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Filed with the Securities and Exchange Commission on May 16, 2003

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K
ANNUAL REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended February 1, 2003

Commission file number 0-25347

dELiA^*s Corp.
(Exact name of registrant as specified in its charter)

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.    ý YES    o 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.    ý

        Aggregate market value of voting and non-voting common equity held by non-affiliates as of August 2, 2002, the last business day of the most recently completed second fiscal quarter: $119,600,000. Such value is calculated using the closing price on the NASDAQ of $3.51.

        Indicate by check mark if the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2)    ý YES    o NO

Number of shares outstanding (excluding shares in treasury) as of May 12, 2003
                of the registrant's Class A common stock:    53,114,529
                of the registrant's Class B common stock:    None

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.

        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 restructuring efforts will not produce savings from additional operating efficiencies in a timely fashion or at all; costs related to the 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; 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.

        We file reports and other information with the Securities and Exchange Commission pursuant to the information requirements of the Securities Exchange Act of 1934. Readers may read and copy any document we file at the SEC's public reference room in Washington D.C. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. Our filings are also available to the public from commercial document retrieval services and at the SEC's website at www.sec.gov.

        Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to such reports are available on our internet website free of charge. Our website address is www.dELiAs.cOm. The information available at our website is not incorporated by reference in this report.

        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. For example, references to "fiscal 2002" in this report mean the period from February 3, 2002 to February 1, 2003. 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 dELiA*s retail stores. In fiscal 2002, dELiA*s Direct (which includes the operations of our dELiA*s catalog and our dELiAs.cOm e-commerce site) provided 49% of our consolidated net sales and dELiA*s Retail provided 51%.

        Consolidated Sales.    Apparel sales represented 79% of our fiscal 2002 consolidated net sales. Sales of accessories represented 10% of our fiscal 2002 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 2002, dELiA*s catalog circulation was 34 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 lists rented primarily from other direct mailers to customers with children and high household income. We have recently changed our mailing strategy for catalog requesters so that they receive two mailings. Based on the results of those mailings, we model the customer on a demographic basis that helps us determine the number of additional mailings, which ranges from two to six.

        Retail Stores.    As of February 1, 2003, we operated 68 dELiA*s stores, including six outlet stores, in 22 states. These stores range in size from 2,500 to 5,100 square feet with an average size of approximately 3,700 square feet.

        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.    We have developed our proprietary 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 2002, approximately 1.6 million new names were added to our database. As of February 1, 2003, our proprietary database included approximately 14.6 million names, approximately 10.1 million of which have made a purchase or requested a catalog. Our database contains a person's name, gender, residence, presence of children, child's approximate age, family status, household income, credit rating

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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 currently have 1.5 million e-mail recipients of a newsletter that is sent several times per week. We are committed to protecting the privacy of our customers. Our privacy policy is available on our dELiAs.cOm website.

        Contact Center Operations.    We provide our dELiA*s Direct customers with toll-free telephone access as well as around-the-clock fax and web service. Our contact center in Ohio currently has 100 seats, which is expandable to 120. At our peak in the holiday season, our staff currently have the capacity to handle 1,450 calls per hour. Such capacity is expandable to 1,700. Our representatives process orders directly into our management information system.

        Distribution and Fulfillment.    Our customer orders and retail stock shipments are processed through our warehouse and fulfillment center in Hanover, Pennsylvania. For fiscal 2002, we shipped an average of 23,000 units to retail stores and 5,000 customer packages per day from this center. Our busiest shipping days for dELiA*s Retail and Direct involved 50,000 units to retail stores and 14,000 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 2002, 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 May 10, 2003, the dELiA*s Direct channel had approximately $700,000 in backorders as compared to approximately $350,000 a year earlier.

        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.

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,

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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 1, 2003, we had approximately 1,350 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. Recently, we received a $16.5 million advance when we entered into a licensing agreement and a $2.7 million equity contribution from an group of our officers and directors, who also provided us with a put option to sell our distribution center. As a result of these transactions, along with a recent amendment to our credit facility and an expected refinancing of our mortgage, 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, as amended, and received 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. Additional 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 may be considered dilutive to our current stockholders.

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.

