Alloy to Spin Off Catalogs, Stores; Quarter Loss Widens

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Alloy Inc. will spin off its retail and catalog business, the youth-oriented media, marketing services and apparel marketer reported late Tuesday. The news comes as the company reported a quarterly net loss of $15.9 million compared with a loss of $9.2 million a year ago.


The New York-based company will transfer the assets and liabilities of its retail and direct marketing business -- which includes the Delia's, Alloy and CCS brands -- to the new corporation. Shareholders will receive 100 percent of the common shares of the firm. The transaction is to be completed by the fourth quarter.


Approximately $13 million in gross proceeds are expected from the sale, Alloy said in its first quarter earnings statement that was released yesterday.


The new, unnamed company will sell apparel, accessories, footwear, room furnishings and action sports equipment to the youth market through catalogs, Web sites and retail stores.


According to yesterday's statement, Alloy's revenues for the fiscal quarter ended April 30 totaled $87.7 million, an increase of 4.6 percent.


Net merchandise revenues totaled $44.4 million for the quarter, a 10.3 percent gain compared to the same period last year. Sponsporship and other revenues totaled $43.3 million compared to $43.6 million during last year's first quarter.


After separating from Alloy, the new business will offer shareholders rights to buy up to $20 million in newly issued shares as it hopes to raise funds for its retail stores. Rob Bernard will be CEO of the new company. Alloy and the new company will be independent and will have separate public ownership, boards of directors and management.


Alloy will continue its media and marketing services businesses under the Alloy Media + Marketing banner, and Matt Diamond will continue as CEO of Alloy.


Also Tuesday, Alloy said it will sell Dan's Competition, a catalog for competitive cross-country bicyclists, to XP Innovation LLC to focus on its core brands. This transaction is expected to close within the week.


Chantal Todé covers catalog and retail news and BTB marketing for DM News and DM News.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters


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