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dELiA*s, Inc. Announces Third Quarter 2009 Results
  • Revenue increased 4.9% to $59.7 million
  • Operating loss reduced 43%

NEW YORK--(BUSINESS WIRE)--Nov. 24, 2009-- dELiA*s, Inc. (NASDAQ: DLIA), a direct marketing and retail company comprised of two lifestyle brands primarily targeting teenage girls and young women, today announced the results for its third quarter of fiscal 2009. All financial results in this press release are for continuing operations unless otherwise stated.

Robert Bernard, Chief Executive Officer, commented, “During the third quarter we continued our trend of improved operating results, while reducing inventory levels, controlling costs and preserving cash. We achieved flat year-over-year comparable store sales and expanded merchandise margin in the retail segment for the August through September Back-to-School period. However, we experienced weak sales performance in both segments of the business in October, which intensified during the last two weeks of the month and drove our negative comparable store sales results for the quarter in our retail segment.”

Fiscal Third Quarter Results

Total revenue for the third quarter of fiscal 2009 increased 4.9% to $59.7 million from $56.9 million in the third quarter of fiscal 2008. Revenue from the retail segment increased 8.2% to $35.2 million, or 59.0% of total revenue. Revenue from the direct segment increased 0.5% to $24.5 million, or 41.0% of total revenue.

Total gross margin was 36.5% in the third quarter of fiscal 2009, compared to 37.0% in the prior year quarter, reflecting increased clearance sales in the direct segment partially offset by improved inventory management.

Selling, general and administrative (SG&A) expenses were $23.7 million, or 39.6% of sales, for the third quarter of 2009 compared to $23.8 million, or 41.9% of sales, in the third quarter of 2008. The improvement in SG&A as a percent of sales was a result of reduced overhead costs.

The operating loss for the third quarter of 2009 was $1.9 million, an improvement of approximately $1.5 million, or 43.4%, from an operating loss for the third quarter of 2008 of $3.4 million. The operating loss in the third quarter of 2008 included a noncash impairment charge of $0.6 million related to an underperforming store location.

Net loss for the third quarter of fiscal 2009 was $1.3 million, or $0.04 per diluted share, compared to net income of $0.8 million, or $0.03 per diluted share, for the third quarter of fiscal 2008. The benefit for income taxes for the third quarter of 2009 was $0.7 million compared to a benefit for income taxes of $4.4 million for the prior year period.

Income from discontinued operations for the third quarter of 2008 was $2.7 million. Net income for the third quarter of fiscal 2008, including the results of discontinued operations, was $3.5 million, or $0.11 per diluted share.

Results by Segment

Retail Segment Results

Total revenue for the retail segment for the third quarter of fiscal 2009 increased 8.2% to $35.2 million from $32.6 million in the third quarter of fiscal 2008. Retail comparable store sales decreased 3.6% for the third quarter of fiscal 2009 compared to an increase of 7.6% for the third quarter of fiscal 2008. Gross margin for the retail segment, which includes distribution, occupancy and merchandising costs was 30.9% compared to 30.0% in the prior year period. Gross margin was driven by an increase in merchandise margin and improved inventory management.

SG&A expenses for the retail segment were $12.1 million, or 34.4% of sales, in the third quarter of 2009 compared to $11.6 million, or 35.5% of sales, in the prior year period, reflecting the leveraging of reduced overhead costs. The operating loss for the third quarter of fiscal 2009 for the retail segment improved to $1.2 million from $2.4 million in the prior year period.

The Company opened 4 store locations during the third quarter of fiscal 2009, ending the period with 108 stores.

Direct Segment Results

Total revenue for the direct segment for the third quarter of fiscal 2009 increased 0.5% to $24.5 million from $24.4 million. Gross margin for the direct segment was 44.5% compared to 46.3% in the third quarter of the prior year due to increased clearance activity.

SG&A expenses for the direct segment were $11.6 million, or 47.2% of sales, compared to $12.3 million, or 50.3% of sales, in the prior year period. The improvement in SG&A as a percentage of sales reflects the leveraging of reductions in overhead costs. The operating loss for the third quarter of fiscal 2009 for the direct segment was $0.7 million compared with an operating loss of $1.0 million in the prior year period.

