New York—dELiA*s, Inc., the specialty retailer aimed at teenage girls, reported Monday that it swung into a larger second quarter loss as sales suffered from “challenging traffic trends.”
For the quarter ended August 3, dELiA*s posted a loss from continuing operations of $11.1 million compared to a loss of $5.4 million in the same quarter in 2012.
Total revenue decreased 16.7% to $33.2 million while analysts’ estimates expected $39.8 million in sales. Revenue from the retail segment decreased 14.7% to $24.5 million, including a comparable store sales decrease of 14.9%. Revenue from the direct segment decreased 21.8% to $8.7 million.
Gross margin narrowed to 20.9% compared to 31.6% in the prior year quarter, primarily due to increased inventory reserves, lower merchandise margins associated with higher markdowns on legacy product and occupancy costs.
“Our second quarter results were indicative of challenging traffic trends, combined with the underperformance of our legacy inventory,” said CEO Tracy Gardner. “We expect these trends to continue throughout the third quarter as we work to move through this inventory. The team is currently focused on stabilizing the business, amplifying the dELiA*s brand image and driving improved execution in the near term. During this period, we are also focused on implementing our go forward strategy that we believe will better position us for more consistent long term growth. While we acknowledge that this turnaround will take time, we remain excited about our future potential.”