NEW YORK — Delia’s Corp.’s fourth-quarter earnings are out, but the forms aren’t all in yet.
This story first appeared in the May 12, 2003 issue of WWD. Subscribe Today.
After a 43-day delay, the New York-based teen retailer finally released results showing a doubling of its fourth-quarter losses on Friday and said it is working to secure financing that would allow it to file its overdue annual report without auditor qualification by the end of this week.
The firm was originally slated to release its results on March 27, but was delayed twice as it sought $2 million in additional capital and a refinancing of the $2.9 million mortgage on its Hanover, Pa., distribution center. Because of the current uncertainty of its finances, it has yet to file an annual report, Form 10-K, with the Securities and Exchange Commission.
Delia’s previously negotiated an amendment of its existing $20 million, three-year secured credit facility with Wells Fargo Retail Finance and received $16.5 million in cash against future royalties in a wholesaling and licensing venture arranged with JLP Daisy LLC, an affiliate of Schottenstein Stores Corp.
It said it now “believes that it can secure” the additional capital and mortgage refinancing that would allow it to receive an unqualified audit opinion for inclusion in its annual report. Filing with the SEC is planned by May 16.
The firm, which sells apparel, accessories and home furnishings through its catalog and 67 stores, said for the three months ended Feb 1, its losses fattened to $12.4 million, or 27 cents a diluted share, including a $2.7 million or 6-cent charge for a facility shutdown and store impairment charges. The company also incurred expenses of $1.6 million, or 4 cents, for inventory reserves on winter-holiday goods and costs related to recent financial arrangements. In last year’s quarter, the company reported a loss of $6 million, or 14 cents.
Overall, quarterly sales inched up 1.6 percent to $49.8 million over $49 million. Retail sales increased 35 percent, driven by new store openings, while direct sales decreased 16 percent on a 23 percent reduction in circulation.
“The fourth quarter continued to be impacted significantly by the same product and planning miscues that negatively affected our back-to-school and fall business,” Stephen Kahn, chief executive, acknowledged in a statement. “Off-trend and overplanned merchandise contributed to significant margin deterioration and depressed sales throughout the fourth quarter.”
However, by mid-March, he said, gross margins had returned to healthier levels and all channels were showing signs of improvement.
The teen retailer said it also has taken steps to cut costs, stabilize its balance sheet and reduce inventory levels. Over the past six months, corporate staff has been cut by one-third.
For the full year, Delia’s reported a loss of $19 million, or 42 cents a diluted share, compared with a loss of $28.5 million, or 70 cents. Excluding the benefit of an accounting change, the loss for the most recent year totaled $34.4 million, or 76 cents. Sales dropped 4.2 percent to $137.6 million over year-ago sales of $143.7 million.