If you think keeping your teenager out of the mall will keep money in your pocket, think again: dELiA*s has her covered -- or almost covered -- with bare-midriff peasant tops, short shorts, and barely-there sandals, not to mention Feng Shui necklaces and iridescent lip gloss. The multi-channel retailer sells trendy clothing, accessories, and home furnishings to teenage girls through about 100 dELiA*s stores, a catalog, and its website. The stores, located in 30-plus states along the East Coast and in the Midwest, offer apparel and accessories under the dELiA*s and to a lesser extent national brands. After failing to find a buyer, dELiA*s filed Chapter 11 in late 2014.
After struggling for years dELiA*s in December 2014 filed for Chapter 11 bankruptcy protection. The company, which listed its debt at $32.2 million and assets at $74 million, said it would liquidate its merchandise after reporting negative cash flow of $30 million for the first half of the year. It follows fellow tween retailer Deb Shops and adult stores Loehmann's and Coldwater Creek into protection.
New York-based dELiA*s has 101 stores in 32 states. Its largest markets include New Jersey, New York, and Texas.
dELiA*s sells apparel and accessories through its retail stores (70% of sales) and direct to its young customers via catalog and online. The chain circulated approximately 19.8 million direct mail catalogs for its dELiA*s brand, and sent, on average, about 9 million emails per week to its target audience. In June 2013, the company sold its Alloy subsidiary, a direct-only lifestyle brand that sold branded junior apparel (including plus sizes), accessories, footwear, and outerwear to young women.
dELiA*s is struggling to remain popular with fickle teens in a crowded retail market. The company's sales slide continued and accelerated in fiscal 2014 (ended January). Indeed, sales fell 39% in fiscal 2014 versus the prior year, to $136.7 million, and the company's loss widened to $58.5 million -- marking its fifth consecutive year of unprofitability. The precipitous sales decline resulted from a 26% drop in direct marketing revenues and a 24% erosion in sales at the retail stores. Same-store sales decreased 18% primarily due to reduced traffic and a lower store count. Shoppers also spent less per visit to a dELiA*s store in fiscal 2014 than the previous year. The decline in direct marketing sales, which includes online sales, is especially worrisome given that the company's target customers -- teens and young women -- are big online shoppers.
Amid falling sales and profit the retailer in fall 2014 said that it's exploring strategic alternatives, including a possible sale or merger of the business, after receiving several inquiries from potential buyers. The company warned that it could run short on cash in the coming year. In an attempt to right itself, in 2013 the company abandoned its Alloy brand to focus on its core dELiA*s brand.
Mergers, Acquisitions, and Divestments
In June 2013, dELiA*s sold certain assets of Merchandise, LLC (formerly Alloy Merchandise, LLC) to HRSH Acquisitions for about $4 million in cash.