An inventory write-off widened fourth quarter losses at Bluefly, despite a substantial increase in revenues at the online fashion retailer.

Fourth quarter revenues were up 10% to US$29.7m, but the inventory write-off knocked back gross profit by 7%, while the company's net loss for the quarter widened to $5.6m from $3.5m last year.

Full-year revenue leapt 19% to $91.5m, but the company's operating loss was up from $12.1m to $16m, and its net loss increased from $12.2m to $15.8m.

Meanwhile, Bluefly also announced that it had secured $3m in debt financing from affiliates of Soros Fund Management and private funds associated with Maverick Capital, in a one-year deal.

"The operational issues that we experienced as a result of our move to our new third-party distribution centre, coupled with the overall slowdown in the retail environment, led to disappointing fourth quarter results, especially after the strong first half we had in 2007," said Melissa Payner, Bluefly CEO.

"While the inventory write-off had a negative impact on gross margin during the fourth quarter and for the full year, we believe that it better positions our business for 2008."