BFLY

[David Randolph]

I will have my wife take a look at it also.  Like most women, she loves to shop and has an eye (although not wallet) for quality of product and ease of use and layout of websites.

Lol basonista, I guess your wife's finances will improve if you buy some of BFLY . Thanks for putting her to work for 3 SOF 

Thanks for your analysis cumulina, that's what I needed, because the revenues and probably the profits in the 4th quarter I already see.

With sales surging in Q4 (as you can read on this thread or just BFLY's headlines) I believe BFLY will be able to show its first quarterly profit since 1997 .

Longer term, I think it can only get better, from what cumulina said and the historical revenue trend. Remember that George Soros Funds own 39% of this company, and he's one of the greatest investors ever.

My business with BFLY is buy and hold, I don't care about the short term volatility, because I know I can't beat it, I firmly believe nobody can over the long term. But good luck if you're trying

[basonista]

Haha, I did buy BFLY so maybe in a couple of years, I'll surprise her with a Blufly shopping trip!  She didn't have time to look at the site yesterday but I'll ask her to do it this morning when she has her coffee.

[basonista]

OK, my wife had a chance to look at the Bluefly site and here are her comments:

1. They are a reseller of other people's goods and don't have their own branded merchandise (this was my thought also the first time I took a look at the site).  Her thought was that it was similar to Overstock.com but at a higher price.

2. She likes what they sell but thought that anyone that can afford to pay these prices will probably want to do it in a store and not online.  I would agree with her here and comment that most likely people that can afford to buy this stuff aren't that concerned about the discounts offered on Bluefly.com and probably do prefer to go to the store and actually touch the product.

3. She doesn't know the product brands very well (since she never shops for them) but agreed that this is more high-end merchandise and would not cater to the average shopper.

She is a pretty savy shopper and splits her time pretty evenly between shopping online and in the stores.

Her comparision between bluefly.com and overstock.com is probably not valid since overstock.com sells merchandise that is discontinued while bluefly probably sells more current offerings.

BFLY must be doing something right with their increase in earnings and investment by Soros and others.  I'll have to give more thought about this investment.  In the meantime, I hope this helps!

[David Randolph]

Thanks for your testimonials on BFLY, basonista and makemoney2007

Basonista, you really need to start making some more money for your wife (lol just kidding, don't let her see this). I'll look into that www.overstock.com, also looks interesting. I wonder about the stock (OSTK). Thanks

The target audience for BFLY is women with an average annual income of $75,000.

But, makemoney2007's words from China were like music to my ears. The issue he's writing about is exactly what I had in mind when I initially recommended BFLY, as you can read on this thread.

I know how Chinese, Japanese and almost all of Asia girls which start getting an interesting income love these American and European fashion trademarks. They love it, but they can't buy them, yet. Only traveling a lot, which doesn't make any sense. Online makes sense. www.bluefly.com fills their need.

I have another example here at home, in Europe. I know my wife will be buying stuff from www.bluefly.com when she gets her paycheck. She will tell her friends.

Technically, the stock seems ready for another bullish push. The consolidation was made, the time for another big white candlestick is approaching. Nothing better to do than to keep on holding BFLY (kind of similar with SYX, but I think even better, we'll see).

[David Randolph]

BFLY is showing lower and lower volume. Short term players are exasperating. But look, there wasn't any technical damage to the chart, and fundamentals ... are great if you ask me.

I'll keep on holding BFLY, just love their business model (and outstanding revenue growth). Profits look to be around the corner, probably the 4th quarter will be profitable already. Take a look at www.bluefly.com again. Look at it everyday. As a shareholder, or the owner of a store, you want to know what's going on. Even for shareholders, online retailers are much more transparent than brick and mortar (you would have to physically go to the store everyday to find out what they are selling and at what prices).

[David Randolph]

BFLY is trying to rally, but still couldn't do it today. Maybe tomorrow? At least today's candlestick is quite bullish.

The company is making even more discounts, probably to sell all they can before Christmas: www.bluefly.com

I'm aware most momentum traders already left BFLY, but I ain't no momentum trader, and according to my method, BFLY is a screaming buy at current levels.

