dELiA*s, the youth culture retailer from the brand Alloy, has slowly been shifting it’s product mix away from accessories and cool youth-oriented home furnishings (think Urban Outfitters, Teen Pottery Barn) to concentrating on apparel since April 02006. In addition, it’s strategy this year has been to cut loose stores that didn’t meet expectations and expand slowly with only 71 stores to date. And as many people know, dELiA*s also has a strong direct online business for itself.
The results as of 3rd quarter reports released last week imply that dELiA*s strategy is working: stock is up 10% in pre-market trading last week, and revenues were up 12% over the 3rd quarter in 02005 from $67.5 million to $68.2 million. Profits were not only driven by the retail strategy and change in its product mix, but also by it’s strong direct business which contributed 4.5% of the increase in profits.
For the retail segment of dELiA*’s, margins are reported similar to Hot Topic and PacSun at 32.4% for the quarter, but still lag behind the leader, Zumiez at 36.8%.