DELIA S INC, S-1/A, 1996-12-18

DELIA S INC
S-1/A, 1996-12-18
CATALOG & MAIL-ORDER HOUSES

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 18, 1996

REGISTRATION NO. 333-15153
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

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[LOGO OF DELIA*S INC.]
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 5961 13-3914035
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NUMBER)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)

435 HUDSON STREET
NEW YORK, NEW YORK 10014
(212) 807-9060
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

STEPHEN I. KAHN
435 HUDSON STREET
NEW YORK, NEW YORK 10014
(212) 807-9060
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

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COPIES OF COMMUNICATIONS TO:

JEFFREY A. HORWITZ, ESQ. LARRY A. BARDEN, ESQ.
EDWARD W. KERSON, ESQ. SIDLEY & AUSTIN
PROSKAUER ROSE GOETZ & MENDELSOHN ONE FIRST NATIONAL PLAZA, SUITE 4400
LLP CHICAGO, ILLINOIS 60603-2279
1585 BROADWAY (312) 853-7000
NEW YORK, NEW YORK 10036-8299

(212) 969-3000

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effectiveness of this Registration Statement.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the
same offering. [_]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]

----------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.

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<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

SUBJECT TO COMPLETION, DATED DECEMBER 18, 1996

PROSPECTUS

2,350,000 SHARES

LOGO

COMMON STOCK

Of the 2,350,000 shares of Common Stock offered hereby, 2,000,000 shares are
being sold by the Company and 350,000 shares are being sold by the Selling
Stockholders. The Company will not receive any of the proceeds from the sale of
shares by the Selling Stockholders. See "Principal and Selling Stockholders."

Prior to this offering, there has been no public market for the Common Stock
of the Company. It is currently estimated that the initial public offering
price will be between $10.00 and $12.00 per share. See "Underwriting" for a
discussion of the factors to be considered in determining the initial public
offering price. The Company has applied to have the Common Stock approved for
quotation on the Nasdaq National Market under the symbol DLIA.

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THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
COMMENCING ON PAGE 5.

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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

<TABLE>
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<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO PROCEEDS TO SELLING
PUBLIC DISCOUNT (1) COMPANY (2) STOCKHOLDERS
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<S> <C> <C> <C> <C>
Per Share.................. $ $ $ $
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Total (3).................. $ $ $ $
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</TABLE>
(1) See "Underwriting" for indemnification arrangements with the several
Underwriters.

(2) Before deducting expenses payable by the Company estimated at $600,000.

(3) The Company and certain Selling Stockholders have granted the Underwriters
a 30-day option to purchase up to 352,500 additional shares of Common
Stock, solely to cover over-allotments, if any. If all such shares are
purchased, the total Price to Public, Underwriting Discount, Proceeds to
Company and Pro- ceeds to Selling Stockholders will be $ , $ , $ and
$ , respectively.See "Underwriting."

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The shares of Common Stock are offered by the several Underwriters subject to
prior sale, receipt and acceptance by them and subject to the right of the
Underwriters to reject any order in whole or in part and certain other
conditions. It is expected that certificates for such shares will be available
for delivery on or about , 1996 at the office of the agent of Hambrecht &
Quist LLC in New York, New York.

HAMBRECHT & QUIST OPPENHEIMER & CO., INC.

, 1996
<PAGE>

[PHOTOGRAPHS AND ART FROM DELIA*S CATALOGS.]

The Company intends to distribute to its stockholders annual reports
containing financial statements audited by its independent public accountants
and will make available copies of quarterly reports for the first three
quarters of each fiscal year containing unaudited financial information.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OF THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN
THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY
BE DISCONTINUED AT ANY TIME.

"dELiA*s" is a registered trademark of the Company in the United States.
Trade names and trademarks of other companies appearing in this Prospectus are
the property of their respective holders.

2
<PAGE>

[PHOTOGRAPHS AND ART FROM DELIA*S CATALOGS.]
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and the Financial Statements and Notes thereto appearing elsewhere
in this Prospectus. The Common Stock offered hereby involves a high degree of
risk. See "Risk Factors."

THE COMPANY

dELiA*s is a direct marketer of casual apparel and related accessories to
girls and young women primarily between the ages of 10 and 24 (an age group
known as "Generation Y"). The Company believes that it is one of a limited
number of direct marketers distributing an apparel-based catalog exclusively
for this market. The Company offers a carefully edited assortment of recognized
and emerging brands of teen apparel and accessories, complemented by dELiA*s
own branded products. Merchandise ranges from basics, such as jeans, shorts and
t-shirts, to more fashion-oriented apparel and accessories, such as woven and
knit junior dresses, swimwear, sunglasses, watches, costume jewelry and
cosmetics. The Company believes that its selection and presentation of
merchandise have contributed to a growing recognition of dELiA*s as a teen
fashion resource.

With the large "baby boom" generation maturing and having children, the
younger segments of the U.S. population are increasing in size. According to
the U.S. Census Bureau, the population of 10 to 24 year-olds is currently 55
million and is expected to grow by 12% to approximately 62 million by 2005.
According to data from one independent research firm, teens spent approximately
$109 billion in 1995. Another independent research firm estimated that apparel
accounted for over one-third of teen spending on certain major categories of
goods and services. As a result of the growing population and spending patterns
of Generation Y and the limited number of national apparel retailers and
catalogers exclusively targeting this age group, the Company believes that this
large and underserved market represents a significant direct marketing
opportunity.

dELiA*s catalogs are designed to create a distinctive and entertaining
shopping experience by combining the feel and editorial flair of a teen-focused
fashion magazine with the convenience of direct mail shopping. The catalogs
include colorful layouts with creative "catch phrases" and feature teen models
who convey a culture and attitude unique to dELiA*s. Merchandise items are
styled and arranged to encourage customers to create their own outfits, which
typically can be purchased for under $100.