Our historical growth may continue to present operational, management and inventory challenges

        Our historical growth has placed significant demands on our management and other administrative, operational and financial resources. Operation of a greater number of retail stores, expansion into new geographic markets and online expansion may continue to present competitive and merchandising challenges to our existing businesses. Expansion also required further investment in infrastructure and

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marketing for our direct and retail businesses. Such investments increase our operating expenses, which could have a material adverse effect on the results of our business if anticipated sales do not materialize, and could require us to seek additional capital. There can be no assurance that we would be able to obtain this financing on acceptable terms or at all.

We may be delisted from the NASDAQ stock exchange

        On November 12, 2002, we received notice from The Nasdaq Stock Market that the bid price of our common stock had closed at less than $1.00 per share over the previous 30 consecutive days, and, as a result, we did not comply with Marketplace Rule 4450(a)(5). In accordance with the Marketplace Rules, we had until May 12, 2003 to regain compliance. On May 13, 2003 we received notice from The Nasdaq Stock Market that we have not regained compliance and a determination to delist. On May 15, 2003 we requested a hearing to appeal the determination to delist. This request for a hearing has stayed the delisting pending a determination by the Nasdaq Hearing Panel. Pending such determination, our shares will continue to be listed on The Nasdaq National Market. There can be no assurances, however, as to the outcome of any appeal. If our stock were to be delisted, shareholders would be adversely affected by the resulting reduction in liquidity.

Seasonal, cyclical and quarterly fluctuations make it difficult to predict future results.

        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 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:

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general economic conditions;



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changes in consumer spending patterns;



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levels of competition;



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



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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;



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the timing of merchandise deliveries;



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



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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;



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



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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.

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We have a limited operating history on which an investor can evaluate our business

        We opened the first full-priced dELiA*s retail store in February 1999, and the majority of our dELiA*s retail stores were opened after fiscal 2000. 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.

        In addition, we did not begin selling merchandise on the Internet until May 1998.

        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.

We are party to class action litigation and may continue to be objects of securities class action litigation due to our volatile stock price

        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. The parties have reached an agreement in principle on a settlement of the action. That agreement has not yet been memorialized and will not become effective until a stipulation of settlement is executed by all parties and finally approved by the Court, after notice is given and an opportunity to object and a hearing has been accorded to all interested parties. On December 9, 2002, the Court entered an Order discontinuing the action ("Order of Discontinuance"), without prejudice to any party to apply to the Court on five days' notice to restore the action to the trial calendar if the settlement is not consummated within 45 days. By Order dated March 19, 2003, the Court extended the Order of Discontinuance until 30 days following the date on which the pending settlement is approved by the Court. The parties are continuing to negotiate over certain terms and conditions of the settlement, and the settlement papers have not been submitted for Court approval. There can be no assurances that the settlement will be completed. The claim and proposed settlement are covered under our insurance policy. However, if the settlement is not completed, we cannot predict the outcome of any litigation or whether the resolution of the litigation could have a material adverse effect on our business.

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

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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:

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



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



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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.

        A portion of our merchandise is sourced 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 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 27% 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 and Evan Guillemin, Chief Financial Officer, or other key employees would have a material adverse effect on our business.

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

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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.

        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:

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the consumer acceptance of our product offerings;



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



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



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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.

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.

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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.

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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:

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the impact of recessions in economies outside the United States;



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regulatory and political changes in foreign markets;



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reduced protection for intellectual property rights in some countries;



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



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



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



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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.

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.

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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.

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.

We are subject to certain risks in connection with our dELiAs.com website

        There are certain risks and difficulties that we may encounter as a 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;



•

minimize technical difficulties, system downtime, security issues 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 could be materially adversely affected. We cannot assure you that we will successfully address these risks or that our Internet business strategy will be successful.

12

Item 2. Properties

        The following table sets forth information regarding the principal facilities, excluding retail stores, that we used during fiscal 2002. Except for the property in Hanover, PA, which we own, all such facilities are leased. We believe our facilities are well maintained and in good operating condition.

*

We are currently negotiating to terminate the lease covering a portion (14,000 square feet) of this space or to sublet such space.

@

This lease was terminated and the premises surrendered as of 3/14/02.

