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--Net loss from continuing operations reduced by 39%
dELiA*s, Inc. (NASDAQ: DLIA), a direct marketing and retail company comprised of two lifestyle brands primarily targeting teenage girls and young women, today announced the results for its first quarter of fiscal 2009. All financial results in this press release are for continuing operations unless otherwise stated.
Robert Bernard, Chief Executive Officer, commented, "Our business experienced continued positive momentum as we entered the new fiscal year with double-digit sales growth in both our retail and direct segments. In light of the current environment, we were pleased with our comparable store sales performance and improved merchandise margin in the retail business. Our careful edit of our dELiA*s brand, along with our emphasis on outfitting, continues to resonate well with our core teenage customer. In addition, we are encouraged by the improvement in top-line results in our direct business, driven by both full price and clearance sales."
Fiscal First Quarter Results
Total revenue for the first quarter of fiscal 2009 increased 11.3% to $52.1 million from $46.8 million in the first quarter of fiscal 2008. Revenue from the retail segment increased 10.0% to $25.2 million, or 48.4% of total revenue. Revenue from the direct segment increased 12.5% to $26.9 million, or 51.6% of total revenue.
Total gross margin was 32.4% in the first quarter of fiscal 2009 as compared to 33.5% in the prior year quarter, which reflects increased clearance sales in the direct segment partially offset by an improvement in merchandise margin in the retail segment.
Selling, general and administrative (SG&A) expenses were $22.2 million, or 42.5% of sales, for the first quarter of 2009 compared to $22.7 million, or 48.5% of sales, in the first quarter of 2008. The improvement in SG&A expenses as a percentage of sales reflects the leveraging of selling expenses on higher sales in both the retail and direct segments, and reductions in overhead costs.
Results for the first quarter of 2009 reflect approximately $1.7 million of cost reductions related to the Company's recent restructuring process.
Net loss for the first quarter of fiscal 2009 improved to $3.6 million, or $0.12 per diluted share, compared to a net loss of $5.9 million, or $0.19 per diluted share, for the first quarter of fiscal 2008. Income from discontinued operations for the first quarter of 2008 was $2.0 million. Net loss for the first quarter of fiscal 2008, including the results of discontinued operations, was $3.9 million, or $0.13 per diluted share.
In addition, the Company paid approximately $23.7 million in income taxes for fiscal 2008 during the quarter, primarily related to the gain on the sale of CCS.
Results by Segment
Retail Segment Results
Total revenue for the retail segment for the first quarter of fiscal 2009 increased 10.0% to $25.2 million from $22.9 million in the first quarter of fiscal 2008. Retail comparable store sales increased 0.2% for the first quarter compared to an increase of 1.7% for the first quarter of fiscal 2008. Gross margin for the retail segment, which includes distribution, occupancy and merchandising costs, increased to 22.3% from 21.4% in the prior year period. The increase in retail segment gross margin was driven by improved merchandise margins.
SG&A expenses for the retail segment were $10.5 million, or 41.8% of sales, in the first quarter of 2009 compared to $10.7 million, or 46.7% of sales, in the prior year period, reflecting the leveraging of store selling expenses on higher sales and reductions in overhead costs. The operating loss for the first quarter for the retail segment improved to $4.9 million from $5.8 million in the prior year period.
The Company opened three store locations during the first quarter of fiscal 2009, including one relocated store, ending the period with 99 stores.
Direct Segment Results
Total revenue for the direct segment for the first quarter of fiscal 2009 increased 12.5% to $26.9 million from $23.9 million. Sales were driven by increased volume as a result of higher clearance activity following the fourth quarter holiday sales period, as well as increases in full price spring selling. Gross margin for the direct segment was 41.8% compared to 45.1% in the first quarter of the prior year due to increased clearance. SG&A expenses for the direct segment were $11.6 million, or 43.3% of sales, compared to $12.0 million, or 50.1% of sales, in the prior year period. The significant improvement in SG&A as a percentage of sales reflects the leveraging of catalog expenses on higher sales and reductions in overhead costs. The operating loss for the first quarter for the direct segment was $0.4 million compared with a loss of $1.2 million in the prior year period.