The Company believes that its proprietary customer database is one of its key
competitive advantages. This database has been developed primarily through
referrals, word-of-mouth, returns of catalog request cards and targeted
advertising. The Company believes that this database yields response rates that
exceed average response rates for the consumer catalog industry and that this
database would be difficult to replicate primarily because it consists mostly
of names of persons who specifically requested the dELiA*s catalog and which
may not be available through purchased or rented lists. As of October 31, 1996,
the Company's database included over one million names, including approximately
200,000 customers who had made purchases from the Company within the preceding
24 months. The Company has customers in all 50 states and Japan.

dELiA*s plans to increase catalog mailings from an anticipated 7 million in
fiscal 1996 to approximately 18 million in fiscal 1997, and to increase the
number of catalog editions from five in fiscal 1996 to seven in fiscal 1997.
The Company's operations are supported by its integrated, state-of-the-art
telephone and management information systems, which allow teleservice
representatives to provide real-time product availability and order status
information. As of October 31, 1996, the Company employed approximately 240
teleservice representatives to provide 24-hour, seven-day-a-week customer
service.

dELiA*s goal is to be the leading direct marketer of casual apparel,
accessories and other related products to Generation Y girls and young women.
The Company plans to build on its core catalog business and to leverage the
dELiA*s brand identity to develop new channels of distribution and products
aimed at the Generation Y market.

Notwithstanding the significant direct marketing opportunities the Company
believes exist for apparel, accessories and other related products targeted at
the Generation Y market, the Company faces intense competition and has a
limited operating history that makes it difficult to predict the Company's
results of operations. In view of these risks and those more fully described
under "Risk Factors," there can be no assurance the Company will achieve its
goal of becoming the leading direct marketer of casual apparel, accessories and
other related products to Generation Y girls and young women.

The Company was incorporated in Delaware in October 1996 and is a successor
to a business founded in September 1993. The Company's executive offices are
located at 435 Hudson Street, New York, New York 10014, and its telephone
number is (212) 807-9060.

3
<PAGE>

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by the Company................. 2,000,000 shares
Common Stock offered by the Selling Stockholders.... 350,000 shares
Common Stock to be outstanding after the offering... 12,000,000 shares (1)
Use of proceeds..................................... For working capital and general
corporate purposes
Proposed Nasdaq National Market symbol.............. DLIA
</TABLE>

SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
SEPTEMBER 9,
1993 NINE MONTHS
(INCEPTION) TO FISCAL YEAR 1994 FISCAL YEAR 1995 ENDED OCTOBER 31,
JANUARY 31, ENDED ENDED -----------------
1994 JANUARY 31, 1995 JANUARY 31, 1996 1995 1996
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<S> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS
DATA:
Net sales............. $ -- $ 139 $5,652 $ 2,844 $ 15,482
Gross profit.......... -- 50 2,574 1,391 8,061
Net income (loss)..... $ (33) $ (332) $ 27 $ (73) $ 1,739
Pro forma net income
(loss) (2)........... $ (19) $ (202) $ 18 $ (44) $ 1,035
Pro forma net income
(loss) per share
(3).................. $(0.00) $(0.02) $ 0.00 $ (0.00) $ 0.10
Shares used in the
calculation of
pro forma net income
(loss) per share
(3).................. 10,000 10,000 10,000 10,000 10,000
SELECTED OPERATING DATA:
Number of catalogs
mailed............... -- 26 1,700 1,050 4,950(4)
House names (5)....... -- 17 290 196 1,080
</TABLE>

<TABLE>
<CAPTION>
OCTOBER 31, 1996
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ACTUAL PRO FORMA (6) AS ADJUSTED (7)
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<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................ $1,140 $19,599
Working capital.......................... 1,946 20,405
Total assets............................. 6,901 25,360
Total stockholders' equity............... 2,749 1,348 21,208
</TABLE>
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(1) Excludes 1,250,000 shares of Common Stock reserved for issuance under the
Company's 1996 Stock Incentive Plan (under which options to purchase an
aggregate of 261,000 shares of Common Stock will be outstanding immediately
after the completion of this offering) and 250,000 shares of Common Stock
reserved for issuance pursuant to an outstanding non-plan stock option the
Company has granted to an executive. See "Management--1996 Stock Incentive
Plan" and "Management--Stock Option Agreement."

(2) Computed on the basis described in Note 6 of Notes to Financial Statements
and assuming the pro forma tax provisions described therein. Prior to this
offering, the Company effected the Reorganization described under "The
Reorganization," in which the Company converted from a limited liability
company to a C corporation.
(3) See Note 2 of Notes to Financial Statements for an explanation of the
determination of shares used in computing pro forma net income per share.
(4) Does not include 750,000 copies of the Company's winter 1996 catalog mailed
in October 1996. The Company did not mail any copies of its winter 1995
catalog in the nine months ended October 31, 1995.
(5) House names represents the number of customers who have made at least one
purchase or have requested a catalog from the Company in the preceding 24
months, determined at the end of the applicable fiscal period.

(6) Pro forma stockholders' equity gives effect to the portion of the LLC
Distribution described in "Dividend Policy" that depended on the Company's
results of operations from inception through October 31, 1996.

(7) As adjusted gives effect to: (i) the portion of the LLC Distribution that
depended on the Company's results of operations from inception through
October 31, 1996 and (ii) the sale of 2,000,000 shares of Common Stock
offered by the Company hereby at an assumed initial public offering price
of $11.00 per share and the application of the estimated proceeds
therefrom. See "Capitalization" and "Dividend Policy."
--------------------

Except as otherwise noted, all information in this Prospectus assumes no
exercise of the Underwriters' over-allotment option. See "Description of
Capital Stock," "Underwriting" and Notes to Financial Statements. In addition,
unless otherwise indicated, all information in this Prospectus gives effect to
the Reorganization (as defined under "The Reorganization") that was effected
prior to the completion of this offering. As used in this Prospectus,
references to "dELiA*s" or the "Company" prior to the Reorganization mean
dELiA*s LLC and its predecessor, and, thereafter, dELiA*s Inc. All references
in this Prospectus to a particular fiscal year refer to the year ended January
31 following the particular year (e.g., "fiscal 1996" refers to the fiscal year
ending January 31, 1997).

4
<PAGE>

RISK FACTORS

The following principal risk factors should be considered carefully in
addition to the other information contained in this Prospectus before
purchasing the Common Stock offered hereby. This Prospectus contains forward-
looking statements that involve risks and uncertainties. Actual results could
differ materially from those discussed herein. Factors that could cause or
contribute to such differences include, but are not limited to, those
discussed below and in the section entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operations" as well as those
discussed elsewhere in this Prospectus.

Limited Operating History. The Company has a limited operating history, and
therefore it is difficult to predict the Company's future catalog response
rates (the rates at which catalog recipients respond to catalog mailings by
ordering products), merchandise return rates, success in identifying fashion
trends and other elements that affect the Company's results of operations.
Although the Company had net income in fiscal 1995 and the first nine months
of fiscal 1996, the Company incurred losses of $33,000 from September 9, 1993
(inception) to January 31, 1994 and $332,000 in fiscal 1994. There can be no
assurance the Company will achieve or sustain growth in revenues or maintain
profitability in future periods.