^

This lease was terminated and the premises surrendered as of 1/31/03

¥

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 in February 2002 and merit discovery was completed in May 2002 and all other discovery was completed in September 2002. The parties have reached an agreement in principle on a settlement of the action. That agreement has not yet been memorialized and will not become effective until a stipulation of settlement is executed by all parties and finally approved by the Court, after notice is given and an opportunity to object and a hearing has been accorded to all interested parties. On December 9, 2002, the Court entered an Order discontinuing the action ("Order of Discontinuance"), without prejudice to any party to apply to the Court on five days' notice to restore the action to the trial calendar if the settlement is not consummated within 45 days. By Orders dated January 17, January 30 and March 19, 2003, the Court extended the Order of Discontinuance until 30 days following the date on which the pending settlement is approved by the Court. The parties are continuing to negotiate over certain terms and conditions of the settlement, and the settlement papers have not been submitted for Court approval. There can be no assurances that the settlement will be completed. The claim and proposed settlement are covered under our insurance policy. However, if the settlement is not completed, we cannot predict the outcome of any litigation or whether the resolution of the litigation could have a material adverse effect on our business.

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        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 which became a final order in May 2002. Pursuant to the settlement, we issued one million shares of dELiA*s Class A common stock, substantially all of which have been distributed to the members of the class. The total $6.3 million value of the non-cash settlement was recorded as a charge in the fourth quarter of fiscal 2001.

Item 4. Submission of Matters to a Vote of Security Holders

        None.

14

PART II

Item 5. Market for Common Stock and Related Stockholder Matters

        Our Class A common stock trades on the NASDAQ National Market under the symbol DLIA. The following table sets forth the high and low sales prices of our Class A common stock as reported by NASDAQ for the periods indicated. These quotations reflect interdealer prices without adjustments for retail markups, markdowns or commissions and may not necessarily represent actual transactions.

        On April 28, 2003, there were approximately 600 holders of record of our common stock and approximately 8,000 beneficial owners of our common stock.

        Because the bid price of our common stock has closed at less than $1.00 per share for an extended period of time, we recently received a determination to delist from The Nasdaq Stock Market and requested an appeal hearing. This request for a hearing has stayed the delisting pending a determination by the Nasdaq Hearing Panel. Pending such determination, our shares will continue to be listed on The Nasdaq National Market.

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 2002

        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 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.

15

(1)

Loss on early extinguishment of debt. We expect to reclassify this to operations in fiscal 2003..See Comparison of Fiscal 2001 and 2002.

(2)

Write-off of negative goodwill in connection with our adoption of SFAS 142. See Comparison of Fiscal 2001 and 2002.

16

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.

        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.

        Facility Relocation and Corporate Severance.    During fiscal 2002, we recorded charges of approximately $1.8 million related to our decision to relocate our contact center from Long Island City, New York to Columbus, Ohio and $600,000 for severance related to a corporate cost-cutting initiative.

        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. The restructuring of our businesses was substantially completed in fiscal 2001. In connection with these initiatives, we recorded significant charges during fiscal 2000 and 2001. During fiscal 2002, we recorded an additional net charge of $68,000 related to final lease settlements for our discontinued non-core businesses. As of February 1, 2003, approximately $900,000 remains accrued for future lease obligations relating to our restructuring initiatives. We expect this amount to be paid in full during fiscal 2003.

        Impairment and Other Non-cash Charges Relating to Property and Equipment.    For fiscal 2002, selling, general and administrative expenses included a charge of approximately $2.0 million relating to the write-down to fair value of tangible assets at eight dELiA*s retail stores. In addition, we recorded a charge in connection with our fiscal 2002 facility relocation of approximately $900,000 relating to the write-off of leasehold improvements at the closed facility.

        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. Such estimates are based on historical return timing and rates.



•

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, based on our budgets, for that catalog cost pool.

17

•

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 estimated net realizable value based on market conditions.



•

Long-Lived Assets—In accordance with the SFAS No. 144, 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. The carrying amount of a long-lived asset is considered impaired when the anticipated cash flows expected to be generated by the asset, based on our detailed projections, are less than its carrying amount. The impairment charge is the amount required to bring the carrying value to the fair value based on expected future discounted cash flows. For fiscal 2002, selling, general and administrative expenses included a charge of approximately $2.0 million relating to the write-down to fair value of tangible assets at eight dELiA*s retail stores.

