"We are on track to grow our store base by approximately 25% this year, and on May 1, we achieved a significant milestone: We now have over half of our store base in the new prototype format. This is an important step toward improving the long-term productivity and profitability of our dELiA*s retail division.”
Retail Segment Results: Net sales for the dELiA*s retail stores increased by 34% to $19.7 million for the quarter compared to last year's $14.7 million. During the quarter, we opened six new stores, relocated one store and closed four stores. In addition, we closed our Natick, MA location in April to remodel and reopen for Back-to-School.
Accordingly, we ended the quarter with 75 stores in operation as compared to the 61 premiere locations open as of April 29, 2006, the ending date of last year's fiscal quarter. Gross profit for the retail segment, which includes distribution, occupancy and merchandising costs, was $3.9 million versus last year's $3.6 million, an increase of 10% in dollars, and a decrease, expressed as a percentage of revenues, from 24.1% of sales in fiscal 2006 to 19.9% of sales this year.
This decrease reflected additional promotional markdowns required to clear excess carryover merchandise in the retail segment. Selling, general and administrative expenses, which includes allocated overhead, improved to 43.6% of sales from 45.0% last year, resulting in a quarterly loss for the segment of $4.7 million versus $3.1 million last year.
Direct Segment Results: Net sales for the direct segment increased 3% to $38.1 million versus last year's $37.1 million for the quarter. Net sales for the direct segment would have increased by 11% based upon comparing the thirteen-week period ended May 5, 2007 to the comparable thirteen weeks ended May 6, 2006. Gross profit was $16.9 million versus last year's $16.3 million, an increase of 4%.
This improvement reflected higher merchandise margins, despite the calendar shift. Selling, general and administrative expenses were up 8% in dollars and by over 200 bps to 41.3% of sales, with approximately half of this increase attributable to the costs of the test CCS Girls catalog. Income for the direct segment thus decreased to $1.2 million from $1.7 million.
marketing@alchempro.com