Robert Bernard, Chief Executive Officer, commented, "We are pleased with the improvement in sales trends and traffic that we experienced in April with the Easter and Spring Break shift. That said, as we enter the second quarter we are finding that traffic has slowed, and we expect sales trends to be challenging until the beginning of the Back to School selling season. However, we are confident in our merchandise assortment and comfortable with our retail inventory and believe we will be able to drive increased margins. We continue to be optimistic about our prospects for the year and we remain on track with our expectations to achieve break-even EBITDA for fiscal 2009. Over the long-term, we will remain focused on maximizing our growth opportunities and realizing the full potential of our dELiA*s and Alloy brands as we continue to provide an exciting and distinctive offering to our core customer."
Supplemental Disclosures
Additional comparable historical information for the years ended January 31, 2009, February 2, 2008 and February 3, 2007 is provided in the attached tables in order to reflect the Company's former CCS business as discontinued operations.
Conference Call and Webcast Information
A conference call to discuss first quarter 2009 results is scheduled for Thursday, May 28, 2009 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 June 28, 2009 and can be accessed by dialing 888-286-8010 and providing the passcode 89636081.
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 direct marketing and 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, footwear and room furnishings to consumers through direct mail catalogs, websites, and dELiA*s mall-based specialty 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.
CONSOLIDATED BALANCE SHEETS
(in thousands, except par value and share data)
May 2, 2009 January 31, 2009 May 3, 2008
ASSETS (unaudited) (unaudited)
Current Assets:
Cash and cash equivalents $ 51,690 $ 92,512 $ 8,343
Restricted cash 9,350 - -
Inventories, net 29,082 33,942 25,797
Prepaid catalog costs 2,024 2,759 2,906
Deferred income taxes 2,000 2,000 -
Other current assets 7,719 5,481 7,278
Assets held for sale - - 13,055
Total current assets 101,865 136,694 57,379
Property and equipment, net 54,282 53,164 55,990
Goodwill 12,073 12,073 12,073
Intangible assets, net 2,434 2,440 2,478
Other assets 406 430 276
Assets held for sale - - 28,170
Total assets $ 171,060 $ 204,801 $ 156,366
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 14,414 $ 21,389 $ 19,368
Bank loan payable - - 1,858
Current portion of mortgage note payable 2,150 2,205 213
Accrued expenses and other current liabilities 28,862 28,822 28,726
Income taxes payable 1,554 25,243 690
Liabilities held for sale - - 330
Total current liabilities 46,980 77,659 51,185
Deferred credits and other long-term liabilities 12,158 11,813 9,530
Long-term portion of mortgage note payable - - 2,155
Total liabilities 59,138 89,472 62,870
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; 31 31 31
31,199,889, 31,199,889 and 31,026,473 shares issued and outstanding,
respectively
Additional paid-in capital 97,955 97,728 97,003
Retained earnings (accumulated deficit) 13,936 17,570 (3,538 )
Total stockholders' equity 111,922 115,329 93,496
Total liabilities and stockholders' equity $ 171,060 $ 204,801 $ 156,366
dELiA*s, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(unaudited)