Seasonal and Quarterly Fluctuations. The Company is subject to seasonal
fluctuations in its merchandise sales and results of operations. The Company
expects its sales and operating results generally to be lower in the first and
second quarters than in the third and fourth quarters of each fiscal year
(which include the back-to-school and holiday seasons). The Company's
quarterly results may fluctuate as a result of numerous factors, including the
timing, quantity and cost of catalog mailings (including sale circulars), the
response rates to such mailings, the timing of merchandise deliveries, market
acceptance of the Company's merchandise (including new merchandise categories
or products introduced), the mix, pricing and presentation of products offered
and sold, the hiring and training of additional personnel, the timing of
inventory writedowns, the incurrence of other operating costs and factors
beyond the Company's control, such as general economic conditions and actions
of competitors. Accordingly, the results of operations in any quarter will not
necessarily be indicative of the results that may be achieved for a full
fiscal year or any future quarter. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations."

Changes in Fashion Trends and Industry Risks. The Company's success depends,
in part, on management's ability to anticipate the fashion tastes of its
customers and to offer merchandise that appeals to their preferences on a
timely and affordable basis. The fashion tastes of the Company's customers are
expected to change frequently and the failure of the Company successfully to
anticipate, identify or react to changes in styles, trends or brand
preferences of its customers could lead to, among other things, excess
inventories and price markdowns, which could have a material adverse effect on
the Company. In addition, misjudgments in apparel selection could adversely
affect the Company's image with its customers, which could have a material
adverse effect on the Company.

The apparel and accessories industries are cyclical. Purchases of apparel
and accessories tend to decline during recessionary periods and may decline at
other times. There can be no assurance the Company will be able to maintain
its historical rate of growth, particularly if the retail environment
declines. A recession in the national or regional economies or uncertainties
regarding future economic prospects, among other things, could affect consumer
spending habits and have a material adverse effect on the Company. The
Company's business is sensitive to consumer spending patterns and preferences.
Shifts in consumer discretionary spending away from casual apparel and
accessories to other consumer goods also could have a material adverse effect
on the Company.

Ability to Develop and Maintain Proprietary Customer Lists. The Company
mails catalogs to names in its proprietary database (which are primarily
derived from word-of-mouth inquiries and responses to the Company's
advertising) and to potential customers whose names are obtained from
purchased and rented lists. Approximately 40% of the names of persons to whom
the Company mailed its most recent catalog were derived from purchased or
rented lists, and the Company anticipates continuing its use of such lists.
Names derived from purchased or rented lists may generate lower response rates
than names derived from word-of-

5
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mouth requests. Accordingly, the Company anticipates that overall response
rates would decline if it increased its use of purchased and rented lists
relative to its use of names in its database. In addition, the Company's
database primarily contains names of teen girls and young women. As these
individuals age beyond their teens, they may no longer purchase products aimed
at younger individuals. Accordingly, the Company must constantly update its
mailing lists to identify new, prospective teen customers. Failure to do so
could have a material adverse effect on the Company.

Recently, there has been increasing public concern regarding the
compilation, use and distribution of information about teens and children.
Federal legislation has been introduced in the U.S. Congress that proposes
restrictions on persons, principally list brokers, that sell, purchase or
otherwise use for commercial purposes personal information about teens (under
the age of 16) and children. The Company is not a list broker but it does mail
catalogs to persons whose names were derived from purchased or rented lists.
The Company may increase its use of purchased and rented lists or, in the
future, decide to sell lists containing information about teens.
Consequently,the proposed legislation, or other similar laws or regulations
that may be enacted, could impair the Company's ability to collect customer
names or profit from future plans to sell demographic information relating to
the teen population. Furthermore, additional legislation or regulations could
limit the Company's ability to continue to compile personal information on
teens or to use that information in the course of its business, which could
have a material adverse effect on the Company.

Operational, Management and Inventory Risks of Growth Strategy. The recent
growth in the Company's operating income has resulted largely from increases
in the number of catalogs the Company mails and the number of products
included in its catalogs, as well as increases in response rates. This growth
has placed significant demands on the Company's management, administrative,
operational and financial resources. The Company intends to continue to pursue
an aggressive growth strategy for the foreseeable future and its future
operating results will largely depend on its ability to manage a larger
business. Managing its growth will require the Company to continue to
implement and improve its operations and financial and management information
systems and to continue to expand, motivate and effectively manage its
workforce. The Company plans to continue to increase the number of catalogs it
mails and the frequency of such mailings and intends to broaden the range of
products offered in its catalogs (including additional dELiA*s-branded
products). These actions could result in lower response rates and operating
margins. Furthermore, as the Company's sales increase, the Company anticipates
maintaining higher inventory levels in an effort to continue to maintain
satisfactory fulfillment rates for its catalog customers. This anticipated
increase in inventory levels may expose the Company to greater risk of excess
inventories and inventory obsolescence, which could have a material adverse
effect on the Company.

The Company is exploring a number of new business opportunities, including
opening a retail store, developing traditional or electronic publishing
ventures ancillary to its existing business and expanding its use of
electronic interactive media for promotional and customer development
purposes. There can be no assurance the Company will pursue or successfully
implement any or all of these plans. Failure to implement successfully any of
these plans, if pursued, could have a material adverse effect on the Company.
See "Business--Growth Strategy."

The Company expects from time to time to consider acquisitions or
investments within and outside the direct mail, retail and apparel industries.
The Company has never made an acquisition, and if it does make an acquisition,
there can be no assurance it will do so on favorable terms or that it will be
able successfully to integrate any acquired business with its existing
operations.

Dependence on Key Vendors. The Company's business depends, in part, on the
Company's ability to purchase current-season brand-name apparel at competitive
prices, in sufficient quantities and of acceptable quality. Six vendors
accounted for approximately 50% of the net sales generated by the Company's
spring 1996 catalog, and five vendors accounted for approximately 53% of the
net sales generated by the Company's summer 1996 catalog. Apparel produced by
Urban Outfitters accounted for approximately 24% of net sales for each of the
spring 1996 and summer 1996 catalogs. The Company does not have a long-term
contract

6
<PAGE>

with Urban Outfitters or any other supplier. In addition, many of the
Company's smaller vendors have limited resources, production capacities and
operating histories. The failure of key vendors to expand with the Company,
the loss of one or more key vendors, a material change in the Company's
current purchase terms or a limitation on the Company's ability to procure
products could have a material adverse effect on the Company.

