This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

The Deal: dELiA*s Wins Over Investors With Turnaround Plan

NEW YORK ( The Deal) -- Teenage girls' clothing retailer dELiA*s (DLIA) is greasing the wheels of its turnaround effort with a two-part capital raise that brought in a total of $37.6 million, an amount that is higher than the company's shareholders had expected.

The company's second largest shareholder Whitney Tilson of T2 Partners LLC was initially befuddled when he got wind of dELiA*s plans.

"The real question was, why were they raising so much money?" Tilson asked himself when he saw the two-part raise's total price. "It was obviously highly dilutive. They didn't need that much money -- they probably could have raised half as much," he said.

However, after a one-on-one meeting about the capital raise with dELiA*s' new CEO Tracy Gardner, Tilson was sold on the offering and purchased 2.2 million shares at $1.05 each.

Tilson pledged his continued faith by participating in the latest common stock offering, which raised $15.8 million when it closed on Wednesday, July 31 -- higher than the anticipated $13.7 million.

Last week, dELiA*s announced that it raised $21.8 million in 7.25% convertible notes, which the investors plan to convert into 20.7 million shares of common stock upon shareholder approval.

Tilson explained that the note offering was simply a way for Gardner, board chairman Michael Zimmerman, and Zimmerman's investment firm Prentice Capital LP, to participate in the capital raise without causing compliance problems for the insider-buyers. Prentice is dELiA*s' largest shareholder.

"Effectively, they're just buying the stock on the same terms I was -- I think it was fair," Tilson said, adding that he doesn't anticipate any issues securing shareholder approval for the conversion of notes to stock. "While it was highly dilutive, the fact that the stock didn't go down very much says that the market is correctly assessing a dramatic reduction in the risk of this company."

The New York-based teenage girls' clothing retailer reported disappointing results for the quarter ended May 4, with revenues down by nearly 15% after years of consistent losses, but Tilson believes Gardner has what it takes to effect a turnaround.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
DLIA $0.00 21.95%
AAPL $129.62 -2.20%
FB $79.34 -1.50%
GOOG $532.32 -1.44%
TSLA $247.46 -0.11%

Markets

DOW 18,041.54 -190.48 -1.04%
S&P 500 2,104.20 -21.86 -1.03%
NASDAQ 5,032.7510 -56.6110 -1.11%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs