Revenues up 8.9% at dELiA*s in Q2 FY'12

The Company closed three stores during the second quarter of fiscal 2012, ending the period with 109 stores.

Direct Segment Results

Total revenue for the direct segment for the second quarter of fiscal 2012 increased 9.1% to $19.6 million from $18.0 million in the second quarter of fiscal 2011.

Gross margin for the direct segment was 44.0% for the second quarter of fiscal 2012 compared to 43.1% in the second quarter of fiscal 2011. The increase in gross margin resulted primarily from higher merchandise margins partially offset by higher shipping and handling costs.

SG&A expenses for the direct segment were $10.2 million, or 52.3% of sales, in the second quarter of fiscal 2012 compared to $9.6 million, or 53.6% of sales, in the prior year period. The increase in SG&A expenses in dollars resulted primarily from costs related to the closing of our customer contact center and additional investments in web-based marketing. The decrease in SG&A expenses as a percent of sales reflects the leveraging of selling and depreciation expenses on higher sales.

Operating loss for the second quarter of fiscal 2012 for the direct segment was $1.3 million as compared to $1.9 million in the prior year period. Included in the second quarter of fiscal 2012 was incremental gift card breakage income of $0.3 million, and the aforementioned costs related to the closing of our customer contact center of $0.3 million.

Balance Sheet Highlights

At the end of the second quarter of fiscal 2012, cash and cash equivalents were $11.7 million compared with $22.2 million at the end of the second quarter of fiscal 2011.

Total net inventories at the end of the second quarter of fiscal 2012 were $38.0 million compared with $39.9 million at the end of the second quarter of fiscal 2011. Inventory per average retail store was down 2.1% compared to the prior year period, and inventory for the direct segment was down 1.1% compared to the prior year.

First Six Month Results

For the six-month period ended July 28, 2012, total revenue increased 7.8% to $100.8 million from $93.5 million for the prior year period. Total gross margin was 33.3% compared to 30.4% for the prior year period. SG&A expenses were $43.1 million, or 42.7% of sales, for the first six months of fiscal 2012, compared to $43.3 million, or 46.3% of sales, for the prior year period.

The operating loss for the first six months of fiscal 2012 decreased to $8.5 million, compared to $14.8 million for the first six months of fiscal 2011.

Net loss for the first six months of fiscal 2012 decreased to $8.9 million, or $0.28 per diluted share, compared to a net loss of $14.1 million, or $0.45 per diluted share, for the first six months of fiscal 2011. Included in the first six months of fiscal 2012 is gift card breakage of $1.0 million, or $0.03 per diluted share, compared to $0.1 million, or $0.00 per diluted share, in first six months of fiscal 2011.

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 $0.9 million, or $0.03 per diluted share, for fiscal 2011.

dELiA*s, Inc. is a multi-channel 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 and footwear to consumers through direct mail catalogs, websites, and dELiA*s mall-based retail stores.

dELiA*s Inc