Dependence on Key Personnel. The success of the Company has largely depended
upon the efforts and abilities of its senior management, including the
Company's co-founders, Stephen I. Kahn, Chairman of the Board, President and
Chief Executive Officer, and Christopher C. Edgar, Executive Vice President
and Chief Operating Officer. The loss of one or more of its key employees
could have a material adverse effect on the Company.

The direct marketing and apparel experience of a significant number of the
Company's senior management personnel is limited to their experience with the
Company. The Company's future success will depend on the ability of the
Company's management to retain key managers and employ additional qualified
senior operating management. There can be no assurance that the Company will
be successful in attracting or retaining additional qualified personnel.

Competition. The apparel and accessories industries are highly competitive,
and the Company expects competition in these markets to increase. The Company
competes with traditional department-store retailers, as well as specialty
apparel and accessory retailers for teen and young-adult customers. The
Company also competes with other direct marketers. Many of the Company's
competitors are larger and have substantially greater financial, distribution
and marketing resources than the Company.

There are few barriers to entry in the teen apparel and accessories market
and the Company expects other catalogers, as well as additional store-based
retailers and apparel manufacturers, to enter this market. The Company also
could face competition from manufacturers of apparel and accessories
(including the Company's current vendors), who could market their products
directly to retail customers or make their products more readily available in
retail stores or through other catalogs. In addition, competitors could enter
into exclusive distribution arrangements with the Company's vendors and deny
the Company access to their products. Increased competition could result in
pricing pressures, marketing expenditures and loss of market share, and could
have a material adverse effect on the Company.

The Company expects that the direct marketing industry will be affected by
technological changes in distribution and marketing methods, such as on-line
catalogs, retail kiosks and Internet shopping. The Company believes its
success will depend, in part, on its ability to adapt to new technologies and
to respond to competitors' actions in these areas. Adapting to new
technologies could require significant capital expenditures by the Company.
There can be no assurance that the Company will remain competitive in response
to technological changes.

Fluctuations in Postage and Paper Expenses. Postage and paper expenses, in
the aggregate, equalled approximately 12% of the Company's net sales in fiscal
1995 and 11% of the Company's net sales in the first nine months of fiscal
1996. The Company has not passed on, and has no future plans to pass on, the
costs of catalog mailings and paper to its customers. Material increases in
paper or catalog delivery costs could have a material adverse effect on the
Company.

Reliance on Information Systems. The Company's success depends, in part, on
its ability to provide prompt, accurate and complete service to its customers
on a competitive basis, and to purchase and promote products, manage
inventory, ship products, manage sales and marketing and maintain efficient
operations through its telephone and management information systems. A
significant disruption in its telephone and management information systems
could adversely affect the Company's relations with its customers and vendors
and its ability to manage its operations. Furthermore, there can be no
assurance that extended or repeated reliance on the Company's back-up computer
and telephone systems would not have a material adverse effect on the Company.

7
<PAGE>

Reliance on Third-Party Fulfillment and Parcel Services. All the Company's
orders for merchandise are currently being handled by a single third-party
fulfillment company at a single facility near Lancaster, Pennsylvania. Any
disruption in fulfillment operations could have a material adverse effect on
the Company and its reputation with customers. In addition, strikes or other
service interruptions by the Company's shippers or parcel services could have
a material adverse effect on the Company's ability to deliver merchandise on a
timely basis. See "Business--Operations."

The Company attempts to deliver its catalogs to its customers at timely
seasonal intervals. The failure of the Company to deliver catalogs at
appropriate times or postal delays or disruptions in the mailing of catalogs,
could affect the demand for the Company's products and could have a material
adverse effect on the Company. See "Business--Operations--Distribution and
Fulfillment."

International Business Risks. The Company recently began to distribute its
catalog in Japan and intends to increase distribution there and to explore
distribution opportunities in other international markets. Approximately 1% of
the Company's net sales for the first nine months of fiscal 1996 were from
sales to customers outside the United States, substantially all of whom were
located in Japan. In addition, certain of the Company's vendors procure
products from outside the United States (approximately 30% of the Company's
gross sales derived from its early fall 1996 catalog were of products the
Company believes were manufactured outside the United States), and the Company
may in the future purchase merchandise for its dELiA*s-branded apparel
directly from non-U.S. manufacturers. The Company's international business is
subject to a number of risks generally associated with doing business abroad,
including the opening and management of foreign offices and distribution
centers, maintenance of uniform quality of merchandise, development of
customer lists and marketing channels, disruptions or delays in shipping,
fluctuations in the value of foreign currencies, exposure to potentially
adverse tax consequences, imposition of import/export duties and quotas, and
unexpected regulatory, economic and political changes in foreign markets.
There can be no assurance these factors will not have a material adverse
effect on the Company. Furthermore, expansion into new international markets
may present competitive and merchandising challenges different from those the
Company currently faces. There can be no assurance the Company will expand
internationally or that any such expansion will result in profitable
operations. See "Business--Growth Strategy."

Dependence on Intellectual Property. There can be no assurance that the
actions taken by the Company to establish and protect its trademarks and other
proprietary rights (including the dELiA*s name, the dELiA*s logo and the daisy
(" LOGO ") symbol) will prevent imitation of its products and services or
infringement of its intellectual property rights by others. In addition, there
can be no assurance others will not resist or seek to block sales of the
Company's products as violative of their trademark and proprietary rights. See
"Business--Intellectual Property."

Risk that the Company May Be Required to Collect Sales Tax. At present, the
Company does not collect sales or other similar taxes in respect of shipments
of goods into most states. However, various states have sought to impose state
sales tax collection obligations on out-of-state mail-order companies, such as
the Company. A successful assertion by one or more states that the Company
should have collected or be collecting sales taxes on the sale of products
could have a material adverse effect on the Company.

Unspecified Use of Proceeds. The principal purposes of this offering are to
obtain additional capital to support anticipated growth, create a public
market for the Common Stock, facilitate future access for the Company to
public equity markets and enhance the Company's ability to use its Common
Stock as consideration for potential acquisitions and as a means of attracting
and retaining key employees. The Company expects to use the net proceeds from
this offering primarily for working capital and general corporate purposes.
The Company has no current specific plan for a significant portion of the
proceeds of this offering, and, as a consequence, management will have
discretion over the use of a significant portion of the proceeds.