        Recent Accounting Pronouncements—In April 2002, the FASB issued SFAS 145, "Rescission of FASB Statements 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections" to amend or clarify accounting guidance related to gains and losses from extinguishment of debt and other topics. Upon adoption of SFAS 145 as of the beginning of fiscal 2003, we will be required to reclassify a pre-tax extraordinary loss of approximately $800,000 recognized in fiscal 2001 to a non-extraordinary expense category. The adoption of SFAS 145 is not expected to have any other material effect on our consolidated 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.

18

Comparison of Fiscal Years 2001 and 2002

        Net Sales.    Net sales decreased approximately $6.1 million from $143.7 million in fiscal 2001 to $137.6 million in fiscal 2002. The decrease reflects divestitures of non-core businesses. Net sales in our core dELiA*s business remained essentially flat, with increases in dELiA*s Retail sales almost offsetting decreases at dELiA*s Direct. Despite a disappointing reception to our second half assortment, Retail segment sales increased 28% due to new store openings, partially offset by comparable store sales declines. Direct segment sales decreased 19% due, in part, to a decrease in catalog circulation as well as disappointing response to our second half catalog mailings and online offerings.

        Gross Profit.    Gross profit margin decreased from 47.2% in fiscal 2001 to 38.4% in fiscal 2002 with declines in both segments of our business. The decline was primarily driven by more promotional clearance activity at Retail and lower pricing in our catalogs and online as compared to the prior year. In addition, to address overstock inventory issues resulting from poor inventory delivery and planning and weak back half sales, we executed significant inventory liquidations and recorded significant obsolescence reserves in the second half of the year. Higher transportation expense on goods sourced from overseas also contributed to the margin decline. We expect our margins to improve as we negotiate better inventory terms and sourcing arrangements and implement better inventory planning procedures.

        Selling, General and Administrative Expenses.    Selling, general and administrative expenses decreased from $84.6 million in fiscal 2001 to $84.2 million in fiscal 2002. Selling, general and administrative expenses increased as a percentage of net sales, from 58.9% in fiscal 2001 to 61.2% in fiscal 2002. Elimination of operating expenses relating to our discontinued non-core businesses resulted in a decrease of approximately $12.4 million. Such declines were offset in part by an increase in operating expenses at our core dELiA*s business. At dELiA*s Retail, increases of $10.6 million primarily related to the continued expansion of our store base as well as $2.9 million of non-cash asset impairment charges. Decreases of $8.5 million at dELiA*s Direct related primarily to reduced catalog circulation and an increased percentage of online orders. Depreciation and amortization expenses increased approximately $4.7 million in connection with our adoption of SFAS 142 and continued capital expenditures for store buildout, while non-cash compensation and other corporate expenses decreased $1.3 million in part due to corporate cost-cutting initiatives.

        Merger, Restructuring and Finance Charges.    During fiscal 2001, we recorded 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. During fiscal 2002, we recorded an additional net charge of $68,000 related to final lease settlements for our discontinued non-core businesses.

        Facility Relocation and Corporate Severance.    During fiscal 2002, we recorded charges of approximately $1.8 million related to our decision to relocate our contact center from Long Island City, New York to Columbus, Ohio and $600,000 for severance related to a corporate cost-cutting initiative.

        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.

        Interest and other (income) expense, net.    For fiscal 2002, net interest expense of $600,000 related primarily to our credit agreement and other debt. For fiscal 2001, net interest income of $500,000 related primarily to our cash balances.

        Income Taxes.    No tax benefit has been recorded and our deferred tax assets are fully reserved due to the uncertainty of our ability to utilize the benefit.

19

        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. Upon adoption of SFAS 145 as of the beginning of fiscal 2003, we expect to reclassify this charge to operations.

        Cumulative Effect of Change in Accounting Principle.    In connection with our adoption of SFAS 142, we recorded a $15.4 million cumulative effect of change in accounting principle which represented 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.

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 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 store expansion. 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 Profit.    Gross profit 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 profit margin for our core dELiA*s business remained essentially flat.

        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.

        Interest and other (income) expense, net.    Net interest and other income was $300,000 in fiscal 2000 and $500,000 in fiscal 2001. The fiscal 2000 income was offset, in part, 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. Upon adoption of SFAS 145 as of the beginning of fiscal 2003, we expect to reclassify this charge to operations.

21

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.

