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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 second quarter of fiscal 2009. All financial results in this press release are for continuing operations unless otherwise stated.
Robert Bernard, Chief Executive Officer, commented, "As expected, sales trends continued to be challenging during the second quarter, as the consumer followed a need based buying pattern and store traffic slowed. Although our comparable store sales were slightly below our expectations, we were able to deliver increased retail merchandise margins and control our inventory levels. The later occurrence of this year's Back-to-School selling season contributed to an anticipated deferral of full price sales in our direct business, yet customers continued to respond well to our clearance offerings, driving overall increased sales and corresponding reductions in inventory levels. These favorable trends, combined with continued expense reductions, enabled us to achieve improved bottom line results."
Fiscal Second Quarter Results
Total revenue for the second quarter of fiscal 2009 increased 2.4% to $45.7 million from $44.6 million in the second quarter of fiscal 2008. Revenue from the retail segment increased 0.3% to $23.7 million, or 51.8% of total revenue. Revenue from the direct segment increased 4.9% to $22.1 million, or 48.2% of total revenue.
Total gross margin was 32.7% in the second quarter of fiscal 2009 as compared to 33.7% in the prior year quarter, reflecting 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 $21.9 million, or 47.8% of sales, for the second quarter of 2009 compared to $22.5 million, or 50.4% of sales, in the second quarter of 2008. The improvement in SG&A as a percent of sales was a result of reduced overhead costs.
Net loss for the second quarter of fiscal 2009 improved to $4.7 million, or $0.15 per diluted share, compared to a net loss of $6.6 million, or $0.21 per diluted share, for the second quarter of fiscal 2008. Income from discontinued operations for the second quarter of 2008 was $1.6 million. Net loss for the second quarter of fiscal 2008, including the results of discontinued operations, was $5.0 million, or $0.16 per diluted share.
The benefit for income taxes for the second quarter of 2009 was $2.3 million compared to the benefit for income taxes of $1.0 million for the prior year period.
Results by Segment
Retail Segment Results
Total revenue for the retail segment for the second quarter of fiscal 2009 increased 0.3% to $23.7 million from $23.6 million in the second quarter of fiscal 2008. Retail comparable store sales decreased 8.1% for the second quarter of fiscal 2009 compared to an increase of 5.2% for the second quarter of fiscal 2008. Gross margin for the retail segment, which includes distribution, occupancy and merchandising costs was 22.1% compared to 22.2% in the prior year period. Gross margin was driven by an increase in merchandise margin and improved inventory management, offset by the deleveraging of occupancy costs.
SG&A expenses for the retail segment were $11.0 million, or 46.6% of sales, in the second quarter of 2009 compared to $11.4 million, or 48.2% of sales, in the prior year period, reflecting the leveraging of reduced overhead costs. The operating loss for the second quarter for the retail segment improved to $5.8 million from $6.1 million in the prior year period.
The Company opened 6 store locations during the second quarter of fiscal 2009, including 1 relocated store, ending the period with 104 stores.
Direct Segment Results
Total revenue for the direct segment for the second quarter of fiscal 2009 increased 4.9% to $22.1 million from $21.0 million. Sales were primarily driven by increased volume as a result of incremental clearance activity. Gross margin for the direct segment was 44.1% compared to 46.7% in the second quarter, also due to the increased clearance sales.
SG&A expenses for the direct segment were $10.8 million, or 49.1% of sales, compared to $11.1 million, or 52.9% of sales, in the prior year period. The improvement in SG&A as a percentage of sales reflects the leveraging of reductions in overhead costs. The operating loss for the second quarter of fiscal 2009 for the direct segment was $1.1 million compared with a loss of $1.3 million in the prior year period.
Mr. Bernard, concluded, "Although the timing of Labor Day and shifts in some tax holidays have delayed the Back-to-School selling period in most markets, we have experienced positive year-over-year results in those districts that have reached peak selling weeks. We are cautiously optimistic that we will deliver positive Back-to-School sales results, although we await the remaining three weeks of peak selling season in some of our highest volume districts. We are pleased with our ongoing improved performance in a number of key metrics, remain focused on our strategic initiatives, and continue to believe that we will achieve break-even EBITDA for the current year."
