DELIAS CORP - 10-K Annual Report

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FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 3, 2002
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
ANNUAL REPORT
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Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

FOR THE FISCAL YEAR ENDED FEBRUARY 2, 2002

Commission file number 0-25347

DELIA(*)S CORP.

(Exact name of registrant as specified in its charter)

DELAWARE 13-3963754
(State or other jurisdiction (I.R.S. Employer Identification No.)
of
incorporation or organization)

435 HUDSON STREET, NEW YORK, NEW YORK 10014
(Address of principal executive offices)
(Zip Code)

(212) 807-9060
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Class A Common Stock, $.01 par value per share
Preferred Stock Purchase Rights
(TITLE OF CLASS)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. /X/ YES / / NO

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. /X/

The aggregate market value of common stock held by non-affiliates of the
registrant as of April 16, 2002 was $209,540,100.

The number of shares outstanding of the registrant's Class A common stock as
of April 16, 2002 was 46,798,619.

The number of shares outstanding of the registrant's Class B common stock as
of April 16, 2002 was 11,425,000.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's definitive proxy statement pursuant to
Regulation 14A, which statement will be filed not later than 120 days after the
end of the fiscal year covered by this Report, are incorporated by reference in
Part III hereof.

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STATEMENTS CONTAINED IN THIS DOCUMENT OR INCORPORATED BY REFERENCE,
INCLUDING, WITHOUT LIMITATION, INFORMATION APPEARING UNDER "PART I--ITEM
1--BUSINESS" AND "PART I--ITEM 7--MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS," MAY BE FORWARD-LOOKING
STATEMENTS (WITHIN THE MEANING OF SECTION 27A OF THE AMENDED SECURITIES ACT OF
1933 AND SECTION 21E OF THE AMENDED SECURITIES EXCHANGE ACT OF 1934). THE WORDS
"BELIEVE," "PLAN," "INTEND," "EXPECT" AND SIMILAR EXPRESSIONS ARE INTENDED TO
IDENTIFY FORWARD-LOOKING STATEMENTS. READERS ARE CAUTIONED NOT TO PLACE UNDUE
RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH APPLY ONLY AS OF THE DATE OF
THIS REPORT. THESE STATEMENTS ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD
CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED IN THE
FORWARD-LOOKING STATEMENTS. SUCH RISKS AND UNCERTAINTIES INCLUDE, BUT ARE NOT
LIMITED TO: THE CONDITION OF THE FINANCIAL MARKETS GENERALLY; ACCESS TO
FINANCING TO FUND THE OPERATIONS AND THE EXPANSION STRATEGIES OF OUR BUSINESS;
FUTURE CONDITIONS OF THE MARKET FOR OUR COMMON STOCK; THE RISK THAT OUR MERGER
AND RESTRUCTURING EFFORTS WILL NOT PRODUCE SAVINGS FROM ADDITIONAL OPERATING
EFFICIENCIES IN A TIMELY FASHION OR AT ALL; COSTS RELATED TO THE MERGER AND
RESTRUCTURING INITIATIVES; OUR ABILITY TO REDUCE EXPENSES SUCCESSFULLY; THE RISK
THAT COST REDUCTION INITIATIVES MAY LEAD TO REDUCED SERVICE LEVELS OR PRODUCT
QUALITY, WHICH COULD HAVE AN ADVERSE IMPACT ON REVENUES; INCREASES IN THE COST
OF MATERIALS, PRINTING, PAPER, POSTAGE, SHIPPING AND LABOR; TIMING AND QUANTITY
OF CATALOG AND ELECTRONIC MAILINGS; RESPONSE RATES; OUR ABILITY TO LEVERAGE
INVESTMENTS MADE IN INFRASTRUCTURE TO SUPPORT EXPANSION; AVAILABILITY OF
ACCEPTABLE STORE SITES AND LEASE TERMS; ABILITY TO OPEN NEW STORES IN A TIMELY
FASHION; POSSIBILITY OF INCREASING COMPARABLE STORE SALES; ADVERSE WEATHER
CONDITIONS AND OTHER FACTORS AFFECTING RETAIL STORES GENERALLY; THE ABILITY OF
OUR COMPUTER SYSTEMS TO SCALE WITH GROWTH IN ONLINE TRAFFIC; DIFFICULTY IN
INTEGRATING NEW TECHNOLOGIES; OUR ABILITY TO RETAIN KEY PERSONNEL; LEVELS OF
COMPETITION; GENERAL ECONOMIC CONDITIONS; CHANGES IN CONSUMER SPENDING PATTERNS;
OUR ABILITY TO ANTICIPATE AND RESPOND TO FASHION TRENDS; OUR DEPENDENCE ON THIRD
PARTIES; AND OTHER FACTORS DETAILED ELSEWHERE IN THIS REPORT. THESE FACTORS, AND
OTHER FACTORS THAT APPEAR IN THIS DOCUMENT INCLUDING, WITHOUT LIMITATION, UNDER
"RISK FACTORS," COULD AFFECT OUR ACTUAL RESULTS AND COULD CAUSE OUR ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN ANY FORWARD-LOOKING
STATEMENTS MADE BY US OR ON OUR BEHALF. WE UNDERTAKE NO OBLIGATION TO PUBLICLY
UPDATE ANY FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION,
FUTURE EVENTS OR OTHERWISE. YOU ARE ADVISED, HOWEVER, TO CONSULT ANY ADDITIONAL
DISCLOSURES WE MAKE IN OUR REPORTS TO THE SEC ON FORMS 10-K, 10-Q AND 8-K.

THIS REPORT MAY INCLUDE OR INCORPORATE BY REFERENCE MARKET DATA RELATED TO
THE INDUSTRIES IN WHICH WE ARE INVOLVED. THIS DATA HAS BEEN DERIVED FROM STUDIES
PUBLISHED BY MARKET RESEARCH FIRMS, TRADE ASSOCIATIONS AND OTHER ORGANIZATIONS.
THESE ORGANIZATIONS SOMETIMES ASSUME EVENTS, TRENDS AND ACTIVITIES WILL OCCUR
AND PROJECT INFORMATION BASED ON THOSE ASSUMPTIONS. IF ANY OF THEIR ASSUMPTIONS
ARE WRONG, THEIR PROJECTIONS MAY ALSO BE WRONG.

IN MAY 1999, WE ANNOUNCED A CHANGE IN OUR FISCAL YEAR TO THE 52 OR 53 WEEKS
ENDED ON THE SATURDAY CLOSEST TO JANUARY 31 FOLLOWING THE CORRESPONDING CALENDAR
YEAR. REFERENCES IN THIS REPORT TO "FISCAL 2001" MEAN THE PERIOD FROM
FEBRUARY 4, 2001 TO FEBRUARY 2, 2002. REFERENCES IN THIS REPORT TO "FISCAL 2000"
MEAN THE PERIOD FROM JANUARY 30, 2000 TO FEBRUARY 3, 2001. REFERENCES TO "FISCAL
1999" MEAN THE PERIOD FROM FEBRUARY 1, 1999 TO JANUARY 29, 2000. ANY REFERENCE
IN THIS REPORT TO A PARTICULAR FISCAL YEAR BEFORE 1999 IS TO THE YEAR ENDED
JANUARY 31 FOLLOWING THE CORRESPONDING CALENDAR YEAR. FOR EXAMPLE, "FISCAL 1998"
MEANS THE PERIOD FROM FEBRUARY 1, 1998 TO JANUARY 31, 1999.

ON NOVEMBER 20, 2000, DELIA*S INC. WAS RECOMBINED WITH ITS MAJORITY-OWNED
SUBSIDIARY, ITURF INC., AND WE RENAMED THE PARENT COMPANY OF THE RECOMBINED
BUSINESS DELIA*S CORP. THE MERGER TRANSACTION WAS ACCOUNTED FOR AS A PURCHASE BY
DELIA*S INC. OF THE MINORITY INTEREST IN ITURF. AS A RESULT, THE HISTORICAL
FINANCIAL STATEMENTS OF DELIA*S CORP. CONTAINED HEREIN ARE THE HISTORICAL
FINANCIAL STATEMENTS OF DELIA*S INC. WITH EARNINGS PER SHARE RESTATED TO REFLECT
THE TRANSACTION. SEE NOTE 1 OF NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

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PART I

ITEM 1. BUSINESS

OVERVIEW

We are a multichannel retailer that markets apparel, accessories and home
furnishings to teenage girls and young women. We reach our customers through the
dELiA*s catalog, www.dELiAs.cOm and the growing chain of dELiA*s retail stores.
In fiscal 2001, dELiA*s Direct (which includes the operations of our dELiA*s
catalog and our dELiAs.cOm e-commerce site) provided 58% of our consolidated net
sales, dELiA*s Retail provided 38% and our non-core businesses represented the
remaining 4%.

FISCAL 2000 MERGER AND RESTRUCTURING. During fiscal 2000, we announced our
intention to focus on our core dELiA*s brand and to sell or shut down our
non-core businesses. These initiatives, which were completed during fiscal 2001,
resulted in significant merger and restructuring-related charges.

CONSOLIDATED SALES. Apparel sales through our core dELiA*s channels
represented 78% of our fiscal 2001 consolidated net sales. No other product
category represented more than 10%.

MERCHANDISING. Our dELiA*s catalogs, retail stores and e-commerce pages
feature a broad assortment of merchandise, ranging from basics, such as jeans,
shorts and t-shirts, to more fashion oriented apparel and accessories, such as
woven and knit junior dresses, swimwear, sunglasses, watches, costume jewelry
and cosmetics, to enable our customers to fulfill many of their fashion needs.
dELiA*s also offers home furnishings, light furniture and household articles to
teen girls and young women. While we continue to offer recognized and emerging
brands purchased from third-party vendors, we also continue to increase our
focus on dELiA*s-branded merchandise that we source directly from manufacturers
or purchase from third-party vendors for sale under the "dELiA*s" label. We
present merchandise in coordinated groupings to encourage customers to create
outfits, which we believe increases average purchase size and enhances sales.

CATALOG AND INTERNET OFFERINGS. In fiscal 2001, DELIA*S catalog circulation
was nearly 42 million. Our distinctive catalogs and dELiAs.cOm Web site include
detailed product descriptions and specifications, full color photographs and
pricing information. They are designed to create a unique and entertaining
shopping experience and to offer customers more than the typical apparel catalog
or Web site by combining the feel and editorial flair of a magazine or web/zine
with the convenience of at-home shopping.

We mail our catalogs to persons listed in our proprietary database, as well
as to persons from rented lists. We believe we can leverage our proprietary
database to develop additional targeted mailings to specific customer segments,
and may expand our strategy of more frequent mailings of supplemental catalogs
to repeat customers.

RETAIL STORES. As of February 2, 2002, we operated 45 dELiA*s stores,
including four outlet stores. Our stores range in size from 2,500 to 5,100
square feet with an average size of approximately 3,700 square feet. They are
located on the East Coast (Connecticut, Delaware, Maryland, Massachusetts, New
Jersey, New York, Pennsylvania, Rhode Island, Virginia) and in the Midwest
(Indiana, Illinois, Missouri, Ohio, Wisconsin).

Our retail stores have point-of-sale terminals that transmit information
daily on sales by item, color and size. We evaluate this information, together
with merchandise statistics reports, when making merchandising decisions
regarding reorders of fast-selling items and merchandise allocations.

PROPRIETARY DATABASE DEVELOPMENT. Except for our September 1998 purchase of
approximately 6 million names from the estate of Fulcrum Direct, Inc., we have
historically developed our proprietary

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customer database primarily through referrals, word-of-mouth, catalog requests,
on-line membership programs and targeted classified advertising in selected
magazines, including SEVENTEEN and YM. During fiscal 2001, approximately
1.5 million new names were added to our database. As of February 2, 2002, our
proprietary database included approximately 13 million names, approximately
8.5 million of which have made a purchase or requested a catalog. Our database
contains a person's name, gender, residence, age, family status and historical
transaction data (including, among other things, referral source, history of
orders, payment method, average order size and product purchase information).
Whenever possible, we also gather additional demographic data and e-mail
addresses. We are committed to protecting the privacy of our customers. Our
privacy policy is available on our dELiAs.cOm website.

CALL CENTER OPERATIONS. We provide our dELiA*s Direct customers with
toll-free telephone access as well as around-the-clock fax and web service.
Teleservice representatives process orders directly into our management
information system.

Our New York call center is flexibly configured to handle up to 300 phone
stations. Our approximately 200 (as of February 2, 2002) full- and part-time
teleservice representatives have the capacity to handle nearly 2,500 calls per
hour. We also use an outside teleservices provider for overflow calls. We
process telephone orders in an average of 4 to 5 minutes, depending upon the
nature of the order and whether the customer is a first-time or repeat customer.

Inquiries received by our customer service representatives are principally
concerned with order and refund status.

DISTRIBUTION AND FULFILLMENT. Our customer orders and retail stock
shipments are processed through our warehouse and fulfillment center in Hanover,
Pennsylvania. From this center, we processed an average in fiscal 2001 of over
15,000 retail shipments and 6,500 customer shipments per day. Our busiest
shipping days for dELiA*s Retail and Direct involved 37,000 retail shipments and
22,000 customer packages, respectively. We use an integrated picking, packing
and shipping system with a live connection to our direct order entry and retail
systems. The system monitors the in-stock status of each item ordered, processes
orders and retail stock requests and generates warehouse selection tickets and
packing slips for order and retail stock fulfillment operations.

A majority of our catalog and Internet orders are shipped within 48 hours of
credit approval. In cases in which the order is placed using another person's
credit card and it exceeds a specified threshold, the order is shipped only
after we have received confirmation from the cardholder. Customers generally
receive orders within three to ten business days after shipping. Our shipments
are generally carried to customers by United Parcel Service and the United
States Postal Service.

For fiscal 2001, merchandise returns were approximately 17% of shipped sales
in our dELiA*s Direct segment and 9% of sales in our dELiA*s Retail segment.
Return experience is closely monitored to identify trends in product offerings,
product defects and quality issues. As of April 17, 2002, the dELiA*s Direct
channel had approximately $500,000 in backorders as compared to approximately
$400,000 on that date in 2001.

INVENTORY LIQUIDATION. We have excess inventory in varying degrees over the
course of the year. We mail sale catalogs, run promotional sales of excess items
and sell excess inventory through our outlet stores and our online discount
service, Discount Domain. We have also used third-party liquidators, event sales
and charitable donations to dispose of excess inventory and may consider other
liquidation options in the future.

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INTELLECTUAL PROPERTY

We have registered the dELiA*s name, stylized logo and daisy symbol, among
other trademarks, with the U.S. Patent and Trademark Office. We use the
trademarks, tradenames, logos and endorsements of our suppliers with their
permission. While we do from time to time receive notices of alleged
infringement of other people's intellectual property rights, we are not aware of
any pending material conflicts concerning our marks or our use of others'
intellectual property.

