Red ink, layoffs abound at Delia’s

These are tough times for teen apparel cataloger/retailer Delia’s (NasdaqNM: DLIA). During its third quarter the company more than tripled its net loss and cut about 20% of its corporate payroll.

For the three months ended Nov. 2, Delia’s loss $10.7 million on sales of $32.9 million. For the previous third quarter, the New York-based company had lost $3.2 million on $32.5 million in sales. Catalog and Web sales tumbled 19% on a 10% cut in circulation.

This year’s thrid-quarter loss included a $1.6 million charge related to severance and relocation expenses, and a $2.3 million charge for selling off underperforming back-to-school merchandise. “The second and third quarters were the most difficult and disappointing in Delia’s history,” CEO Stephen Kahn said in a statement. “Significant back-to-school product and planning miscues negatively affected performance in both the retail and direct channels.”

Delia’s wouldn’t specify how many jobs were cut, though it said that the layoffs would reduce payroll expenses by about $3.5 million.

Meanwhile, chief financial officer Dennis Goldstein quit to “pursue other interests” according to the company. Chief operating officer Evan Guillemin, who’d been CFO from July 1996 to March 2000, is replacing Goldstein. Looking ahead, Delia’s said it expects to post a fourth-quarter profit before interest, taxes, depreciation and amortization for the fourth quarter, which includes the holiday selling season. In October, Delia’s said it had retained an advisor to explore strategic alternatives. In a release, the company also said it is “continuing to pursue strategic relationships to bolster our resources and optimize our operating flexibility,” referring to its hiring in October of an advisor to explore “strategic alternatives,” including a possible sale.

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