NEW YORK — Hit by lower margins and higher expenses, Delia’s, the Generation Y direct marketing firm, reported a loss of $1.8 million in the fourth quarter.
The results include a pretax gain of $8 million on sales of ITurf stock, a tax benefit of $3 million and a special charge of $761,000.
Last year, Delia’s earned $3.2 million, or 21 cents a diluted share.
Sales grew 12.7 percent to $67.5 million from $60 million, driven by contributions from new catalogs and retail stores, the company said.
“Fiscal 1999 was a transitional year in which we strengthened the Delia’s brand and positioned the company for growth as a multichannel retailer,” commented Evan Guillemin, Delia’s president, in a statement. “We made investments in each channel of our business and we upgraded our distribution and operating systems, which we believe will ensure the continued success of our direct marketing business, including our Internet efforts.”
The firm, based here, sells apparel, accessories and home furnishings through its catalog, retail stores and Internet businesses.
Gross margins dropped to 42 percent of sales from 49 percent due primarily to “aggressive markdowns, liquidation at the Screeem stores and promotional shipping during the holiday season,” the firm said. Selling, general and administrative costs jumped to $44.3 million from $24.4 million due to retail store and Internet expansions.
Guillemin further noted that the firm has strengthened its senior management team with the addition of Estelle DeMusey, executive vice president of direct mail; Tricia Waechter, executive vice president of retail, and James Cooper, executive vice president and chief financial officer.
On the retail front, the company opened 17 retail stores this year and is in the process of converting former Screeem stores to the Delia’s concept.
Guillemin also said that the company’s ITurf subsidiary, an online teen network, is performing ahead of expectations.
In the year, earnings surged 87.6 percent to $11 million, or 71 cents a share, from $5.8 million, or 41 cents, reflecting a pretax gain of $78.1 million related to the initial public offering and subsequent sale of ITurf stock and a pretax charge of $23.7 million related to Screeem.
Sales grew 20.5 percent to $190.8 million from $158.4 million, but margins fell to 43 percent of sales from 51 percent last year.

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