dELiA*s, Inc. Announces Fourth Quarter and Year End Fiscal 2012 Results

  dELiA*s, Inc. Announces Fourth Quarter and Year End Fiscal 2012 Results

       Retention of a Strategic Advisor with an Initial Focus on Alloy

                   Update to Senior Leadership Transitions

Business Wire

NEW YORK -- March 28, 2013

dELiA*s, Inc. (NASDAQ: DLIA), a multi-channel retail company comprised of two
lifestyle brands primarily marketing to teenage girls and young women, today
announced the results for its fourth quarter of fiscal 2012 (the fourth
quarter of fiscal 2012 consisted of fourteen weeks compared to the fourth
quarter of 2011, which consisted of thirteen weeks) and fiscal year 2012
(fiscal year 2012 consisted of fifty-three weeks compared to fiscal year 2011,
which consisted of fifty-two weeks).

Fourth Quarter Fiscal 2012 Highlights:

  *Total revenue increased 1.0% to $66.2 million from $65.6 million in the
    prior year quarter. Revenue from the retail segment decreased 2.4% to
    $32.8 million, due to a reduction in store count and a comparable store
    sales decrease of 0.3%. Revenue from the direct segment increased 4.4% to
    $33.4 million on a catalog circulation increase of 1.0%.
  *Consolidated gross margin decreased to 31.4% compared to 32.3% in the
    prior year quarter.
  *Net loss was $10.7 million, or $0.34 per diluted share, compared to $4.2
    million, or $0.13 per diluted share, in the prior year quarter. Included
    in the fourth quarter of fiscal 2012 were CEO transition costs of $0.6
    million, or $0.02 per diluted share, and a goodwill impairment charge of
    $4.5 million, or $0.14 per diluted share.

Walter Killough, Chief Executive Officer, commented, “For the year, the
dELiA*s brand had improved performance, driven primarily by the retail segment
which recorded a comparable sales increase of over 5% and reduced its
operating loss by almost $8 million. However, the fourth quarter proved
disappointing, as a slowdown in mall and web traffic during January caused a
negative change in trends in both segments. As we move through a senior
management transition, I am focusing on improving the business, including
implementing plans to reduce expenses by approximately $7 million and limit
capital expenditures, managing inventory levels to improve turns, and
partnering with our strategic advisor on a potential sale of the Alloy
business.”

Results by Segment

Retail Segment Results

Total revenue for the retail segment for the fourth quarter of fiscal 2012
decreased 2.4% to $32.8 million from $33.6 million for the fourth quarter of
fiscal 2011 due primarily to a reduction in store count. Fiscal 2012 includes
a fifty-third week and therefore the fourth quarter comparable sales are
compared to the fourteen-week period ended February 4, 2012 for the prior
year. Comparable store sales decreased 0.3% compared to the comparable period
of the prior year.

Gross margin for the retail segment, which includes distribution, occupancy
and merchandising costs, was 20.9% for the fourth quarter of fiscal 2012
compared to 20.5% in the prior year period. The increase in gross margin
resulted primarily from the leveraging of reduced occupancy costs partially
offset by increased inventory reserves.

Selling, general and administrative (SG&A) expenses for the retail segment
were $12.4 million, or 37.7% of sales, in the fourth quarter of fiscal 2012
compared to $12.8 million, or 38.0% of sales, in the prior year period. The
decrease in SG&A expenses, in dollars and as a percent of revenues, resulted
from reduced selling and depreciation expenses. Included in SG&A expenses for
the fourth quarter of fiscal 2012 were approximately $0.3 million of costs
related to the Company's CEO transition.

In the fourth quarter of fiscal 2012, the Company recorded a pre-tax non-cash
store impairment charge of $0.2 million related to an underperforming store
location. In the fourth quarter of fiscal 2011, the Company recorded a pre-tax
non-cash store impairment charge of $0.5 million related to certain
underperforming store locations.

The operating loss for the fourth quarter of fiscal 2012 for the retail
segment decreased to $5.6 million compared to $6.2 million in the prior year
period.

The Company closed three stores during the fourth quarter of fiscal 2012,
ending the period with 104 stores.

Direct Segment Results

Total revenue for the direct segment for the fourth quarter of fiscal 2012
increased 4.4% to $33.4 million from $32.0 million in the fourth quarter of
fiscal 2011. Catalog circulation increased by 1.0% compared to the fourth
quarter of fiscal 2011. Fiscal 2012 includes a fifty-third week and therefore
fourth quarter revenues consisted of a fourteen week period. The extra week in
the fourth quarter of fiscal 2012 added $1.7 million in revenues.

