dELiA*s, Inc. Announces Third Quarter 2012 Results Business Wire NEW YORK -- November 20, 2012 dELiA*s, Inc. (NASDAQ: DLIA), a multi-channel retail company comprised of two lifestyle brands primarily targeting teenage girls and young women, today announced the results for its third quarter of fiscal 2012. Third Quarter Fiscal 2012 Highlights: *Total revenue decreased 4.0% to $55.7 million from $58.1 million in the third quarter of fiscal 2011. Revenue from the retail segment decreased 2.8% to $35.2 million, due to a reduction in store count, partially offset by a comparable store sales increase of 2.4%. Revenue from the direct segment decreased 6.1% to $20.6 million on a catalog circulation decrease of 14.4%. *Consolidated gross margin increased to 33.9% compared to 32.3% in the prior year quarter. *Net loss was $2.0 million, or $0.06 per diluted share. Net loss for the third quarter of fiscal 2011 was $4.4 million, or $0.14 per diluted share. Walter Killough, Chief Executive Officer, commented, “We achieved our third consecutive quarter of positive comparable store sales and merchandise margin improvement for the retail segment. While we were pleased with the results of our back-to-school season, our sales trends slowed in late September and October. Hurricane Sandy also had a significant effect on both segments of our business during the first week of the new quarter, although we expect its impact on our overall fourth quarter results to be minimal. Subsequent to the storm, sales trends improved, and we have been pleased with the strong response to our Holiday assortment in both our dELiA*s retail and direct businesses. We believe that we are well-positioned with compelling merchandise, timely inventory flow and a strong marketing program in place, and remain on track to deliver improved sales and margins as we continue to execute on our strategic initiatives.” Results by Segment Retail Segment Results Total revenue for the retail segment for the third quarter of fiscal 2012 decreased 2.8% to $35.2 million from $36.2 million in the third quarter of fiscal 2011 due to a reduction in store count. Retail comparable store sales increased 2.4% for the third quarter of fiscal 2012 compared to a decrease of 1.7% for the third quarter of fiscal 2011. Gross margin for the retail segment, which includes distribution, occupancy and merchandising costs, was 29.7% for the third quarter of fiscal 2012 compared to 26.0% in the prior year period. The increase in gross margin resulted primarily from higher merchandise margins, driven by increased full price selling and fewer markdowns, and the leveraging of reduced occupancy costs. Selling, general and administrative (SG&A) expenses for the retail segment were $11.6 million, or 33.1% of sales, in the third quarter of fiscal 2012 compared to $12.1 million, or 33.5% of sales, in the prior year period. The decrease in SG&A expenses in dollars resulted from reduced selling and depreciation expenses. The operating loss for the third quarter of fiscal 2012 for the retail segment was $1.0 million compared to $2.7 million in the prior year period. Included in the third quarter of fiscal 2012 were store closing costs of $0.5 million. The Company closed two stores during the third quarter of fiscal 2012, ending the period with 107 stores. Direct Segment Results Total revenue for the direct segment for the third quarter of fiscal 2012 decreased 6.1% to $20.6 million from $21.9 million in the third quarter of fiscal 2011. Catalog circulation was reduced by 14.4% compared to the third quarter of fiscal 2011. Gross margin for the direct segment was 41.2% for the third quarter of fiscal 2012 compared to 42.7% in the third quarter of fiscal 2011. The decrease in gross margin resulted primarily from higher shipping and handling costs partially offset by higher merchandise margins. SG&A expenses for the direct segment were $10.9 