8
<PAGE>

Control by Principal Stockholder. At the completion of this offering,
Stephen I. Kahn, the Chairman, Chief Executive Officer and President of the
Company, will beneficially own approximately 71.9% (approximately 69.2%, if
the Underwriters' over-allotment option is exercised in full) of the
outstanding shares of Common Stock, including 3,903,738 shares he will own
directly and an additional 4,723,051 shares in the aggregate subject to a
stockholders agreement among certain of the Company's existing stockholders
(the "Family Stockholders Agreement") and agreements with holders of
restricted stock. Under the Family Stockholders Agreement, Mr. Kahn is
entitled, among other things, to vote and restrict the transfer of all the
shares subject to the Family Stockholders Agreement, and, under the agreements
with holders of restricted stock, Mr. Kahn is entitled to vote such holders'
shares. Therefore, Mr. Kahn can control the election of directors of the
Company and the outcome of all issues submitted to a vote of stockholders of
the Company. The foregoing, together with certain provisions in the Company's
certificate of incorporation, may make it more difficult for a third party to
acquire, and may discourage acquisition bids for, the Company and could limit
the price that certain investors might be willing to pay for shares of Common
Stock. In addition, stockholders may take any action by written consent in
accordance with the General Corporation Law of the State of Delaware and the
Company's bylaws, which may allow Mr. Kahn to direct corporate action without
advance notice to other stockholders. See "Principal and Selling Stockholders"
and "Description of Capital Stock."

Possibility of Adverse Effect on the Market Price of the Common Stock by
Virtue of Certain Anti-Takeover Provisions. Certain provisions of the
Company's certificate of incorporation and bylaws may make it more difficult
for a third party to acquire, or may discourage acquisition bids for, the
Company and could limit the price that certain investors might be willing to
pay in the future for shares of Common Stock. These provisions, among other
things, (a) divide the board of directors into three classes, (b) require the
affirmative vote of the holders of at least 66 2/3% of the shares to approve a
sale, lease, transfer or exchange of all or substantially all the assets of
the Company, (c) require the affirmative vote of the holders of at least 66
2/3% of the shares to remove a director or to fill a vacancy on the board of
directors, (d) require the affirmative vote of the holders of at least 66 2/3%
of the shares to amend or repeal certain provisions of the certificate of
incorporation and (e) require the affirmative vote of the holders of at least
66 2/3% of the shares or two-thirds of the members of the board of directors
to amend or repeal the bylaws of the Company. In addition, the rights of
holders of Common Stock will be subject to, and may be adversely affected by,
the rights of any holders of Preferred Stock that may be issued in the future
and that may be senior to the rights of the holders of Common Stock. Under
certain conditions, section 203 of the General Corporation Law of the State of
Delaware would prohibit the Company from engaging in a "business combination"
with an "interested stockholder" (in general, a stockholder owning 15% or more
of the Company's outstanding voting stock) for a period of three years. See
"Description of Capital Stock."

Absence of Dividends. Following the completion of this offering, the Company
intends to retain any future earnings for use in its business and, therefore,
does not anticipate paying any cash dividends on the Common Stock in the
foreseeable future. See "Dividend Policy."

Absence of Prior Public Market; Possible Volatility of Stock Price. There
has been no public market for the Common Stock prior to this offering, and
there can be no assurance an active public market for the Common Stock will
develop or continue after this offering. The initial public offering price for
the Common Stock will be determined by negotiations among the Company, the
Selling Stockholders and the representatives of the Underwriters (the
"Representatives"). See "Underwriting." There can be no assurance the market
price of the Common Stock will not decline below the initial public offering
price. The Company believes factors such as actions of competitors and
quarterly variations in operating results, as well as changes in market
conditions, analysts' estimates and the stock market may cause the market
price of the Common Stock to fluctuate significantly. Further, the stock
market has historically experienced volatility that sometimes has been
unrelated to operating performance. In addition, future sales of Common Stock
by the Company's existing stockholders following the completion of this
offering and the expiration of the 180-day lock-up period referred to in
"Possibility of Adverse Effect on the Market Price of the Common Stock by
Virtue of Public Sales of Common Stock Following This Offering" below could
have an adverse effect on the market price of

<PAGE>

the Common Stock. See "--Possibility of Adverse Effect on the Market Price of
the Common Stock by Virtue of Public Sales of Common Stock Following This
Offering" below, "Shares Eligible for Future Sale" and "Underwriting."

Possibility of Adverse Effect on the Market Price of the Common Stock by
Virtue of Public Sales of Common Stock Following This Offering. Sales of
substantial amounts of Common Stock in the public market following this
offering (including shares issued upon the exercise of stock options) by
current holders of the Company's Common Stock and stock options, or the
perception that such sales might occur, could adversely affect the market
price of the Common Stock and the Company's ability to raise additional equity
capital. Upon the completion of this offering, 12,000,000 shares of Common
Stock will be outstanding. The shares of Common Stock sold in this offering
will be freely tradeable by persons other than "affiliates" of the Company
without restriction under the Securities Act of 1933, as amended (the
"Securities Act"). All other outstanding shares are subject to lock-up
commitments, pursuant to which such shares may not be sold or otherwise
disposed of for a period of 180 days after the date of this Prospectus (the
"Lock-Up Period") without the prior written consent of Hambrecht & Quist LLC.
Such shares consist of an aggregate of 7,400,396 shares that are subject to
lock-up agreements (the "Lock-Up Agreements") with Hambrecht & Quist LLC and
an aggregate of 4,723,051 shares that are subject to restrictions on transfer
contained in the Family Stockholders Agreement or the Restricted Stock Plan,
which restrictions the Company has agreed with Hambrecht & Quist LLC not to
waive during the Lock-Up Period (without the prior written consent of
Hambrecht & Quist LLC). Hambrecht & Quist LLC may release all or any portion
of the shares subject to the Lock-Up Agreements. After termination of the
Lock-Up Period, all such shares will become eligible for sale in the public
market only in compliance with the registration requirements of the Securities
Act or pursuant to a valid exemption from registration. See "Management--
Restricted Stock Plan," "Principal and Selling Stockholders" and "Shares
Eligible for Future Sale."

Dilution. Investors in this offering will incur an immediate dilution in net
tangible book value per share of Common Stock of $9.26 (based on an initial
public offering price of $11.00). See "Dilution."

