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8-K - FORM 8-K - dELiAs, Inc. | d314747d8k.htm |
EXHIBIT 99.1
50 WEST 23RD STREET, NEW YORK, NY 10010
TELEPHONE: 212-590-6200 FAX: 212-590-6580
CONTACT: | David Dick |
Chief Financial Officer
212-590-6200
ICR
Jean Fontana
646-277-1214
dELiA*s, INC. ANNOUNCES
FOURTH QUARTER AND FISCAL 2011 RESULTS
New York, NY March 15, 2012 dELiA*s, Inc. (NASDAQ: DLIA), a multi-channel retail company comprised of two lifestyle brands primarily targeting teenage girls and young women, today announced the results for its fourth quarter and fiscal year ended January 28, 2012.
Walter Killough, Chief Executive Officer, commented, Our fourth quarter marked the end of a transition period in merchandising for dELiA*s. Despite disappointing overall fourth quarter results, we were pleased with the sales and margin performance of product bought under our new merchandising strategy. The comparable store sales decline and the margin contraction in the quarter reflected weak sell-through on sweater and outerwear key items associated with our prior merchandising approach.
Since the start of January we are beginning to see customer acceptance and positive sales in all channels with our new merchandising strategy, which reflects shorter lead times and more frequent deliveries of new product, with the ability to chase business effectively. We are optimistic that this shift in strategy, among other key initiatives in real estate and the web, will position us to drive improved financial performance for the long term.
Fiscal Fourth Quarter Results
Total revenue for the fourth quarter of fiscal 2011 decreased 2.0% to $65.6 million from $66.9 million in the fourth quarter of fiscal 2010. Revenue from the retail segment decreased 3.6% to $33.6 million, or 51.3% of total revenue. Revenue from the direct segment was flat at $32.0 million, or 48.7% of total revenue.
50 WEST 23RD STREET, NEW YORK, NY 10010
TELEPHONE: 212-590-6200 FAX: 212-590-6580
Total gross margin decreased to 32.3% in the fourth quarter of fiscal 2011, compared to 36.8% in the prior year quarter, predominantly reflecting reduced merchandise margins related to markdowns and the deleveraging of occupancy costs.
Selling, general and administrative (SG&A) expenses were $26.3 million, or 40.1% of sales, for the fourth quarter of fiscal 2011 compared to $26.2 million, or 39.1% of sales, in the fourth quarter of fiscal 2010. The increase in SG&A expenses as a percent of sales reflects the deleveraging of selling and overhead expenses.
Net loss for the fourth quarter of fiscal 2011 was $4.2 million, or $0.13 per diluted share, compared to net income for the fourth quarter of fiscal 2010 of $0.7 million, or $0.02 per diluted share. The net loss for the fourth quarter of fiscal 2011 included a gift card breakage benefit of $1.8 million, or $0.06 per diluted share, and store impairment charges of $0.5 million, or $0.02 per diluted share. The net income for the fourth quarter of fiscal 2010 included a gift card breakage benefit of $0.2 million, or $0.01 per diluted share.
The provision for income tax expense for the fourth quarter of fiscal 2011 was $72,000, or $0.00 per diluted share, compared to a benefit for income taxes of $2.1 million, or $0.07 per diluted share, for the prior year period.
Results by Segment
Retail Segment Results
Total revenue for the retail segment for the fourth quarter of fiscal 2011 decreased 3.6% to $33.6 million from $34.9 million in the fourth quarter of fiscal 2010. Retail comparable store sales decreased 3.6% for the fourth quarter of fiscal 2011 compared to a decrease of 2.3% for the fourth quarter of fiscal 2010.
Gross margin for the retail segment, which includes distribution, occupancy and merchandising costs, was 20.5% for the fourth quarter of fiscal 2011 compared to 27.0% in the prior year period. The decrease in gross margin resulted primarily from lower merchandise margins and the deleveraging of occupancy costs.
