Revenues dip 4% at retailer dELiA*s in Q3 FY'12

The Company closed two stores during the third quarter of fiscal 2012, ending the period with 107 stores.

Direct Segment Results

Total revenue for the direct segment for the third quarter of fiscal 2012 decreased 6.1% to $20.6 million from $21.9 million in the third quarter of fiscal 2011. Catalog circulation was reduced by 14.4% compared to the third quarter of fiscal 2011.

Gross margin for the direct segment was 41.2% for the third quarter of fiscal 2012 compared to 42.7% in the third quarter of fiscal 2011. The decrease in gross margin resulted primarily from higher shipping and handling costs partially offset by higher merchandise margins.

SG&A expenses for the direct segment were $10.9 million, or 53.2% of sales, in the third quarter of fiscal 2012 compared to $10.9 million, or 50.0% 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.

Operating loss for the third quarter of fiscal 2012 for the direct segment was $0.8 million as compared to $1.5 million in the prior year period. Included in the third quarter of fiscal 2012 was incremental gift card breakage income of $1.6 million.

Balance Sheet Highlights

At the end of the third quarter of fiscal 2012, cash and cash equivalents were $5.9 million compared with $15.8 million at the end of the third quarter of fiscal 2011.

Total net inventories at the end of the third quarter of fiscal 2012 were $38.8 million compared with $41.7 million at the end of the third quarter of fiscal 2011. Inventory per average retail store was down 11.2% compared to the prior year period, and inventory for the direct segment was up 2.6% compared to the prior year.

First Nine Month Results

For the nine-month period ended October 27, 2012, total revenue increased 3.2% to $156.5 million from $151.6 million for the prior year period. Total gross margin was 33.5% compared to 31.1% for the prior year period. SG&A expenses were $65.6 million, or 41.9% of sales, for the first nine months of fiscal 2012, compared to $66.4 million, or 43.8% of sales, for the prior year period.

The operating loss for the first nine months of fiscal 2012 decreased to $10.3 million, compared to $19.0 million for the first nine months of fiscal 2011.

Net loss for the first nine months of fiscal 2012 decreased to $10.9 million, or $0.35 per diluted share, compared to a net loss of $18.5 million, or $0.59 per diluted share, for the first nine months of fiscal 2011. Included in the first nine months of fiscal 2012 is gift card breakage of $2.8 million, or $0.09 per diluted share, compared to $0.2 million, or $0.01 per diluted share, in first nine months of fiscal 2011.

The provision for income taxes for first nine months of 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 first nine months of fiscal 2011.

dELiA*s Inc