For the Thirteen Weeks Ended
May 2, 2009 May 3, 2008
Net revenues $ 52,097 100.0 % $ 46,818 100.0 %
Cost of goods sold 35,238 67.6 % 31,147 66.5 %
Gross profit 16,859 32.4 % 15,671 33.5 %
Selling, general and administrative expenses 22,166 42.5 % 22,689 48.5 %
Operating loss (5,307 ) -10.2 % (7,018 ) -15.0 %
Interest income (expense), net 9 0.0 % (89 ) -0.2 %
Loss from continuing operations before income taxes (5,298 ) -10.2 % (7,107 ) -15.2 %
Benefit for income taxes (1,664 ) -3.2 % (1,183 ) -2.5 %
Loss from continuing operations (3,634 ) -7.0 % (5,924 ) -12.7 %
Income from discontinued operations, net of income taxes - 0.0 % 1,975 4.2 %
Net loss $ (3,634 ) -7.0 % $ (3,949 ) -8.4 %
Basic & diluted (loss) earnings per share:
Loss from continuing operations $ (0.12 ) $ (0.19 )
Income from discontinued operations $ - $ 0.06
Net loss $ (0.12 ) $ (0.13 )
WEIGHTED AVERAGE BASIC AND DILUTED COMMON SHARES OUTSTANDING 31,029,651 30,878,134
dELiA*s Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
For the Thirteen Weeks Ended
May 2, 2009 May 3, 2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (3,634 ) $ (3,949 )
Less income from discontinued operations - 1,975
Loss from continuing operations (3,634 ) (5,924 )
Adjustments to reconcile net loss to net cash used in operating
activities of continuing operations:
Depreciation and amortization 2,408 2,071
Stock-based compensation 227 270
Changes in operating assets and liabilities:
Restricted cash (9,350 ) -
Inventories 4,860 1,626
Prepaid catalog costs and other assets (1,479 ) 164
Income taxes payable (23,689 ) 112
Accounts payable, accrued expenses and other liabilities (8,003 ) (3,895 )
Total adjustments (35,026 ) 348
Net cash used in operating activities of continuing operations (38,660 ) (5,576 )
Net cash provided by operating activities of discontinued - 5,344
operations
Net cash used in operating activities (38,660 ) (232 )
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (2,107 ) (4,635 )
Net cash used in investing activities (2,107 ) (4,635 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of mortgage note payable (55 ) (47 )
Net borrowings under line of credit agreement - 1,858
Net cash (used in) provided by financing activities (55 ) 1,811
NET DECREASE IN CASH AND CASH EQUIVALENTS (40,822 ) (3,056 )
CASH AND CASH EQUIVALENTS, beginning of period 92,512 11,399
CASH AND CASH EQUIVALENTS, end of period $ 51,690 $ 8,343
dELiA*s, Inc.
SELECTED OPERATING DATA
(in thousands, except number of stores)
(unaudited)
For The Thirteen Weeks Ended
May 2, 2009 May 3, 2008
Channel net revenues (1):
Retail $ 25,234 $ 22,930
Direct:
Catalog 4,720 4,323
Internet 22,143 19,565
Total direct 26,863 23,888
Total net revenues $ 52,097 $ 46,818
Internet % of total direct revenues 82% 82%
Comparable store sales 0.2% 1.7%
Catalogs mailed (1) 9,330 9,641
Inventory - retail $ 13,257 $ 13,208
Inventory - direct (1) $ 15,839 $ 12,589
Number of stores:
Beginning of period 97 86
Opened 3 ** 7 *
Closed 1 ** 1 *
End of period 99 92
Total gross sq. ft @ end of period 378.1 349.5
* Totals include one store that was closed and relocated to an
alternative site in the same mall during the first quarter of fiscal
2008.
** Totals include one store that was closed, remodeled and reopened
in the first quarter of fiscal 2009.
(1) Restated to exclude the CCS business
dELiA*s, Inc.
