NEW YORK — Delia’s Corp.’s chief financial officer stepped down Tuesday as the beleaguered company reported its third-quarter loss more than tripled.
This story first appeared in the December 18, 2002 issue of WWD. Subscribe Today.
Chief operating officer Evan?Guillemin, who served as Delia’s cfo from 1996 to 2000, succeeds outgoing cfo Dennis Goldstein and will handle both positions.
For the three months ended Nov. 2, the New York-based multichannel Generation Y retailer recorded a net loss of $10.7 million, or 23 cents a diluted share. That compares with last year when the company sustained a loss of $3.2 million, or 7 cents.
Included in the net loss were corporate severance and call center relocation charges totaling $1.6 million, or 4 cents. Moreover, Delia’s took a $2.3 million, or 5 cent, pretax charge to cost of sales for the liquidation of back-to-school inventories that underperformed at retail.
Sales for the period inched up 1.2 percent to $32.9 million from $32.5 million, but same-store sales plunged 12.1 percent on a b-t-s shopping season “nadir.”
“The second and third quarters were the most difficult and disappointing in Delia’s history,” said chief executive officer Stephen Kahn on a conference call with analysts. “Merchandising and promotional miscues killed back-to-school. We rode the bohemian trend too long and missed opportunities in the athletic and preppy looks. However, the vast majority of these problems are discrete and discretionary and have been addressed.”
By channel, retail sales grew 23 percent on the strength of new store openings, but direct sales fell 19 percent on a 10 percent decrease in catalog circulation.
In an attempt to right the foundering company, in August, Delia’s took “austere” steps to reduce costs and work through excess inventory. To address overhead, the company reduced corporate payroll by $3.5 million, or about 20 percent, and immediately liquidated extra inventory to be better positioned for the holiday shopping season. As a result, Kahn said the company should produce a fourth-quarter operating profit before interest, taxes, depreciation and amortization.
Additionally, as reported in October, Delia’s has retained Peter J. Solomon Co.— which advised Lands’ End in its $1.9 billion sale to Sears Roebuck & Co. — to “pursue strategic relationships.” Kahn said Delia’s hopes to announce a decision in this regard by fiscal yearend.
Overall, for the first nine months of the year, Delia’s suffered a net loss of $6.6 million, or 14 cents a diluted share. That compares favorably with last year’s loss of $22.4 million, or 57 cents. Excluding special items and a change in accounting principle in both periods, this year’s loss would have been a more drastic $22 million, or 48 cents, versus $21.6 million, or 55 cents, a year ago.
Sales for the period slumped 7.2 percent to $87.8 million from $94.7 million.