Gross margin for the direct segment was 41.4% for the fourth quarter of fiscal
2012 compared to 44.6% in the fourth quarter of fiscal 2011. The decrease in
gross margin resulted primarily from higher shipping and handling costs.

SG&A expenses for the direct segment were $15.4 million, or 46.2% of sales, in
the fourth quarter of fiscal 2012 compared to $13.5 million, or 42.4% of
sales, in the prior year period. The increase in SG&A expenses, in dollars and
as a percent of sales, reflects increased selling, overhead and depreciation
expenses. Included in SG&A expenses for the fourth quarter of fiscal 2012 were
approximately $0.3 million of costs related to the Company's CEO transition.

In the fourth quarter of fiscal 2012, the Company recorded a pre-tax non-cash
goodwill impairment charge of $4.5 million primarily as a result of the
performance of the Alloy business. The Company also recognized $1.2 million of
gift card breakage income in the fourth quarter of fiscal 2012 compared to
$1.6 million in the prior year period.

Operating loss for the fourth quarter of fiscal 2012 for the direct segment
was $4.8 million compared to an operating income of $2.3 million in the prior
year period. Included in the fourth quarter of fiscal 2012 was the
aforementioned goodwill impairment charge of $4.5 million, $0.3 million of
costs related to the Company's CEO transition and the gift card breakage
benefit of $1.2 million. Included in the fourth quarter of fiscal 2011 was a
$1.6 million gift card breakage benefit.

Balance Sheet Highlights

At the end of the fourth quarter of fiscal 2012, cash and cash equivalents
were $16.8 million compared with $28.4 million at the end of the fourth
quarter of fiscal 2011.

Total net inventories at the end of the fourth quarter of fiscal 2012 were
$30.5 million compared with $30.9 million at the end of the fourth quarter of
fiscal 2011. Inventory per average retail store was up 7.7% compared to the
prior year period, and inventory for the direct segment was up 0.8% compared
to the prior year.

Fiscal Year 2012 Results

For the fiscal year ended February 2, 2013, total revenue increased 2.6% to
$222.7 million from $217.2 million for the prior year period. Fiscal 2012
includes a fifty-third week and therefore the fiscal 2012 comparable sales are
compared to the fifty-three week period ended February 4, 2012 for the prior
year. Comparable store sales increased 5.2% compared to the comparable
fifty-three week period of the prior year. Revenues in the direct segment
increased 3.4% over the prior year.

Total gross margin was 32.8% compared to 31.5% for the prior year period. SG&A
expenses were $93.4 million, or 42.0% of sales, for fiscal 2012, compared to
$92.7 million, or 42.7% of sales, for the prior year period.

The operating loss for fiscal 2012 decreased to $20.8 million, compared to
$22.9 million for fiscal 2011. Included in fiscal 2012 were the pre-tax
non-cash store impairment charge of $0.2 million, $0.6 million of costs
related to the Company's CEO transition, $4.5 million of a pre-tax non-cash
goodwill impairment charge, store and customer contact center closing costs of
$1.1 million, and a gift card breakage benefit of $4.2 million. Included in
fiscal 2011 were pre-tax non-cash store impairment charges of $0.5 million and
a gift card breakage benefit of $2.0 million.

Net loss for fiscal 2012 decreased to $21.6 million, or $0.69 per diluted
share, compared to a net loss of $22.7 million, or $0.73 per diluted share,
for fiscal 2011. Included in fiscal 2012 were the aforementioned store
impairment charge of $0.2 million, or $0.01 per diluted share, CEO transition
costs of $0.6 million, or $0.02 per diluted share, goodwill impairment charge
of $4.5 million, or $0.14 per diluted share, store and customer contact center
closing costs of $1.1 million, or $0.04 per diluted share, and gift card
breakage benefit of $4.2 million, or $0.13 per diluted share. Included in
fiscal 2011 were the aforementioned store impairment charge of $0.5 million,
or $0.02 per diluted share, and a gift card breakage benefit of $2.0 million,
or $0.06 per diluted share.

The provision for income taxes for fiscal 2012 was $0.1 million, or $0.00 per
diluted share, compared to an income tax benefit of $0.8 million, or $0.03 per
diluted share, for fiscal 2011.

Retention of a Strategic Advisor

The Company has retained Janney Montgomery Scott LLC as strategic advisor to
the Board of Directors. The initial focus will be on the potential disposition
of the Company’s Alloy brand. The Board of Directors has not set a definitive
timetable for any transaction, and there can be no assurance that Janney’s
retention will result in any specific action or transaction. The Company does
not intend to disclose or comment on developments until such time as the Board
takes action, if any, or otherwise deems disclosure appropriate or required.