50 WEST 23RD STREET, NEW YORK, NY 10010
TELEPHONE: 212-590-6200 FAX: 212-590-6580
SG&A expenses for the retail segment were $12.8 million, or 38.0% of sales, in the fourth quarter of fiscal 2011 compared to $12.8 million, or 36.7% of sales, in the prior year period. The increase as a percent of sales reflects the deleveraging of selling and overhead expenses.
In the fourth quarter of fiscal 2011, the Company recorded a pre-tax non-cash store impairment charge of $0.5 million related to certain underperforming store locations.
The operating loss for the fourth quarter of fiscal 2011 for the retail segment was $6.2 million compared to $3.3 million in the prior year period. Included in fiscal 2011 was the aforementioned store impairment charge of $0.5 million.
The Company opened one store location and closed two store locations during the fourth quarter of fiscal 2011, ending the period with 113 stores.
Direct Segment Results
Total revenue for the direct segment for the fourth quarter of fiscal 2011 was flat compared to the prior year period at $32.0 million.
Gross margin for the direct segment was 44.6% compared to 47.6% in the fourth quarter of the prior year, primarily resulting from decreased merchandise margins and increased shipping costs.
SG&A expenses for the direct segment were $13.5 million, or 42.4% of sales, compared to $13.3 million, or 41.7% of sales, in the prior year period. The increase in SG&A expenses in dollars and as a percent of sales reflects increased selling expenses.
Operating income for the fourth quarter of fiscal 2011 for the direct segment was $2.3 million as compared to $2.0 million in the prior year period. Included in fiscal 2011 is an incremental gift card breakage benefit of $1.5 million.
50 WEST 23RD STREET, NEW YORK, NY 10010
TELEPHONE: 212-590-6200 FAX: 212-590-6580
Balance Sheet Highlights
At the end of the fourth quarter of fiscal 2011, cash and cash equivalents were $28.4 million compared with $36.3 million, including restricted amounts, at the end of the fourth quarter of fiscal 2010.
Total net inventories at January 28, 2012 were $30.9 million compared with $32.0 million at January 29, 2011. Inventory per average retail store was down 7.4% compared to the prior year period, and inventory for the direct segment was down 5.3% compared to the prior year.
Fiscal Year Results
For the fiscal year ended January 28, 2012, total revenue decreased 1.6% to $217.2 million from $220.7 million for the prior year period.
Total gross margin was 31.5% compared to 33.3% for the prior year period. SG&A expenses were $92.7 million, or 42.7% of sales, for fiscal 2011, compared to $95.7 million, or 43.4% of sales, for the prior year period.
The operating loss for fiscal 2011 decreased to $22.9 million, compared to $29.4 million for fiscal 2010. Included in fiscal 2011 was the aforementioned store impairment charge of $0.5 million and gift card breakage benefit of $2.0 million. In fiscal 2010, the Company recognized a goodwill impairment charge related to the direct marketing segment of $7.6 million, and a gift card breakage benefit of $0.5 million.
Net loss for fiscal 2011 increased to $22.7 million, or $0.73 per diluted share, compared to a net loss of $21.6 million, or $0.70 per diluted share, for fiscal 2010. Included in fiscal 2011 was the aforementioned store impairment charge of $0.5 million, or $0.02 per diluted share, and gift card breakage benefit of $2.0 million, or $0.06 per diluted share. Included in fiscal 2010 was the aforementioned goodwill impairment charge of $7.6 million, or $0.24 per diluted share, and gift card breakage benefit of $0.5 million, or $0.02 per diluted share.
The benefit for income taxes for fiscal 2011 was $0.8 million, or $0.03 per diluted share, compared to a benefit of $8.1 million, or $0.26 per diluted share, for fiscal 2010.
50 WEST 23RD STREET, NEW YORK, NY 10010
TELEPHONE: 212-590-6200 FAX: 212-590-6580
Conference Call and Webcast Information
A conference call to discuss fourth quarter and fiscal year 2011 results is scheduled for Thursday, March 15, 2012 at 10:00 A.M. Eastern Time. The conference call will be webcast live at www.deliasinc.com. A replay of the call will be available until April 12, 2012 and can be accessed by dialing (888) 286-8010 and providing the pass code number 32682089.