SUPPLEMENTAL FINANCIAL DATA
(in thousands)
(unaudited)
First Quarter Ended
2008 2007 2006
Net Sales - Continuing
Retail $ 22,930 $ 19,678 $ 14,738
Direct 23,888 23,075 23,815
Total Continuing $ 46,818 $ 42,753 $ 38,553
Gross Margin - Continuing
Retail $ 4,908 $ 3,910 $ 3,489
Direct 10,763 10,797 11,113
Total Continuing $ 15,671 $ 14,707 $ 14,602
Selling, general and administrative expenses - Continuing
Retail $ 10,761 $ 9,199 $ 7,022
Direct 11,928 11,696 11,438
Total Continuing $ 22,689 $ 20,895 $ 18,460
Income tax (benefit) provision
Continuing operations $ (1,183 ) $ (1,044 ) $ (1,401 )
Discontinued operations 1,278 1,064 1,321
Total $ 95 $ 20 $ (80 )
Net (loss) income
Continuing operations $ (5,924 ) $ (4,935 ) $ (2,409 )
Discontinued operations 1,975 1,670 1,189
Total $ (3,949 ) $ (3,265 ) $ (1,220 )
Earnings per share:
Continuing operations - basic and diluted $ (0.19 ) $ (0.16 ) $ (0.10 )
Discontinued operations - basic and diluted 0.06 0.05 0.05
Total - basic and diluted $ (0.13 ) $ (0.11 ) $ (0.05 )
Weighted average shares outstanding - basic and diluted 30,878,134 30,778,033 25,636,187
dELiA*s, Inc.
SUPPLEMENTAL FINANCIAL DATA
(in thousands)
(unaudited)
Second Quarter Ended
2008 2007 2006
Net Sales - Continuing
Retail $ 23,621 $ 19,365 $ 14,960
Direct 21,022 20,297 22,299
Total Continuing $ 44,643 $ 39,662 $ 37,259
Gross Margin - Continuing
Retail $ 5,246 $ 3,594 $ 2,986
Direct 9,814 9,278 10,221
Total Continuing $ 15,060 $ 12,872 $ 13,207
Selling, general and administrative expenses - Continuing
Retail $ 11,379 $ 9,933 $ 7,831
Direct 11,118 10,735 10,838
Total Continuing $ 22,497 $ 20,668 $ 18,669
Income tax (benefit) provision
Continuing operations $ (1,010 ) $ (1,110 ) $ (1,995 )
Discontinued operations 1,073 965 1,752
Total $ 63 $ (145 ) $ (243 )
Net (loss) income
Continuing operations $ (6,630 ) $ (6,608 ) $ (3,358 )
Discontinued operations 1,647 1,520 229
Total $ (4,983 ) $ (5,088 ) $ (3,129 )
Earnings per share:
Continuing operations - basic and diluted $ (0.21 ) $ (0.21 ) $ (0.13 )
Discontinued operations - basic and diluted 0.05 0.05 0.01
Total - basic and diluted $ (0.16 ) $ (0.16 ) $ (0.12 )
Weighted average shares outstanding - basic and diluted 30,893,358 30,845,214 26,374,270
dELiA*s, Inc.
SUPPLEMENTAL FINANCIAL DATA
(in thousands)
(unaudited)
Third Quarter Ended
2008 2007 2006
Net Sales - Continuing
Retail $ 32,569 $ 27,282 $ 25,861
Direct 24,377 24,735 24,475
Total Continuing $ 56,946 $ 52,017 $ 50,336
Gross Margin - Continuing
Retail $ 9,761 $ 7,395 $ 8,472
Direct 11,290 11,621 12,214
Total Continuing $ 21,051 $ 19,016 $ 20,686
Selling, general and administrative expenses - Continuing
Retail $ 11,566 $ 10,880 $ 8,889
Direct 12,269 12,558 12,450
Total Continuing $ 23,835 $ 23,438 $ 21,339
Income tax (benefit) provision
Continuing operations $ (4,377 ) $ (1,735 ) $ (213 )
Discontinued operations 1,587 1,827 457
Total $ (2,790 ) $ 92 $ 244
Net (loss) income
Continuing operations $ 810 $ (2,856 ) $ (524 )
Discontinued operations 2,708 2,868 3,793
Total $ 3,518 $ 12 $ 3,269
Earnings per share:
Basic:
Continuing operations - basic $ 0.03 $ (0.09 ) $ (0.02 )
Discontinued operations - basic 0.08 0.09 0.14
Total - basic $ 0.11 $ 0.00 $ 0.12
Weighted average shares outstanding - basic 31,108,981 30,858,372 27,604,578
Diluted:
Continuing operations - diluted $ 0.03 $ (0.09 ) $ (0.02 )
Discontinued operations - diluted 0.08 0.09 0.14
Total - diluted $ 0.11 $ 0.00 $ 0.12
Weighted average shares outstanding - diluted 31,128,163 30,858,372 27,604,578
dELiA*s, Inc.