First Six Month Results
For the six-month period ended August 1, 2009, total revenue increased 7.0% to $97.8 million from revenue of $91.5 million for the prior year period. Total gross margin was 32.5% compared to 33.6% for the prior year. SG&A expenses were $44.0 million, or 45.0% of sales, for the first six months of fiscal 2009, compared to $45.2 million, or 49.4% of sales, for the prior year period.
Net loss for the first six months of fiscal 2009 improved to $8.3 million, or $0.27 per diluted share, compared to a net loss of $12.6 million, or $0.41 per diluted share, for the first six months of fiscal 2008. Income from discontinued operations was $3.6 million for first six months of fiscal 2008. Net loss for the first six months of fiscal 2008, including the results of discontinued operations, was $8.9 million, or $0.29 per diluted share.
Conference Call and Webcast Information
A conference call to discuss second quarter 2009 results is scheduled for Thursday, August 27, 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 September 24, 2009 and can be accessed by dialing 888-286-8010 and providing the passcode 70982237.
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)
August 1, January 31, August 2,
2009 2009 2008
ASSETS (Unaudited) (Unaudited)
Current Assets:
Cash and cash equivalents $ 36,709 $ 92,512 $ 9,498
Inventories, net 36,778 33,942 32,968
Prepaid catalog costs 3,038 2,759 3,504
Deferred income taxes 2,000 2,000 -
Other current assets 10,356 5,481 6,792
Assets held for sale - - 14,721
Total current assets 88,881 136,694 67,483
Property and equipment, net 56,575 53,164 56,019
Goodwill 12,073 12,073 12,073
Intangible assets, net 2,428 2,440 2,458
Restricted cash 15,787 - -
Other assets 573 430 222
Assets held for sale - - 28,170
Total assets $ 176,317 $ 204,801 $ 166,425
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 24,870 $ 21,389 $ 24,336
Bank loan payable - - 9,380
Current portion of mortgage note payable 2,095 2,205 225
Accrued expenses and other current liabilities 29,007 28,822 30,920
Income taxes payable 545 25,243 810
Liabilities held for sale - - 330
Total current liabilities 56,517 77,659 66,001
Deferred credits and other long-term liabilities 12,297 11,813 9,544
Long-term portion of mortgage note payable - - 2,089
Total liabilities 68,814 89,472 77,634
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;
31,200,889,
31,199,889 and 31,108,981 shares issued and outstanding, respectively 31 31 31
Additional paid-in capital 98,194 97,728 97,280
Retained earnings (accumulated deficit) 9,278 17,570 (8,520)
Total stockholders' equity 107,503 115,329 88,791
Total liabilities and stockholders' equity $ 176,317 $ 204,801 $ 166,425
dELiA*s, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(unaudited)
For the Thirteen Weeks Ended
August 1, 2009 August 2, 2008
Net revenues $ 45,732 100.0 % $ 44,643 100.0 %
Cost of goods sold 30,773 67.3 % 29,583 66.3 %
Gross profit 14,959 32.7 % 15,060 33.7 %
Selling, general and administrative expenses 21,854 47.8 % 22,497 50.4 %
Operating loss (6,895 ) -15.1 % (7,437 ) -16.7 %
Interest expense, net (53 ) -0.1 % (203 ) -0.5 %
Loss from continuing operations before income taxes (6,948 ) -15.2 % (7,640 ) -17.1 %
Benefit for income taxes (2,284 ) -5.0 % (1,010 ) -2.3 %
Loss from continuing operations (4,664 ) -10.2 % (6,630 ) -14.9 %
Income from discontinued operations, net of income taxes 6 0.0 % 1,647 3.7 %
Net loss $ (4,658 ) -10.2 % $ (4,983 ) -11.2 %
Basic & diluted (loss) earnings per share:
Loss from continuing operations $ (0.15 ) $ (0.21 )
Income from discontinued operations $ 0.00 $ 0.05
Net loss $ (0.15 ) $ (0.16 )
WEIGHTED AVERAGE BASIC & DILUTED COMMON SHARES OUTSTANDING 31,035,578 30,893,358
dELiA*s, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(unaudited)
For the Twenty-Six Weeks Ended
August 1, 2009 August 2, 2008
Net revenues $ 97,829 100.0 % $ 91,461 100.0 %