COMPETITION

Our industry is highly competitive and we expect competition to increase. We
compete with traditional department stores, as well as specialty retailers, for
teen and young adult customers. We also compete with other direct marketers and
other e-commerce companies, some of which may specifically target our customers.
Many of our competitors are larger than us and have substantially greater
financial, distribution and marketing resources. Increased competition could
result in pricing pressures, increased marketing expenditures and loss of market
share. We believe our success will depend, in part, on our ability to adapt to
new technologies and to respond to competitors' actions in these areas.

EMPLOYEES

As of February 2, 2002, we had approximately 1,550 full-time and part-time
employees. None of our employees are represented by a collective bargaining
unit. We consider our relations with our employees to be good.

RISK FACTORS

THE FOLLOWING PRINCIPAL RISK FACTORS SHOULD BE CONSIDERED CAREFULLY IN
ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS REPORT BY PROSPECTIVE
INVESTORS OR CURRENT STOCKHOLDERS EVALUATING AN INVESTMENT IN OUR COMMON STOCK.
THE RISKS AND UNCERTAINTIES DESCRIBED BELOW ARE NOT THE ONLY ONES FACING OUR
COMPANY AND OUR STOCKHOLDERS. ADDITIONAL RISKS AND UNCERTAINTIES MAY ALSO
ADVERSELY IMPAIR OUR BUSINESS OPERATIONS. IN ADDITION, ACTUAL RESULTS OF OUR
BUSINESS COULD DIFFER MATERIALLY FROM THOSE DESCRIBED AS A RESULT OF THE
FOLLOWING RISK FACTORS AND THOSE DESCRIBED IN THE SECTION ENTITLED "ITEM
7--MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS."

WE MAY NEED ADDITIONAL CAPITAL, WHICH MAY NOT BE AVAILABLE, AND ADDITIONAL
CAPITAL COULD DILUTE STOCKHOLDERS

Historically, we have financed our business operations primarily through the
sale of equity and bank loans. We believe that available cash on hand and
available borrowings will enable us to maintain our currently planned
operations. However, in the event of lower than expected sales or higher than
expected expenses or in the event of material changes to our vendor payment
terms, it is likely that we would need to raise additional funds to finance our
operations. We are currently in compliance with the covenants of our credit
agreement with Wells Fargo Retail Finance LLC and receive a waiver from Allfirst
Bank of the financial covenant in our mortgage loan agreement. However, if our
business was to deteriorate and we were to fail to comply with the financial
covenants under our credit agreement, we may not continue to have access to
these sources of funding. In addition, in the event that we elect to accelerate
the expansion of our retail operations, we would likely require additional
financing. As an alternative to bank financing, we may seek an equity-based
investment from a strategic or financial partner. Debt or equity financing may
not be available in sufficient amounts or on terms acceptable to us, or at all,
and any equity-based financing would be dilutive to our current stockholders.

HISTORICAL RESULTS MAY NOT BE INDICATIVE OF FUTURE RESULTS DUE TO SEASONAL,
CYCLICAL AND QUARTERLY FLUCTUATIONS

We experience seasonal and cyclical fluctuations in our revenues and results
of operations. For example, sales of apparel, accessories and footwear are
generally lower in the first half of each year. In

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addition, due to the cyclical nature of our businesses and our sensitivity to
consumer spending patterns, purchases of apparel and accessories tend to decline
during recessionary periods and may decline at other times. Consequently, our
results of operations from quarter to quarter may not be comparable.

Our quarterly results may also fluctuate as a result of a number of other
factors, including:

- general economic conditions;

- changes in consumer spending patterns;

- levels of competition;

- market acceptance of our merchandise, including new merchandise categories
or products introduced;

- opportunities to expand, including the ability to locate and obtain
acceptable store sites and lease terms or renew existing leases, and the
ability to increase comparable store sales;

- the timing of merchandise deliveries;

- increases in the cost of materials, printing, paper, postage, shipping and
labor;

- the timing, quantity and cost of catalog and electronic mailings and
response rates to those mailings;

- adverse weather conditions, changes in weather patterns and other factors
affecting retail stores;

- changes in the growth rate of Internet usage and online user traffic
levels; and

- other factors outside our control.

As a result of seasonal and cyclical patterns and the other factors
described above, you should not rely on quarter-to-quarter comparisons of our
results of operations as indicative of our future performance. In addition, it
is possible that in some future periods our results of operations may be below
the expectations of public market analysts and investors, which could adversely
affect our stock price.

WE HAVE A LIMITED OPERATING HISTORY ON WHICH AN INVESTOR CAN EVALUATE OUR
BUSINESS

RETAIL STORES. We opened the first full-priced dELiA*s retail store in
February 1999, and many of the dELiA*s retail stores were opened after fiscal
1999. As a result, we do not have substantial data regarding comparable store
sales, which is an important measure of performance for a retail company.
Because of our limited history as an operator of retail stores and the limited
data available to assess the trends in individual store performance, there can
be no assurances of our ability to run these stores profitably. In addition,
failure to expand the numbers of dELiA*s retail stores will limit our ability to
leverage our infrastructure and would have a material adverse effect on our
financial condition and results of operations.

As a result of these factors, our future revenues are difficult to forecast.
Any shortfall in revenues may have a material adverse effect on our business and
would likely affect the market price of our common stock in a manner unrelated
to our long-term operating performance.

E-COMMERCE. We did not begin selling merchandise from the dELiA*s catalog
on the Internet until May 1998. As a result, our Internet business has generated
substantially all of its revenues since that time. You must consider the risks
and difficulties that we will encounter as an early-stage company in the new and
rapidly evolving e-commerce market. These risks include our ability to:

- maintain and enhance our systems to support growth of operations and
increasing user traffic;

- retain existing customers, attract new customers and maintain customer
satisfaction;

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- introduce new and enhanced Web pages, services, products and alliances;

- minimize technical difficulties, system downtime and the effect of
Internet brown-outs;

- respond to technological changes in the industry; and

- respond to changes in government regulation.

If we do not successfully manage these risks, our business will be materially
adversely affected. We cannot assure you that we will successfully address these
risks or that our business strategy will be successful.

WE ARE PARTY TO CLASS ACTION LITIGATION

We are currently party to two purported class action litigations. The first
was originally filed in two separate complaints in Federal District Court for
the Southern District of New York in 1999 against dELiA*s Inc. and certain of
its officers and directors. These complaints were consolidated. The consolidated
complaint alleges, among other things, that the defendants violated Rule 10b-5
under the Securities Exchange Act of 1934 by making material misstatements and
by failing to disclose certain allegedly material information regarding trends
in the business during part of 1998. We believe that the allegations are without
substantial merit and that the claim is covered under our insurance policy and
we intend to vigorously contest this action. However, we cannot predict at this
time the outcome of any litigation or whether the resolution of the litigation
could have a material adverse effect on our business.

The second was originally filed as three separate complaints in Delaware
Chancery Court against iTurf Inc., dELiA*s Inc. and each of iTurf's directors in
connection with the recombination of the iTurf Inc. and dELiA*s Inc. businesses.
The actions were consolidated and an amended complaint was filed on January 19,
2001. The complaint alleges that dELiA*s and the members of the iTurf board of
directors breached their fiduciary duties to iTurf's public stockholders and
that the exchange ratio was unfair to iTurf's public stockholders. On
January 15, 2002, all parties entered into a stipulation and agreement of
compromise, settlement and release, which was approved without objection by the
court on April 8, 2002 and, provided no appeal is taken, will become a final
order in May 2002.

OUR GROWTH STRATEGY MAY PRESENT OPERATIONAL, MANAGEMENT AND INVENTORY CHALLENGES

Our historical growth has placed significant demands on our management and
other administrative, operational and financial resources. We intend to continue
to pursue a growth-oriented strategy in our core dELiA*s business for the
foreseeable future and our future operating results will largely depend on our
ability to open and operate new retail stores, appropriately expand our Internet
e-commerce business and manage a larger core dELiA*s business. Managing this
growth will require us to continue to implement and improve our operations and
financial and management information systems and to continue to expand, motivate
and effectively manage our workforce. If we cannot manage this process
effectively or grow our businesses as planned, we may not achieve our desired
future operating results.

Operation of a greater number of retail stores, expansion into new
geographic or demographic markets and online expansion may present competitive
and merchandising challenges that are different from those we currently
encounter in our existing businesses. Such expansion will also require further
investment in infrastructure and marketing for our direct and retail businesses.
This investment will increase our operating expenses, which could have a
material adverse effect on the results of our business if anticipated sales do
not materialize, and may require us to seek additional capital. There can be no
assurance that we will be able to obtain this financing on acceptable terms or
at all.

In addition, expansion of our retail and e-commerce businesses within our
existing markets may adversely affect the individual financial performance of
existing stores or catalog sales. Historically,

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efforts to increase Internet sales have reduced catalog sales. There can be no
assurance that increased sales through our retail stores will not reduce catalog
or Internet sales. Also, new stores may not achieve sales and profitability
levels consistent with existing stores.

Furthermore, as our sales increase, we anticipate maintaining higher
inventory levels. This anticipated increase in inventory levels will expose us
to greater risk of excess inventories and inventory obsolescence, as well as
increase our dependence on our vendors and exposure to their payment terms, all
of which could have a material adverse effect on our business.

WE MAY FAIL TO ANTICIPATE AND RESPOND TO FASHION TRENDS AND THE TASTES OF OUR
CUSTOMERS

Our failure to anticipate, identify or react to changes in styles, trends or
brand preferences of our customers may result in lower revenue from reduced
sales and promotional pricing. Our success depends, in part, on our ability to
anticipate the frequently-changing fashion tastes of our customers and to offer
merchandise and services that appeal to their preferences on a timely and
affordable basis. If we were to misjudge our offerings, our image with our
customers would be materially adversely affected. Poor customer reaction to our
products or our failure to source these products effectively would have a
material adverse effect on our business.

WE RELY ON THIRD-PARTY VENDORS FOR MERCHANDISE

Our business depends on the ability of third-party vendors and their
subcontractors or suppliers to provide us with current-season, brand-name
apparel and merchandise at competitive prices, in sufficient quantities,
manufactured in compliance with all applicable laws and of acceptable quality.
We do not have long-term contracts with any supplier and are not likely to enter
into these contracts in the foreseeable future. In addition, many of the smaller
vendors that we use have limited resources, production capacities and operating
histories. As a result, we are subject to the following risks, which could have
a material adverse effect on our business:

- our key vendors may fail or be unable to expand with us;

- we may lose or cease doing business with one or more key vendors;

- our current vendor terms may be changed to require increased payments in
advance of delivery, and we may not be able to fund such payments through
our current credit facility; or

- our ability to procure products may be limited.

It is our current strategy to increase the percentage of our goods designed
and manufactured to our specifications and to source this merchandise from
independent factories. To the extent we concentrate our sourcing with fewer
manufacturers, we may increase our exposure to failed or delayed deliveries,
which could have a material adverse effect on our business.

Furthermore, as part of our move towards more private-label merchandise, we
are likely to source an increasing proportion of our goods from factories in the
Far East and Latin America. These goods will be subject to existing or potential
duties, tariffs or quotas that may limit the quantity of some types of goods
which may be imported into the United States from countries in those regions. We
will increasingly compete with other companies for production facilities and
import quota capacity. Sourcing more merchandise abroad will also subject our
business to a variety of other risks generally associated with doing business
abroad, such as political instability, currency and exchange risks and local
political issues. Our future performance will be subject to these factors, which
are beyond our control. Although a diverse domestic and international market
exists for the kinds of merchandise sourced by us, there can be no assurance
that these factors would not have a material adverse effect on our results of
operations. We believe that alternative sources of supply would be available in
the event of a supply disruption in one or more regions of the world. However,
we do not believe that, under current

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circumstances, entering into committed alternative supply arrangements is
warranted, and there can be no assurance that alternative sources would in fact
be available at any particular time.

OUR CHIEF EXECUTIVE OFFICER HOLDS SUBSTANTIAL EQUITY IN THE COMPANY AND MAY USE
HIS INFLUENCE IN WAYS THAT ARE NOT CONSISTENT WITH THE INTERESTS OF OTHER
STOCKHOLDERS

Stephen I. Kahn, our Chief Executive Officer, holds or has the right to vote
in the aggregate approximately 22% of our Class A common stock, net of treasury
stock and stock held by subsidiaries. Accordingly, Mr. Kahn may have substantial
influence over the company and may exercise his influence in ways that might not
be consistent with the interests of other stockholders.

WE MAY HAVE DIFFICULTY ATTRACTING AND RETAINING KEY PERSONNEL

Our success will depend on the continued service of our key senior
management personnel. Loss of the services of our senior management personnel,
including Stephen I. Kahn, Chairman of our board of directors and Chief
Executive Officer, Andrea Weiss, President, Wendy Heath, Executive Vice
President of Product Development and Design, and Dennis Goldstein, Chief
Financial Officer, or other key employees would have a material adverse effect
on our business.

Competition for employees in our industries is intense. As a result, we have
in the past experienced, and we expect to continue to experience, difficulty
hiring and retaining skilled employees with appropriate qualifications.

WE MAY NOT BE ABLE TO ATTRACT NEW CUSTOMERS TO REPLENISH OUR CUSTOMER BASE

Our customers are primarily teens and young adults. As these individuals age
beyond their teens, they may no longer purchase products aimed at younger
individuals. Accordingly, we must constantly update our marketing efforts to
attract new, prospective teen and young adult customers. Failure to attract new
customers would have a material adverse effect on our business.

OUR CATALOG RESPONSE RATES MAY DECLINE

Catalog response rates usually decline when we mail additional catalog
editions within the same fiscal period. Response rates also decline in
geographic regions where we open new stores. As we open additional new stores,
we expect aggregate catalog response rates to decline further. In addition, as
we continue to increase the number of catalogs distributed or mail our catalogs
to a broader group of new potential customers, we have observed that these new
potential customers respond at lower rates than existing customers have
historically responded. These trends in response rates have had and are likely
to continue to have a material adverse effect on our rate of sales growth and on
our profitability and could have a material adverse effect on our business.

OUR INDUSTRIES ARE HIGHLY COMPETITIVE

The apparel and accessories industry is highly competitive, and we expect
competition to increase. As a result of this competition, we may experience
pricing pressures, increased marketing expenditures and loss of market share,
which would have a material adverse effect on our business.

We compete with traditional department stores, as well as specialty
retailers, for teen and young adult customers. We also compete with other direct
marketers and e-commerce companies, some of which may specifically target our
customers. In addition, because there are few barriers to entry in the teen
apparel and accessories market, we could face competition from manufacturers of
apparel and accessories, including our current vendors, who could market their
products directly to retail customers or make their products more readily
available in competitor catalogs, Web sites and retail stores.