During the conference call, the Company may discuss and answer questions concerning business and financial developments and trends. The Companys responses to questions, as well as other matters discussed during the conference call, may contain or constitute information that has not been disclosed previously.
About dELiA*s, Inc.
dELiA*s, Inc. is a multi-channel retail company comprised of two lifestyle brands primarily targeting teenage girls and young women. Its brands dELiA*s and Alloy generate revenue by selling apparel, accessories, footwear and room furnishings to consumers through direct mail catalogs, websites, and dELiA*s mall-based retail stores.
Forward-Looking Statements
This announcement may contain forward-looking statements made in reliance upon the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding our expectations and beliefs regarding our future results or performance. Because these statements apply to future events, they are subject to risks and uncertainties. When used in this announcement, the words anticipate, believe, estimate, expect, expectation, should, would, project, plan, predict, intend and similar expressions are intended to identify such forward-looking statements. Our actual results could differ materially from those projected in the forward-looking statements. Additionally, you should not consider past results to be an indication of our future performance. For a discussion of risk factors that may affect our results, see the Risk Factors That May Affect Future Results section of our filings with the Securities and Exchange Commission, including our annual report on Form 10-K and quarterly reports on Form 10-Q. We do not intend to update any of the forward-looking statements after the date of this announcement to conform these statements to actual results, to changes in managements expectations or otherwise, except as may be required by law.
50 WEST 23RD STREET, NEW YORK, NY 10010
TELEPHONE: 212-590-6200 FAX: 212-590-6580
dELiA*s, Inc.
CONSOLIDATED BALANCE SHEETS
(in thousands, except par value and share data)
(unaudited)
January 28, 2012 | January 29, 2011 | |||||||
ASSETS |
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CURRENT ASSETS: |
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Cash and cash equivalents |
$ | 28,426 | $ | 28,074 | ||||
Inventories, net |
30,937 | 32,025 | ||||||
Prepaid catalog costs |
2,111 | 1,845 | ||||||
Restricted cash |
| 8,268 | ||||||
Other current assets |
3,556 | 12,511 | ||||||
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TOTAL CURRENT ASSETS |
65,030 | 82,723 | ||||||
PROPERTY AND EQUIPMENT, NET |
42,588 | 49,988 | ||||||
GOODWILL |
4,462 | 4,462 | ||||||
INTANGIBLE ASSETS, NET |
2,419 | 2,419 | ||||||
OTHER ASSETS |
837 | 111 | ||||||
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TOTAL ASSETS |
$ | 115,336 | $ | 139,703 | ||||
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LIABILITIES AND STOCKHOLDERS EQUITY |
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CURRENT LIABILITIES: |
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Accounts payable |
$ | 24,199 | $ | 21,301 | ||||
Accrued expenses and other current liabilities |
16,747 | 21,788 | ||||||
Income taxes payable |
736 | 742 | ||||||
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TOTAL CURRENT LIABILITIES |
41,682 | 43,831 | ||||||
DEFERRED CREDITS AND OTHER LONG-TERM LIABILITIES |
11,545 | 11,828 | ||||||
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TOTAL LIABILITIES |
53,227 | 55,659 | ||||||
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COMMITMENTS AND CONTINGENCIES |
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STOCKHOLDERS EQUITY: |
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Preferred Stock, $.001 par value; 25,000,000 shares authorized, none issued |
| | ||||||
Common Stock, $.001 par value; 100,000,000 shares authorized; 31,726,645 and 31,432,531 shares issued and outstanding, respectively |
32 | 31 | ||||||
Additional paid-in capital |
99,244 | 98,510 | ||||||
Accumulated deficit |
(37,167 | ) | (14,497 | ) | ||||
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TOTAL STOCKHOLDERS EQUITY |
62,109 | 84,044 | ||||||
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TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |
