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NEW YORK--(BUSINESS WIRE)--Aug. 28, 2000

Bluefly, Inc. (NASDAQ SmallCap: BFLY), a leading Internet retailer of designer fashions and home furnishings at outlet store prices (), announced today that it has expanded and extended its relationship with America Online, Inc. (NYSE: AOL) for placement in the Shop@AOL online shopping destinations.

Under the new agreement, Bluefly.com will be a gold tenant in the following Shop@AOL, AOL.COM, CompuServe, Netscape, Spinner and Winamp online shopping destinations: Women's Clothing and Accessories; Men's Clothing and Accessories; Teen Girl's Clothing and Accessories; Department Stores, Shoes, Handbags, and Accessories; and Home Furnishings & Decor. In addition, Bluefly will be a silver tenant in the Kids & Baby Clothing and Accessories area and will make its over 200,000 items easily available through AOL's popular shopping search database.

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"AOL has proven to be a significant, cost-effective customer acquisition tool for Bluefly," said Alanna Richter, Vice President of Marketing at Bluefly. "Working with AOL should enhance our ability to gain high value customers in an economic and highly branded manner," Richter added.

"We've had a great relationship with Bluefly," said Patrick Gates, AOL Vice President of E-Commerce. "Bluefly's breadth and depth of quality designer products, in addition to their well-respected brand name, helps us provide a truly great shopping experience for AOL and CompuServe members and visitors to our Web-based brands."

Bluefly is a NASDAQ SmallCap public company headquartered in New York City, in the heart of the fashion district. Distinguishing itself with discounts of up to 75%, products from more than 350 designers and a Tiffany Flower Ring 90-day money back guarantee, Bluefly.com aims to be the world's first full service outlet store for designer fashions. Its innovative MyCatalog feature is designed to eliminate the "hit-or-miss" aspect of off-price shopping by allowing shoppers to see only those products that are available for sale and match their interests. The online merchant has established strategic alliances with many of the most visited Web Sites and portals including AOL, Excite, MSN, Netcenter, Women.com and Yahoo! For more information, visit .

This press release may include statements that constitute "forward-looking" statements, usually containing the words "believe", "project", "expect", or similar expressions. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. The risks and uncertainties are detailed from time to time in reports filed by the company with the Securities and Exchange Commission, including Forms 8-A, 8-K, 10-QSB, and 10-KSB. These risks and uncertainties include, but are not limited to, the following: the Company's limited working capital, need for additional capital and potential inability to raise such capital; the competitive nature of the business and the potential for competitors with greater resources to enter such business; risks of litigation for sale of unauthentic or damaged goods and litigation risks related to sales in foreign countries; consumer acceptance of the Internet as a medium for purchasing apparel; recent losses and anticipated future losses; the startup nature of the Internet business; the capital intensive nature
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