9

We cannot assure you that we will be able to compete successfully with these
companies or that competitive pressures will not materially and adversely affect
our business. We believe that our ability to compete depends upon many factors,
including the following:

- the consumer acceptance of our product offerings;

- the success of our brand building and sales and marketing efforts;

- the performance, price and reliability of products developed by us or our
competitors; and

- the effectiveness of our customer service and support efforts.

Many of our competitors are larger and have substantially greater financial,
distribution and marketing resources than us. Our competitors may develop
products or services that are equal or superior to, or achieve greater market
acceptance than, ours. Our competitors could also enter into exclusive
distribution arrangements with our vendors and deny us access to these vendors'
products. These factors may have a material adverse effect on our business.

THE EXPECTED BENEFITS OF OUR MERGER MAY NOT BE REALIZED

The success of the recent recombination of our Internet, catalog and retail
businesses will depend, in part, on our ability to realize growth opportunities
and synergies from combining the businesses of the two companies. Although we
expect the merger to affect our stockholders positively, we may not realize the
anticipated benefits of the merger. We believe that we will reduce some
administrative overhead costs by combining the two companies, but these savings
are not expected to have a material effect on our results of operations.
Moreover, some of the synergies we hope to exploit are strategic and, by nature,
speculative. For example, we hope to improve catalog productivity through
targeted e-mails, but there is no definitive evidence that targeted e-mails will
improve our sales productivity or allow us to distribute fewer catalogs.

WE RELY ON INFORMATION AND TELECOMMUNICATIONS SYSTEMS, WHICH ARE SUBJECT TO
DISRUPTION

The success of our direct marketing and retail store businesses depends, in
part, on our ability to provide prompt, accurate and complete service to our
customers on a competitive basis, and to purchase and promote products, manage
inventory, ship products, manage sales and marketing and maintain efficient
operations through our telephone and management information systems. In
addition, the success of our e-commerce business depends, in part, on our
ability to provide a consistently prompt and user-friendly experience to our
customers, with a minimum of technical delays or disruptions.

Our operations therefore depend on our ability to maintain our computer and
telecommunications systems and equipment in effective working order. Any
sustained or repeated system failure or interruption would have a material
adverse effect on sales and customer relations.

Unanticipated problems affecting our systems have caused from time to time
in the past, and in the future could cause, disruptions in our services. These
system interruptions could result from the failure of our telecommunications
providers to provide the necessary data communications capacity in the time
frame we require or from events such as fire, power loss, water damage,
telecommunications failures, vandalism and other malicious acts, and similar
unexpected adverse occurrences. Any damage or failure that interrupts or delays
our operations could have a material adverse effect on our business.

10

STRIKES OR OTHER SERVICE INTERRUPTIONS AFFECTING THIRD-PARTY SHIPPERS WOULD
IMPACT OUR ABILITY TO DELIVER MERCHANDISE ON A TIMELY BASIS

We rely on third-party shippers, including the United States Postal Service
and United Parcel Service, to ship merchandise to our customers. Strikes or
other service interruptions affecting our shippers would affect our ability to
deliver merchandise on a timely basis and could have a material adverse effect
on our business.

WE DEPEND ON THE STORAGE OF PERSONAL INFORMATION ABOUT OUR CUSTOMERS, AND
PROPOSED LEGISLATION MAY LIMIT OUR ABILITY TO CAPTURE AND USE SUCH CUSTOMER
INFORMATION

Web sites typically place identifying data, or "cookies," on a user's hard
drive without the user's knowledge or consent. dELiAs.cOm and other Web sites
use cookies for a variety of reasons, including the collection of data derived
from the user's Internet activity. Any reduction or limitation in the use of
cookies could limit the effectiveness of our sales and marketing efforts.

Most currently available Web browsers allow users to remove cookies at any
time or to prevent cookies from being stored on their hard drives. In addition,
some commentators, privacy advocates and governmental bodies have suggested
limiting or eliminating the use of cookies. Furthermore, the European Union
recently adopted a directive addressing data privacy that may limit the
collection and use of information regarding Internet users. Any of these actions
may limit our ability to collect and use information about our customers, which
could have a material adverse effect on our business.

Recently, there has been increasing public concern regarding the
compilation, use and distribution of information about teens and children.
Federal legislation has been introduced in the U.S. Congress that proposes
restrictions on persons, principally list brokers, that sell, purchase or
otherwise use for commercial purposes personal information about teens under the
age of 16 and children. List brokerage is not currently a material part of our
business but we do market to persons whose names are derived from purchased or
rented lists. We may increase our use of purchased and rented lists or, in the
future, decide to increase our list brokerage business. Consequently, the
proposed legislation, or other similar laws or regulations that may be enacted,
could impair our ability to collect customer information, use that information
in the course of our business or profit from future plans to sell customer
information, which could have a material adverse effect on our business.

WE MAY BECOME SUBJECT TO CURRENCY, POLITICAL, TAX AND OTHER UNCERTAINTIES AS WE
EXPAND INTERNATIONALLY

We distribute our dELiA*s catalogs in Japan and Canada and plan to explore
distribution opportunities in other international markets. Our dELiAs.cOm Web
site are visited by a global audience. Our international business is subject to
a number of risks of doing business abroad, including:

- the impact of recessions in economies outside the United States;

- regulatory and political changes in foreign markets;

- reduced protection for intellectual property rights in some countries;

- potential limits on the use of some of our vendors' trademarks outside the
United States;

- exposure to potentially adverse tax consequences or import/ export quotas;

- inconsistent quality of merchandise and disruptions or delays in shipping;
and

- difficulties in developing customer lists and marketing channels.

Furthermore, expansion into new international markets may present
competitive and merchandising challenges different from those we currently face.
We cannot assure you that we will expand internationally or that any such
expansion will result in profitable operations.

11

WE MAY BE REQUIRED TO COLLECT SALES TAX

At present, we do not collect sales or other similar taxes in respect of
direct shipments of goods to consumers into most states. However, various states
have sought to impose state sales tax collection obligations on out-of-state
direct mail companies. A successful assertion by one or more states that we
should have collected or be collecting sales taxes on the direct sale of our
merchandise would have a material adverse effect on our business.

WE MAY NOT BE ADEQUATELY PROTECTED AGAINST INFRINGEMENT OF OUR INTELLECTUAL
PROPERTY, WHICH IS ESSENTIAL TO OUR BUSINESS

We regard our service marks, trademarks, trade secrets and similar
intellectual property as critical to our success. We rely on trademark and
copyright law, trade secret protection and confidentiality, license and other
agreements with employees, customers, strategic partners and others to protect
our proprietary rights, and have also pursued and applied for the registration
of our trademarks and service marks in the United States. The steps we have
taken to protect our intellectual property may not be adequate, and third
parties may infringe or misappropriate our copyrights, trademarks and similar
proprietary rights. In addition, effective trademark, service mark, copyright
and trade secret protection may not be available in every country in which our
products and services are made available.

WE MAY BECOME SUBJECT TO LIABILITY FOR INFRINGING THIRD-PARTY INTELLECTUAL
PROPERTY RIGHTS

From time to time we receive complaints that we have infringed on
third-party intellectual property rights. Our reliance on independent vendors
makes it difficult to guard against infringement and we have occasionally agreed
to refrain from selling some merchandise at the request of third parties
alleging infringement. To date, these claims have not had a material adverse
effect on our business. However, future infringement claims, if directed at key
items of our merchandise or our material intellectual property, could have a
material adverse effect on our business.

OUR BUSINESS MAY BE ADVERSELY AFFECTED BY FLUCTUATIONS IN POSTAGE AND PAPER
EXPENSES

Significant increases in paper or catalog delivery costs would have a
material adverse effect on our business.

THE PRICE OF OUR COMMON STOCK COULD BE EXTREMELY VOLATILE

The market price of our common stock has fluctuated in the past and may
continue to be volatile. In the past, companies that have experienced volatility
in the market price of their stock have been the objects of securities class
action litigation, which could have material adverse effects on our business.

DELAWARE LAW AND OUR ORGANIZATIONAL DOCUMENTS AND STOCKHOLDER RIGHTS PLAN MAY
INHIBIT A TAKEOVER

Provisions of Delaware law, our Restated Certificate of Incorporation or our
bylaws could make it more difficult for a third party to acquire us, even if
doing so would be beneficial to our stockholders.

In addition, our board of directors has adopted a stockholder rights plan,
the purpose of which is to protect stockholders against unsolicited attempts to
acquire control of us that do not offer a fair price to all of our stockholders.
The rights plan may have the effect of dissuading a potential acquirer from
making an offer for our common stock at a price that represents a premium to the
then current trading price.

12

WE MAY BE EXPOSED TO POTENTIAL LIABILITY OVER PRIVACY CONCERNS

Despite the display of our privacy policy on our dELiAs.cOm Web site, any
penetration of our network security or misappropriation of our customers'
personal or credit card information could subject us to liability. We may be
liable for claims based on unauthorized purchases with credit card information,
impersonation or other similar fraud claims. Claims could also be based on other
misuses of personal information, such as for unauthorized marketing purposes.
These claims could result in litigation, which could divert management's
attention from the operation of our business and result in the imposition of
significant damages.

In addition, the Federal Trade Commission and several states have
investigated the use by Internet companies of personal information. In 1998, the
U.S. Congress enacted the Children's Online Privacy Protection Act of 1998. The
Federal Trade Commission recently promulgated final regulations interpreting
this act. We depend upon collecting personal information from our customers and
we believe that the regulations under this act will make it more difficult for
us to collect personal information from some of our customers. Any failure to
comply with this act may make us liable for substantial fines and other
penalties. We could also incur expenses if new regulations regarding the use of
personal information are introduced or if our privacy practices are
investigated.

GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES COULD CREATE ADDITIONAL BURDENS TO
DOING BUSINESS ON THE INTERNET

Laws and regulations applicable to Internet communications, commerce and
advertising are becoming more prevalent. The adoption or modification of laws or
regulations applicable to the Internet could adversely affect our business. The
law governing the Internet, however, remains largely unsettled.

Although our online transmissions generally originate in New York, the
governments of other states or foreign countries might attempt to regulate our
transmissions or levy sales or other taxes relating to our activities. It may
take years to determine whether and how existing laws governing intellectual
property, privacy, libel and taxation apply to the Internet. In addition, the
growth and development of online commerce may prompt calls for more stringent
consumer protection laws, both in the United States and abroad. We also may be
subject to regulation not specifically related to the Internet, including laws
affecting direct marketers and advertisers. The interpretation or enactment of
any of these types of laws or regulations may impose burdens on our business.

THIRD-PARTY INTERNET PROVIDERS MAY EXPERIENCE SYSTEM FAILURES THAT COULD HAVE A
MATERIAL ADVERSE EFFECT ON OUR BUSINESS

Our customers depend on Internet service providers and Web site operators
for access to our Web site. Some of these groups have experienced significant
outages in the past and could experience outages, delays and other difficulties
due to system failures unrelated to our systems. These types of occurrences
could have a material adverse effect on our business.

A DECREASE IN THE GROWTH OF WEB USAGE OR INADEQUATE INTERNET INFRASTRUCTURE
WOULD ADVERSELY AFFECT OUR BUSINESS

The Internet industry is new and rapidly evolving. A decrease in the growth
of Web usage would have a material and adverse effect on our business. Some of
the factors that may inhibit growth in Web usage are:

- inadequate Internet infrastructure;

- security and privacy concerns;

- inconsistent quality of service; and

- unavailability of cost-effective, high-speed service.

13

The success of our dELiAs.cOm Web site depends upon the ability of the
Internet infrastructure to support increased use. The performance and
reliability of the Web may decline as the number of users increases or the
bandwidth requirements of users increase. The Web has experienced a variety of
outages due to damage to portions of its infrastructure. If outages or delays
frequently occur in the future, Web usage, including usage of our dELiAs.cOm Web
site, could grow slowly or decline. Even if the necessary infrastructure or
technologies are developed, we may have to spend considerable amounts to adapt
our solutions accordingly.

WEB SECURITY CONCERNS COULD HINDER ONLINE COMMERCE

The need to transmit confidential information such as credit card and other
personal information securely over the Internet has been a significant barrier
to online commerce. Any publicized compromise of security could deter people
from accessing the Web or from using it to transmit confidential information.
These security concerns could reduce our market for online commerce. We may also
incur significant costs to protect ourselves against the threat of problems
caused by security breaches.

ITEM 2. PROPERTIES

The following table sets forth information regarding our principal
facilities, excluding retail stores. Except for the property in Hanover, PA,
which we purchased during fiscal 1999, all such facilities are leased. We
believe our facilities are well maintained and in good operating condition.

- --------------------------

* We have negotiated a definitive settlement to terminate this lease.

** We are currently negotiating to terminate this lease or to sublet the space.

ITEM 3. LEGAL PROCEEDINGS

In 1999, two separate purported securities class action lawsuits were filed
against dELiA*s Inc. and certain of its officers and directors, and one former
officer of a subsidiary. The original complaints were filed in Federal District
Court for the Southern District of New York by Allain Roy on June 1, 1999 and by
Lorraine Padgett on June 3, 1999. The suits were consolidated into a single
class action and an amended and consolidated complaint was filed on March 22,
2000. The complaint in this lawsuit purports to be a class action on behalf of
the purchasers of our securities during the period January 20, 1998 through
September 10, 1998. The complaint generally alleges that the defendants violated
Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder
by making material misstatements and by failing to disclose allegedly material
information regarding trends in our business. The complaint also alleges that
the individual defendants are liable for those violations under Section 20(a) of
the Securities Exchange Act. The complaint seeks unspecified damages, attorneys'
and experts' fees and costs, and such other relief as the court deems proper. On
April 14, 2000, dELiA*s Inc. and the other named defendants filed a motion to
dismiss the lawsuit. The motion to dismiss was denied on March 29, 2001. By
order dated December 10, 2001, the court certified the class. We filed our
answer to the consolidated amended complaint on February 13, 2002. We intend to
vigorously defend against this action. While an estimate of the possible range
of loss cannot be made,

14

based upon information presently known to management, we believe that the claim
is covered under our insurance policy and do not believe that the ultimate
resolution of this lawsuit will have a material adverse effect on our business.