22

Liquidity and Capital Resources

        As shown in the accompanying statements of operations and cash flows, we have incurred net losses and negative cash flows from operations in each of the last three fiscal years. Recently, we have undertaken cost-cutting efforts, including headcount reductions, and completed several financing initiatives, and continue to work at others, as described below.

        In February 2003, we entered into an agreement with JLP Daisy LLC, an affiliate of Schottenstein Stores, to license our dELiA*s brand on an exclusive basis for wholesale distribution in certain product categories. Group 3 Design Corp., a leading brand management firm, has been retained to manage these licensing activities, which will focus on the distribution of dELiA*s products primarily in mid- and upper-tier department stores. We received a $16.5 million cash advance against future royalties from the licensing ventures. Once JLP Daisy recoups its advance plus a preferred return, the Company will receive a majority of the royalty stream after brand management fees. The initial term of the master license agreement is 10 years, which is subject to extension under specified circumstances. The master license agreement may be terminated early under certain circumstances, including at the option of the Company upon payment to JLP Daisy of an amount based upon royalties received from the sale of the licensed products. In addition, the Company granted to JLP Daisy a security interest in the dELiA*s trademarks, although the only event that would entitle JLP Daisy to exercise its rights with respect to these trademarks is a termination or rejection of the master license agreement in a bankruptcy proceeding. In connection with the engagement of Group 3 Design as brand manager, an executive of Group 3 Design received a warrant to purchase 50,000 shares of our Class A Common Stock.

        We are currently subject to certain covenants under our mortgage loan agreement relating to our distribution facility in Hanover, Pennsylvania, including a covenant to maintain a fixed charge coverage ratio. Effective May 1, 2001, the bank agreed to waive the fixed charge coverage ratio covenant through August 6, 2003 in exchange for an adjustment in our payment schedule. The principal balance of $3.0 million as of February 1, 2003 is scheduled to be paid in full by August 2003. We are currently considering several options with respect to the mortgage, including a refinancing and other transactions, including a sale-leaseback that would enable us to satisfy our obligations. We expect to complete these efforts prior to the final payment date. If we do not finalize an arrangement by that time, it is likely that we will exercise a put option to sell the facility, which is being provided to us by a group of our officers and directors, and continue to use the facility under a new lease arrangement.

        During and subsequent to fiscal 2002, we signed several amendments to our credit facility with Wells Fargo Retail Finance LLC, a subsidiary of Wells Fargo & Company. In order to facilitate these amendments, we incurred normal fees and, in one case, we repaid a significant portion of our outstanding loan. The most recent amendment, which was effective April 29, 2003, among other changes, extended the life of the agreement to April 2006 and, in an effort to reduce our unused fees, reduced our revolving line of credit limit from $25 million to $20 million (which we retain the right to increase to $25 million in the first eighteen months at our option). The credit line is secured by our assets and borrowing availability fluctuates based on inventory levels. The April 2003 amendment increased the advance rate based on inventory value and also expanded the borrowing base to include certain receivables. The agreement contains certain covenants and default provisions customary for credit facilities of this nature, including limitations on our capital expenditures. At our option, borrowings under this facility bear interest at Wells Fargo Bank's prime rate plus 25 basis points or at the LIBOR Rate plus 250 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. As of February 1, 2003, the outstanding balance on our Wells Fargo credit facility, which was classified as a current liability, was $3.9 million, outstanding letters of credit were $3.7 million and unused available credit was $2.1 million.

        In May 2003, we received an equity infusion of $2.7 million from a group of our directors and officers. In addition to the equity transaction, the investing group provided us with a put option that

23

would require them to purchase, but would not require us to sell, our Hanover distribution facility for an agreed-upon price that would allow us to satisfy our outstanding mortgage. This put option is intended to provide us with an alternative means of satisfying the mortgage in case we are not able to refinance, extend or otherwise satisfy the mortgage such as through a sale-leaseback arrangement. In consideration for the grant of the put option, the investors received warrants, exercisable for an aggregate 600,000 shares of our stock at $0.37 per share.

