Retail Q3 revenues slip 30.9% at dELiA*s

dELiA*s, Inc. results for all periods presented reflect its former Alloy business as a discontinued operation. All financial results in this press release are for continuing operations only unless otherwise stated.

Third Quarter Fiscal 2013 Highlights:

-Total revenue decreased 28.9% to $33.0 million from $46.4 million in the third quarter of fiscal 2012. Revenue from the retail segment decreased 30.9% to $24.3 million, including a comparable store sales decrease of 22.9%. Revenue from the direct segment decreased 22.6% to $8.7 million.

-Consolidated gross margin was 12.9% compared to 32.8% in the prior year quarter, primarily due to increased inventory reserves and lower merchandise margins in connection with clearing legacy product, as well as the deleveraging of occupancy costs.

-Stockholders ratified the issuance of $21.8 million of convertible notes and approved the issuance of 20.7 million shares of common stock upon conversion of the notes.

-Loss from continuing operations was $19.3 million, including $3.3 million in non-cash store impairment charges and $2.9 million in non-cash charges related to the note conversion, compared to a loss from continuing operations for the third quarter of fiscal 2012 of $2.1 million.

First Nine Month Results

For the nine-month period ended November 2, 2013, total revenue decreased 20.5% to $101.3 million from $127.4 million for the prior year period. Total gross margin was 19.3% compared to 32.0% for the prior year period. SG&A expenses were $51.9 million, or 51.2% of sales, for the first nine months of fiscal 2013, compared to $54.3 million, or 42.6% of sales, for the prior year period.

The operating loss for the first nine months of fiscal 2013 increased to $35.1 million, compared to $11.7 million for the first nine months of fiscal 2012. The operating loss for the first nine months of fiscal 2013 included $3.3 million of non-cash impairment charges related to underperforming stores.

Loss from continuing operations for the first nine months of fiscal 2013 increased to $39.6 million, compared to $11.8 million for the first nine months of fiscal 2012. Included in the first nine months of fiscal 2013 is a gift card breakage benefit of $0.5 million compared to $1.7 million in the first nine months of fiscal 2012. The loss from continuing operations for the first nine months of fiscal 2013 included $3.3 million of non-cash impairment charges related to underperforming stores, and $2.9 million in non-cash charges related to the conversion of the notes payable to equity.

Interest expense for the first nine months of fiscal 2013 was $4.4 million, including $2.4 million in non-cash charges related to the conversion of the notes payable to equity, compared to $0.5 million for the first nine months of fiscal 2012.

The provision for income taxes for the first nine months of fiscal 2013 was $0.1 million, compared to an income tax benefit of $0.4 million for fiscal 2012.

dELiA