First Nine Month Results

For the nine-month period ended October 31, 2009, total revenue increased 6.2% to $157.6 million from revenue of $148.4 million for the prior year period. Total gross margin was 34.0% compared to 34.9% for the prior year. SG&A expenses were $67.7 million, or 43.0% of sales, for the first nine months of fiscal 2009, compared to $69.0 million, or 46.5% of sales, for the prior year period.

Net loss for the first nine months of fiscal 2009 improved to $9.6 million, or $0.31 per diluted share, compared to a net loss of $11.7 million, or $0.38 per diluted share, for the first nine months of fiscal 2008. Income from discontinued operations was $6.3 million for first nine months of fiscal 2008. Net loss for the first nine months of fiscal 2008, including the results of discontinued operations, was $5.4 million, or $0.18 per diluted share.

Mr. Bernard continued, “In the first few weeks of November, both of our segments continued to see negative low double-digit comparable sales trends in line with the trends that we experienced in the last two weeks of October. While it is still early in the season, we do not expect to deliver a positive comparable sales trend for the fourth quarter given the current retail environment and our holiday merchandise mix. As a result of these developments, we have tempered our outlook for the remainder of the year, and we do not expect to deliver break-even EBITDA for the full year. In addition, taking into consideration current trends, we anticipate scaling back our stated expansion and capital expenditure plans for 2010 to conserve cash and allow for increased focus on driving sales productivity in the existing store base.”

The Company now expects year-end cash, including restricted amounts, to range from $45 million to $50 million, down from a prior forecast of $50 million to $55 million.

Conference Call and Webcast Information

A conference call to discuss third quarter 2009 results is scheduled for Tuesday, November 24, 2009 at 10:00 a.m. eastern time. The conference call will be webcast live at www.deliasinc.com. A replay of the call will be available until December 22, 2009 and can be accessed by dialing (888) 286-8010 and providing the pass code number 26361106.

During the conference call, the Company may discuss and answer questions concerning business and financial developments and trends. The Company's responses to questions, as well as other matters discussed during the conference call, may contain or constitute information that has not been disclosed previously.

About dELiA*s, Inc.

dELiA*s, Inc. is a direct marketing and retail company comprised of two lifestyle brands primarily targeting teenage girls and young women. Its brands – dELiA*s and Alloy – generate revenue by selling apparel, accessories, footwear and room furnishings to consumers through direct mail catalogs, websites, and dELiA*s mall-based specialty retail stores.

Forward-Looking Statements

This announcement may contain forward-looking statements made in reliance upon the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding our expectations and beliefs regarding our future results or performance. Because these statements apply to future events, they are subject to risks and uncertainties. When used in this announcement, the words “anticipate”, “believe”, “estimate”, “expect”, “expectation”, “should”, “would”, “project”, “plan”, “predict”, “intend” and similar expressions are intended to identify such forward-looking statements. Our actual results could differ materially from those projected in the forward-looking statements. Additionally, you should not consider past results to be an indication of our future performance. For a discussion of risk factors that may affect our results, see the “Risk Factors That May Affect Future Results” section of our filings with the Securities and Exchange Commission, including our annual report on Form 10-K and quarterly reports on Form 10-Q. We do not intend to update any of the forward-looking statements after the date of this announcement to conform these statements to actual results, to changes in management's expectations or otherwise, except as may be required by law.

         
dELiA*s, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value and share data)
 
October 31, January 31, November 1,
2009 2009 2008
ASSETS (unaudited) (unaudited)

CURRENT ASSETS:

Cash and cash equivalents $ 26,396 $ 92,512 $ 7,966
Inventories, net 36,936 33,942 40,208
Prepaid catalog costs 4,765 2,759 5,344
Deferred income taxes 2,000 2,000 -
Other current assets 11,187 5,481 6,396
Assets held for sale   -   -   18,735  
 
TOTAL CURRENT ASSETS 81,284 136,694 78,649
 
PROPERTY AND EQUIPMENT, NET 56,484 53,164 54,423
GOODWILL 12,073 12,073 12,073
INTANGIBLE ASSETS, NET 2,423 2,440 2,447
RESTRICTED CASH 15,753 - -
OTHER ASSETS 563 430 196
ASSETS HELD FOR SALE   -   -   28,170  
TOTAL ASSETS $ 168,580 $ 204,801 $ 175,958  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