10
<PAGE>

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 2,000,000 shares of
Common Stock offered by the Company at an assumed initial public offering
price of $11.00 per share are estimated to be $19,860,000 ($20,397,075 if the
Underwriters' over-allotment option is exercised in full). The Company intends
to use the net proceeds primarily for working capital and general corporate
purposes. The Company also is evaluating a future investment in its
fulfillment operations. Pending such uses, the net proceeds will be invested
in investment-grade, interest-bearing securities. The Company will not receive
any proceeds from the sale of Common Stock by the Selling Stockholders. See
"Risk Factors--Unspecified Use of Proceeds" and "Principal and Selling
Stockholders."

DIVIDEND POLICY

To date, the Company has neither declared nor paid any cash dividends (other
than the LLC Distribution). The Company currently intends to retain its
earnings for future growth and, therefore, does not anticipate paying any cash
dividends in the foreseeable future.

In connection with the Reorganization described below under "The
Reorganization," prior to the completion of this offering, dELiA*s LLC made a
distribution of $4.0 million to certain of its members, a portion of which is
intended to be used for the payment by such members of taxes attributable to
them by virtue of their respective ownership interests in dELiA*s LLC. The
distribution (the "LLC Distribution") was paid in cash. See "Use of Proceeds."

THE REORGANIZATION

The Company is a successor to a business originally founded in September
1993. In 1995, the successor business began to operate as a New York limited
liability company under the name "dELiA*s LLC." As a limited liability
company, dELiA*s LLC was treated for income tax purposes as a partnership with
taxes on the income generated by dELiA*s paid by its members. In October 1996,
dELiA*s Inc. was incorporated in Delaware. Prior to the completion of this
offering, dELiA*s LLC and dELiA*s Inc. engaged in a reorganization transaction
(the "Reorganization"), pursuant to which dELiA*s LLC contributed its assets
to dELiA*s Inc. and dELiA*s Inc. assumed, and agreed to pay, perform and
discharge, all liabilities of dELiA*s LLC (except for income tax liabilities).
In connection with the Reorganization, dELiA*s Inc. issued 10,000,000 shares
of Common Stock to dELiA*s LLC, of which 704,794 shares are restricted under
the Company's Restricted Stock Plan. See "Management--Restricted Stock Plan."
The LLC Distribution and the distribution of the 10,000,000 shares of Common
Stock of dELiA*s Inc. were effected in accordance with the dELiA*s LLC
operating agreement. As a result of the distribution of Common Stock, the
members of dELiA*s LLC became stockholders of the Company and, as soon as
practicable after the completion of this offering, the separate existence of
dELiA*s LLC will cease.

11
<PAGE>

CAPITALIZATION

The following table sets forth the capitalization of the Company as of
October 31, 1996 (i) on an actual basis, reflecting the completion of the
Reorganization without giving effect to the LLC Distribution; (ii) on a pro
forma basis to give effect to the portion of the LLC Distribution that
depended on the Company's results of operations from inception through October
31, 1996; and (iii) on an adjusted basis, to give effect to the portion of the
LLC Distribution that depended on the Company's results of operations from
inception through October 31, 1996, the sale of 2,000,000 shares of Common
Stock offered by the Company at an assumed initial offering price of $11.00
per share and the application of the estimated net proceeds therefrom. See
"Dividend Policy," "Reorganization" and "Use of Proceeds." This table should
be read in conjunction with the Financial Statements and Notes thereto
included in this Prospectus.

<TABLE>
<CAPTION>
OCTOBER 31, 1996
-----------------------------
ACTUAL PRO FORMA AS ADJUSTED
------ --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Stockholders' Equity:
Preferred Stock, par value $.01 per share;
Authorized--1,000,000 shares;
Shares issued and outstanding--none......... $ -- $ -- $ --
Common Stock, par value $.01 per share;
Authorized--50,000,000 shares
Issued and outstanding--10,000,000 and
12,000,000 shares, respectively (1)......... 100 100 120
Note receivable from stockholder (2)......... (50) (50) (50)
Deferred compensation (3).................... (169) (169) (169)
Additional paid-in capital................... 1,467 1,467 21,307
Retained earnings (4)........................ 1,401 0 --
------ ------ -------
Total stockholders' equity.................. 2,749 1,348 21,208
------ ------ =======
Total capitalization....................... $2,749 $1,348 $21,208
====== ====== =======
</TABLE>
- ---------------------

(1) Excludes 1,250,000 shares of Common Stock reserved for issuance under the
Company's 1996 Stock Incentive Plan (under which options to purchase an
aggregate of 261,000 shares of Common Stock will be outstanding
immediately after the completion of this offering) and 250,000 shares of
Common Stock reserved for issuance pursuant to an outstanding non-plan
stock option the Company has granted to an executive. See "Management--
1996 Stock Incentive Plan" and "Management--Stock Option Agreement."
(2) See Note 8 of Notes to Financial Statements.
(3) See Note 7 of Notes to Financial Statements.

(4) No adjustment has been made to give effect to the portion of the LLC
Distribution that depended on the Company's results of operations from
November 1, 1996 through the date of the distribution. The LLC
Distribution was 4.0 million. To the extent that the Company's retained
earnings are less than $4.0 million at the date of distribution, the
balance will be charged to additional paid-in capital.

12
<PAGE>

DILUTION

As of October 31, 1996, the Company's pro forma net tangible book value,
after giving effect to the Reorganization and the portion of the LLC
Distribution that depended on the Company's results of operations from
inception through October 31, 1996, was $1,036,000, or approximately $0.10 per
share of Common Stock based on 10,000,000 shares of Common Stock outstanding.
Pro forma net tangible book value per share represents the amount of total
stockholders' equity less intangible assets divided by the number of
outstanding shares of Common Stock. The net proceeds to the Company from the
sale of 2,000,000 shares in this offering at an assumed initial public
offering price of $11.00 per share will increase the pro forma net tangible
book value of the Company at October 31, 1996 to $20,896,000, or approximately
$1.74 per share of Common Stock. This would result in an increase in the
Company's pro forma net tangible book value of $19,860,000, or $1.64 per share
of Common Stock, to existing stockholders and an immediate dilution in pro
forma net tangible book value of $9.26 per share to investors purchasing
shares in this offering. The following table illustrates this per share
dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share (1)............ $11.00
Pro forma net tangible book value per share before offering.. $0.10
Increase per share attributable to new investors............. 1.64
-----
Pro forma net tangible book value per share after offering..... 1.74
------
Dilution per share to new investors............................ $ 9.26
======
</TABLE>