Cost of goods sold 66,011 67.5 % 60,730 66.4 %
Gross profit 31,818 32.5 % 30,731 33.6 %
Selling, general and administrative expenses 44,020 45.0 % 45,186 49.4 %
Operating loss (12,202 ) -12.5 % (14,455 ) -15.8 %
Interest expense, net (44 ) 0.0 % (292 ) -0.3 %
Loss from continuing operations before for income taxes (12,246 ) -12.5 % (14,747 ) -16.1 %
Benefit for income taxes (3,948 ) -4.0 % (2,193 ) -2.4 %
Loss from continuing operations (8,298 ) -8.5 % (12,554 ) -13.7 %
Income from discontinued operations, net of income taxes 6 3,622
Net loss $ (8,292 ) $ (8,932 )
Basic & diluted (loss) earnings per share:
Loss from continuing operations $ (0.27 ) $ (0.41 )
Income from discontinued operations $ 0.00 $ 0.12
Net loss $ (0.27 ) $ (0.29 )
WEIGHTED AVERAGE BASIC & DILUTED COMMON SHARES OUTSTANDING 31,032,615 30,885,841
dELiA*s Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
For the Twenty-Six Weeks Ended
August 1, 2009 August 2, 2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (8,292 ) $ (8,932 )
Less income from discontinued operations 6 3,622
Loss from continuing operations (8,298 ) (12,554 )
Adjustments to reconcile net loss to net cash
used in operating activities of continuing operations:
Depreciation and amortization 4,877 4,218
Stock-based compensation 465 547
Changes in operating assets and liabilities:
Inventories (2,836 ) (5,545 )
Prepaid catalog costs and other assets (5,297 ) 106
Restricted cash (15,787 ) -
Income taxes payable (24,698 ) 232
Accounts payable, accrued expenses and other liabilities 2,930 4,113
Total adjustments (40,346 ) 3,671
Net cash used in operating activities of continuing operations (48,644 ) (8,883 )
Net cash provided by operating activities of discontinued operations 6 5,325
Net cash used in operating activities (48,638 ) (3,558 )
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (7,056 ) (7,622 )
Net cash used in investing activities (7,056 ) (7,622 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from bank borrowing - 9,380
Payment of mortgage note payable (110 ) (101 )
Proceeds from exercise of employee stock options 1 -
Net cash (used in) provided by financing activities (109 ) 9,279
NET DECREASE IN CASH AND CASH EQUIVALENTS (55,803 ) (1,901 )
CASH AND CASH EQUIVALENTS, beginning of period 92,512 11,399
CASH AND CASH EQUIVALENTS, end of period $ 36,709 $ 9,498
dELiA*s, Inc.
SELECTED OPERATING DATA
(in thousands, except number of stores)
(unaudited)
For The Thirteen Weeks Ended For The Twenty-Six Weeks Ended
August 1, 2009 August 2, 2008 August 1, 2009 August 2, 2008
Channel net revenues (1):
Retail $ 23,681 $ 23,621 $ 48,916 $ 46,551
Direct:
Catalog 3,774 3,562 8,493 7,885
Internet 18,277 17,460 40,420 37,025
Total direct 22,051 21,022 48,913 44,910
Total net revenues $ 45,732 $ 44,643 $ 97,829 $ 91,461
Internet % of total direct
revenues 83% 83% 83% 82%
Comparable store sales -8.1% 5.2% -3.9% 3.4%
Catalogs mailed (1) 9,163 9,326 18,493 18,967
Inventory - retail $ 20,434 $ 18,656 $ 20,434 $ 18,656
Inventory - direct (1) $ 16,344 $ 14,312 $ 16,344 $ 14,312
Number of stores:
Beginning of period 99 92 97 86
Opened 6 * 3 ** 9 * 10 **
Closed 1 * 1 ** 2 * 2 **
End of period 104 94 104 94
Total gross sq. ft @ end
of period 395.7 358.1 395.7 358.1
* Totals include one store that was closed, remodeled and reopened
in the first quarter of fiscal 2009, and one store that was closed
and relocated to an alternative site in the same mall during the
second quarter of fiscal 2009.
** Totals include one store that was closed and relocated to an
alternative site in the same mall during the first quarter of fiscal
2008, and one store that was closed and relocated to an alternative
site in the same mall during the second quarter of fiscal 2008.
(1) Restated to exclude the CCS business
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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