Accounts payable $ 22,231 $ 21,389 $ 30,190
Bank loan payable - - 13,813
Current portion of mortgage note payable - 2,205 2,260
Accrued expenses and other current liabilities 27,073 28,822 26,676
Income taxes payable 715 25,243 -
Liabilities held for sale   -   -   330  
TOTAL CURRENT LIABILITIES 50,019 77,659 73,269
DEFERRED CREDITS AND OTHER LONG-TERM LIABILITIES   12,163   11,813   10,166  
TOTAL LIABILITIES   62,182   89,472   83,435  
 
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:

Preferred Stock, $.001 par value; 25,000,000 shares authorized, none issued - - -
Common Stock, $.001 par value; 100,000,000 shares authorized;

31,201,514, 31,199,889 and 31,108,981 shares issued and outstanding, respectively

31 31 31
Additional paid-in capital 98,430 97,728 97,494
Retained earnings (accumulated deficit)   7,937   17,570   (5,002 )
 
TOTAL STOCKHOLDERS' EQUITY   106,398   115,329   92,523  
 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 168,580 $ 204,801 $ 175,958  
 
           
dELiA*s, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(unaudited)
 
For the Thirteen Weeks Ended
October 31, 2009 November 1, 2008
 
 
NET REVENUES $ 59,736 100.0 % $ 56,946 100.0 %
 
Cost of goods sold   37,957   63.5 %   35,895   63.0 %
 
GROSS PROFIT   21,779   36.5 %   21,051   37.0 %
Selling, general and administrative expenses 23,678 39.6 % 23,835 41.9 %
Impairment of long-lived assets   -   0.0 %   574   1.0 %
TOTAL OPERATING EXPENSES   23,678   39.6 %   24,409   42.9 %
OPERATING LOSS (1,899 ) -3.2 % (3,358 ) -5.9 %
Interest expense, net   (97 ) -0.2 %   (209 ) -0.4 %
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES (1,996 ) -3.3 % (3,567 ) -6.3 %
Benefit for income taxes   (650 ) -1.1 %   (4,377 ) -7.7 %
(LOSS) INCOME FROM CONTINUING OPERATIONS (1,346 ) -2.3 % 810 1.4 %
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX   5   0.0 %   2,708   4.8 %
NET (LOSS) INCOME $ (1,341 ) -2.2 % $ 3,518   6.2 %
 
BASIC (LOSS) INCOME PER SHARE:
(LOSS) INCOME FROM CONTINUING OPERATIONS $ (0.04 ) $ 0.03
INCOME FROM DISCONTINUED OPERATIONS $ 0.00   $ 0.08  
NET (LOSS) INCOME $ (0.04 ) $ 0.11  
 
WEIGHTED AVERAGE BASIC COMMON SHARES OUTSTANDING   31,036,236     30,995,942  
 
DILUTED (LOSS) INCOME PER SHARE:
(LOSS) INCOME FROM CONTINUING OPERATIONS $ (0.04 ) $ 0.03
INCOME FROM DISCONTINUED OPERATIONS $ 0.00   $ 0.08  
NET (LOSS) INCOME $ (0.04 ) $ 0.11  
 
WEIGHTED AVERAGE DILUTED COMMON SHARES OUTSTANDING   31,036,236     31,015,124  
 
           
dELiA*s, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(unaudited)
 
For the Thirty-Nine Weeks Ended
October 31, 2009 November 1, 2008
 
 
NET REVENUES $ 157,565 100.0 % $ 148,407 100.0 %
 
Cost of goods sold   103,968   66.0 %   96,625   65.1 %
 
GROSS PROFIT   53,597   34.0 %   51,782   34.9 %
Selling, general and administrative expenses 67,698 43.0 % 69,021 46.5 %
Impairment of long-lived assets   -   0.0 %   574   0.4 %
TOTAL OPERATING EXPENSES   67,698   43.0 %   69,595   46.9 %
OPERATING LOSS (14,101 ) -8.9 % (17,813 ) -12.0 %
Interest expense, net   (141 ) -0.1 %   (501 ) -0.3 %
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES (14,242 ) -9.0 % (18,314 ) -12.3 %
Benefit for income taxes   (4,598 ) -2.9 %   (6,570 ) -4.4 %
LOSS FROM CONTINUING OPERATIONS (9,644 ) -6.1 % (11,744 ) -7.9 %
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX   11   0.0 %   6,330   4.3 %
NET LOSS $ (9,633 ) -6.1 % $ (5,414 ) -3.6 %
 
