Just got this from INVESTORS BUSINESS DAILY for MONDAY, 1/27/97:
Hope this helps our friends at Claire's as it opens investor's eyes to the enormous profits awaiting the teen market!
I do not own any stock in this company,Delia !
Just found the demographics a good heads up article.
Good luck to everyone. I am long 3000 CLE!
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After slipping and sliding for years, teen retailers have made a comeback as kids spend record sums.
Merchants are wooing kids with hip styling and the coolest brands. They've also made it more fun for teen-agers to shop in their stores.
In '96, chains like Gadzooks Inc. and Claire's Stores Inc. watched their earnings soar, quarter after quarter. Investors took notice. Teen retailers led the last year's rally in retail stocks.
Now, after a recent IPO, Delia's Inc. has come on the scene with a different tactic. It's trying to make mail order cool.
Delia's sells branded and private-label casual apparel and accessories to girls and women aged 10 to 24.
It's one of few catalogers aimed at that age group. Most mail-order firms target teens only as a secondary market, says New York catalog consultant Glenda Shasho-Jones, since they usually aren't big buyers through the mail.
But Delia's is hoping to change all that. It offers catalogs aimed specifically at teens and that offer stylish merchandise and plenty of popular labels. Each catalog carries about 50 brands, including national labels such as Urban Outfitters and niche brands such as Dollhouse.
Its catalogs combine the editorial flair of a teen magazine with the convenience of direct-mail shopping. The company uses colorful layouts, catch phrases and feature teen models who convey a culture and attitude unique to Delia's.
Such a strategy is a plus in marketing to teen-age girls, who ''love to read'' catalogs and who often get frustrated looking for retailers that carry the hot brands, says analyst Shelly Hale Young of Hambrecht & Quist.Items, priced at less than $100, are styled and arranged to encourage customers to create their own outfits.
The firm is distinct in other ways. No other cataloger focuses solely on female teen-agers, adds analyst Chad Jacobs of Ladenburg, Thalmann & Co.
And no other retailer brings the latest hot brands into teens' living rooms, he says. Such a convenience is appealing to today's kids, who often find out about hot brands and styles by watching MTV, for example. They have less need to travel to stores to see what's fashionable.
Teens are a compelling group in terms of size, growth and spending power, especially in apparel.
In 1995, teens each had about $3,000 of their own money to spend, 50% more than the $2,000 in 1985, says analyst Anita Gallitano of Alex. Brown & Sons.
They're also growing in numbers. Their population stands at 55 million, according to the U.S. Census Bureau, and is expected to swell 13% to 62 million by 2005.
The company was founded in 1993 by Stephen I. Kahn, president and CEO, and Christopher Edgar, executive vice president. They delivered their first catalog in 1994 via a network of on-campus college reps.
A year later, they broadened their reach by moving to direct mail as its prime distribution channel. To promote the product, Delia's placed mail-order ads in women's magazines like Seventeen and received high response rates.
Delia's has built a following mostly via word of mouth, an approach that gives a feeling of authenticity to the brand, says analyst Jacobs.
Business sizzled from the start. Sales leapt to $5.7 million in fiscal '95 ended Jan. 31, 1996, from $139,000 the year before.
In the nine months ended Oct. 31, pro-forma net surged to $1.7 million, or 10 cents a share, from a loss of $73,000. Sales surged more than sixfold to $15.4 million from $2.8 million the prior year.
Young estimates Delia's will earn 16 cents a share for fiscal '96 and more than double profit to 38 cents in '97.
Key to the firm's long- term growth is its ability to leverage its database of more than 1 million names. The database contains important demographic information, purchasing preferences and patterns, analysts say. Delia's uses it to target customers and build loyalty.
About 40% of Delia's mailings go to names from rented lists. The remainder is from its database, which, because of its precise targeting produces higher response rates. As the database grows, the average response rate on each mailing should increase, Young predicts.
The firm's growth strategy involves more mailings to more consumers. Delia's plans to increase the number of mailings from more than seven million in fiscal 1996 to about 18 million this fiscal year. It also will increase the number of editions from five last year to seven in 1997.
The firm will also broaden its penetration. Its customer list of about 300,000 names is less than 2% of its target base of 26 million young women. Also, the firm will increase the number of Delia's branded items, Jacobs says.
And longer-term, Delia's will expand its distribution into new channels. That may mean rolling out a retail store, or getting involved in online ventures, the firm says. It will also expand its use of interactive media to market its catalog and to develop and prospect customers.
Transmitted: 1/24/97 10:01 PM (r1ae25i1) |
