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 110 dELiA*s stores, a catalog, and its website. The stores, located in about 35 states along the East Coast and in the Midwest, offer apparel and accessories under the dELiA*s and to a lesser extent national brands. The firm's Alloy lifestyle brand sells apparel and accessories targeting young women online and by catalog.
Direct-only Alloy sells branded junior apparel (including plus sizes), accessories, footwear, and outerwear to young women. Brands offered include Truck Jeans, Spoon Jeans, Pinky, Blue Heaven, and Lily White. Alloy mailed about 19 million catalogs in fiscal 2012 (ends January).
dELiA*s is struggling to remain popular with fickle teens in a crowded retail market. The company's fiscal 2012 (ends January) sales are down 3% vs. fiscal 2010, and the $217-million-and-change it rang up in 2012 was well below its pre-recession high of more than $274 million. Also, the business has been unprofitable in four of the last five years. Sales at dELiA*s stores inched up less than 1% in 2012, driven by the addition of new stores. Same-store sales (generally considered the best indicator of a retailer's health) were flat (up just 0.1%) for the year. The retailer's direct sales, fell by more than 4%, with both the Alloy and dELiA*s brands posting declines. However, online sales posted a slight increase, while catalog sales tumbled 41%. Still, the tepid growth in Internet sales is worrisome given that the company's target customers -- teens and young women -- are big online shoppers.
Under the leadership of Walter Killough, a veteran of J. Crew who was promoted to CEO from COO 2010, the company is tweaking its merchandise assortment and visual presentation for its dELiA*s brand. It appears to be making some progress reversing its recent slide, posting double-digit increases in both same-store sales and in its dELiA*s direct business in the second quarter of fiscal 2013. The company uses the data gleaned from its "sticky" website (designed to engage visitors with entertainment news, college information, quizzes, social media, horoscopes and more) and purchases made online to target customers more directly, and help it identify potential retail store locations. Indeed, in recent years dELiA*s has focused its growth efforts on its mall-based retail store operation, which has outgrown the company's website and catalog business. The chain has added about 15 stores in recent years and entered new markets, including Arizona and California. Stores have grown to account for more than 50% sales, up from about a third not too long ago. However, given the drop in same-store sales it's not surprising that going forward, dELiA*s plans to keep its net square footage relatively flat, while improving the profitability of existing stores. While the company is closing some underperforming locations, it hopes to grow its store base over the long term. Also, Killough in mid-2011 recruited the former merchandising chief of rival Wet Seal to serve as president for its namesake dELiA*s brand. The company is trimming the number of catalogs it mails (from 69 million in 2008 to about 38 million last year) as it looks to the Internet for growth. E-commerce contributed more than 90% of non-store sales in fiscal 2012.
The investment firm T2 Partners Management owns about 10% of the firm's shares, with Prentice Capital holding more than 9%.
▲ Show Less▼ Show Full Description