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dELiA*s, Inc. Announces First Quarter 2013 Results

  dELiA*s, Inc. Announces First Quarter 2013 Results

Business Wire

NEW YORK -- May 30, 2013

dELiA*s, Inc. (NASDAQ: DLIA), a multi-channel retail company primarily
marketing to teenage girls, today announced the results for its first quarter
of fiscal 2013.

dELiA*s, Inc. results for the first quarter of 2013 reflect its Alloy business
as a discontinued operation for all periods presented. As previously
disclosed, the Company has retained Janney Montgomery Scott LLC to assist in
the potential disposition of the Alloy brand. All financial results in this
press release are for continuing operations only unless otherwise stated.

First Quarter Fiscal 2013 Highlights:

  *Total revenue decreased 14.6% to $35.2 million from $41.2 million in the
    first quarter of fiscal 2012. Revenue from the retail segment decreased
    14.4% to $24.7 million, including a comparable store sales decrease of
    7.1% and an 8% reduction in store count. Revenue from the direct segment
    decreased 15.3% to $10.5 million.
  *Consolidated gross margin was 23.8% compared to 31.6% in the prior year
    quarter, primarily due to increased inventory reserves, as well as lower
    merchandise margins in the retail segment.
  *Loss from continuing operations was $9.2 million compared to a loss from
    continuing operations for the first quarter of fiscal 2012 of $4.3
    million. Overhead expenses previously allocated to the Alloy business have
    now been reallocated to continuing operations for both fiscal 2013 and
    2012. These costs were approximately $1.5 million for the first quarter of
    fiscal 2013.

Walter Killough commented, “We were disappointed with our first quarter
performance, which we believe was the result of product offerings that did not
align with our customers’ preferences coupled with a challenging retail
environment underpinned by unseasonable weather. We have taken aggressive
action to work through our current inventory and began to make adjustments to
our product offerings which have already yielded improved results. With the
potential disposition of Alloy, we are currently evaluating our cost structure
in order to right-size the business.”

Results by Segment

Retail Segment Results

Total revenue for the retail segment for the first quarter of fiscal 2013
decreased 14.4% to $24.7 million from $28.9 million in the first quarter of
fiscal 2012. This decrease was due to an 8% reduction in store count, and a
comparable store sales decrease of 7.1%. Comparable store sales for the first
quarter of fiscal 2012 increased by 7.3%.

Gross margin for the retail segment, which includes distribution, occupancy
and merchandising costs, was 16.5% for the first quarter of fiscal 2013
compared to 26.4% in the prior year period. Gross margin decreased
approximately 740 basis points as a result of increased markdown and other
inventory reserves in connection with underperforming inventory. The decrease
was also driven by a 190 basis point reduction in merchandise margins related
to increased markdowns, as well as the deleveraging of occupancy costs.

Selling, general and administrative (SG&A) expenses for the retail segment
were $11.1 million, or 45.1% of sales, in the first quarter of fiscal 2013
compared to $11.3 million, or 39.1% 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. Included in overhead expenses for
fiscal 2013 were approximately $0.3 million in costs related to the Company’s
recent management transitions.

The operating loss for the first quarter of fiscal 2013 for the retail segment
was $7.0 million compared to $3.6 million in the prior year period.

The Company relocated one store location and closed one store location during
the first quarter of fiscal 2013, ending the period with 103 stores.

Direct Segment Results

Total revenue for the direct segment for the first quarter of fiscal 2013
decreased 15.3% to $10.5 million from $12.4 million in the first quarter of
fiscal 2012.

Gross margin for the direct segment was 41.1% for the first quarter of fiscal
2013 compared to 43.7% in the first quarter of fiscal 2012. The decrease in
gross margin resulted primarily from increased inventory reserves and higher
shipping and handling costs, partially offset by a 110 basis point improvement
in merchandise margins.

SG&A expenses for the direct segment were $6.4 million, or 60.8% of sales, in
the first quarter of fiscal 2013 compared to $6.4 million, or 51.9% 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.
Included in overhead expenses for fiscal 2013 were approximately $0.3 million
in costs related to the Company’s recent management transitions.

