Delia's Suffers August Meltdown

Share this content:
The long, hot month of August proved withering for those holding stock in Delia's Corp., New York.


Most of the stock's value melted away as the multichannel marketer of apparel, accessories and home furnishings to teen-age girls and young women plunged 63.5 percent from July 29 to Sept. 3, falling from $4 per share to $1.46.


The company announced preliminary financial results for second-quarter fiscal 2002 on Aug. 7, stating that it expected to report sales of about $26 million and a loss per share of 14 cents to 15 cents. The consensus estimate for the quarter had been a loss of 9 cents per share.


"On the retail side of the business, comparable-store sales turned positive in the month of June, and following our back-to-school floorset on July 7, remained positive through the first two weeks of July," company president Andrea Weiss said. "However, comps turned negative in the third and fourth weeks of the month, which resulted in a negative low-single-digit comp for the quarter. In addition, during the month of July our direct business experienced a slower ramp of back-to-school sales than originally expected.


" ... Our projections for the back half of the year assumed a strengthening in the underlying economy. ... Given the current weakness in the overall economic environment, we feel it necessary to adopt a more conservative posture for the remainder of fiscal 2002. ... For the back half of the fiscal year we now expect revenues of approximately $100-110 million and earnings per share in the range of $0.03 to $0.05."


The stock on Aug. 7 closed where it had opened, at $3.35 on volume of 14,600 shares. It was downgraded the next day from Strong Buy to Outperform by US Bancorp Piper Jaffray and from Buy to Hold by Brean Murray.


Jeff Klinefelter, senior research analyst at US Bancorp Piper Jaffray, attributed some of the company's troubles to a shift from a diversified product line to a single-brand approach.


"They've been harder hit than other companies that are larger with better scale and that can absorb top-line speed bumps," Klinefelter said. "The possibilities are very solid for them to turn things around. They have a multichannel retail model that makes a lot of sense, and I think they will definitely figure out a way to drive up their top-line performance. They are dealing with some merchandise miscues this back-to-school season.


"They've had several new stores that have opened and have trended well," he said. "Now it's a matter of implementing that throughout the organization."


close

Next Article in Multichannel Marketing

Sign up to our newsletters

Company of the Week

Since 1985, Melissa has helped thousands of companies clean, correct and complete contact data to better target and communicate with their customers. We offer a full spectrum of data quality solutions, including global address, phone, email, and name validation, identify verification - available for batch or real-time processes, in the Cloud or on-premise. Our service bureau provides dedupe, email/phone append and geographic/demographic append services for better targeting and insight. For direct mailers, Melissa offers easy-to-use address management/postal software, list hygiene services and 100s of specialty mailing lists - all with competitive pricing and excellent customer service.

Find out more here »

Career Center

Check out hundreds of exciting professional opportunities available on DMN's Career Center.  
Explore careers in digital marketing, sales, eCommerce, marketing communications, IT, data strategies, and much more. And don't forget to update your resume so employers can contact you privately about job opportunities.

>>Click Here