$ | 115,336 | $ | 139,703 | ||||
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50 WEST 23RD STREET, NEW YORK, NY 10010
TELEPHONE: 212-590-6200 FAX: 212-590-6580
dELiA*s Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(unaudited)
For the Thirteen Weeks Ended | ||||||||||||||||
January 28, 2012 | January 29, 2011 | |||||||||||||||
NET REVENUES |
$ | 65,592 | 100.0 | % | $ | 66,913 | 100.0 | % | ||||||||
Cost of goods sold |
44,436 | 67.7 | % | 42,266 | 63.2 | % | ||||||||||
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GROSS PROFIT |
21,156 | 32.3 | % | 24,647 | 36.8 | % | ||||||||||
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Selling, general and administrative expenses |
26,333 | 40.1 | % | 26,160 | 39.1 | % | ||||||||||
Impairment of long-lived assets |
495 | 0.8 | % | | 0.0 | % | ||||||||||
Other operating income |
(1,763 | ) | -2.7 | % | (174 | ) | -0.3 | % | ||||||||
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TOTAL OPERATING EXPENSES |
25,065 | 38.2 | % | 25,986 | 38.8 | % | ||||||||||
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OPERATING LOSS |
(3,909 | ) | -6.0 | % | (1,339 | ) | -2.0 | % | ||||||||
Interest expense, net |
183 | 0.3 | % | 93 | 0.1 | % | ||||||||||
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LOSS BEFORE INCOME TAXES |
(4,092 | ) | -6.2 | % | (1,432 | ) | -2.1 | % | ||||||||
Provision (benefit) for income taxes |
72 | 0.1 | % | (2,124 | ) | -3.2 | % | |||||||||
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NET (LOSS) INCOME |
$ | (4,164 | ) | -6.3 | % | $ | 692 | 1.0 | % | |||||||
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BASIC (LOSS) INCOME PER SHARE: |
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NET (LOSS) INCOME PER SHARE |
$ | (0.13 | ) | $ | 0.02 | |||||||||||
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WEIGHTED AVERAGE BASIC COMMON SHARES OUTSTANDING |
31,239,527 | 31,136,931 | ||||||||||||||
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DILUTED (LOSS) INCOME PER SHARE: |
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NET (LOSS) INCOME PER SHARE |
$ | (0.13 | ) | $ | 0.02 | |||||||||||
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WEIGHTED AVERAGE DILUTED COMMON SHARES OUTSTANDING |
31,239,527 | 31,265,800 | ||||||||||||||
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50 WEST 23RD STREET, NEW YORK, NY 10010
TELEPHONE: 212-590-6200 FAX: 212-590-6580
dELiA*s, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(unaudited)
For the Fifty-Two Weeks Ended | ||||||||||||||||
January 28, 2012 | January 29, 2011 | |||||||||||||||
NET REVENUES |
$ | 217,152 | 100.0 | % | $ | 220,697 | 100.0 | % | ||||||||
Cost of goods sold |
148,816 | 68.5 | % | 147,242 | 66.7 | % | ||||||||||
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GROSS PROFIT |
68,336 | 31.5 | % | 73,455 | 33.3 | % | ||||||||||
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Selling, general and administrative expenses |
92,740 | 42.7 | % | 95,746 | 43.4 | % | ||||||||||
Impairment of long-lived assets and goodwill |
495 | 0.2 | % | 7,611 | 3.4 | % | ||||||||||
Other operating income |
(1,957 | ) | -0.9 | % | (475 | ) | -0.2 | % | ||||||||
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TOTAL OPERATING EXPENSES |
91,278 | 42.0 | % | 102,882 | 46.6 | % | ||||||||||
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OPERATING LOSS |
(22,942 | ) | -10.6 | % | (29,427 | ) | -13.3 | % | ||||||||
Interest expense, net |
577 | 0.3 | % | 353 | 0.2 | % | ||||||||||
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LOSS BEFORE INCOME TAXES |
(23,519 | ) | -10.8 | % | (29,780 | ) | -13.5 | % | ||||||||
Benefit for income taxes |
(849 | ) | -0.4 | % | (8,137 | ) | -3.7 | % | ||||||||
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NET LOSS |
$ | (22,670 | ) | -10.4 | % | $ | (21,643 | ) | -9.8 | % | ||||||
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BASIC AND DILUTED LOSS PER SHARE: |
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NET LOSS PER SHARE |
$ | (0.73 | ) | $ | (0.70 | ) | ||||||||||
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WEIGHTED AVERAGE BASIC AND DILUTED COMMON SHARES OUTSTANDING |
31,217,185 | 31,111,878 | ||||||||||||||