BASIC AND DILUTED (LOSS) INCOME PER SHARE:
LOSS FROM CONTINUING OPERATIONS $ (0.31 ) $ (0.38 )
INCOME FROM DISCONTINUED OPERATIONS $ 0.00   $ 0.20  
NET LOSS $ (0.31 ) $ (0.18 )
 
WEIGHTED AVERAGE BASIC & DILUTED COMMON SHARES OUTSTANDING   31,033,822     30,912,987  
 
       
dELiA*s Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
For the Thirty-Nine Weeks Ended
October 31, 2009 November 1, 2008
 
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (9,633 ) $ (5,414 )
Income from discontinued operations   11     6,330  
Loss from continuing operations (9,644 ) (11,744 )

Adjustments to reconcile net loss to net cash used in operating activities of continuing operations:

 
Depreciation and amortization 7,479 6,450
Stock-based compensation 700 761
Impairment of long-lived assets - 574
Changes in operating assets and liabilities:
Inventories (2,994 ) (12,785 )
Prepaid catalog costs and other assets (7,845 ) (1,433 )
Restricted cash (15,753 ) -
Income taxes payable (24,528 ) 121
Accounts payable, accrued expenses and other liabilities   (1,040 )   7,385  
 
Total adjustments   (43,981 )   1,073  
Net cash used in operating activities of continuing operations (53,625 ) (10,671 )
Net cash provided by operating activities of discontinued operations   11     4,350  
NET CASH USED IN OPERATING ACTIVITIES   (53,614 )   (6,321 )
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures   (10,299 )   (10,770 )
NET CASH USED IN INVESTING ACTIVITIES   (10,299 )   (10,770 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from bank borrowing - 13,813
Payment of mortgage note payable (2,205 ) (155 )
Proceeds from exercise of employee stock options   2     -  
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES   (2,203 )   13,658  
 
 
NET DECREASE IN CASH AND CASH EQUIVALENTS (66,116 ) (3,433 )
CASH AND CASH EQUIVALENTS, beginning of period 92,512 11,399
   
CASH AND CASH EQUIVALENTS, end of period $ 26,396   $ 7,966  
 
           
dELiA*s, Inc.
SELECTED OPERATING DATA
(in thousands, except number of stores)
(unaudited)
 

 

For The Thirteen Weeks Ended

For The Thirty-Nine Weeks Ended

 

October 31, 2009

November 1, 2008 October 31, 2009 November 1, 2008
 

Channel net revenues (1):

 
Retail   $ 35,235   $ 32,569   $ 84,151   $ 79,121  

Direct:

Catalog 4,275 4,641 12,769 12,525
Internet     20,226     19,736     60,645     56,761  
Total direct     24,501     24,377     73,414     69,286  
Total net revenues   $ 59,736   $ 56,946   $ 157,565   $ 148,407  
 

Internet % of total direct revenues

  83 %   81 %   83 %   82 %
 
Comparable store sales     -3.6 %   7.6 %   -3.8 %   5.4 %
 
Catalogs mailed (1)     14,576     14,725     33,148     33,693  
 
Inventory - retail   $ 20,348   $ 21,242   $ 20,348   $ 21,242  
Inventory - direct (1)   $ 16,588   $ 18,966   $ 16,588   $ 18,966  
 

Number of stores:

Beginning of period 104 94 97 86
Opened 4 2 13 * 12 **
Closed     -     -     2   *   2   **
End of period     108     96     108     96  
 

Total gross sq. ft @ end of period

  411.7     366.1     411.7     366.1  

* Totals include one store that was closed, remodeled and reopened in the first quarter of fiscal 2009, and one store that was closed and relocated to an alternative site in the same mall during the second quarter of fiscal 2009.

** Totals include one store that was closed and relocated to an alternative site in the same mall during the first quarter of fiscal 2008, and one store that was closed and relocated to an alternative site in the same mall during the second quarter of fiscal 2008.

(1) Restated to exclude the CCS business

Source: dELiA*s, Inc.

dELiA*s, Inc.
David Dick, 212-590-6200
Chief Financial Officer
or
FD
Leigh Parrish, Caren Villarreal
212-850-5600





©2013 dELiA*s, Inc.