[David Randolph]

Bears, or at least "non bulls" at BFLY say something like this:

"Show me the money. This company's revenues have been rising steadily, but they never had a profitable year".

That's true, BFLY never had a profitable year (except when it was still an incipient company back in 1996). But I believe that as sales grow, it will eventually turn profitable, probably in fiscal 2007. Let's check how the gross margin has evolved over the years:



Gross margin has been rising, now standing at 41.7%. So, the company isn't just selling more and more, it is doing so in a more efficient manner. I have little doubts that 2007 will be a profitable year for BFLY, and perhaps we'll see a profitable quarter right here, right now, in Q4 2006, because sales are soaring and this is seasonally the strongest quarter for the company (as for any retailer).

I'll continue holding BFLY.

[KCScott]

Since I deal with retailers, (Haven't made enough money trading to quit my day job)

Some thoughts on Bluefly.com

Most women regard shopping as a social & emotional experience.
This means they enjoy going into the stores to browse, as much as the actual purchase.
A large % of the sales made to women are based on Impulse buying.
Impulse buying is prdeicated on sensatory response to the merchandise (see, touch,)
in that respect, this is a strike against bluefly.

A second strike is sizing. My wife is 5'6 wighs 118 and wears anywhere from a size 6 in things like jeans, to a Small / Medium in sweaters. However, sizes vary from different manufacturers, so she stays away from those she is not familiar with unless she can go and try them on. She will shop at J.Crew or Banana Republic online since she has familiarity with those brands (Both are branded companies also - This means that all merchandise is made for them) - This is different than the bluefly mix where you have multiple vendors the customer may not have familiarity with (ie; she has not tried on their merchandise before). The most absolute category is Jeans.

A thrid strike, is based on my own personal experience shopping this holiday season. My wife wanted a new cashmere argyle sweater - bluefly was one of the sites I checked out (they came up on a google search) . The pricing there was outragous in comparison to other places I shopped (I ended up buying from Macy's a division of Fedrated dept. stores). This tells me that the "average" consumer won't be buying from bluefly. The demographics target  (as mentioned earlier in this thread) I believe is Women making over 75K. if you consider, though, the average age of women making over 75K must be 35+ (on Average) - That narrows your market considerably and if you look at bluefly merchandise, that looks to be targeted at the 20 something market. The most successful retailers that target the 30+ women (including J.crew, Banana Republic (division of Gap) also include Limited Brands and though they are way down now, Chico's Fashions. The 18-30 Market is dominated by ANF, American Eagle Outfitters, Urban Outfitters, Aeropostale - All of which do online as well as brick and mortar stores (hence the ability to try it on and confirm fit before buying online)

There is also the fad factor to be considered. One of the stocks I made some nice money on this year was True Religion Jeans - I made it by playing short at 22. When times get tight (As I believe they will in the first half of 2007) Your not going to find a lot of buyers for $150 jeans and $300 sweaters. My wife constantly shops the "clearance" sections of Nordstrom, Saks, Bloomingdales & Neiman Marcus and when you see quantities of a particular brand marked off 50%+  you'll know there is problems.

Overall retail looks weak this year, - My customers are telling me. One only needs to look a the huge "sales" that started on 3 weeks before Xmas to confirm this. Had Thanksgiving not fallen when it did this year (Which gave shoppers almost an extra week) I believe you'd have seen same store comps down as compared to flat or up just a bit.

Just my .02.

Good luck

[Terliso]

Daily chart is bullish, weekly chart is bullish....time to go up now!

[HANDBALLJIM]

BFLY is starting to make me nervous at this level. It seems to be hoping for some good news about the Christmas season sales figures. I took a larger position in this trade perhaps. Can someone help ease my mind?

Thanks, Jimmy

[David Randolph]

Hi HANDBALLJIM, thanks for your comment

BFLY is starting to make me nervous at this level. It seems to be hoping for some good news about the Christmas season sales figures.

Investors that hold the stock naturally expect nice revenues for this season, given the latest two press releases from the company:

• Bluefly Monthly Sales Increase
AP (Thu, Dec 7)

• Bluefly.com Has First Million Dollar Day
Business Wire (Wed, Dec 13)

Also, the historical revenue graph says sales have been growing steadily:



Q4 is the strongest for BFLY (as for most retailers) and it is possible that the company reports a profit for this quarter. Longer term I can only see sales and profits growing, as more and more people know about their website.