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50 WEST 23RD STREET, NEW YORK, NY 10010
TELEPHONE: 212-590-6200 FAX: 212-590-6580
dELiA*s Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
For the Fifty-Two Weeks Ended | ||||||||
January 28, 2012 | January 29, 2011 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net loss |
$ | (22,670 | ) | $ | (21,643 | ) | ||
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Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
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Depreciation and amortization |
11,446 | 10,669 | ||||||
Deferred income taxes |
| 1,138 | ||||||
Stock-based compensation |
734 | 827 | ||||||
Impairment of long-lived assets and goodwill |
495 | 7,611 | ||||||
Changes in operating assets and liabilities: |
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Inventories |
1,088 | 1,677 | ||||||
Prepaid catalog costs and other assets |
7,963 | 1,064 | ||||||
Restricted cash |
8,268 | (728 | ) | |||||
Income taxes payable |
(6 | ) | 9 | |||||
Accounts payable, accrued expenses and other liabilities |
(2,951 | ) | (8,389 | ) | ||||
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Total adjustments |
27,037 | 13,878 | ||||||
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NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES |
4,367 | (7,765 | ) | |||||
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Capital expenditures |
(4,015 | ) | (5,819 | ) | ||||
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NET CASH USED IN INVESTING ACTIVITIES |
(4,015 | ) | (5,819 | ) | ||||
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Proceeds from exercise of employee stock options |
| 12 | ||||||
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NET CASH PROVIDED BY FINANCING ACTIVITIES |
| 12 | ||||||
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
352 | (13,572 | ) | |||||
CASH AND CASH EQUIVALENTS, beginning of period |
28,074 | 41,646 | ||||||
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CASH AND CASH EQUIVALENTS, end of period |
$ | 28,426 | $ | 28,074 | ||||
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50 WEST 23RD STREET, NEW YORK, NY 10010
TELEPHONE: 212-590-6200 FAX: 212-590-6580
dELiA*s, Inc.
SELECTED OPERATING DATA
(in thousands, except number of stores)
(unaudited)
For The Thirteen Weeks Ended | For The Fifty-Two Weeks Ended | |||||||||||||||
January 28, 2012 | January 29, 2011 | January 28, 2012 | January 29, 2011 | |||||||||||||
Channel net revenues: |
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Retail |
$ | 33,634 | $ | 34,906 | $ | 123,223 | $ | 122,444 | ||||||||
Direct |
31,958 | 32,007 | 93,929 | 98,253 | ||||||||||||
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Total net revenues |
$ | 65,592 | $ | 66,913 | $ | 217,152 | $ | 220,697 | ||||||||
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Comparable store sales |
(3.6 | %) | (2.3 | %) | 0.1 | % | (4.1 | %) | ||||||||
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Catalogs mailed |
12,817 | 14,121 | 38,758 | 43,271 | ||||||||||||
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Inventory - retail |
$ | 16,149 | $ | 16,414 | $ | 16,149 | $ | 16,414 | ||||||||
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Inventory - direct |
$ | 14,788 | $ | 15,611 | $ | 14,788 | $ | 15,611 | ||||||||
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Number of stores: |
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Beginning of period |
114 | 115 | 114 | 109 | ||||||||||||
Opened |
1 | | 4* | 9** | ||||||||||||
Closed |
2 | 1 | 5* | 4** | ||||||||||||
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End of period |
113 | 114 | 113 | 114 | ||||||||||||
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Total gross sq. ft @ end of period |
434.4 | 436.3 | 434.4 | 436.3 | ||||||||||||
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* | Totals include two stores that were closed, remodeled and reopened during fiscal 2011, and one store that was closed and relocated to an alternative site in the same mall during fiscal 2011. |
** | Totals include one store that was closed, remodeled and reopened during fiscal 2010, and one store that was closed and relocated to an alternative site in the same mall during fiscal 2010. |