The following table sets forth, on a pro forma basis as of October 31, 1996
after giving effect to the Reorganization, the number of shares of Common
Stock purchased from the Company, the total consideration paid to the Company
and the average price per share paid to the Company by existing stockholders
and to be paid by the investors in this offering (at an assumed initial public
offering price of $11.00 per share and before deducting estimated offering
expenses and underwriting discounts and commissions):

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE PRICE
--------------------- ---------------------- PER
NUMBER (1) PERCENTAGE AMOUNT PERCENTAGE SHARE
---------- ---------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Existing
stockholders (1)....... 10,000,000 83.3% $ 1,567,000 6.6% $ 0.16
New investors (1)....... 2,000,000 16.7 22,000,000 93.4 11.00
---------- ----- ----------- -----
Total................. 12,000,000 100.0% $23,567,000 100.0%
========== ===== =========== =====
</TABLE>
- ---------------------
(1) Sales by Selling Stockholders in this offering will reduce the number of
shares held by existing stockholders to 9,650,000, or approximately 80.4%
(9,350,000 shares, or approximately 77.5%, if the Underwriters' over-
allotment option is exercised in full), of the number of shares of Common
Stock outstanding after this offering. See "Principal and Selling
Stockholders."

13
<PAGE>

SELECTED FINANCIAL DATA

The selected financial data set forth below have been derived from the
financial statements of the Company set forth elsewhere in this Prospectus,
which have been prepared in accordance with generally accepted accounting
principles. This following selected data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Financial Statements and Notes appearing elsewhere in this
Prospectus, including the Company's financial statements as of July 31, 1996
and for the six-month period ended July 31, 1996 which have been audited by
Deloitte & Touche LLP, independent auditors. The data at January 31, 1996 and
January 31, 1995 and for each of the two fiscal years ended January 31, 1996
and January 31, 1995 and for the period from September 9, 1993 (inception) to
January 31, 1994 are derived from the Company's financial statements which
have been audited by Richard A. Eisner & Company, LLP, independent auditors,
which financial statements are included elsewhere herein. The data at October
31, 1996 and for the nine-month periods ended October 31, 1995 and 1996 are
derived from the Company's unaudited financial statements for such period,
and, in the opinion of the Company's management, contain all adjustments
(consisting of only normal recurring accruals) necessary to present fairly the
results of operations for such interim periods. All financial data has been
restated to give effect to the Reorganization. Results for the nine months
ended October 31, 1996 are not necessarily indicative of the Company's results
that may be achieved for the fiscal year ending January 31, 1997 or any future
period.

<TABLE>
<CAPTION>
SEPTEMBER 9,
1993 NINE MONTHS
(INCEPTION) TO FISCAL YEAR 1994 FISCAL YEAR 1995 ENDED OCTOBER 31,
JANUARY 31, ENDED ENDED ---------------------
1994 JANUARY 31, 1995 JANUARY 31, 1996 1995 1996
-------------- ---------------- ---------------- ------- ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS
DATA:
Net sales............. $ -- $ 139 $ 5,652 $ 2,844 $15,482
Cost of sales......... -- 89 3,078 1,453 7,421
------ ------ ------- ------- -------
Gross profit.......... -- 50 2,574 1,391 8,061
Selling, general and
administrative
expenses............. 34 384 2,569 1,482 6,331
Interest income, net.. 1 2 25 18 24
------ ------ ------- ------- -------
Income (loss) before
provision for income
taxes................ (33) (332) 30 (73) 1,754
Provision for income
taxes................ -- -- 3 -- 15
------ ====== ------- ------- -------
Net income (loss)..... $ (33) $ (332) $ 27 $ (73) $ 1,739
====== ====== ======= ======= =======
Pro forma net income
(loss) (1)........... $ (19) $ (202) $ 18 $ (44) $ 1,035
====== ====== ======= ======= =======
Pro forma net income
(loss) per
share (2)............ $(0.00) $(0.02) $ 0.00 $ (0.00) $ 0.10
====== ====== ======= ======= =======
Shares used in the
calculation of
pro forma net income
(loss) per
share (2)............ 10,000 10,000 10,000 10,000 10,000
====== ====== ======= ======= =======
SELECTED OPERATING DATA:
Number of catalogs
mailed............... -- 26 1,700 1,050 4,950(4)
House names (3)....... -- 17 290 196 1,080
<CAPTION>
OCTOBER 31, 1996
---------------------
JANUARY 31, 1995 JANUARY 31, 1996 ACTUAL PRO FORMA(5)
---------------- ---------------- ------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash
equivalents.......... $ 704 $ 675 $1,140
Working capital....... 826 720 1,946
Total assets.......... 870 1,266 6,901
Total stockholders'
equity............... 835 962 2,749 1,348
</TABLE>
- ---------------------

(1) Computed on the basis described in Note 6 of Notes to Financial Statements
and assuming the pro forma tax provisions described therein. Prior to this
offering, the Company effected the Reorganization, in which the Company
converted from a limited liability company to a C corporation. See "The
Reorganization."
(2) See Note 2 of Notes to Financial Statements for an explanation of the
determination of shares used in computing pro forma net income per share.
(3) House names represents the number of customers who have made at least one
purchase or have requested a catalog from the Company in the preceding 24
months, determined at the end of the applicable fiscal period.
(4) Does not include 750,000 copies of the Company's winter 1996 catalog
mailed in October 1996. The Company did not mail any copies of its winter
1995 catalog in the nine months ended October 31, 1995.

(5) Pro forma stockholders' equity gives effect to the portion of the LLC
Distribution that depended on the Company's results of operations from
inception through October 31, 1996.

14
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with
"Selected Financial Data" and the Company's Financial Statements and Notes
thereto included elsewhere in this Prospectus. Except for the historical
information contained herein, the discussion in this Prospectus contains
forward-looking statements that involve risks and uncertainties, such as
statements of the Company's plans, objectives, expectations and intentions.
The cautionary statements made in this Prospectus should be read as being
applicable to all related forward-looking statements wherever they appear in
this Prospectus. The Company's actual results could differ materially from
those discussed here. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed below and in the
section entitled "Risk Factors" as well as those discussed elsewhere in this
Prospectus.

OVERVIEW

The Company was founded in 1993 and distributed its first catalog in 1994
through a network of on-campus college representatives. In early 1995, in an
effort to broaden the reach of its catalogs, the Company changed its primary
channel of distribution from college representatives to direct mail. This
change has resulted in a substantial increase in the Company's sales. In order
to support its direct marketing operations, the Company has made significant
capital expenditures for telephone and management information systems and has
hired and maintained an in-house workforce of teleservice representatives.