Between August 17 and August 25, 2000, three purported class action
complaints on behalf of stockholders of iTurf Inc., a partly-owned subsidiary of
dELiA*s Inc. at the time, were filed in Delaware Chancery Court against
iTurf Inc., dELiA*s Inc. and each of iTurf's directors. These actions include:
Pack v. Kahn, et al., Del. Ch., C.A. No. 18242NC, Semeraro v. Kahn, et al., Del.
Ch., C.A. No. 18258, and Engel v. Kahn, et al., Del. Ch., C.A. No. 18260NC. All
three complaints made virtually identical claims, alleging that dELiA*s Inc. and
the members of iTurf's board of directors breached their fiduciary duties to
iTurf's public stockholders and that the merger exchange ratio was unfair to
iTurf's public stockholders. The actions were consolidated and an amended
complaint was filed on January 19, 2001. On March 5, 2001, we answered that
complaint, asserted affirmative defenses and separately moved to strike certain
allegations. Also on March 5, 2001, we moved to dismiss the complaint. On
January 15, 2002, all parties entered into a stipulation and agreement of
compromise, settlement and release. Pursuant to the settlement, the defendants
will receive full release in exchange for one million shares of dELiA*s common
stock, which shares were issued and delivered on April 26, 2002. The total
$6.3 million value of the non-cash settlement is recorded as a fiscal 2001
merger charge with an offset to additional paid-in capital. The settlement was
approved without objection by the court on April 8, 2002 and, provided no appeal
is taken, will become a final order in May 2002.

In the first quarter of fiscal 2001, we were served with a purported class
action complaint alleging that we improperly collected sales tax from residents
of New York State. On October 31, 2001, the plaintiffs agreed to discontinue the
action.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

PART II

ITEM 5. MARKET FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS

Since our November 20, 2000 merger, our Class A common stock has traded on
the NASDAQ National Market under the symbol DLIA. Prior to that date,
iTurf Inc. Class A common stock was traded on the NASDAQ National Market under
the symbol TURF while dELiA*s Inc. common stock was traded on the NASDAQ
National Market under the symbol DLIA. The following table sets forth the high
and low sales prices as reported by NASDAQ for the periods indicated for dELiA*s
Corp. Class A common stock since the merger and iTurf Inc. Class A common stock
prior to November 20, 2000. These quotations reflect interdealer prices without
adjustments for retail markups, markdowns or commissions and may not necessarily
represent actual transactions.

15

On April 16, 2002, there were approximately 200 holders of record of our
common stock and approximately 7,800 beneficial owners of our common stock.

DIVIDEND INFORMATION

Since inception, we have neither declared nor paid any cash dividends on our
common stock. We currently intend to retain our earnings for future growth and,
therefore, do not anticipate paying any cash dividends in the foreseeable
future. Our credit agreement prohibits us from paying dividends.

SALES OF UNREGISTERED SECURITIES IN THE FOURTH QUARTER OF FISCAL 2001

None.

ITEM 6. SELECTED FINANCIAL DATA

The selected financial information set forth below has been derived from our
consolidated financial statements. The following selected data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the consolidated financial statements and notes
thereto appearing elsewhere in this report. All applicable information has been
restated to give effect to our December 1997 acquisition of TSI Soccer
Corporation, which was accounted for as a pooling of interests. In addition, all
net income (loss) per share amounts for periods prior to the November 2000
merger of dELiA*s Inc. and iTurf Inc. have been retroactively adjusted to
reflect the merger exchange ratio by multiplying the number of dELiA*s Inc.
shares by 1.715.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH
"ITEM 6--SELECTED FINANCIAL DATA" AND OUR CONSOLIDATED FINANCIAL STATEMENTS AND
NOTES THERETO INCLUDED ELSEWHERE IN THIS REPORT. EXCEPT FOR THE HISTORICAL
INFORMATION PRESENTED, THE DISCUSSION IN THIS REPORT CONTAINS FORWARD-LOOKING
STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES, SUCH AS STATEMENTS OF OUR
PLANS, OBJECTIVES, EXPECTATIONS AND INTENTIONS. THE CAUTIONARY STATEMENTS MADE
IN THIS REPORT SHOULD BE READ AS BEING APPLICABLE TO ALL RELATED FORWARD-LOOKING
STATEMENTS WHEREVER THEY APPEAR IN THIS REPORT. OUR ACTUAL RESULTS COULD DIFFER
MATERIALLY FROM THOSE DISCUSSED HERE. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO
THESE DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED BELOW AND
UNDER "ITEM 1--BUSINESS--RISK FACTORS," AS WELL AS THOSE DISCUSSED ELSEWHERE IN
THIS REPORT.

OVERVIEW

We are a multichannel retailer that markets apparel, accessories and home
furnishings to teenage girls and young women. We reach our customers through the
dELiA*s catalog, www.dELiAs.cOm and the dELiA*s retail stores.

MERGER AND RESTRUCTURING. On November 20, 2000, iTurf Inc. and
dELiA*s Inc. were recombined and the parent company was renamed dELiA*s Corp. As
a result of the "reverse acquisition" accounting treatment, dELiA*s Corp.
reports the historical results of dELiA*s Inc. for periods prior to the merger
with all share and per share information, except for amounts on our Consolidated
Balance Sheets and Consolidated Statements of Stockholders' Equity,
retroactively adjusted to reflect the merger exchange ratio by multiplying the
number of dELiA*s Inc. shares by 1.715. In presenting our shares outstanding and
calculating loss per share for periods after the merger, we have assumed
conversion on the merger date of all eligible shares of dELiA*s Inc. common
stock.

During fiscal 2000, we also announced our intention to focus on our core
dELiA*s brand and to sell or shut down our non-core businesses. In connection
with our fiscal 2000 merger and restructuring initiatives, we recorded
significant charges in fiscal 2000 and additional charges of $10.7 million
during fiscal 2001, including $6.3 million for the non-cash settlement of a
merger-related class action suit.

As a result of our merger and restructuring initiatives, we currently have
two reportable segments: dELiA*s Direct (which includes the operations of our
dELiA*s catalog and our dELiAs.cOm e-commerce site) and dELiA*s Retail. See
Note 5 to our consolidated financial statements for disclosure of results by
reportable segment.

17

FISCAL 2001 FINANCE INITIATIVES AND EXTRAORDINARY ITEM. Our fiscal 2001
merger, restructuring and finance charges include a $600,000 finance charge
relating to the early termination of an interest rate swap that was tied to our
distribution facility mortgage. Also during fiscal 2001, we recorded an
extraordinary charge of approximately $800,000 when we replaced our Congress
Financial Corporation credit facility with one from Wells Fargo Retail Finance
LLC.

THESPARK.COM, INC. On February 15, 2000, we acquired TheSpark.com, Inc. In
accordance with the acquisition agreement, as amended, we paid the sellers
$4.2 million (including $1.7 million in connection with our March 2001 sale of
the businesses) in fiscal 2001 and issued them 1,315,271 and 197,835 shares of
our Class A common stock on June 1, 2001 and March 1, 2002, respectively. The
value of all consideration paid subsequent to our decision to sell the
businesses was included in our restructuring charges.

SALE OF COMMON STOCK. On June 19, 2001, we sold 5.74 million shares of our
Class A common stock for approximately $29.5 million in net proceeds.

CAPITAL INVESTMENTS. We have made and continue to make significant capital
expenditures for construction of our dELiA*s retail stores. Our current plan is
to grow the total number of dELiA*s retail stores by 20 during fiscal 2002. We
expect capital expenditures of approximately $10 million, the majority of which
will be spent on the expansion of our retail store base.

CRITICAL ACCOUNTING POLICIES INVOLVING ESTIMATES. Our financial statements
are based on the selection and application of significant accounting policies,
which require management to make significant estimates and assumptions. We
believe that the following are some of the more critical judgment areas in the
application of our accounting policies currently affect our financial condition
and results of operations:

- REVENUE RECOGNITION--Revenue is recognized when merchandise is shipped to
customers or at the point of retail sale. We accrue a sales return
allowance in accordance with our return policy for estimated returns of
merchandise subsequent to the balance sheet date that relate to sales
prior to that date.

- CATALOG COSTS--Catalog costs, which primarily consist of catalog
production and mailing costs, are capitalized and amortized over the
expected life of the related future revenue stream, which generally covers
three to five months from mailing date. We account for catalog costs in
accordance with AICPA Statement of Position ("SOP") 93-7, "Reporting on
Advertising Costs." SOP 93-7 requires that expenses relating to
capitalized advertising costs be computed using the ratio of current
period revenues for the catalog cost pool to the total of current and
estimated future period revenues for that catalog cost pool.

- MERCHANDISE INVENTORIES--Merchandise inventories, which are primarily
finished goods, are stated at the lower of cost (determined on a first-in,
first-out basis) or market value, which is determined based on estimated
recovery.

- LONG-LIVED ASSETS--In accordance with the Statement of Financial
Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of
Long-Lived Assets and Long-Lived Assets to Be Disposed Of," we
periodically review long-lived assets and certain identifiable intangibles
for impairment whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. Recoverability of
assets to be held and used is measured by a comparison of the carrying
amount of an asset to future net cash flows (on an undiscounted basis)
expected to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized would be measured by the amount
by which the carrying amount of the assets exceeds the fair value of the
assets.

18

RECENT ACCOUNTING PRONOUNCEMENTS--In June 2001, the Financial Accounting
Standards Board issued Statement No. 142, "Goodwill and Other Intangible
Assets." SFAS 142 addresses the accounting and reporting of acquired goodwill
and other intangible assets. SFAS 142 discontinues amortization of acquired
goodwill and instead requires annual impairment testing of acquired goodwill.
Intangible assets will be amortized over their useful economic life and tested
for impairment in accordance with SFAS 121 "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." Intangible
assets with an indefinite useful economic life should not be amortized until the
life of the asset is determined to be finite. In connection with our adoption of
SFAS 142, we expect to record a favorable cumulative effect of change in
accounting principle of approximately $15.4 million in the first quarter of
fiscal 2002. This amount represents the reversal of the unamortized balance of
the negative goodwill recorded on our books in connection with the
November 2000 merger of dELiA*s Inc. and iTurf Inc.

In August 2001, the Financial Accounting Standards Board issued Statement
No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" which
supersedes SFAS 121 "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of." SFAS 144 is effective for fiscal years
beginning after December 15, 2001. The adoption of SFAS 144 is not expected to
have a material effect on our consolidated financial position or results of
operations.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, the percentage
relationship of items from our Consolidated Statements of Operations to net
sales. Any trends reflected by the following table may not be indicative of
future results.

19

COMPARISON OF FISCAL YEARS 2000 AND 2001

NET SALES. Net sales decreased approximately $71.4 million from
$215.1 million in fiscal 2000 to $143.7 million in fiscal 2001. The decrease was
primarily due to the impact of divestitures of non-core businesses. Net sales in
our core dELiA*s business decreased 2% with a 13% decrease in dELiA*s Direct and
a 20% increase at dELiA*s Retail. The decrease at Direct can be attributed to
the current economic environment as well as sporadic mail delays and mail
disruptions that delayed the in-home date of our key holiday mailing in many of
our major markets. The increase at Retail is a function of our continued store
expansion, a trend that we plan to continue. However, comp store sales declined
as a result of decreased mall traffic, particularly in the Northeast where the
majority of our stores are located.

GROSS MARGIN. Gross margin increased from 44.6% in fiscal 2000 to 47.2% in
fiscal 2001 primarily as a result of the elimination of lower margin non-core
businesses. Gross margin for our core dELiA*s business remained essentially
flat. We expect gross margins to improve as we continue to increase our dELiA*s
branded merchandise offerings and continue our sourcing initiatives.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses decreased approximately $70.9 million from
$155.5 million in fiscal 2000 to $84.6 million in fiscal 2001. Selling, general
and administrative expenses also decreased as a percentage of net sales, from
72.3% in fiscal 2000 to 58.9% in fiscal 2001. Approximately $58.2 million of the
decrease relates to operating expenses of our discontinued non-core businesses.
Depreciation, amortization and non-cash compensation expenses decreased
approximately $13.2 million. Operating expenses at our core dELiA*s business
also decreased; increases of $4.9 million at dELiA*s Retail primarily related to
the continued expansion of our store base while decreases of $5.5 million at
dELiA*s Direct related primarily to online advertising and mailing costs. These
decreases were offset by $1.1 million net increases in other expenses.

MERGER, RESTRUCTURING AND FINANCE CHARGES. During fiscal 2000, we recorded
primarily non-cash charges of $29.2 million relating to our decision to focus
exclusively on our core dELiA*s business and the related merger. Additional
related charges are included in fiscal 2000 cost of sales and income taxes.
During fiscal 2001, we recorded additional charges of $4.4 million as we
substantially completed the sale or shut down of our non-core businesses. In
addition, a $600,000 finance charge in fiscal 2001 related to the early
termination of an interest rate swap that was tied to our distribution facility
mortgage.

MERGER SETTLEMENT CHARGE. During fiscal 2001, we recorded a $6.3 million
charge for the non-cash settlement of a merger-related class action suit and
$4.4 million for other costs related to substantially completing our initiatives
to dispose of our non-core businesses. In addition, a $600,000 finance charge in
fiscal 2001 related to the early termination of an interest rate swap that was
tied to our distribution facility mortgage.

INTEREST AND OTHER INCOME, NET. Interest and other income, net was $300,000
in fiscal 2000 and $500,000 in fiscal 2001. The fiscal 2000 income was offset,
in party, by a one-time loss on an investment in an Internet business.

20

MINORITY INTEREST. For the period that iTurf Inc. was not wholly-owned by
dELiA*s, we reflected the outside ownership of iTurf as minority interest.

INCOME TAXES. In accounting for the November 2000 merger of dELiA*s Inc.
and iTurf Inc., deferred tax liabilities relating to earlier issuances of iTurf
common stock were eliminated and the remaining net deferred tax asset was
reserved with a non-cash tax charge of $19.8 million. Since the November 2000
merger of dELiA*s Inc. and iTurf Inc., our deferred tax assets have been fully
reserved due to the uncertainty of our ability to utilize the benefit.

EXTRAORDINARY ITEM. During the third quarter of fiscal 2001, we entered
into an agreement with Wells Fargo Retail Finance LLC that provides us with a
$25 million line of credit. This facility replaces the credit facility we had
with Congress Financial Corporation. In connection with this change in lenders,
we have recorded a charge of approximately $800,000.

COMPARISON OF FISCAL YEARS 1999 AND 2000

NET SALES. Net sales increased 12.7% to $215.1 million in fiscal 2000 from
$190.8 million in fiscal 1999. The increase is primarily due to increases in our
core dELiA*s businesses, with increases of $28.2 million and $11.0 million in
dELiA*s Retail and dELiA*s Direct, respectively. The increase in net sales in
our dELiA*s Retail segment is primarily due to 14 new store openings and the
increase in net sales in our dELiA*s Direct segment is primarily due to higher
sales per catalog mailed. These increases were offset by decreases in our
non-core businesses of $14.9 million, with a significant portion of that
decrease relating to the closure of our Screeem! retail chain.