I took a larger position in this trade perhaps. Can someone help ease my mind?

Yes, probably you are too much overweighted on BFLY. Perhaps you should reduce your position to a normal weighting.

Help ease your mind? Yes, buy and read Eckart Tolle's book, "Practicing the Power of now":





I see sales growth accelerating at BFLY and this company becoming profitable soon. There's an interesting article on Market Watch today about recent consumer trends:

E-tailers reach a tipping point

I'll continue holding BFLY.

[David Randolph]

Unfortunately BFLY has been unable to rally and technically it broke down below the 10 SMA short term support. But I think key support stands at $1.20. Only a close clearly below $1.20 would make it definitely bearish from a technical standpoint.

I compare BFLY with KNOT, for example, and I don't see many differences. Revenues are about the same ... but KNOT is profitable and BFLY isn't, yet. And, of course, KNOT is a $802 M market cap company and BFLY is just $170 M (yet).

I have to say this on BFLY: I'm finding it hard to find attractive long term investments out there, at least in the small cap world. BFLY has a business model that I have a lot of faith in. I'll continue holding BFLY whatever happens to the technical picture.

[Se7en]

Golden cross today? 50 and 200MA @ 1.02$! 
It also looks like BFLY is making a small pennant here...

[David Randolph]

Golden cross today? 50 and 200MA @ 1.02$! 
It also looks like BFLY is making a small pennant here...

Yes, nice golden cross on BFLY on a 2.4% rise

Fundamentally, the 4th quarter is the most important quarter for the company, since it usually makes about 36.2% of revenues over that quarter (if there wasn't any seasonality, of course the normal would be 25% of revenues).

I estimate $30 M revenue for Q4, 2006. This will represent 38.46% of 2006's total revenue. The gross margin in Q4 was 42.86% in 2005 and 2004, as you can see on the following graph:



So I expect the same 42.86% gross margin for Q4 2007. This gives me 0.4286*$30 M = $12.86 M as Gross Operating Profit.

Selling/General/Admin Expenses were $5 M in Q4 2004 and $8 M in Q4 2005. So perhaps $11 M in Q4 2006?

This means EBITDA would be something like $1.86 M ... there's no long term debt so no borrowing costs, apply a 40% income tax and this would go down to the bottom line as net income of $1.116 M.

Since there are 129,248,990 shares outstanding, EPS would be just $1,116,000/129,248,990 = $0.0086, that is, $0.01.

Not much, but I'm sure it would make the stock rally. I need to think of BFLY as a long term holding, www.bluefly.com is a business I would love to own. But I own it already, since I'm a shareholder of the company I'm not willing to sell my great business, not now, not at this price.

[zibeaster]

It is such fun to read this thread. everybody is asking their wife/girl-friend for the advise.

So I did my share and asked my wife about it. Her conculsion is, the site is not too good, not to bad either. she doesn't feel she has the perticular interest to buy from it. some items on this site can be bought from other places like ebay with less (new items from ebay sellers).

Regardless what she say, I do think bluefly has its place. There is a need for upsale online retailer. If all of our wives/girlfriends like it, bluefly will be a multi- billion dollar company by now.

I used to own an retail store. Right after I bought the store, I gave my wife the responsibility to order fashion items like accessaries and cloths. As it turned out, the things my wife likes doesn't sell. The reason is, the area around the store has an increasing latino population, they have a completely difference taste from my wife's. After that, I no longer rely on her judgement 

So I think the ultimate judgement in this case is to check the sales numbers. BFLY is passing it with flying colors.  The trend is up, the stock should be up too.

Without thinking about wether BFLY is going to dominate luxury goods sale online or offline, there is no denying that BFLY's business is in an up trend. The question of course, is if the stock price is too high at this point. Looking at the 5 year chart, I don't think so. It is actually in the low range. I think BFLY can go back to its old highs of 2003, which is $5.

So I think I will buy some BFLY when market opens. I can see (hope) it going to $2 or $3 if they have a good Q4 number.

happy trading