50 WEST 23RD STREET, NEW YORK, NY 10010
TELEPHONE: 212-590-6200 FAX: 212-590-6580
EXHIBIT 99.1
CONTACT: | David Dick | |
| Chief Financial Officer | ||
| 212-590-6200 | ||
| FD | ||
| Leigh Parrish, Caren Villarreal | ||
| 212-850-5600 |
dELiA*s, INC. ANNOUNCES
SECOND QUARTER 2009 RESULTS
| • | Revenue increased 2.4% to $45.7 million |
| • | Operating loss reduced by 7% |
New York, NY – August 27, 2009 – 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.
50 WEST 23RD STREET, NEW YORK, NY 10010
TELEPHONE: 212-590-6200 FAX: 212-590-6580
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.
50 WEST 23RD STREET, NEW YORK, NY 10010
TELEPHONE: 212-590-6200 FAX: 212-590-6580
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.
50 WEST 23RD STREET, NEW YORK, NY 10010
TELEPHONE: 212-590-6200 FAX: 212-590-6580
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
50 WEST 23RD STREET, NEW YORK, NY 10010
TELEPHONE: 212-590-6200 FAX: 212-590-6580
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.
50 WEST 23RD STREET, NEW YORK, NY 10010
TELEPHONE: 212-590-6200 FAX: 212-590-6580
dELiA*s, Inc.
CONSOLIDATED BALANCE SHEETS
(in thousands, except par value and share data)
| August 1, 2009 | January 31, 2009 | August 2, 2008 | ||||||||
| (Unaudited) | (Unaudited) | |||||||||
ASSETS | ||||||||||
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 | ||||
50 WEST 23RD STREET, NEW YORK, NY 10010
TELEPHONE: 212-590-6200 FAX: 212-590-6580
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 & dluted (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 | ||||||||||||
50 WEST 23RD STREET, NEW YORK, NY 10010
TELEPHONE: 212-590-6200 FAX: 212-590-6580
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 & dluted (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 | ||||||||||||
50 WEST 23RD STREET, NEW YORK, NY 10010
TELEPHONE: 212-590-6200 FAX: 212-590-6580
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 | ||||
50 WEST 23RD STREET, NEW YORK, NY 10010
TELEPHONE: 212-590-6200 FAX: 212-590-6580
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 |