SUPPLEMENTAL FINANCIAL DATA
(in thousands)
(unaudited)
Fourth Quarter Ended
2008 2007 2006
Net Sales - Continuing
Retail $ 33,942 $ 31,744 $ 28,535
Direct 33,271 35,381 36,863
Total Continuing 67,213 $ 67,125 $ 65,398
Gross Margin - Continuing
Retail 8,823 $ 8,327 $ 7,582
Direct 16,386 17,594 18,677
Total Continuing 25,209 $ 25,921 $ 26,259
Selling, general and administrative expenses - Continuing
Retail 12,039 $ 12,073 $ 9,809
Direct 14,500 13,935 15,456
Total Continuing 26,539 $ 26,008 $ 25,265
Income tax (benefit) provision
Continuing operations (304 ) $ (2,275 ) $ 396
Discontinued operations 25,567 2,520 215
Total 25,263 $ 245 $ 611
Net (loss) income
Continuing operations (873 ) $ 2,065 $ 730
Discontinued operations 23,446 3,941 6,104
Total 22,573 $ 6,006 $ 6,834
Earnings per share:
Basic:
Continuing operations - basic $ (0.03 ) $ 0.07 $ 0.02
Discontinued operations - basic 0.76 0.12 0.21
Total - basic $ 0.73 $ 0.19 $ 0.23
Weighted average shares outstanding - basic 31,003,988 30,857,581 30,293,755
Diluted:
Continuing operations - diluted $ (0.03 ) $ 0.07 $ 0.02
Discontinued operations - diluted 0.76 0.12 0.19
Total - diluted $ 0.73 $ 0.19 $ 0.21
Weighted average shares outstanding - diluted 31,003,988 30,961,350 32,116,107
dELiA*s, Inc.
SUPPLEMENTAL FINANCIAL DATA
(in thousands)
(unaudited)
Year Ended
2008 2007 2006
Net Sales - Continuing
Retail $ 113,063 $ 98,069 $ 84,094
Direct $ 102,557 $ 103,488 $ 107,452
Total Continuing $ 215,620 $ 201,557 $ 191,546
Gross Margin - Continuing
Retail $ 28,738 $ 23,226 $ 22,529
Direct $ 48,253 $ 49,290 $ 52,225
Total Continuing $ 76,991 $ 72,516 $ 74,754
Selling, general and administrative expenses - Continuing
Retail $ 45,745 $ 42,085 $ 33,551
Direct $ 49,815 $ 48,924 $ 50,182
Total Continuing $ 95,560 $ 91,009 $ 83,733
Income tax (benefit) provision
Continuing operations $ (6,874 ) $ (6,164 ) $ (3,213 )
Discontinued operations $ 29,505 $ 6,376 $ 3,745
Total $ 22,631 $ 212 $ 532
Net (loss) income
Continuing operations $ (12,617 ) $ (12,334 ) $ (5,561 )
Discontinued operations $ 29,776 $ 9,999 $ 11,315
Total $ 17,159 $ (2,335 ) $ 5,754
Earnings per share:
Continuing operations - basic and diluted $ (0.41 ) $ (0.40 ) $ (0.20 )
Discontinued operations - basic and diluted 0.96 0.32 0.41
Total - basic and diluted $ 0.55 $ (0.08 ) $ 0.21
Weighted average shares outstanding - basic an diluted 30,942,877 30,834,884 27,545,738
SOURCE: dELiA*s, Inc.
dELiA*s, Inc. David Dick, 212-590-6200 Chief Financial Officer OR FD Leigh Parrish/Caren Villarreal, 212-850-5600
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