GROSS MARGIN. Gross margin increased to 44.6% in fiscal 2000 from 43.3% in
fiscal 1999. The change represents significant improvements in our core dELiA*s
business partially offset by declines in our non-core businesses.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased approximately $31.2 million, to
$155.5 million or 72.3% of net sales in fiscal 2000 from $124.3 million or 65.2%
of net sales in fiscal 1999. The increase primarily relates to our Internet and
other non-core businesses, in particular to the increase in goodwill
amortization associated with our acquisitions of Internet businesses. In our
core dELiA*s businesses, increases at dELiA*s Retail of $13.0 million, relating
to the addition of 14 new stores, were partially offset by decreases at dELiA*s
Direct in excess of $3.0 million.

MERGER AND RESTRUCTURING CHARGES. During fiscal 2000, we recorded primarily
non-cash charges of $29.2 million relating to our decision to focus exclusively
on our core dELiA*s business and the related merger. During fiscal 1999, we
recorded a charge of $23.7 million in connection with our plans to close our
Screeem! and Jean Country retail operations. These charges are in addition to
the related charges included in cost of sales and income taxes.

GAIN ON SUBSIDIARY IPO AND SALE OF SUBSIDIARY STOCK. In connection with the
April 1999 iTurf initial public offering, we recognized a one-time pre-tax gain
of approximately $70.1 million. During the fourth quarter of fiscal 1999, we
recorded an additional $8.0 million pre-tax gain on our sale of 1,075,000 shares
of iTurf stock for cash.

MINORITY INTEREST. For the period that iTurf Inc. was not wholly-owned by
dELiA*s, we reflected the outside ownership of iTurf as minority interest.

INTEREST AND OTHER INCOME, NET. Interest and other income, net decreased to
$300,000 in fiscal 2000 from $2.4 million in fiscal 1999 due to the sale of
marketable securities, increased interest expense due to additional borrowings
and a one-time loss in fiscal 2000 on an investment in an Internet business.

21

INCOME TAXES. In accounting for the November 2000 merger of dELiA*s Inc.
and iTurf Inc., deferred tax liabilities relating to earlier issuances of iTurf
common stock were eliminated and the remaining net deferred tax asset was
reserved with a non-cash tax charge of $19.8 million.

SELECTED QUARTERLY RESULTS OF OPERATIONS AND SEASONALITY

We experience seasonal and cyclical fluctuations in our revenues and results
of operations. For example, sales of apparel, accessories and footwear are
generally lower in the first half of each year than in the second half. In
addition, due to the cyclical nature of our businesses and our sensitivity to
consumer spending patterns, purchases of apparel and accessories tend to decline
during recessionary periods and may decline at other times. Consequently, our
results of operations from quarter to quarter may become less comparable. Our
quarterly results will also be affected by the timing of catalog mailings and
promotions and may also fluctuate as a result of a number of other factors
described in "Risk Factors." As a result of seasonal and cyclical patterns and
these other factors, you should not rely on quarter-to-quarter comparisons of
our results of operations as indicative of our future performance.

LIQUIDITY AND CAPITAL RESOURCES

Cash used by operations was $15.6 million in fiscal 2001 compared to
$37.0 million in fiscal 2000. This decrease primarily relates to lower operating
losses as a result of the sale or shut down of our non-core businesses in
connection with our restructuring initiatives.

Investing activities provided $6.5 million and $24.1 million in fiscal 2001
and 2000, respectively, primarily relating to net proceeds from our investments
offset by capital expenditures and, in fiscal 2001, to the cash proceeds and
payments relating to our non-core businesses. During fiscal 2002, we expect to
make capital expenditures of approximately $10 million, primarily for the
expansion of our retail store base.

Financing activities were not significant in fiscal 2000. In fiscal 2001,
financing activities provided cash of $26.9 million, which primarily relates to
the June 2001 sale of 5.74 million shares of our Class A common stock and stock
option exercises.

In August 1999, in connection with the purchase of our distribution facility
in Hanover, Pennsylvania, we borrowed $5.3 million from Allfirst Bank in the
form of a seven-year mortgage loan on the property. We are subject to certain
covenants under the loan agreement, including a covenant to maintain a fixed
charge coverage ratio. In August 1999, we also entered into an interest-rate
swap agreement with Allfirst Bank, under which we effectively converted the
LIBOR-based variable interest rate mortgage to a fixed rate loan with an
interest rate of approximately 8.78%. Effective May 1, 2001, we received a
waiver of the fixed charge coverage ratio covenant through August 6, 2003 in
exchange for a principal payment of $2.0 million on May 7, 2001 and our
agreement to pay on August 6, 2003 the outstanding principal balance as of that
date. On May 4, 2001, we terminated the related interest-rate swap agreement and
recorded a $600,000 charge. The principal balance on the mortgage was
$5.2 million and $3.1 million as of February 3, 2001 and February 2, 2002,
respectively. Future mortgage principal payments are as follows: fiscal
2002--$100,000; and 2003--$3.0 million.

As of September 24, 2001, we entered into a three-year agreement with Wells
Fargo Retail Finance LLC, a subsidiary of Wells Fargo & Company, consisting of a
revolving line of credit that permits us to borrow up to $25 million, limited to
specified percentages of the value of our eligible inventory as determined under
the credit agreement, and provides for the issuance of documentary and standby

23

letters of credit up to $10 million. Under this Wells Fargo facility, as
amended, our obligations are secured by a lien on substantially all of our
assets, except certain real property and other specified assets. The agreement
contains certain covenants and default provisions customary for credit
facilities of this nature, including limitations on our payment of dividends.
The agreement also contains controls on our cash management and certain limits
on our ability to distribute assets. This credit facility replaced our existing
facility with Congress Financial Corporation. At our option, borrowings under
this facility bear interest at Wells Fargo Bank's prime rate plus 50 basis
points or at the Eurodollar Rate plus 275 basis points. A fee of 0.375% per year
is assessed monthly on the unused portion of the line of credit as defined in
the agreement. The facility matures September 30, 2004 and can extend for
successive twelve-month periods at our option under certain terms and
conditions. In connection with our change in lenders, we have recorded a charge
of approximately $800,000 in fiscal 2001. As of February 2, 2002, the
outstanding balance, which was classified as current, was $4.4 million,
outstanding letters of credit were $800,000 and unused available credit was
$2.8 million.

We believe that our cash on hand and cash generated by operations, together
with the funds available under our credit agreement, will be sufficient to meet
our capital and operating requirements through fiscal 2002. Our future capital
requirements depend on numerous factors, including, without limitation, the
success of our marketing, sales and distribution efforts. Additional funds, if
required, may not be available to us on favorable terms or at all.

The following is a summary of our contractual obligations and commitments as
of February 2, 2002 and the timing of related future payments:

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Our variable-rate mortgage arrangements and our credit facility expose us to
changes in interest rates. Based on our outstanding balances of $3.1 million and
$4.4 million, respectively, at February 2, 2002, a hypothetical 100 basis point
increase in interest rates would cause an increase in our annual interest
expense of approximately $75,000.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See Item 14 of Part IV of this report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

24

PART III

The information required by Part III (Items 10 through 13) is incorporated
by reference to the captions "Beneficial Ownership of Voting Securities,"
"Election of Directors," "Management" and "Certain Transactions" in our
definitive Proxy Statement to be filed with the Securities and Exchange
Commission pursuant to Regulation 14A within 120 days after the end of our
fiscal year covered by this report.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, AND REPORTS ON FORM 8-K

(a) See Index to Financial Statements on page F-1.

All schedules are omitted either because they are not applicable or the
required information is disclosed in the consolidated financial statements or
notes thereto.

(b) We did not file any reports on Form 8-K during the fourth quarter of
fiscal 2001.

(c) See Exhibit Index immediately following Signature Page.

25

DELIA*S CORP.

INDEX TO CONSOLIDATED FINANCIAL STATEMENT

F-1

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Stockholders of dELiA*s Corp.

We have audited the accompanying consolidated balance sheets of dELiA*s
Corp. (the "Company") as of February 3, 2001 and February 2, 2002 and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the three fiscal years in the period ending February 2, 2002.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
dELiA*s Corp. as of February 3, 2001 and February 2, 2002 and the consolidated
results of the Company's operations and cash flows for each of the three fiscal
years in the period ending February 2, 2002 in conformity with accounting
principles generally accepted in the United States.

ERNST & YOUNG LLP

New York, New York
March 11, 2002,
except for the last paragraph of Note 10,
as to which the date is April 26, 2002

F-2

DELIA*S CORP.

CONSOLIDATED BALANCE SHEETS

FEBRUARY 3, 2001 AND FEBRUARY 2, 2002
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

See notes to consolidated financial statements.

F-3

DELIA*S CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
FISCAL YEARS ENDED JANUARY 29, 2000, FEBRUARY 3, 2001 AND FEBRUARY 2, 2002
(IN THOUSANDS, EXCEPT PER SHARE DATA)

See notes to consolidated financial statements.

F-4

DELIA*S CORP.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FISCAL YEARS ENDED JANUARY 29, 2000, FEBRUARY 3, 2001 AND FEBRUARY 2, 2002
(IN THOUSANDS, EXCEPT SHARE DATA)

See notes to consolidated financial statements.

F-5

DELIA*S CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FISCAL YEARS ENDED JANUARY 29, 2000, FEBRUARY 3, 2001 AND FEBRUARY 2, 2002
(IN THOUSANDS)

See notes to consolidated financial statements.

F-6

DELIA*S CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 2, 2002

1. BUSINESS AND BASIS OF PRESENTATION

We are a multichannel retailer that markets apparel, accessories and home
furnishings to teenage girls and young women. We reach our customers through the
dELiA*s catalog, www.dELiAs.cOm and the dELiA*s retail stores.

On April 14, 1999, dELiA*s Inc. completed the initial public offering of 28%
of the common stock of iTurf Inc., its Internet-focused subsidiary. iTurf used
$17.7 million of the offering proceeds to purchase from dELiA*s Inc. 945,044
shares (551,046 pre-merger shares) of dELiA*s Inc. common stock, which was
treated as treasury stock in the consolidation of dELiA*s Inc. In connection
with the subsidiary offering, dELiA*s Inc. recognized a pre-tax gain of
approximately $70.0 million. Later in fiscal 1999, dELiA*s Inc. sold an
additional 1.1 million shares of iTurf stock for cash and recorded a related
gain of $8.0 million. As a result of such sales and the issuance of additional
shares for acquisitions, dELiA*s Inc.'s ownership of iTurf declined to 54% as of
November 20, 2000.

On November 20, 2000, iTurf Inc. and dELiA*s Inc. were recombined through
the merger of dELiA*s Inc. into a wholly-owned subsidiary of iTurf Inc. We
issued 1.715 shares of iTurf Class A common stock to dELiA*s Inc. stockholders
for each outstanding share of dELiA*s Inc. common stock surrendered in the
merger. All outstanding dELiA*s Inc. options and shares of restricted stock were
converted at the same exchange ratio. We renamed the parent company of the
recombined business dELiA*s Corp. Because the former stockholders of
dELiA*s Inc. owned more than 50% of dELiA*s Corp. after the merger, the
transaction was accounted for as a "reverse acquisition" by dELiA*s Inc. of the
minority interest in iTurf. In connection with the merger, deferred tax
liabilities relating to earlier issuances of iTurf common stock were eliminated
and the remaining net deferred tax asset was reserved with a fiscal 2000 tax
charge (see Note 13) of $19.8 million. The excess of the net assets acquired
over the merger consideration, after the writeoff of the minority interest
proportionate percentage of iTurf's noncurrent assets and an adjustment relating
to our fiscal 2000 restructuring initiatives (see Note 4), was recorded as
$20.1 million of "excess of fair value over purchase price" for amortization
over five years.

As a result of the "reverse acquisition" treatment, dELiA*s Corp. reports
the historical results of dELiA*s Inc. for periods prior to the merger with all
share and per share information, except for amounts on our Consolidated Balance
Sheets and Consolidated Statements of Stockholders' Equity, retroactively
adjusted to reflect the merger exchange ratio by multiplying the number of
dELiA*s Inc. shares by 1.715. In presenting our shares outstanding and
calculating loss per share for periods after the merger, we have assumed
conversion on the merger date of all eligible shares of dELiA*s Inc. common
stock. References herein to "we," "our" and similar phrases and to "dELiA*s"
refer to dELiA*s Inc. prior to November 20, 2000 and to dELiA*s Corp. on or
after that date.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

FISCAL YEAR--In May 1999, we announced a change in our fiscal year to the 52
or 53 weeks ended on the Saturday closest to January 31 following the
corresponding calendar year. References in this report to "fiscal 2001" mean the
period from February 4, 2001 to February 2, 2002. References in this report to
"fiscal 2000" mean the period from January 30, 2000 to February 3, 2001.
References to "fiscal 1999" mean the period from February 1, 1999 to
January 29, 2000.

PRINCIPLES OF CONSOLIDATION--Our consolidated financial statements include
the accounts of dELiA*s and subsidiaries, all of which, except iTurf, were
wholly-owned for all periods presented. For the period

F-7

DELIA*S CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FEBRUARY 2, 2002

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
that iTurf was not wholly-owned, the accounts of iTurf were included in the
consolidated financial statements with the outside ownership of iTurf reflected
as minority interest. All significant intercompany balances and transactions
have been eliminated in consolidation.

USE OF ESTIMATES--The preparation of financial statements in conformity with
accounting principles generally accepted in the United States requires us to
make estimates and assumptions that affect the amounts reported in our financial
statements and footnotes thereto. Actual results could differ from those
estimates.

RECLASSIFICATIONS--Certain amounts have been reclassified to conform to the
current period presentation.

STATEMENTS OF CASH FLOWS--During fiscal 1999, 2000 and 2001, we paid
$600,000, $1.3 million and $600,000, respectively, for interest and did not pay
any income taxes. Non-cash investing and financing activities include the
issuances of common stock for the merger described in Note 1, the acquisitions
described in Note 3 and the merger settlement described in Note 10 and the
issuances of restricted stock described in Note 11.

CASH AND CASH EQUIVALENTS--We consider all highly liquid investments with
maturities of 90 days or less when purchased to be cash equivalents. Cash
equivalents are stated at cost, which approximates market value.

RESTRICTED CASH--Restricted cash represents collateral for replacement
letters of credit issued in connection with our change in lenders. The
restriction will be removed after the letters of credit expire or are cancelled,
which is expected to be completed during fiscal 2002.

INVESTMENTS--Our investments consisted of debt securities, principally
instruments of the U.S. Government and its agencies, of municipalities and of
short-term mutual municipal and corporate bond funds. All such investments were
classified as held-to-maturity and carried at amortized cost. Realized gains and
losses on sales of these securities were reported in earnings and computed using
the specific identification cost basis.

MERCHANDISE INVENTORIES--Merchandise inventories, which are primarily
finished goods, are stated at the lower of cost (determined on a first-in,
first-out basis) or market value, which is determined based on estimated
recovery.