Operating loss for the first quarter of fiscal 2013 for the direct segment was
$2.0 million as compared to $0.9 million in the prior year period.

Balance Sheet Highlights

At the end of the first quarter of fiscal 2013, cash and cash equivalents were
$3.6 million compared with $16.6 million at the end of the first quarter of
fiscal 2012.

Total net inventories at the end of the first quarter of fiscal 2013 were
$26.1 million compared with $25.3 million at the end of the first quarter of
fiscal 2012. Inventory per average retail store was up 9.0% compared to the
prior year period, and inventory for the direct segment was up 20.3% compared
to the prior year. In the first quarter of fiscal 2013, the Company recorded
additional inventory reserves related to $1.6 million of product removed from
the retail channel subsequent to quarter end.

Conference Call and Webcast Information

A conference call to discuss first quarter 2013 results is scheduled for
Thursday, May 30, 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
through June 30, 2013 and can be accessed by dialing (877) 870-5176 and
providing the pass code number 6369891.

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 primarily marketing to teenage
girls. It generates revenue by selling apparel, accessories and footwear to
consumers through direct mail catalogs, websites, and 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)
                                                        
                                            May 4, 2013       April 28, 2012
ASSETS
CURRENT ASSETS:
Cash and cash equivalents                   $ 3,643           $  16,634
Inventories, net                              26,119             25,293
Prepaid catalog costs                         1,565              1,047
Deferred income taxes                         -                  -
Other current assets                          5,596              3,494
Assets held for sale                         6,094            6,224    
                                                                             
TOTAL CURRENT ASSETS                          43,017             52,692
                                                                             
PROPERTY AND EQUIPMENT, NET                   34,988             41,471
GOODWILL                                      -                  4,462
INTANGIBLE ASSETS, NET                        2,419              2,419
OTHER ASSETS                                  968                822
ASSETS HELD FOR SALE                         657              -        
TOTAL ASSETS                                $ 82,049         $  101,866  
                                                                             
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable                            $ 21,927          $  15,603
Bank loan payable                             1,550              -
Accrued expenses and other current            11,703             12,160
liabilities
Income taxes payable                          666                788
Liabilities held for sale                    4,552            3,538    
TOTAL CURRENT LIABILITIES                     40,398             32,089
                                                                             
DEFERRED CREDITS AND OTHER LONG-TERM         9,455            11,155   
LIABILITIES
TOTAL LIABILITIES                            49,853           43,244   
                                                                             
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; 32,789,615 and 31,726,645
shares issued
and outstanding, respectively                 33                 32
Additional paid-in capital                    100,099            99,431
Accumulated deficit                          (67,936 )         (40,841  )
TOTAL STOCKHOLDERS' EQUITY                   32,196           58,622   
                                                                             
TOTAL LIABILITIES AND STOCKHOLDERS'         $ 82,049         $  101,866  
EQUITY

                                                                             
                                                                             
dELiA*s, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(unaudited)
                                                              
                         For the Thirteen Weeks Ended
                         May 4, 2013                April 28, 2012
                                                                             
NET REVENUES             $ 35,177         100.0 %   $ 41,214         100.0 %
Cost of goods sold        26,811        76.2  %    28,194        68.4  %
                                                                             
GROSS PROFIT              8,366         23.8  %    13,020        31.6  %
Selling, general
and administrative         17,492         49.7  %     17,688         42.9  %
expenses
Other operating           (146       )   -0.4  %    (208       )   -0.5  %
income
TOTAL OPERATING           17,346        49.3  %    17,480        42.4  %
EXPENSES
OPERATING LOSS             (8,980     )   -25.5 %     (4,460     )   -10.8 %
Interest expense          185           0.5   %    153           0.4   %
LOSS FROM
CONTINUING                 (9,165     )   -26.1 %     (4,613     )   -11.2 %
OPERATIONS BEFORE
INCOME TAXES
Provision
(benefit) for             28            0.1   %    (294       )   -0.7  %
income taxes
LOSS FROM
CONTINUING                 (9,193     )   -26.1 %     (4,319     )   -10.5 %
OPERATIONS
(LOSS) INCOME FROM
DISCONTINUED              (22        )   -0.1  %    645           1.6   %
OPERATIONS, NET OF
TAX
NET LOSS                 $ (9,215     )   -26.2 %   $ (3,674     )   -8.9  %
                                                                             