Cash Requirements Related to Operations

        As a result of our recent licensing arrangement, credit facility amendments and equity infusion, as well as our expected mortgage transaction or distribution facility sale, we believe that our cash on hand and cash expected to be generated from operations, together with the funds available under our credit agreement, will be sufficient to meet our cash requirements in the year ahead. However, our future capital requirements will depend on numerous factors, including, without limitation, the successful turnaround of sales and profit margin performance of both of our operating segments. Additional funds, if required, may not be available to us on favorable terms or at all.

Certain Information Concerning Contractual Obligations

        The following is a summary of our contractual obligations and commitments as of February 1, 2003 and the timing of related future payments. Note that we do not have any purchase obligations and our other long-term liabilities are not included as they are primarily non-cash liabilities relating to our retail rents. In addition, the outstanding balance under our credit facility, which is classified as a current liability, is not included due to its nature as a revolving facility that does not have a specific repayment schedule.

Sources and Uses of Cash in Fiscal 2002 and 2001

        Cash used by operations was $16.5 million in fiscal 2002 compared to $15.6 million in fiscal 2001. The increase primarily relates to higher operating losses offset in part by changes in working capital balances.

        During fiscal 2002, we used $10.9 million for capital expenditures, our only investing activities. During fiscal 2001, investing activities provided $6.5 million, primarily relating to net proceeds from our investments offset by capital expenditures and to the cash proceeds and payments relating to our non-core businesses. During fiscal 2003, we expect to make capital expenditures of approximately $400,000, primarily for store improvements and computer equipment.

        Financing activities were not significant in fiscal 2002. 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.

Item 7A. Quantitative and Qualitative Disclosure About Market Risk

        Our variable-rate mortgage arrangement and our credit facility expose us to changes in interest rates. Based on our outstanding balances of $3.0 million and $3.9 million, respectively, at February 1, 2003, a hypothetical 100 basis point increase in interest rates would cause an increase in our annual interest expense of approximately $69,000. However, the amount of our variable rate debt, and therefore our sensitivity to market interest rates, can fluctuate significantly as a result of changes in the amount our outstanding credit facility indebtedness.

24

Item 8. Financial Statements and Supplementary Data

        See Item 15 of Part IV of this report.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

        None.

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.

Item 14. Controls and Procedures

(a)   Evaluation of Disclosure Controls and Procedures

        An evaluation has been carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and the operation of our "disclosure controls and procedures" (as such term is defined in Rules 13a-14 (c) under the Securities and Exchange Act of 1934). This evaluation took place as of a date within 90 days prior to the filing date of this annual report ("Evaluation Date"). Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the Evaluation Date, the disclosure controls and procedures are reasonably designed and effective to ensure that (i) information required to be disclosed by us in the reports we file or submit under the Securities Exchange Act of 1934 is recorded, summarized and reported within the time periods specified in the SEC's rules and forms, and (ii) such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

(b)   Changes in Internal Controls

        Since the Evaluation Date, there have not been any significant changes in our internal controls or in other factors that could significantly affect such controls.

PART IV

Item 15. 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 filed a current report on Form 8-K on December 13, 2002 copying information originally filed on Form 8-K on October 30, 2002, in connection with (i) Amendment No. 1 to the Employment Agreement Between Registrant and Andrea Weiss dated October 17, 2002 and (ii) the second Amendment to Loan and Security Agreement with Wells Fargo Retail Finance, LLC, dated October 21, 2002. No financial statements were filed with this Form 8-K.



(c)

See Exhibit Index immediately following Signature Page and Certifications.

25

dELiA*s CORP.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

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 2, 2002 and February 1, 2003 and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the three fiscal years in the period ending February 1, 2003. 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 2, 2002 and February 1, 2003and the consolidated results of the Company's operations and cash flows for each of the three fiscal years in the period ending February 1, 2003 in conformity with accounting principles generally accepted in the United States.

        As discussed in Note 2 to the consolidated financial statements, the Company adopted Statement of Accounting Standard No. 142, "Goodwill and Other Intangible Assets," effective February 3, 2002.

        ERNST & YOUNG LLP

New York, New York
April 29, 2003, except for the 1^st paragraph of Note 10 and the 3^rd paragraph of Note 15,
as to which the date is May 12, 2003

F-2

dELiA*s CORP.

CONSOLIDATED BALANCE SHEETS

FEBRUARY 2, 2002 AND FEBRUARY 1, 2003
(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 2000, 2001 AND 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 2000, 2001 AND 2002
(in thousands, except share data)