Delia’s Inc. swung to a fourth-quarter loss on higher expenses and markdowns and weak merchandise, sending its stock down 11 percent Wednesday.
This story first appeared in the March 25, 2010 issue of WWD. Subscribe Today.
The multichannel teen retailer said spring sales trends have been under pressure despite some improvement in March.
The New York-based firm recorded a net loss of $791,000, or 3 cents a diluted share, in the period ended Jan. 30, compared with a profit of $22.6 million, or 73 cents a share, in the prior-year quarter. Analysts on average expected a 3 cent loss.
Revenue slid 1.4 percent to $66.3 million from $67.2 million in 2008. Retail segment sales edged up 1.1 percent, to $34.3 million, as comparable-store sales contracted 10.4 percent in the quarter. Direct sales declined 3.9 percent to $32 million.
Gross margin fell to 37.2 percent of sales from 37.5 percent, and selling, general and administrative expenses were up 2.6 percent to $27.2 million.
Chief executive officer Robert Bernard said on a conference call the quarterly results, while in line with revised expectations, were “disappointing” and principally the result of “merchandising challenges.”
“Spring sales trends have remained negative as a result of our merchandising challenges, as well as the additional negative impact of bad weather during the month of February,” he said. “We’ve seen improvement in March, but still believe we will have a negative comp trend through the quarter.”
As it focuses on improved sales productivity, Delia’s expects to scale back expansion plans. In 2009, the firm opened 15 stores and finished the year with 109 units.
For the year, the owners of the Delia’s and Alloy brands posted a loss of $10.4 million, or 34 cents a diluted share, versus a profit of $17.2 million, or 55 cents, in 2008. Revenues increased 3.8 percent to $223.9 million, from $215.6 million.
Shares of Delia’s fell 22 cents Wednesday to close at $1.79. In the past year, they have traded as high as $2.88, on Aug. 14, and as low as $1.53, on March 27.