CATALOG COSTS--Catalog costs, which primarily consist of catalog production
and mailing costs, are capitalized and amortized over the expected life of the
related future revenue stream, which generally covers three to five months from
mailing date. We account for catalog costs in accordance with AICPA Statement of
Position ("SOP") 93-7, "Reporting on Advertising Costs." SOP 93-7 requires that
expenses relating to capitalized advertising costs be computed using the ratio
of current period revenues for the catalog cost pool to the total of current and
estimated future period revenues for that catalog cost pool. Deferred catalog
costs, which are included in prepaid expenses and other current assets, were
$3.1 million as of February 3, 2001. As of February 2, 2002, our deferred
catalog cost balance was minimal.

ADVERTISING COSTS--Advertising expenses that are not direct-response catalog
costs are expensed as incurred. For fiscal 1999, 2000 and 2001, such expenses
amounted to $10.6 million, $14.6 million and

F-8

DELIA*S CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FEBRUARY 2, 2002

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
$1.3 million, respectively. Prior to fiscal 2001, these expenses related
primarily to our Internet businesses.

LONG-LIVED ASSETS--In accordance with the Statement of Financial Accounting
Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets
and Long-Lived Assets to Be Disposed Of," we periodically review long-lived
assets and certain identifiable intangibles for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash flows (on an
undiscounted basis) expected to be generated by the asset. If such assets are
considered to be impaired, the impairment to be recognized would be measured by
the amount by which the carrying amount of the assets exceeds the fair value of
the assets.

REVENUE RECOGNITION--Revenue is recognized when merchandise is shipped to
customers or at the point of retail sale. We accrue a sales return allowance in
accordance with our return policy for estimated returns of merchandise
subsequent to the balance sheet date that relate to sales prior to that date. As
of February 3, 2001 and February 2, 2002, the sales return allowance, which is
included in customer liabilities, was $859,000 and $523,000, respectively.

NONMONETARY TRANSACTION--During fiscal 2001, we exchanged some of our excess
inventory, which had an original cost of $600,000 and a carrying value of
$300,000, for the right to receive future goods and services also valued at
$300,000. As of February 2, 2002, the related asset was approximately $300,000.

SHIPPING EXPENSES--Expenses incurred in shipping goods to customers are
included in cost of sales.

RECOGNITION OF GAIN ON ISSUANCE OF SUBSIDIARY STOCK--In accordance with the
SEC Staff Accounting Bulletin "Accounting for Sales of Stock by a Subsidiary,"
dELiA*s recorded a gain on the April 1999 issuance of subsidiary stock for the
excess of the offering price per share over the carrying amount because the sale
of such shares by a subsidiary was not a part of a broader corporate
reorganization contemplated or planned. During the fourth quarter of fiscal
1999, we contemplated reorganization plans with respect to that subsidiary that
precluded us from recognizing similar gains in connection with subsequent
issuances of that subsidiary's stock.

INCOME TAXES--Deferred income tax assets and liabilities are recorded in
accordance with SFAS No. 109. Valuation allowances are provided when the
expected realization of tax assets does not meet a "more likely than not"
criteria. (See Note 13.)

COMPUTATION OF HISTORICAL NET INCOME (LOSS) PER SHARE--We calculate net
income (loss) per share in accordance with SFAS No. 128, "Computation of
Earnings Per Share" and SEC Staff Accounting Bulletin No. 98. (See Note 6.)

STOCK-BASED COMPENSATION--In accordance with Accounting Principles Board
("APB") No. 25, "Accounting for Stock Issued to Employees," compensation cost
for stock-based awards is measured as the excess, if any, of the quoted market
price of our stock as of the time of grant over the amount, if any, that an
employee must pay to acquire the stock. Stock options are generally granted with
exercise prices equal to the fair value of the shares as of the date of grant;
accordingly, we do not generally recognize compensation expense in connection
with stock options. (See Note 11.)

F-9

DELIA*S CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FEBRUARY 2, 2002

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RECENT ACCOUNTING PRONOUNCEMENTS--In June 2001, the Financial Accounting
Standards Board issued Statement No. 142, "Goodwill and Other Intangible
Assets." SFAS 142 addresses the accounting and reporting of acquired goodwill
and other intangible assets. SFAS 142 discontinues amortization of acquired
goodwill and instead requires annual impairment testing of acquired goodwill.
Intangible assets will be amortized over their useful economic life and tested
for impairment in accordance with SFAS 121 "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." Intangible
assets with an indefinite useful economic life should not be amortized until the
life of the asset is determined to be finite. In connection with our adoption of
SFAS 142, we expect to record a favorable cumulative effect of change in
accounting principle of approximately $15.4 million in the first quarter of
fiscal 2002. This amount represents the reversal of the unamortized balance of
the negative goodwill recorded on our books in connection with the
November 2000 merger of dELiA*s Inc. and iTurf Inc.

In August 2001, the Financial Accounting Standards Board issued Statement
No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" which
supersedes SFAS 121 "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of." SFAS 144 is effective for fiscal years
beginning after December 15, 2001. The adoption of SFAS 144 is not expected to
have a material effect on our consolidated financial position or results of
operations.

3. ACQUISITIONS

THESPARK.COM, INC.

On February 15, 2000, we acquired TheSpark.com, Inc. The aggregate
consideration paid consisted of newly issued shares of a subsidiary's common
stock and the right to receive additional consideration based on the achievement
of certain performance goals. The transaction was accounted for under the
purchase method of accounting with the operating results of the acquired
business included in our consolidated financial statements from the date of
acquisition and the excess of the aggregate purchase price over the fair market
value of net assets acquired of $14.1 million allocated to goodwill. The
goodwill was assigned a five-year life for amortization. In connection with this
issuance of a subsidiary's common stock, we recorded $2.8 million as additional
paid-in capital.

On January 12, 2001, we entered into an agreement with representatives of
the sellers to amend our contingent obligations under the acquisition agreement.
In accordance with the amended agreement, we paid them $4.2 million (including
$1.7 million in connection with our March 2001 sale of the businesses) in fiscal
2001 and issued them 1,315,271 and 197,835 shares of our Class A common stock on
June 1, 2001 and March 1, 2002, respectively. The value of all consideration
paid or issued subsequent to our decision to sell the businesses (see Note 4)
was included in our restructuring charges.

T@PONLINE.COM, INC.

On September 1, 1999, we acquired T@ponline.com, Inc., an operator of a Web
site directed at college and university students that we renamed Ontap.com, for
newly issued shares of a subsidiary's common stock. We accounted for the
transaction under the purchase method of accounting with the operating results
of the acquired business included in our consolidated financial statements from
the date of acquisition and the excess of the aggregate purchase price over the
fair market value of net

F-10

DELIA*S CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FEBRUARY 2, 2002

3. ACQUISITIONS (CONTINUED)
assets acquired of $19.0 million allocated to goodwill. The goodwill was
assigned a five-year life for amortization. In connection with this issuance of
a subsidiary's common stock, we recorded $6.9 million as additional paid-in
capital. During fiscal 2000, we shut down the acquired Internet site. (See
Note 4.)

SCREEEM! AND JEAN COUNTRY

In July 1998, dELiA*s acquired assets located in 26 retail stores operated
under the Screeem! and Jean Country names, as well as the leases for such stores
and several related trademarks. The total shares issued for the acquisition
includes shares issued in February 2000 net of shares cancelled in fiscal 1999
for a working capital purchase price adjustment. The $1.4 million value of the
shares issued in February 2000 was recorded as an increase to goodwill and
stockholders' equity in fiscal 1999 as the contingencies relating to such
issuance had been satisfied by January 29, 2000.

4. MERGER, RESTRUCTURING AND FINANCE CHARGES

FISCAL 2001

During fiscal 2001, we substantially completed our prior year merger and
restructuring initiatives (see below) and recorded the following related
charges:

- $2.3 million for non-cash asset writedowns attributable to the
discontinued non-core businesses, which primarily relates to our June 1,
2001 stock issuance to the sellers of TheSpark.com Inc., the value of
which exceeded our reserve due to the appreciation of our share price;

- a $1.2 million loss, which is net of a $100,000 gain, on the sales of
non-core businesses; and

- a $900,000 increase in reserves, which is net of the reversal of excess
reserves of $85,000, for lease and other obligations as actual costs
differed from our original estimates.

We also recorded a $600,000 finance charge relating to the early termination
of an interest rate swap that was tied to our distribution facility mortgage
(see Note 9) and agreed on a non-cash settlement of a class action suit relating
to the November 2000 merger of dELiA*s Inc. and iTurf Inc (see Note 10.)

As of February 2, 2002, $2.2 million remains accrued for future lease and
other obligations relating to our restructuring initiatives. We expect this
amount to be paid in fiscal 2002.

FISCAL 2000

During fiscal 2000, dELiA*s Inc. and iTurf Inc. merged and we announced our
intention to focus on our core dELiA*s brand and to sell or shut down our
non-core businesses. The merger and restructuring of our businesses included the
following initiatives, which were substantially completed in fiscal 2001:

- the recombination of dELiA*s Inc. and iTurf Inc. in order to allow us,
among other things, to manage the catalog and e-commerce components of our
dELiA*s Direct business segment better;

- the liquidation of our Droog direct business;

F-11

DELIA*S CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FEBRUARY 2, 2002

4. MERGER, RESTRUCTURING AND FINANCE CHARGES (CONTINUED)
- the sale of substantially all of the assets of our TSI Soccer direct
business;

- the sale of the primary assets of our Storybook Heirlooms direct business;

- the liquidation of the retail operations of TSI Soccer; and

- the decision to exit our Internet community businesses.

In connection with these initiatives, we recorded the following in fiscal
2000:

- $37.6 million for non-cash asset writedowns, offset by a $14.3 million
reduction of the excess of fair value over purchase price attributable to
the operations being shut down or sold;

- $19.8 million for a non-cash tax charge taken in connection with the
merger;

- $3.3 million relating to the liquidation of inventory of businesses being
shut down;

- $3.2 million relating to future lease costs and other contractual
obligations;

- $1.8 million in merger transaction costs;

- $1.2 million in severance costs related to the elimination of
approximately 200 full-time and part-time positions at the locations being
sold or shut down and at our corporate offices; and

- a $500,000 loss on the sale of the TSI Soccer direct business.

The total fiscal 2000 charge of $53.1 million was recorded as $30.0 million
of merger and restructuring charges, a $19.8 million fiscal 2000 income tax
charge and $3.3 million in cost of sales. During fiscal 2000, we also reversed
$800,000 of our Screeem! restructuring reserves as actual lease exit penalties
were less than the amount originally estimated (see below).

FISCAL 1999

During fiscal 1999, we recorded a charge of approximately $24.2 million in
connection with our restructuring plan to exit our Screeem! and Jean Country
retail operations. The charge was comprised of the following:

- $19.4 million for the write-off of the remaining unamortized balance of
goodwill and other intangibles relating to our acquisition of the Screeem!
and Jean Country retail operations;

- $3.6 million for the shutdown of certain retail stores, of which
$2.3 million represented the write-off of assets that would no longer be
used and $1.3 million primarily related to future lease costs;

- $700,000 in severance costs relating to the elimination of approximately
125 full-time and part-time jobs at the Screeem! corporate office and the
store locations to be closed; and

- $500,000 for the liquidation of inventory carried at stores to be
converted or closed.

The total fiscal 1999 charge of $24.2 million is recorded as a
$23.7 million restructuring charge in operating expenses and $500,000 in cost of
sales. The total charge includes $1.4 million of goodwill write-off relating to
the value of 288,187 shares (168,039 pre-merger shares) of common stock issued
in

F-12

DELIA*S CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FEBRUARY 2, 2002

4. MERGER, RESTRUCTURING AND FINANCE CHARGES (CONTINUED)
February 2000. This additional goodwill charge was recorded in fiscal 1999, when
the related contingencies were satisfied, as an increase to additional paid-in
capital.

All stores were closed or converted to dELiA*s stores and all planned job
eliminations completed by the end of fiscal 2000.

5. SEGMENTS

Our reportable segments changed as a result of our fiscal 2000 merger and
restructuring initiatives. All disclosures have been restated to conform to the
current presentation. We currently have two reportable segments: dELiA*s Direct
and dELiA*s Retail. All of our other businesses have been sold or shut down and
therefore no longer qualify as operating segments under SFAS No. 131 and are
included as "non-core" below. Our two segments offer similar products to similar
customers, but are managed separately because of their distribution methods.
Both segments earn revenues primarily from the sale of apparel, accessories and
home furnishings to consumers. The Direct segment takes phone, online and mail
orders from our customers and ships merchandise directly to those customers. Our
dELiA*s retail stores display merchandise primarily in mall stores and sell
directly to customers who visit those locations. Inter-segment activity is
minimal, is recorded at cost and is eliminated in consolidation and in
preparation of the disclosure below. We do not sell a significant amount of
product outside of the United States.

We evaluate performance and allocate resources primarily based on operating
income (loss) before certain expense allocations for shared resources;
depreciation, amortization and non-cash compensation; unusual or extraordinary
items; minority interest; interest and other income; and income taxes. There are
no material differences between accounting policies used by the reportable
segments in preparation of this information and those described in the summary
of significant accounting policies in this report.

F-13

DELIA*S CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FEBRUARY 2, 2002

5. SEGMENTS (CONTINUED)

6. NET INCOME (LOSS) PER SHARE

Net income (loss) per share amounts for all periods prior to the
November 2000 merger (see Note 1) have been restated to reflect the merger with
all components of the denominator having been multiplied by the 1.715 exchange
ratio. Net loss per share for fiscal 2000 is calculated assuming that all shares
of dELiA*s Inc. common stock that were eligible for exchange in the merger were
exchanged on the merger date. Net loss per share for fiscal 2001 is calculated
assuming that the shares issued for settlement of the merger-related class
action lawsuit (see Note 10) were issued on the date of the settlement
agreement.

The following table sets forth the computation of basic and diluted net
income (loss) per share:

For fiscal 1999, options to purchase 1.5 million shares (883,000 pre-merger
shares) were outstanding as of the end of the period but not included in the
computation of diluted net income per share because their effect would have been
antidilutive. For fiscal 2000 and 2001, all options (see Note 11) and the shares
issued after the end of the respective fiscal year for the TheSpark.com
acquisition (see Note 3) were excluded from the computations of diluted loss per
share.

F-14

DELIA*S CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FEBRUARY 2, 2002

7. FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying value amounts reported in our balance sheets for cash and cash
equivalents and long-term debt approximate fair values. Our investments of
$11.0 million as of February 3, 2001 represent debt securities that are
classified as held-to-maturity and carried at amortized cost. The fair value of
those debt security investments as of February 3, 2001 was $11.0 million based
on quotes obtained from brokers for those instruments.

