Teen fashion retailer Delia’s Inc has widened its third-quarter loss after lower merchandise margins offset a slight rise in sales.

The New York based company said retail segment sales increased 5.6% to $37.2m, but revenues from its direct segment fell 4.5% to $23.4m.

“During the third quarter, we experienced a sequential improvement in sales trends in both the retail and direct segments,” noted CEO Walter Killough.

“In retail, while traffic has remained inconsistent, we have improved our sales execution which has resulted in increased conversion rates. As a result, we were able to deliver positive comparable store sales performance for the last two months of the quarter.”

He continued: “This positive sales performance has continued into the month of November. At the same time, we realise that in order to become profitable we need to continue to rationalise our expense structure.

“As a result, we have identified $8m in annualised expense savings that we have begun to implement in the fourth quarter of 2010, with a total targeted reduction of over $10m in expenses for fiscal 2011.”

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