NEW YORK — Delia’s Corp. continues to execute the teen retailing business model in reverse.
Late Monday, the company said it had entered the world of wholesaling through a licensing agreement with JLP Daisy LLC, an affiliate of Schottenstein Stores Corp. Daisy, as the master licensee, will in turn advance Delia’s $16.5 million in sorely needed cash against future royalties. Once JLP Daisy recoups the advance plus an unspecified preferred return as sublicensees begin to generate revenue, Delia’s will receive a majority of the royalty stream after brand management fees are subtracted. Group 3 Design Corp. has been retained to manage Delia’s new licensing activities.
Originally a catalog and Web marketer that entered traditional retail and now has 68 stores, Delia’s has incurred losses of nearly $100 million in the last two fiscal years, including a $22.1 million loss in the year ended Feb. 1, 2002. Sales declined 33.2 percent to $143.7 million for that year.
In a statement, Delia chief executive Stephen Kahn noted, “We believe these activities will complement Delia’s direct and specialty businesses. The deal also solidifies Delia’s balance sheet while creating an opportunity to participate in a meaningful future royalty stream. The advance proceeds from this transaction leave us well positioned to continue to run our core Delia’s direct and retail franchises.”
Peter J. Solomon Co. advised Delia’s on the transaction, as reported, and officials with the firm had said that the strategic alternative being put together would be “unconventional.”
Mary Gleason, Group 3’s ceo, said the brand, highly regarded by teenage girls and young women, “has the potential to become a powerhouse licensing franchise.” Products could hit the market in time for fall selling, she said.
A spokesman for Delia’s told WWD Monday, “This is a terrific way for us to expand the brand, heal the business and build a pretty substantial business.”