Update to Senior Leadership Transitions

Walter Killough has agreed to continue to serve as CEO of dELiA*s on a
month-to-month basis as the search for a permanent CEO continues.

Dyan Jozwick, President, dELiA*s Brand, has resigned from the Company
effective March 27, 2013. The Company has retained a senior merchandise
consultant with relevant experience to oversee the merchandising functions on
an interim basis.

Carter Evans, Chairman of the Board, stated, “After much consideration, the
board and Company management have decided to make a series of strategic moves,
including engaging Janney, in order to focus our efforts to strengthen the
balance sheet and better position the dELiA*s brand for long-term success. As
we enter the final stages of our CEO search, we are pleased to have Walter’s
continuing support in executing initiatives that we believe will drive
improved performance in the business and lead to a smooth transition process.
The Board would also like to thank Dyan for her dedicated service.”

Conference Call and Webcast Information

A conference call to discuss fourth quarter and year end fiscal 2012 results
is scheduled for Thursday, March 28, 2013 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 April 28, 2013 and can be accessed by dialing
(877) 870-5176 and providing the pass code number 1253048.

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 marketing to 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 press release 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.
CONSOLIDATED BALANCE SHEETS
(in thousands, except par value and share data)
(unaudited)
                                                           
                                           February 2, 2013   January 28, 2012
ASSETS
CURRENT ASSETS:
Cash and cash equivalents                  $    16,812        $    28,426
Inventories, net                                30,544             30,937
Prepaid catalog costs                           1,702              2,111
Other current assets                           5,297             3,556
                                                                   
TOTAL CURRENT ASSETS                            54,355             65,030
                                                                   
PROPERTY AND EQUIPMENT, NET                     36,797             42,588
GOODWILL                                        -                  4,462
INTANGIBLE ASSETS, NET                          2,419              2,419
OTHER ASSETS                                   921               837
TOTAL ASSETS                               $    94,492        $    115,336
                                                                   
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable                           $    31,018        $    24,199
Accrued expenses and other current              12,098             16,747
liabilities
Income taxes payable                           623               736
TOTAL CURRENT LIABILITIES                       43,739             41,682
                                                                   
DEFERRED CREDITS AND OTHER LONG-TERM           9,500             11,545
LIABILITIES
TOTAL LIABILITIES                              53,239            53,227
                                                                   
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                 32
31,919,615 and 31,726,645 shares issued
and outstanding, respectively
Additional paid-in capital                      99,942             99,244
Accumulated deficit                            (58,721)          (37,167)
TOTAL STOCKHOLDERS' EQUITY                     41,253            62,109
                                                                   
TOTAL LIABILITIES AND STOCKHOLDERS'        $    94,492        $    115,336
EQUITY

 dELiA*s, Inc.
  CONSOLIDATED STATEMENTS OF OPERATIONS
  (in thousands, except share and per share data)
  (unaudited)
                                                                   
                           For the Fiscal Quarters Ended
                           February 2,                 January 28,
                           2013                        2012
                                                                        
                                                                        
  NET REVENUES             $  66,222        100.0%     $  65,592        100.0%
  Cost of goods sold         45,554        68.8%        44,436        67.7%
                                                                        
  GROSS PROFIT               20,668        31.2%        21,156        32.3%
  Selling, general and        27,793        42.0%         26,333        40.1%
  administrative expenses
  Impairment of goodwill      4,462         6.7%          -             0.0%
  Impairment of long-lived    181           0.3%          495           0.8%
  assets
  Other operating income     (1,332)       -2.0%        (1,763)       -2.7%
  TOTAL OPERATING EXPENSES   31,104        47.0%        25,065        38.2%
  OPERATING LOSS              (10,436)      -15.8%        (3,909)       -6.0%
  Interest expense           248           0.4%         183           0.3%
  LOSS BEFORE INCOME TAXES    (10,684)      -16.1%        (4,092)       -6.2%
  (Benefit) provision for    (14)          0.0%         72            0.1%
  income taxes
  NET LOSS                 $  (10,670)      -16.1%     $  (4,164)       -6.3%
                                                                        
  BASIC AND DILUTED LOSS
  PER SHARE:
  NET LOSS PER SHARE       $  (0.34)                   $  (0.13)
                                                                        
  WEIGHTED AVERAGE BASIC
  AND DILUTED COMMON         31,397,294                 31,239,527
  SHARES OUTSTANDING

dELiA*s, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(unaudited)
                                                                   
                       For the Fiscal Years Ended
                       February 2, 2013              January 28, 2012
                                                                        