8. PROPERTY AND EQUIPMENT

Property and equipment are stated at cost and are depreciated on the
straight-line method over the estimated useful lives or, for leasehold
improvements, the shorter of the estimated useful lives or the remaining term of
the lease. Depreciation expense for fiscal 2000 and 2001 was $7.1 million and
$5.5 million, respectively. Major classes of property and equipment at the end
of those fiscal years were as follows:

9. LONG-TERM DEBT AND CREDIT FACILITIES

In August 1999, in connection with the purchase of our distribution facility
in Hanover, Pennsylvania, we borrowed $5.3 million from Allfirst Bank in the
form of a seven-year mortgage loan on the property. We are subject to certain
covenants under the loan agreement, including a covenant to maintain a fixed
charge coverage ratio. In August 1999, we also entered into an interest-rate
swap agreement with Allfirst Bank, under which we effectively converted the
LIBOR-based variable interest rate mortgage to a fixed rate loan with an
interest rate of approximately 8.78%. Effective May 1, 2001, the bank agreed to
waive the fixed charge coverage ratio covenant through August 6, 2003 in
exchange for a principal payment of $2.0 million on May 7, 2001 and our
agreement to pay on August 6, 2003 the outstanding principal balance as of that
date. On May 4, 2001, we terminated the related interest-rate swap agreement and
recorded a $600,000 charge.

The principal balance on the mortgage was $5.2 million and $3.1 million as
of February 3, 2001 and February 2, 2002, respectively. Future mortgage
principal payments are as follows: fiscal 2002--$100,000 and
2003--$3.0 million.

On April 28, 2000, we entered into a three-year agreement with Congress
Financial Corporation that amended and restated the terms of our previous credit
agreement with First Union, the parent company of Congress.

As of September 24, 2001, we entered into a three-year agreement with Wells
Fargo Retail Finance LLC, a subsidiary of Wells Fargo & Company, consisting of a
revolving line of credit that permits us to borrow up to $25 million, limited to
specified percentages of the value of our eligible inventory as

F-15

DELIA*S CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FEBRUARY 2, 2002

9. LONG-TERM DEBT AND CREDIT FACILITIES (CONTINUED)
determined under the credit agreement, and provides for the issuance of
documentary and standby letters of credit up to $10 million. Under this Wells
Fargo facility, as amended, our obligations are secured by a lien on
substantially all of our assets, except certain real property and other
specified assets. The agreement contains certain covenants and default
provisions customary for credit facilities of this nature, including limitations
on our payment of dividends. The agreement also contains controls on our cash
management and certain limits on our ability to distribute assets. This credit
facility replaced our existing Congress facility. At our option, borrowings
under this facility bear interest at Wells Fargo Bank's prime rate plus 50 basis
points or at the Eurodollar Rate plus 275 basis points. A fee of 0.375% per year
is assessed monthly on the unused portion of the line of credit as defined in
the agreement. The facility matures September 30, 2004 and can extend for
successive twelve-month periods at our option under certain terms and
conditions. In connection with our change in lenders, we recorded an
extraordinary charge of approximately $800,000 in fiscal 2001.

As of February 3, 2001 and February 2, 2002, our credit facility balance,
which was classified as current, was $2.4 million and $4.4 million,
respectively, outstanding letters of credit were $1.4 million and $800,000,
respectively, and unused available credit was $5.5 million and $2.8 million,
respectively. During fiscal 2000, the weighted average interest rate incurred on
our credit agreement was 9.5%. During fiscal 2001, the weighted average interest
rate incurred on our credit facility was 7.0%.

During fiscal 1999, 2000 and 2001, interest expense was $700,000,
$1.3 million and $600,000, respectively.

10. COMMITMENTS AND CONTINGENCIES

LEASES

As of February 2, 2002, dELiA*s was obligated under various long-term
non-cancelable leases for offices, retail stores, warehouse and distribution
space and equipment requiring minimum annual rental payments. Those future
obligations, including amounts for which we've reserved in connection with our
restructuring initiatives (see Note 4), are payable as follows:

The total minimum payments for capital leases include approximately $100,000
for imputed interest, which reduces the total future payments to $1.2 million
present value. Amortization of assets recorded under capital leases is included
with depreciation expense on our owned assets. (See Note 8.)

Some of our retail store leases include contingent rent clauses that will
result in higher payments if the store sales exceed expected levels. Some of our
operating leases also include renewal options and

F-16

DELIA*S CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FEBRUARY 2, 2002

10. COMMITMENTS AND CONTINGENCIES (CONTINUED)
escalation clauses with terms that are typical for the industry. In addition, we
are obligated to pay a proportionate share of increases in real estate taxes and
other occupancy costs for space covered by our operating leases. Rent expense
for fiscal 1999, 2000 and 2001 consisted almost entirely of minimum rentals and
was $10.3 million, $7.8 million and $9.4 million, respectively.

BENEFIT PLAN

We have a 401(k) retirement plan covering all eligible employees. Under the
plan, employees can defer 1% to 15% of compensation up to federal limits. We may
make matching contributions on a discretionary basis. The employee's
contribution is 100% vested and the employer's matching contribution vests over
a five-year period. Our employer's contributions to the plan were $46,000,
$82,000 and $107,000 in fiscal 1999, 2000 and 2001, respectively.

INTERNET ALLIANCES

In May 1999, we entered into a strategic marketing alliance with America
Online, Inc. Over the original two-year term of the agreement, we agreed to pay
America Online a total of approximately $8.1 million. On March 30, 2001, the
original agreement was superseded by a new agreement under which we agreed to
pay our remaining obligation of approximately $1.1 million to America Online
over a 27-month period. In connection with the sale of our gURL.com business on
May 24, 2001, we assigned approximately $350,000 of obligations under our
agreement with America Online to PrimediaNet. We remain liable to America Online
for payment of all obligations under the agreement, including the assigned
obligations. In the event PrimediaNet defaults on the obligations it has
assumed, we would have a contractual claim against PrimediaNet and Primedia. As
of February 2, 2002, our remaining payment obligation including the assigned
amount was approximately $400,000.

LITIGATION

In 1999, two separate purported securities class action lawsuits were filed
against dELiA*s Inc. and certain of its officers and directors, and one former
officer of a subsidiary. The original complaints were filed in Federal District
Court for the Southern District of New York by Allain Roy on June 1, 1999 and by
Lorraine Padgett on June 3, 1999. The suits were consolidated into a single
class action and an amended and consolidated complaint was filed on March 22,
2000. The complaint in this lawsuit purports to be a class action on behalf of
the purchasers of our securities during the period January 20, 1998 through
September 10, 1998. The complaint generally alleges that the defendants violated
Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder
by making material misstatements and by failing to disclose allegedly material
information regarding trends in our business. The complaint also alleges that
the individual defendants are liable for those violations under Section 20(a) of
the Securities Exchange Act. The complaint seeks unspecified damages, attorneys'
and experts' fees and costs, and such other relief as the court deems proper. On
April 14, 2000, dELiA*s Inc. and the other named defendants filed a motion to
dismiss the lawsuit. The motion to dismiss was denied on March 29, 2001. By
order dated December 10, 2001, the court certified the class. We filed our
answer to the consolidated amended complaint on February 13, 2002. We intend to
vigorously defend against this action. We believe that the claim is covered
under our insurance policy and do not expect the ultimate resolution of this
lawsuit to have a material adverse effect on our results of operations,
financial position or cash flow.

F-17

DELIA*S CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FEBRUARY 2, 2002

10. COMMITMENTS AND CONTINGENCIES (CONTINUED)
Between August 17 and August 25, 2000, three purported class action
complaints on behalf of stockholders of iTurf Inc., a partly-owned subsidiary of
dELiA*s Inc. at the time, were filed in Delaware Chancery Court against
iTurf Inc., dELiA*s Inc. and each of iTurf's directors. These actions include:
Pack v. Kahn, et al., Del. Ch., C.A. No. 18242NC, Semeraro v. Kahn, et al., Del.
Ch., C.A. No. 18258, and Engel v. Kahn, et al., Del. Ch., C.A. No. 18260NC. All
three complaints made virtually identical claims, alleging that dELiA*s Inc. and
the members of iTurf's board of directors breached their fiduciary duties to
iTurf's public stockholders and that the merger exchange ratio was unfair to
iTurf's public stockholders. The actions were consolidated and an amended
complaint was filed on January 19, 2001. On March 5, 2001, we answered that
complaint, asserted affirmative defenses and separately moved to strike certain
allegations. Also on March 5, 2001, we moved to dismiss the complaint. On
January 15, 2002, all parties entered into a stipulation and agreement of
compromise, settlement and release. Pursuant to the settlement, the defendants
will receive full release in exchange for one million shares of dELiA*s common
stock, which shares were issued and delivered on April 26, 2002. The total
$6.3 million value of the non-cash settlement is recorded as a fiscal 2001
merger charge with an offset to additional paid-in capital. The settlement was
approved without objection by the court on April 8, 2002 and, provided no appeal
is taken, will become a final order in May 2002.

11. STOCK-BASED COMPENSATION

Prior to the iTurf Inc. initial public offering, the board of directors of
iTurf Inc. approved and adopted the 1999 Amended and Restated iTurf Stock
Incentive Plan. Together with the 1996 dELiA*s Inc. Stock Incentive Plan, as
amended, and the 1998 dELiA*s Inc. Stock Incentive Plan, the 1999 iTurf Stock
Incentive Plan, as amended, (collectively, the "Incentive Plans") provide for
the following types of awards to eligible employees: (i) stock options,
including incentive stock options and non-qualified stock options; (ii) stock
appreciation rights, in tandem with stock options or freestanding; and
(iii) restricted stock. The maximum number of shares of common stock subject to
each of the stock options or stock appreciation rights that may be granted to
any individual under the 1999 Stock Incentive Plan is 750,000 for each fiscal
year. If a stock appreciation right is granted in tandem with a stock option, it
shall apply against the individual limits for both stock options and stock
appreciation rights, but only once against the maximum number of shares
available under the Incentive Plans.

STOCK OPTIONS

On November 20, 2000, in connection with the merger of dELiA*s Inc. and
iTurf Inc., dELiA*s Corp. assumed all of the options outstanding under the 1996
Stock Incentive Plan and the 1998 Stock Incentive Plan. Such options were
adjusted to reflect the 1.715 merger exchange ratio with the number of shares
underlying each option multiplied by the ratio and the related exercise prices
divided by the ratio. All historical stock option information of dELiA*s Inc.
that is provided herein has been similarly restated. The 1.2 million iTurf Inc.
options outstanding as of the date of merger, which had an average exercise
price of $9.77, continued to be outstanding after the merger with their terms
and conditions unchanged, and are included in the total fiscal 2000 grants in
the table below. From the date of the recombination of dELiA*s Inc. and
iTurf Inc., options are only available for grant under the 1999 Stock Incentive
Plan. As of February 2, 2002, options to purchase 4.6 million shares were
available for grant under the 1999 Stock Incentive Plan.

F-18

DELIA*S CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FEBRUARY 2, 2002

11. STOCK-BASED COMPENSATION (CONTINUED)
An executive is party to a stock option agreement with us pursuant to which
we granted such executive an option to purchase up to an aggregate of 428,750
shares of our Class A common stock at an exercise price equal to the fair market
value on the date of grant. In fiscal 1998, a portion of the grant was repriced
to reflect the fair market value as of the date of such repricing. The option
became exercisable as to 85,750 shares on each of July 10, 1999, 2000 and 2001
and becomes exercisable as to 85,750 shares on each of July 10, 2002 and 2003.

A summary of our stock option activity for the three most recent fiscal
years is as follows:

The following summarizes our stock option information as of February 2,
2002:

We apply APB No. 25 and related interpretations in accounting for the
Incentive Plans. Generally, all grants have a fixed exercise price with vesting
based solely on service. Accordingly, no compensation expense has been
recognized for options under these plans. Had compensation expense been
determined based on the fair value of stock option grants on the date of grant
in accordance with SFAS No. 123, our net income (loss) and net income (loss) per
share would have been as follows:

The average estimated fair market value of options granted during fiscal
1999, 2000 and 2001 was $7.34, $1.01 and $2.94 per share, respectively. In
preparing such estimates, we used the Black-Scholes

F-19

DELIA*S CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FEBRUARY 2, 2002

11. STOCK-BASED COMPENSATION (CONTINUED)
option pricing model with the following assumptions: no dividend yield; expected
volatility of 65%, 82% and and 85%, respectively, risk-free interest rates of
5.5%, 6.0% and 4.0%, respectively; expected lives of three to five years.

The Black-Scholes option valuation model was developed for use in estimating
the fair value of traded options, which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input of
highly subjective assumptions including the expected stock price volatility.
Because our stock options have characteristics significantly different from
those of traded options, and because changes in the subjective input assumptions
can materially affect the fair value estimate, in our opinion, the existing
models do not necessarily provide a reliable measure of the fair value of our
stock options.

In the accompanying Consolidated Statement of Stockholders' Equity, stock
option activity includes option exercises and restructuring-related adjustments.

RESTRICTED STOCK

On May 14, 2001, we issued 300,000 shares of restricted Class A common stock
to Andrea Weiss in connection with her employment as our President. The shares
vest over a four-year period in accordance with the following schedule: 40% in
year one; 30% in year two; 20% in year three and 10% in year four.

During fiscal 2000, dELiA*s and iTurf issued restricted common stock
primarily in exchange for outstanding options held by certain employees and
non-employee directors, resulting in the issuance of approximately 2.9 million
shares (1.7 million pre-merger shares) of dELiA*s Inc. restricted common stock,
1.1 million shares of iTurf restricted common stock, and 100,000 shares of
dELiA*s Corp. common stock. Certain vesting schedules of the restricted stock
were extended as compared to the related option vesting schedules. Restricted
stock was issued primarily in an effort to retain these employees at a time the
exercise prices of their options were above current market prices for the common
stock.

The value of dELiA*s restricted stock granted, based upon the market value
as of the award date, is recorded as deferred compensation, an offset to
stockholders' equity which is amortized against earnings over the related
vesting periods. Prior to the November 2000 merger, iTurf's restricted stock
grant was recorded as minority interest and was being similarly amortized
against the earnings of that subsidiary. As a result of the merger, all unvested
shares of iTurf restricted stock were revalued based on the current market price
of dELiA*s Inc. stock and such value was added to deferred compensation for
amortization over the remaining vesting periods. During fiscal 2000 and 2001, we
reduced the deferred compensation balance by a total of $3.5 million and
$1.3 million, respectively, as we recognized non-cash compensation expense
relating to restricted stock and made certain adjustments in connection with our
restructuring initiatives. The deferred compensation balance as of February 3,
2001 and February 2, 2002 was $1.2 million and $900,000, respectively.

In the accompanying Consolidated Statement of Stockholders' Equity,
issuances of restricted stock include the effect of subsidiary grants and are
shown net of forfeitures, shares cancelled for related employee tax payments and
restructuring-related adjustments.

