• Q1 profit up 26% to $11.6m
  • Sales decline 26.3% to $25.9m
  • Gross margin slips to 21.3%

Teen apparel retailer Delia's has booked a double-digit increase in first-quarter profit, despite a significant drop in sales and lower margins. 

Net income reached US$11.6m for the 13 weeks to 3 May, compared to $9.2m in the same period a year ago.

Revenues declined 26.3% to $25.9m from $35.2m in the prior year, while comparable sales fell 24.7%, primarily due to reduced website and mall traffic.

Gross margin dropped to 21.3% over 23.8% last year, primarily due to the deleveraging of occupancy costs.

"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," said CEO Tracy Gardner.

She said comparable store performance sequentially improved each month of the quarter, merchandise margin rates were rebuilt to the highest level in the last six quarters, and inventory levels and operating expenses hit targeted reductions.

"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 added. 

Separately, chief financial officer David Dick has resigned but will remain with the company until 1 August. Delia's has commenced a search for his replacement.