million, or 53.2% of sales, in the third quarter of fiscal 2012 compared to $10.9 million, or 50.0% of sales, in the prior year period. The increase in SG&A expenses as a percent of sales reflects the deleveraging of selling, overhead and depreciation expenses. Operating loss for the third quarter of fiscal 2012 for the direct segment was $0.8 million as compared to $1.5 million in the prior year period. Included in the third quarter of fiscal 2012 was incremental gift card breakage income of $1.6 million. Balance Sheet Highlights At the end of the third quarter of fiscal 2012, cash and cash equivalents were $5.9 million compared with $15.8 million at the end of the third quarter of fiscal 2011. Total net inventories at the end of the third quarter of fiscal 2012 were $38.8 million compared with $41.7 million at the end of the third quarter of fiscal 2011. Inventory per average retail store was down 11.2% compared to the prior year period, and inventory for the direct segment was up 2.6% compared to the prior year. First Nine Month Results For the nine-month period ended October 27, 2012, total revenue increased 3.2% to $156.5 million from $151.6 million for the prior year period. Total gross margin was 33.5% compared to 31.1% for the prior year period. SG&A expenses were $65.6 million, or 41.9% of sales, for the first nine months of fiscal 2012, compared to $66.4 million, or 43.8% of sales, for the prior year period. The operating loss for the first nine months of fiscal 2012 decreased to $10.3 million, compared to $19.0 million for the first nine months of fiscal 2011. Net loss for the first nine months of fiscal 2012 decreased to $10.9 million, or $0.35 per diluted share, compared to a net loss of $18.5 million, or $0.59 per diluted share, for the first nine months of fiscal 2011. Included in the first nine months of fiscal 2012 is gift card breakage of $2.8 million, or $0.09 per diluted share, compared to $0.2 million, or $0.01 per diluted share, in first nine months of fiscal 2011. The provision for income taxes for first nine months of fiscal 2012 was $0.1 million, or $0.00 per diluted share, compared to an income tax benefit of $0.9 million, or $0.03 per diluted share, for first nine months of fiscal 2011. Conference Call and Webcast Information A conference call to discuss third quarter 2012 results is scheduled for Tuesday, November 20, 2012 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 20, 2012 and can be accessed by dialing (877) 870-5176 and providing the pass code number 7021640. 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 multi-channel 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 and footwear to consumers through direct mail catalogs, websites, and dELiA*s mall-based 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) (unaudited) October 27, 2012 October 29, 2011 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 5,919 $ 15,778 Inventories, net 38,849 41,655 Prepaid catalog costs 3,689 3,654 Other current assets 3,487 3,741 TOTAL CURRENT ASSETS 51,944 64,828 PROPERTY AND EQUIPMENT, NET 38,340 44,843 GOODWILL 4,462 4,462 INTANGIBLE ASSETS, NET 2,419 2,419 OTHER ASSETS 938 852 TOTAL ASSETS $ 98,103 $ 117,404 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable $ 24,008 $ 21,787 Accrued expenses and other current 11,585 16,941 liabilities Income taxes payable 916 891 TOTAL CURRENT LIABILITIES 36,509 39,619 DEFERRED CREDITS AND OTHER LONG-TERM 9,825 11,676 LIABILITIES TOTAL LIABILITIES 46,334 51,295 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; 32 31 31,684,387 and 31,432,531 shares issued and outstanding, respectively Additional paid-in capital 99,788 99,081 Accumulated deficit (48,051 ) (33,003 ) TOTAL STOCKHOLDERS' EQUITY 51,769 66,109 TOTAL LIABILITIES AND STOCKHOLDERS' $ 98,103 $ 117,404 EQUITY dELiA*s, Inc. