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Delia’s Sells Alloy Assets for $6.8 Million

Buyer HRSH Acquisitions led by Steve Russo and Brian Lattman.

Delia’s Inc. Tuesday sold its Alloy business to HRSH Acquisitions LLC for $3.7 million in cash and $3.1 million in assumed liabilities.

HRSH, formed to make the acquisition, is led by Brian Lattman, who will serve as president of Alloy Apparel and Accessories, a new entity, and Steve Russo, the founder of FAB NY, a firm focused on back-to-school accessories. Lattman was most recently the chief merchandising officer of LANY LLC and earlier held the same post at Norstan Apparel Shops, of which he was also a principal.

The transaction transfers ownership of Alloy, which markets apparel to young women through catalogues and on the Internet, just over two months after Delia’s said it would seek to sell the company and one day before Tracy Gardner assumes the role of Delia’s chief executive officer. Walter Killough, who had been ceo, will stay with the firm as chief operating officer. Gardner joined Delia’s as chief creative officer last month.

The deal also provides for Delia’s to provide transitional services to the buyers for up to one year.

“This transaction will enable us to focus our efforts exclusively on our Delia’s brand as we work to improve our product offerings and enhance the overall customer experience,” said Killough. “In addition, providing transitional services will allow us to offset certain overhead costs as we evaluate our cost structure going forward.”

Delia’s said in March that it had retained Janney Montgomery Scott LLC to explore a potential disposition of Alloy. Last month, it said the net loss in the first quarter ended May 4 grew to $9.2 million from a loss of $3.7 million in the 2012 period as sales contracted 14.6 percent to $35.2 million. Delia’s ended fiscal 2012 with 104 stores totaling about 400,000 square feet of space. Its stores accounted for $125.6 million of total revenues of $222.7 million, while e-commerce generated $93.3 million in sales and phone transactions the remainder.

Delia’s was acquired by Alloy Inc. in 2003 and spun off by the entertainment and marketing company in 2005. Delia retained the rights to the Alloy brand while Alloy Inc. continued to operate the alloy.com and delias.com Web sites. Alloy Inc. was acquired by ZelnickMedia for $126.5 million in 2010.