Internet retailer of designer fashions at outlet store prices, Bluefly Inc, on Tuesday revealed its operating loss narrowed to $1.4 million in the second quarter from $4.2m in the year-ago period.

The New York-based company said that improvement was down to a 29 per cent jump in net sales to $6.8m, a 40 per cent surge in gross profit to $2.4m and a 42 per cent fall in selling, marketing and fulfilment expenses which fell to $2.6m.

Bluefly said that despite spending 82 per cent less on advertising, it acquired 21,057 new customers in the quarter and its gross margin increased to a record 35.4 per cent from 32.6 per cent in the year-ago quarter.

It added that affiliates of Soros Private Equity Partners have invested an additional $2.1m in it through the purchase of Series 2002 Convertible Preferred Stock.

Bluefly CEO, Ken Seiff, commented: "I am extremely pleased by our results this past quarter as well as the continued support we have received from the Soros organisation.

"Achieving a record gross margin of 35.4 per cent is particularly satisfying, especially in light of the fact that many retailers have been forced to reduce their gross margin in an effort to maintain sales revenue."

He added: "The fact that we were able to grow our net sales by 29 per cent and raise our gross margin by 280 basis points is, in and of itself, noteworthy but the fact that we saw these increases at a time when we reduced selling, marketing and fulfilment expenses by 42 per cent makes for what I believe was an outstanding quarter."