As teen apparel brand dELiA’s struggles through fiscal woes, CEO Tracy Gardner remains upbeat and confident about the company’s future trajectory.
"We are in the process of rebuilding dELiA’s,” Gardner said during the company’s first-quarter earnings call on May 29. “This new team has radically changed the way this company operates from product development, inventory forecasting, and management to a holistic omni-channel view of our customer.”
Gardner noted that there are four pillars to transform dELiA’s into a customer-centric, girls-only teen brand that enables the customer to express her individual style.
· Offer a market developed product assortment that is on trend and value right and that is unique to dELiA’s
· Provide an omni-channel engaging customer experience
· Grow our social connection with our customers and drive new customer acquisition
· Improve processes, technology, and customer experience to support our long-term objective of profitable growth
“We are building the foundation that will support more profitable and sustainable growth in the future,” Gardner noted. “We are encouraged by our first-quarter progress in what continues to be a challenging macro retail environment. We achieved all our internal financial targets in the first quarter. We saw sequential improvement in both our sales, month-over-month, and our margin to last year and fourth quarter. Our product margin rates were the highest level we have seen in the last six quarters. We’ve gained control of our on-hand inventory levels, which are down 17% over last year. These are important first steps that we would expect to see at this stage of our turnaround. In addition, we reduced our SG&A by over 5%, which puts us on track for $5 million in annual cost savings.”
During the first quarter dELiA’s saw its total revenue sink 26.3%, to $25.9 million, from $35.2 million in the first quarter of fiscal 2013. Same-store sales, including comparable store sales and direct-to-consumer sales, fell 24.7%, primarily driven by reduced website and mall traffic. What’s more, catalog circulation for the quarter decreased 15.2%.
On top of the poor fiscal numbers, dELiA’s also lost its CFO, David Dick, who announced his resignation, but will remain with the company until Aug. 1.
“Our merchandise margin rates, inclusive of obsolescence, were rebuilt to the highest level we have seen in the last six quarters as we delivered merchandise margin dollars that were only down 13% on a comparable store basis,” Gardner said. “This improvement in merchandise margin levels is an important first step that we would expect to see at this point in our turnaround.”
Gardner thanked Dick for his hard work and dedication the past six years.
“He was actively involved in helping the company navigate a number of challenges and was instrumental in securing recent financing that is central to the execution of dELiA’s strategy going forward,” Gardner said. “On behalf of the entire company, I wish him well in his future endeavors. At this early stage of our turnaround, we are encouraged by our first quarter progress in what continues to be a challenging macro retail environment.”
Gardner, who became CEO at dELiA’s less than a year ago and is a former J. Crew executive, has already sold off the company’s online and catalog-only Alloy brand to become “laser-focused” on making dELiA’s a fashion-forward brand for girls between the ages of 12 and 18.
“Our team has made tremendous progress in developing a product assortment that appeals to our girl’s fashion sense and her desire for great value,” Gardner said. “We are seeing our girl respond to the customer engagement strategies and enhanced store shopping experience that were rolled out in the first quarter. We are optimistic that the sequential improvements we have seen in the first quarter will continue forward while we remain focused on transforming dELiA’s into a customer-centric teen brand that enables her to express her individual style. I want to thank our entire headquarters, distribution center and store teams for their hard work, passion, and dedication to helping dELiA's reach its potential.”