BASIC AND DILUTED
LOSS PER SHARE:
LOSS FROM
CONTINUING               $ (0.29      )             $ (0.14      )
OPERATIONS
(LOSS) INCOME FROM
DISCONTINUED             $ (0.00      )             $ 0.02       
OPERATIONS
NET LOSS PER SHARE       $ (0.29      )             $ (0.12      )
                                                                             
WEIGHTED AVERAGE
BASIC AND DILUTED         31,491,074               31,320,254 
COMMON SHARES
OUTSTANDING

                                                        
                                                                             
dELiA*s Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
                                                                             
                                              For the Thirteen Weeks Ended
                                              May 4, 2013     April 28, 2012
                                                                             
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                      $ (9,193  )     $  (4,319   )
Loss (income) from discontinued                (22     )       645      
operations
Loss from continuing operations                 (9,215  )        (3,674   )
Adjustments to reconcile net loss to
net cash used in
operating activities of continuing
operations:
Depreciation and amortization                   2,484            2,336
Deferred financing fees                         45               45
Stock-based compensation                        151              181
Changes in operating assets and
liabilities:
Inventories                                     (1,279  )        (568     )
Prepaid catalog costs and other assets          (1,359  )        (316     )
Income taxes payable                            43               52
Accounts payable, accrued expenses and         (5,323  )       (8,194   )
other liabilities
                                                                             
Total adjustments                              (5,238  )       (6,464   )
Net cash used in operating activities           (14,453 )        (10,138  )
of continuing operations
Net cash provided by (used in)
operating activities of discontinued           140            (251     )
operations
NET CASH USED IN OPERATING ACTIVITIES          (14,313 )       (10,389  )
                                                                             
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures                           (406    )       (1,403   )
NET CASH USED IN INVESTING ACTIVITIES          (406    )       (1,403   )
                                                                             
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from bank borrowings                  1,550          -        
NET CASH PROVIDED BY FINANCING                 1,550          -        
ACTIVITIES
                                                                             
NET DECREASE IN CASH AND CASH                   (13,169 )        (11,792  )
EQUIVALENTS
CASH AND CASH EQUIVALENTS, beginning of        16,812         28,426   
period
CASH AND CASH EQUIVALENTS, end of             $ 3,643        $  16,634   
period



dELiA*s, Inc.
SELECTED OPERATING DATA
(in thousands, except number of stores)
(unaudited)
                                                     
                                           For The Thirteen Weeks Ended
                                           May 4, 2013     April 28, 2012
                                                                          
Channel net revenues:
Retail                                     $  24,713       $   28,862
Direct (1)                                   10,464         12,352  
Total net revenues                         $  35,177      $   41,214  
                                                                          
Comparable store sales                       (7.1%  )        7.3     %
                                                                          
Catalogs mailed (1)                          4,912          3,864   
                                                                          
Inventory - retail                         $  16,058      $   16,931  
Inventory - direct (1)                     $  10,061      $   8,362   
                                                                          
                                                                          
Number of stores:
Beginning of period                           104              113
Opened                                        1        *       1          **
Closed                                       2       *      2         **
End of period                                103            112     
                                                                          
Total gross sq. ft @ end of period           397.7          429.6   
                                                                          


* Totals include one store that was closed and relocated to an alternative
site in the same mall during the first quarter of fiscal 2013.

** Totals include one store that was closed and relocated to an alternative
site in the same mall during the first quarter of fiscal 2012.

(1) Restated to exclude the Alloy business


Contact:

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