New York—Bluefly.com reported today that its first quarter loss widened due to higher promotions and “separation costs” for its former chief executive officer.
For the quarter ended March 31, the designer website posted a net loss of $7.9 million, or 28 cents a share, compared with a loss of $1.3 million, or 5 cents a share, a year ago.
Revenue rose 12% to $24.3 million from $21.7 million a year ago.
Operating expenses rose 23% to $11.6 million in the quarter. That included $1.3 million in “separation costs” for former CEO Melissa Payner, who resigned in February and was replaced by Joseph Park, the company’s chief operating officer.
Gross margin shrank to 15.4% from 37.8% a year earlier, due to a “significant increase in promotional activity driven by an acceleration of our inventory turns for the purpose of using our capital more efficiently.” While gross margin is expected to be “lower than they have been historically,” the company said they won’t be as low as first quarter.
“We advanced our strategic priorities in the quarter focused on increasing net sales and improving our inventory turns,” said Joseph C. Park, chief executive officer. “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.”
Park said the company expects its inventory turn strategy to continue to pressure gross margins.