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share data) (unaudited) For the Thirteen Weeks Ended October 27, 2012 October 29, 2011 NET REVENUES $ 55,723 100.0 % $ 58,067 100.0 % Cost of goods sold 36,808 66.1 % 39,336 67.7 % GROSS PROFIT 18,915 33.9 % 18,731 32.3 % Selling, general and administrative 22,572 40.5 % 23,081 39.7 % expenses Other operating (1,822 ) -3.3 % (122 ) -0.2 % income TOTAL OPERATING 20,750 37.2 % 22,959 39.5 % EXPENSES OPERATING LOSS (1,835 ) -3.3 % (4,228 ) -7.3 % Interest expense, 159 0.3 % 171 0.3 % net LOSS BEFORE INCOME (1,994 ) -3.6 % (4,399 ) -7.6 % TAXES Provision for 3 0.0 % 26 0.0 % income taxes NET LOSS $ (1,997 ) -3.6 % $ (4,425 ) -7.6 % BASIC AND DILUTED LOSS PER SHARE: NET LOSS PER SHARE $ (0.06 ) $ (0.14 ) WEIGHTED AVERAGE BASIC AND DILUTED 31,355,085 31,209,737 COMMON SHARES OUTSTANDING dELiA*s, Inc. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share data) (unaudited) For the Thirty-Nine Weeks Ended October 27, 2012 October 29, 2011 NET REVENUES $ 156,477 100.0 % $ 151,560 100.0 % Cost of goods sold 103,992 66.5 % 104,381 68.9 % GROSS PROFIT 52,485 33.5 % 47,179 31.1 % Selling, general and administrative 65,640 41.9 % 66,406 43.8 % expenses Other operating (2,837 ) -1.8 % (194 ) -0.1 % income TOTAL OPERATING 62,803 40.1 % 66,212 43.7 % EXPENSES OPERATING LOSS (10,318 ) -6.6 % (19,033 ) -12.6 % Interest expense, 478 0.3 % 394 0.3 % net LOSS BEFORE INCOME (10,796 ) -6.9 % (19,427 ) -12.8 % TAXES Provision (benefit) 88 0.1 % (921 ) -0.6 % for income taxes NET LOSS $ (10,884 ) -7.0 % $ (18,506 ) -12.2 % BASIC AND DILUTED LOSS PER SHARE: NET LOSS PER SHARE $ (0.35 ) $ (0.59 ) WEIGHTED AVERAGE BASIC AND DILUTED 31,334,288 31,209,737 COMMON SHARES OUTSTANDING dELiA*s Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) For the Thirty-Nine Weeks Ended October 27, 2012 October 29, 2011 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (10,884 ) $ (18,506 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 7,412 8,624 Stock-based compensation 543 571 Changes in operating assets and liabilities: Inventories (7,912 ) (9,630 ) Prepaid catalog costs and other assets (1,609 ) 6,220 Restricted cash - 8,268 Income taxes payable 180 149 Accounts payable, accrued expenses and (6,480 ) (4,928 ) other liabilities Total adjustments (7,866 ) 9,274 NET CASH USED IN OPERATING ACTIVITIES (18,750 ) (9,232 ) CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (3,757 ) (3,064 ) NET CASH USED IN INVESTING ACTIVITIES (3,757 ) (3,064 ) NET DECREASE IN CASH AND CASH (22,507 ) (12,296 ) EQUIVALENTS CASH AND CASH EQUIVALENTS, beginning of 28,426 28,074 period CASH AND CASH EQUIVALENTS, end of period $ 5,919 $ 15,778 dELiA*s, Inc. SELECTED OPERATING DATA (in thousands, except number of stores) (unaudited) For The Thirteen Weeks For The Thirty-Nine Weeks Ended Ended October 27, October October 27, October 29, 2012 29, 2011 2012 2011 Channel net revenues: Retail $ 35,172 $ 36,186 $ 92,752 $ 89,589 Direct 20,551 21,881 63,725 61,971 Total net $ 55,723 $ 58,067 $ 156,477 $ 151,560 revenues Comparable 2.4% (1.7%) 7.3% 1.6% store sales Catalogs 8,007 9,356 23,587 25,940 mailed Inventory - $ 21,250 $ 24,501 $ 21,250 $ 24,501 retail Inventory - $ 17,599 $ 17,154 $ 17,599 $ 17,154 direct Number of stores: Beginning 109 115 113 114 of period Opened - 1 ** 1 * 3 ** Closed 2 2 ** 7 * 3 ** End of 107 114 107 114 period Total gross sq. ft @ end of period 410.8 437.2 410.8 437.2 * Totals include one store that was closed and relocated to an alternative site in the same mall during the first quarter of fiscal 2012. ** Totals include one store that was closed, remodeled and reopened in the second quarter of fiscal 2011, and one store that was closed, remodeled and reopened during the third quarter of fiscal 2011. Contact: dELiA*s, Inc. David Dick, 212-590-6200 or ICR Chief Financial Officer Jean Fontana, 646-277-1214
dELiA*s, Inc. Announces Third Quarter 2012 Results
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