Delia’s continues facing challenges in Q2

NEW YORK — Multichannel retailer Delia’s, which markets primarily to teen girls, continues facing challenges in traffic trends as it wrapped up the second quarter ended Aug. 3 with total revenue of $33.2 million, a 16.7% drop from $39.8 million in the year-ago quarter.

The company’s legacy inventory continues to underperform, leading to a drop of 14.7% to $24.5 million in its retail segment from $28.7 million for the year-ago quarter. The dip was primarily due to a comparable store sales decrease of 14.9%, compared to a 14% increase in the year-ago quarter. Revenue from the direct segment decreased 21.8% to $8.7 million.

Consolidated gross margin was 20.9% compared to 31.6% in the prior year quarter, primarily due to increased inventory reserves, lower merchandise margins associated with higher markdowns on legacy product and the deleveraging of occupancy costs.

“Our second quarter results were indicative of challenging traffic trends, combined with the underperformance of our legacy inventory. We expect these trends to continue throughout the third quarter as we work to move through this inventory,” said Tracy Gardner, CEO. “The team is currently focused on stabilizing the business, amplifying the Delia’s brand image and driving improved execution in the near term. During this period, we are also focused on implementing our go forward strategy that we believe will better position us for more consistent long term growth. While we acknowledge that this turnaround will take time, we remain excited about our future potential.”

The company relocated one store location in the same mall during the quarter, ending the period with 103 stores.

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