Delia’s Swings into Q4 Loss, But Optimistic Ahead

New York—DELiA*s reported last Friday that it swung into a fourth quarter loss due to sales declines and narrowed gross margin.

For the quarter ended Jan. 28, dELiA*s posted a net loss of $4.2 million, or 13 cents a share, compared with a net income of $0.7 million, or 2 cents a share, a year ago.

Total revenue decreased 2% to $65.6 million. Sales at the retail division decreased 3.6% to $33.6 million, or 51.3% of total revenue. Retail comparable store sales decreased 3.6%. Direct sales were flat at $32 million.

Gross margin decreased to 32.3% from 36.8% in the prior year quarter, mostly due to reduced margins due to increased markdowns and deleveraging occupancy costs.

‘Optimistic’ about Strategy Shift

For the full-year, the company saw net losses widen to $22.7 million. With sales sliding down 1.6% to $217.2 million, while gross margin declined to 31.5% from 33.3% in the previous year.

“Our fourth quarter marked the end of a transition period in merchandising for dELiA*s,” said Walter Killough, ceo. “Despite disappointing overall fourth quarter results, we were pleased with the sales and margin performance of product bought under our new merchandising strategy. The comparable store sales decline and the margin contraction in the quarter reflected weak sell-through on sweater and outerwear key items associated with our prior merchandising approach.”

“Since the start of January we are beginning to see customer acceptance and positive sales in all channels with our new merchandising strategy, which reflects shorter lead times and more frequent deliveries of new product, with the ability to chase business effectively,” Killough added.”We are optimistic that this shift in strategy, among other key initiatives in real estate and the web, will position us to drive improved financial performance for the long term.”


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