DELIA’S REACHES ACCORD TO BUY SCREEEM, JEAN COUNTRY CHAINS
Byline: Thomas J. Ryan
NEW YORK — Delia’s Inc., the teen catalog, said it reached an agreement to buy the Screeem and Jean Country chains for $23.4 million.
In addition, Delia’s said it plans to test Delia’s full-price stores and a young men’s streetwear catalog in the fourth quarter.
Delia’s also reported first-quarter earnings substantially improved to $2 million, or 15 cents a share, from $322,000, or 3 cents, a year ago.
Sales in the period ended April 30 surged 76.3 percent, to $31.2 million from $17.7 million.
The eight-unit Screeem chain and 16-unit Jean Country chain are being purchased from privately held American Retail Enterprises LP for $14 million in stock and $9.4 million in cash.
The two chains, based here, have stores in New York and New Jersey.
Delia’s expects to complete the transaction at the end of June. On Tuesday, Delia’s stock closed at 21 1/16, down 1 15/16, in over-the-counter trading.
Stephen Kahn, president and chief executive officer, said Delia’s plans to convert the majority of Jean Country locations to Screeem units over the next 12 months.
He said the acquisition will give Delia’s a bigger base in young men’s, which the company started selling with the acquisition in December of TSI Soccer Corp., a soccer-inspired retailer and direct mail firm.
The product mix at Screeem is 60 percent young men’s and 40 percent juniors. Delia’s said the 23 stores it acquired range from 3,000 to 5,000 square feet and average roughly $400 per square foot. Sales are expected to reach $40 million this year.
In a conference call with Wall Street analysts, Kahn described the Screeem locations as mall-based, featuring live deejays, fashion shows and promotional appearances. He expects Delia’s to expand the concept at a 40 percent clip annually over the next three to five years.
Gary Sugarman, Screeem’s founder, will become president of the Screeem operation for Delia’s.
As for Delia’s full-price test store, it will feature a greater assortment of nonapparel items than its catalog, including posters, books, CDs, tattoos, jewelry, accessories, cosmetics and housewares.
Delia’s currently plans to open between 10 and 12 stores in 1999. No location for the test store was disclosed.
Delia’s in May opened its second outlet store in Riverhead, N.Y., and has signed a lease for a third in Woodbury Commons, N.Y. Its first outlet is in Reading, Pa.
Delia’s officials also told analysts that its goal is to open about 100 TSI Soccer stores over the next three to five years. TSI currently has 13 stores.
Kahn said the company slowed circulation of its core catalog in the first quarter due to softer response, but he said a good response to its early summer catalogs “gives us confidence that the overall business strategy and our plan for back-to-school are on track.”
Current hot sellers are skirts, swimsuits and fashion tops, Delia’s said. Dresses have also picked up.
Delia’s house list of individuals who have purchased from or requested either a Delia’s or TSI catalog grew to 4.8 million names at the end of the quarter, from 1.7 million a year earlier.
The number of buyers grew to 1.5 million from 500,000 a year ago.