I am intrigued by Bluefly (NASDAQ: BFLY - Quotes, News, Boards), an e-tailer specializing in selling designer merchandise directly to consumers at deep discounts.
Bluefly's visibility on Wall Street increased considerably over the summer following a $10 million investment from an investor group led by Soros Private Equity Partners. The capital has enabled Bluefly to expand its marketing efforts and accelerate its growth.
Initiatives include advertising, the transition to a larger fulfillment center to handle robust growth, more servers to handle increased traffic and a doubling of inventory to have product to ship to customers.
Additionally, Bluefly is continuously increasing the number of designers whose products are offered on its Web site. At the end of the third quarter, that number stood at over 200 and is projected to increase by more than 50% during the holiday season.
In its most recently completed third quarter ended September 30, Bluefly reported net sales of $873,000, indicative of the nascent stage of its business opportunity. In an environment of zero margin e-tailers, I am impressed with Bluefly's gross margins, which totaled 25% for the third quarter.
So, how are sales looking for the holiday season? Great!
Analyst estimates call for revenue of over $3 million for the fourth quarter. The Thanksgiving weekend alone saw a 600% increase in traffic for Bluefly, indicative of strong consumer interest.
What I really like about Bluefly is that it is creating a new market. Bluefly is not a me-to e-tailer.
It has defined its niche and is driving the market opportunity of selling off-priced goods to the consumer directly.
With only five million shares outstanding, Bluefly has a market capitalization of under $70 million. Its stock closed Friday at $13.25.
If Bluefly can successfully execute its business plan and continue to increase awareness around its name, this is one e-tailer whose best days are ahead of it, not behind it!
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