F-20

DELIA*S CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FEBRUARY 2, 2002

12. STOCK OFFERING AND REPURCHASES

On June 19, 2001, we sold 5.74 million shares of our Class A common stock
for approximately $29.5 million in net proceeds.

On December 13, 2000, we announced that our Board of Directors authorized us
to repurchase up to $2,000,000 worth of shares of our Class A common stock,
subject to market conditions. During the fourth quarter of fiscal 2000, we
purchased approximately 700,000 shares of our Class A common stock at market
value totaling approximately $800,000. Such shares were classified as treasury
stock at cost.

13. INCOME TAXES

The provision for income taxes is comprised of the following:

No income tax provision or benefit was booked for fiscal 2001 due to our
current operating loss.

In connection with the November 20, 2000 merger of dELiA*s Inc. and
iTurf Inc., deferred tax liabilities of approximately $26.1 million were written
off in purchase accounting. In the absence of these deferred tax liabilities, an
additional valuation allowance was required, which resulted in a fiscal 2000
merger-related tax charge of approximately $19.8 million.

During fiscal 1999, additional paid-in capital was increased $1.8 million
for the tax effect of stock option exercises and decreased $2.4 million for the
tax effect of the issuance of a subsidiary's common stock in connection with the
T@ponline.com, Inc. acquisition.

dELiA*s had a federal net operating loss carryover ("NOL") of approximately
$95.0 million as of February 2, 2002, including a separate company loss of
approximately $1.4 million relating to one of the noncore businesses that we
sold in fiscal 2000. This separate company NOL is subject to limitation under
the provisions of the Internal Revenue Code. Our federal NOL will expire in 2012
through 2022.

F-21

DELIA*S CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FEBRUARY 2, 2002

13. INCOME TAXES (CONTINUED)
The effective income tax rates differed from the federal statutory income
tax rates as follows:

The significant components of our net deferred tax assets (liabilities) are
as follows:

- ------------------------

* The company's existing deferred tax assets at February 3, 2001 and
February 2, 2002 have been reduced by a valuation allowance of approximately
$32.7 million and $44.7 million, respectively, due to the uncertainty
regarding the realization of such deferred tax assets.

F-22

SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
our behalf by the undersigned thereunto duly authorized.

/s/ STEPHEN I. KAHN
---------------------------------------------
Stephen I. Kahn
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER

Date: May 3, 2002

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

EXHIBIT INDEX

2.1 Agreement and Plan of Merger dated February 4, 2000, by and
among iTurf, iTurf Caveman Acquisition Corporation,
TheSpark.com, Inc. ("Spark"), and the stockholders of Spark
(incorporated by reference to Exhibit 2.1 to the iTurf Inc.
Current Report on Form 8-K dated February 25, 2000)

2.2 Agreement and Plan of Merger, dated as of August 16, 2000,
among iTurf Inc., iTurf Breakfast Corp. and dELiA*s Inc.
(incorporated by reference to Annex A to the iTurf Inc.
Registration Statement on Form S-4 (Registration No.
333-44916))

3.1 Second Restated Certificate of Incorporation of iTurf Inc.
(incorporated by reference to Annex B to the joint proxy
statement/prospectus included with the iTurf Inc.
Registration Statement on Form S-4 (Registration No.
333-44916))

3.2 Amended and Restated By-laws of dELiA*s Corp. (incorporated
by reference to Exhibit 3.2 to the dELiA*s Corp. Annual
Report on Form 10-K for the fiscal year ended February 3,
2001)

10.1 Employment Agreement between dELiA*s Inc. and Christopher C.
Edgar (incorporated by reference to Exhibit 10.2 to the
dELiA*s Inc. Registration Statement on Form S-1
(Registration No. 333-15153))

10.2 Form of Family Stockholders Agreement among dELiA*s Inc.,
Stephen I. Kahn and the persons listed on Exhibit A thereto
(incorporated by reference to Exhibit to the dELiA*s Inc.
Registration Statement on Form S-1 (Registration No.
333-15153))

10.3 Amended and Restated 1996 Stock Incentive Plan of dELiA*s
Inc. (incorporated by reference to the dELiA*s Inc. Schedule
14A filed on June 12, 1998)

10.4 iTurf Inc. 1999 Amended and Restated Stock Incentive Plan
(incorporated by reference to Annex E of the joint
proxy/prospectus included with the iTurf Inc. registration
statement on Form S-4 (Registration No. 333-44916))

10.5 Lease Agreement dated May 3, 1995 between dELiA*s Inc. and
The Rector, Church Wardens and Vestrymen of Trinity Church
in the City of New York (the "Lease Agreement");
Modification and Extension of Lease Agreement dated
September 26, 1996 (incorporated by reference to Exhibit
10.9 to the dELiA*s Inc. Registration Statement on Form S-1
(Registration No. 333-15153))

10.6 Agreement dated April 4, 1997 between dELiA*s Inc. and The
Rector, Church Wardens and Vestrymen of Trinity Church in
the City of New York amending the Lease Agreement
(incorporated by reference to Exhibit 10.13 to the dELiA*s
Inc. Annual Report on Form 10-K for the fiscal year ended
January 31, 1997)

10.7 Agreement dated October 7, 1997 between dELiA*s Inc. and The
Rector, Church Wardens and Vestrymen of Trinity Church in
the City of New York amending the Lease Agreement
(incorporated by reference to Exhibit 10.14 to the dELiA*s
Inc. Quarterly Report on Form 10-Q for the fiscal quarter
ended October 31, 1997)

10.8 Amendment No. 1 to Employment Agreement between dELiA*s Inc.
and Christopher C. Edgar, dated September 15, 1998
(incorporated by reference to Exhibit 10.15 to the dELiA*s
Inc. Quarterly Report on Form 10-Q for the fiscal quarter
ended October 31, 1998)

10.9 Amendment No. 1 to Employment Agreement between dELiA*s Inc.
and Evan Guillemin, dated September 15, 1998 (incorporated
by reference to Exhibit 10.16 to the dELiA*s Inc. Quarterly
Report on Form 10-Q for the fiscal quarter ended
October 31, 1998)

10.10 1998 Stock Incentive Plan of dELiA*s Inc. (incorporated by
reference to Exhibit 10.17 to the dELiA*s Inc. Quarterly
Report on Form 10-Q for the fiscal quarter ended October 31,
1998)

10.11 Intercompany Services Agreement between dELiA*s Inc. and
iTurf Inc., dated April 8, 1999 (incorporated by reference
to Exhibit 10.1 to the iTurf Inc. registration statement on
Form S-1 (Registration No. 333-71123))

10.12 Trademark License Agreement between dELiA*s Inc. and iTurf
Inc., dated April 8, 1999 (incorporated by reference to
Exhibit 10.2 to the iTurf Inc. registration statement on
Form S-1 (Registration No. 333-71123))

10.13 Advertising Agreement between iTurf Inc. and America Online,
Inc., dated May 4, 1999 (incorporated by reference to
Exhibit 10.16 to the iTurf Inc. Quarterly Report on Form
10-Q for the fiscal quarter ended May 1, 1999) +

10.14 Construction Loan Agreement dated August 6, 1999, among
dELiA*s Distribution Company, dELiA*s Inc. and Allfirst Bank
(incorporated by reference to Exhibit 10.23 to the dELiA*s
Inc. Quarterly Report on Form 10-Q for the fiscal quarter
ended July 31, 1999)

10.15 Mortgage Note dated August 6, 1999 made by dELiA*s
Distribution Company in favor of Allfirst Bank (incorporated
by reference to Exhibit 10.24 to the dELiA*s Inc. Quarterly
Report on Form 10-Q for the fiscal quarter ended July 31,
1999)

10.16 Registration Rights Agreement between iTurf Inc. and
MarketSource Corporation (incorporated by reference to
Exhibit 10.19 to the iTurf Inc. Registration Statement on
Form S-1 (Registration No. 333-90435))

10.17 Amendment No. 2 to Employment Agreement between dELiA*s Inc.
and Christopher C. Edgar, dated October 18, 1999
(incorporated by reference to Exhibit 10.28 to the dELiA*s
Inc. Quarterly Report on Form 10-Q for the fiscal quarter
ended October 31, 1999)

10.18 Amendment No. 2 to Employment Agreement between dELiA*s Inc.
and Evan Guillemin, dated October 18, 1999 (incorporated by
reference to Exhibit 10.29 to the dELiA*s Inc. Quarterly
Report on Form 10-Q for the fiscal quarter ended October 31,
1999)

10.19 Lease Agreement dated January 30, 2000 by and between iTurf
Inc. and the State-Whitehall Company (incorporated by
reference to Exhibit 10.20 to the iTurf Inc. Annual Report
on Form 10-K for the fiscal year ended January 29, 2000)

10.20 Amended and Restated Credit Agreement among dELiA*s Inc. and
its subsidiaries set forth on Schedule 1 thereto and
Congress Financial Corporation dated April 28, 2000
(incorporated by reference to the dELiA*s Inc. Current
Report on Form 8-K dated May 2, 2000)

10.21 Amendment No. 3 to Employment Agreement between dELiA*s Inc.
and Christopher C. Edgar, dated June 9, 2000 (incorporated
by reference to Exhibit 10.36 to the dELiA*s Inc. Quarterly
Report on Form 10-Q for the fiscal quarter ended April 29,
2000)

10.22 Employment Agreement between iTurf and Dennis Goldstein
(incorporated by reference to Exhibit 10.13 to iTurf Inc.
Registration Statement on Form S-1 (Registration No.
333-71123))

10.23 Amendment Number 1 to Employment Agreement between dELiA*s
Corp. (f/k/a iTurf Inc.) and Dennis Goldstein (incorporated
by reference to Exhibit 10.27 to the dELiA*s Corp. Annual
Report on Form 10-K for the fiscal year ended February 3,
2001)

10.24 Amendment No. 1 to Amended and Restated Credit Agreement
among dELiA*s Inc. and certain of its subsidiaries and
Congress Financial Corporation, dated July 31, 2000
(incorporated by reference to Exhibit 10.28 to the dELiA*s
Corp. Annual Report on Form 10-K for the fiscal year ended
February 3, 2001)

10.25 Amendment No. 2 to Amended and Restated Credit Agreement
among dELiA*s Inc. and certain of its subsidiaries and
Congress Financial Corporation, dated November 10, 2000
(incorporated by reference to Exhibit 10.29 to the dELiA*s
Corp. Annual Report on Form 10-K for the fiscal year ended
February 3, 2001)

10.26 Amendment No. 3 to Amended and Restated Credit Agreement
among dELiA*s Corp. and certain of its subsidiaries and
Congress Financial Corporation, dated November 20, 2000
(incorporated by reference to Exhibit 10.30 to the dELiA*s
Corp. Annual Report on Form 10-K for the fiscal year ended
February 3, 2001)

10.27 Amendment No. 4 to Amended and Restated Credit Agreement
among dELiA*s Corp. and certain of its subsidiaries and
Congress Financial Corporation, dated January 19, 2001
(incorporated by reference to Exhibit 10.31 to the dELiA*s
Corp. Annual Report on Form 10-K for the fiscal year ended
February 3, 2001)

10.28 Amendment No. 5 to Amended and Restated Credit Agreement
among dELiA*s Corp. and certain of its subsidiaries and
Congress Financial Corporation, dated February 2, 2001
(incorporated by reference to Exhibit 10.32 to the dELiA*s
Corp. Annual Report on Form 10-K for the fiscal year ended
February 3, 2001)

10.29 Employment Agreement between Evan Guillemin and dELiA*s Inc.
dated as of October 27, 2000 (incorporated by reference to
Exhibit 10.33 to the dELiA*s Corp. Annual Report on
Form 10-K for the fiscal year ended February 3, 2001)

10.30 Modification Agreement, dated as of May 4, 2001, among
Allfirst Bank, dELiA*s Group Inc. and dELiA*s Distribution
Company (incorporated by reference to Exhibit 10.34 to the
dELiA*s Corp. Annual Report on Form 10-K for the fiscal year
ended February 3, 2001)

10.31 Employment Agreement among Andrea Weiss, dELiA*s Corp. and
Stephen I. Kahn dated as of May 7, 2001 (incorporated by
reference to Exhibit 10.33 to Amendment 1 to the dELiA*s
Corp. Annual Report on Form 10-K for the fiscal year ended
February 3, 2001)

10.32 Employment Agreement between dELiA*s Corp. and Stephen I.
Kahn dated as of April 24, 2001 (incorporated by reference
to Exhibit 10.34 to Amendment 1 to the dELiA*s Corp. Annual
Report on Form 10-K for the fiscal year ended February 3,
2001)

10.33 Amendment No. 6 to Amended and Restated Credit Agreement
among dELiA*s Corp. and certain of its subsidiaries and
Congress Financial Corporation, dated May 4, 2001
(incorporated by reference to Exhibit 10.33 to the dELiA*s
Corp. Quarterly Report on Form 10-Q for the fiscal quarter
ended May 5, 2001)

10.34 Amendment No. 7 to Amended and Restated Credit Agreement
among dELiA*s Corp. and certain of its subsidiaries and
Congress Financial Corporation, dated June 12, 2001
(incorporated by reference to Exhibit 10.34 to the dELiA*s
Corp. Quarterly Report on Form 10-Q for the fiscal quarter
ended May 5, 2001)

10.35 Amendment No. 8 to Amended and Restated Credit Agreement
among dELiA*s Corp. and certain of its subsidiaries and
Congress Financial Corporation, dated August 17, 2001
(incorporated by reference to Exhibit 10.35 to the dELiA*s
Corp. Quarterly Report on Form 10-Q for the fiscal quarter
ended August 4, 2001)

10.36 Loan and Security Agreement dated as of September 24, 2001
by and among Wells Fargo Retail Finance LLC, dELiA*s Corp.,
dELiA*s Operating Company, dELiA*s Distribution Company and
dELiA*s Retail Company (incorporated by reference to Exhibit
10.1 to the dELiA*s Inc. Current Report on Form 8-K dated
October 5, 2001)

10.37 First Amendment to Loan and Security Agreement by and among
Wells Fargo Retail Finance LLC, dELiA*s Corp., dELiA*s
Operating Company, dELiA*s Distribution Company and dELiA*s
Retail Company, dated October 29, 2001 (incorporated by
reference to Exhibit 10.2 to the dELiA*s Corp. Quarterly
Report on Form 10-Q for the fiscal quarter ended
November 3, 2001)

10.38* Employment Agreement between dELiA*s Corp. and Christopher
C. Edgar dated as of December 20, 2001

21* Subsidiaries of the Registrant

23* Consent of Ernst & Young LLP

- ------------------------

* Filed herewith

+ Confidential treatment requested as to certain portions, which portions have
been omitted and filed separately with the SEC.