Online luxury retailer Bluefly has seen its third-quarter net losses widen on the back of lower margins and an increase in the number of promotions.
Net loss widened to $6.3 million for the three months to September 30, compared to a $2.6 million loss last year.
Net sales rose 3% to $21.7 million, compared to $21.2 million the same quarter last year. Bluefly said the rise was a result of a reduction in return rates, partially offset by a decline in average order size and a fall in shipping and handling revenue related to an increase in the number of promotions.
Gross profit margin slipped to 13.6%, from 29.1% the prior year. This was primarily due to the shift in the company’s strategy to increase volume sales by selling merchandise at lower gross margin percentages. This was coupled with an increase in freight costs and daily deal promotions during the quarter.
CEO Joseph Park said: “Product margins for the quarter were higher than the first quarter, however our overall gross margins were negatively impacted by a 26% increase in first time customers and the associated acquisition costs from promotional shipping and daily deal offers.”
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