                                                                        
NET REVENUES           $   222,699        100.0%     $   217,152        100.0%
                                                                        
Cost of goods sold        149,546        67.2%         148,816        68.5%
                                                                        
GROSS PROFIT              73,153         32.8%         68,336         31.5%
Selling, general and
administrative             93,433         42.0%          92,740         42.7%
expenses
Impairment of goodwill     4,462          2.0%           -              0.0%
Impairment of              181            0.1%           495            0.2%
long-lived assets
Other operating income    (4,169)        -1.9%         (1,957)        -0.9%
TOTAL OPERATING           93,907         42.2%         91,278         42.0%
EXPENSES
OPERATING LOSS             (20,754)       -9.3%          (22,942)       -10.6%
Interest expense, net     726            0.3%          577            0.3%
LOSS BEFORE INCOME         (21,480)       -9.6%          (23,519)       -10.8%
TAXES
Provision (benefit)       74             0.0%          (849)          -0.4%
for income taxes
NET LOSS               $   (21,554)       -9.7%      $   (22,670)       -10.4%
                                                                        
BASIC AND DILUTED LOSS PER SHARE:
NET LOSS PER SHARE     $   (0.69)                    $   (0.73)
                                                                        
WEIGHTED AVERAGE BASIC
AND DILUTED COMMON        31,350,931                   31,217,185
SHARES OUTSTANDING

dELiA*s Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
                                                          
                                           For the Fiscal Years Ended
                                           February 2, 2013   January 28, 2012
                                                              
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                   $    (21,554)      $    (22,670)
Adjustments to reconcile net loss to net
cash (used in) provided by
operating activities:
Depreciation and amortization                   8,908              11,446
Amortization of deferred financing fees         180                140
Accelerated depreciation on early lease         694                -
terminations
Impairment of goodwill                          4,462              -
Impairment of long-lived assets                 181                495
Stock-based compensation                        698                734
Changes in operating assets and
liabilities:
      Inventories                               393                1,088
      Prepaid catalog costs and other           (1,597)            8,742
      assets
      Restricted cash                           -                 8,268
      Income taxes payable                      (113)              (6)
      Accounts payable, accrued expenses       675               (2,951)
      and other liabilities
                                                              
      Total adjustments                        14,481            27,956
NET CASH (USED IN) PROVIDED BY OPERATING       (7,073)           5,286
ACTIVITIES
                                                              
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures                           (4,541)           (4,015)
NET CASH USED IN INVESTING ACTIVITIES          (4,541)           (4,015)
                                                              
CASH FLOWS FROM FINANCING ACTIVITIES:
     Payments for deferred financing          -                (919)
      costs
NET CASH USED IN FINANCING ACTIVITIES          -                 (919)
                                                              
NET (DECREASE) INCREASE IN CASH AND CASH        (11,614)           352
EQUIVALENTS
CASH AND CASH EQUIVALENTS, beginning of        28,426            28,074
period
CASH AND CASH EQUIVALENTS, end of period   $    16,812        $    28,426

dELiA*s, Inc.
SELECTED OPERATING DATA
(in thousands, except number of stores)
(unaudited)
                                                         
                  For The Fiscal Quarters           For The Fiscal Years
                  Ended                             Ended
                  February         January          February      January
                  2, 2013          28, 2012         2, 2013       28, 2012
                                                                            
Channel net
revenues:
Retail            $  32,842        $  33,634        $ 125,595     $ 123,223
Direct              33,380          31,958         97,104       93,929
Total net         $  66,222        $  65,592        $ 222,699     $ 217,152
revenues
                                                                            
Comparable          (0.3%)          (3.6%)         5.2%         0.1%
store sales
                                                                            
Catalogs            12,948          12,817         36,534       38,758
mailed
                                                                            
Inventory -       $  15,633        $  16,149        $ 15,633      $ 16,149
retail
Inventory -       $  14,911        $  14,788        $ 14,911      $ 14,788
direct
                                                                            
                                                                            
Number of
stores:
Beginning            107              114             113           114
of period
Opened               -                1               1       *     4       **
Closed              3               2              10      *    5       **
End of              104             113            104          113
period
Total gross
sq. ft @          399.4            434.4            399.4         434.4
end of                                                                      
period
                                                                            
* Totals include one store that was closed and relocated to an alternative
site in the same mall during fiscal 2012.
** Totals include two stores that were closed, remodeled and reopened during
fiscal 2011, and one store that was closed and relocated to an alternative
site in the same mall during fiscal 2011.

Contact:

dELiA*s, Inc.
David Dick, Chief Financial Officer, 212-590-6200
or
ICR, Inc.
Jean Fontana, 646-277-1214
 
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