Revenue from continuing operations up by 9.5% at dELiA*s
dELiA*s Inc announced the results for the third quarter ended November 1, 2008. dELiA*s Inc results for the third quarter of 2008 reflect CCS as a discontinued operation for all periods presented. The Company completed its sale of the CCS business on November 5, 2008. Upon closing of the transaction, the Company received $103.2 million in cash proceeds.
The Company reported total revenue from continuing operations of $56.9 million compared with $52.0 million for the third quarter of 2007. Net income for the third quarter from continuing operations was $0.9 million, or $0.03 per diluted share, versus a loss of $2.7 million, or $(0.09) per diluted share for the third quarter of 2007.
Robert Bernard, Chief Executive Officer, commented, "We are very pleased with our improved performance for the third quarter and the Back to School selling period, which, as we have said, we viewed as an important inflection point for our business. Our trend of retail comparable store sales increases and margin growth continued for a third consecutive quarter. We believe that this positive momentum is largely attributable to our improved merchandise assortment and our careful edit of the dELiA*s brand, which has been gaining traction with our customers, even in this difficult economic environment."
"After the close of the quarter, we also completed the strategic sale of our CCS business, which provided our Company with added financial flexibility and a strengthened balance sheet, both of which are particularly important in the current environment," continued Mr. Bernard. "While we are confident in our merchandise assortment as we enter the holiday season, given current retail trends, we are prepared to make the necessary adjustments to our promotional cadence to continue to drive sales. Overall, we are excited about the long-term prospects for our business and view this challenging environment as an opportunity to demonstrate the differentiation of our brands and increase the acceptance of our product by our core customer."
Total revenue from continuing operations increased 9.5% to $56.9 million from $52.0 million in the third quarter of fiscal 2007. Revenue from the retail segment increased 19.4% to $32.6 million, or 57.2% of total revenue.
Total gross margin increased to 37.0% in the third quarter of fiscal 2008 as compared to 36.6% in the third quarter of fiscal 2007. The increase was driven primarily by higher merchandise margins at dELiA*s retail, reflecting improvements in initial mark-ups and full price selling. These improvements were partially offset by higher shipping costs in the direct segment, as well as the "mix" impact of the retail segment's higher proportion of total sales.
Selling, general and administrative (SG&A) expenses were $23.6 million in the third quarter compared to $23.2 million in the third quarter of fiscal 2007. As a percentage of sales, SG&A improved to 41.5% for the third quarter of fiscal 2008 compared to 44.7% for the prior year's quarter. The improvement in SG&A as a percent of sales was primarily due to the Company's ability to leverage selling and other operating expenses on increased sales. The overhead expenses which had been previously allocated to the CCS business have now been reallocated to continuing operations in both 2008 and 2007. These costs are approximately $6.8 million on an annualized basis.