The Company initially mailed catalogs to persons responding to
advertisements and to names on rented lists. The Company has built a
proprietary list of "house names" (customers who have made at least one
purchase or have requested a catalog from the Company in the preceding 24
months), which contained over one million names as of October 31, 1996. A
significant portion of the Company's catalogs are mailed to house names,
supplemented by purchased and rented lists. The Company believes that the
response rates generated from its house list are typically higher than can be
realized from purchased or rented lists.

The Company plans to increase catalog mailings from an anticipated 7 million
in fiscal 1996 to approximately 18 million in fiscal 1997. The Company mailed
four editions of its catalog in fiscal 1995, and anticipates mailing at least
five editions in fiscal 1996 and seven editions in fiscal 1997. Response rates
in fiscal 1996 have increased for each season's catalog compared to the
corresponding seasonal catalog in fiscal 1995. The Company believes such
increases are due, in part, to an increase in the proportion of house names
used in the Company's catalog mailings and, in part, to more effective
merchandising and catalog design. While the Company has achieved response rate
increases on a year-to-year basis, the Company has from time to time
(including fiscal 1996) experienced decreases in response rates from catalog
to catalog within a fiscal year. Response rates are influenced by a number of
factors including the timing of catalog mailings, market acceptance of the
Company's merchandise, the mix and presentation of products and actions of
competitors, and there can be no assurance that the Company will achieve
response rate increases in the future. Average order size has also fluctuated
seasonally. Generally, the average size of orders from the Company's fall and
winter catalogs is larger than the average size of orders from its spring and
summer catalogs.

The Company is currently attempting to increase the flexibility of its
catalog publishing schedule and reduce the lead time for inventory purchases
to take better advantage of early indicators of customer purchasing patterns
and reduce its exposure to the risk of inventory obsolescence. In the third
quarter of fiscal 1996, the Company began mailing catalogs to selected
portions of its house list that typically respond at higher rates. The Company
mailed its first sale circular in August 1996 and its first targeted
supplemental catalog in October 1996. In part to facilitate its targeted
publishing strategy, the Company has developed an in-house art department to
allow for shorter and more flexible publishing schedules. In addition,
recently, at the Company's request, certain of the Company's vendors have
agreed to purchase raw materials in advance and in excess of the Company's
initial purchase orders. This allows the Company to place orders later in a
season in response to early indicators of customer demand while reducing the
Company's inventory risk. Although

15
<PAGE>

the Company sometimes shares the risk of these raw material orders with such
vendors, these advance purchases limit its exposure to the greater risk of
unsold finished goods. The Company believes these actions have helped to
improve its overall profitability in fiscal 1996.

The Company believes that as its revenue base grows and it further
penetrates its target market, the Company may not be able to sustain the
levels of growth in net sales and growth in operating income experienced in
fiscal 1995 and the first nine months of fiscal 1996. Additionally, the
legislation introduced in the U.S. Congress that proposes restrictions on
persons, principally list brokers, that sell, purchase or otherwise use for
commercial purposes personal information about teens (under the age of 16) and
children could adversely affect the Company's use of purchased and rented
lists, as well as the Company's ability to generate new names for its
proprietary database. Although the Company is not a list broker, it does mail
catalogs to persons whose names are derived from purchased and rented lists.
Approximately 40% of the names of persons to whom the Company mailed its most
recent catalog were derived from purchased and rented lists. However, the
Company's use of purchased and rented lists has been declining relative to the
use of its house list. The Company is exploring new methods for developing its
house list and believes it will be able to continue to develop this list
through advertising and new channels for the distribution of its catalogs,
including bulk drops on college campuses. There can be no assurance, however,
that the Company will be able to develop its house list.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, the percentage
relationship of certain items from the Company's statement of operations to
net sales. Any trends reflected by the following table may not be indicative
of future results.
<TABLE>
<CAPTION>
PERCENTAGE OF NET SALES
-----------------------------------------------------
NINE MONTHS
FISCAL YEAR 1994 FISCAL YEAR 1995 ENDED OCTOBER 31,
ENDED ENDED -------------------
JANUARY 31, 1995 JANUARY 31, 1996 1995 1996
---------------- ---------------- -------- --------
<S> <C> <C> <C> <C>
Net sales............... 100.0% 100.0% 100.0% 100.0%
Cost of sales........... 64.0% 54.5% 51.1% 47.9%
------ ----- -------- --------
Gross profit............ 36.0% 45.5% 48.9% 52.1%
Selling, general and
administrative
expenses............... 276.3% 45.4% 52.1% 41.0%
Interest income, net.... 1.4% 0.4% 0.6% 0.2%
------ ----- -------- --------
Income (loss) before
provision for income
taxes.................. (238.9%) 0.5% (2.6%) 11.3%
Provision for income
taxes.................. -- -- -- 0.1%
------ ----- -------- --------
Net income (loss)....... (238.9%) 0.5% (2.6%) 11.2%
====== ===== ======== ========
Pro forma net income
(loss) (1)............. (145.3%) 0.3% 1.5% 6.7%
====== ===== ======== ========
</TABLE>
- ---------------------

COMPARISON OF NINE MONTHS ENDED OCTOBER 31, 1995 AND 1996

Net sales. Net sales increased approximately $12.7 million, from $2.8
million in the first nine months of fiscal 1995 to $15.5 million in the first
nine months of fiscal 1996. The increase in net sales was primarily due to an
increase in the number of catalogs mailed, as well as an increase in response
rates and average order size. The Company increased the number of catalogs it
mailed from over one million in the first nine months of fiscal 1995 to over
4.9 million in the first nine months of fiscal 1996. Sales per catalog from
catalogs mailed

16
<PAGE>

in the first nine months of fiscal 1996 (excluding the late fall 1996 catalog)
increased by 16% over sales per catalog from catalogs mailed in the first nine
months of fiscal 1995. The increase in sales per catalog was primarily caused
by the increase in response rates over the same period, and to a lesser extent
by a slight increase in average order size. The slight increase in average
order size resulted from a combination of factors, including increased prices
on certain existing items, and the addition of certain more expensive items in
the Company's catalogs.

Gross margin. Gross margin increased from 48.9% in the first nine months of
fiscal 1995 to 52.1% in the first nine months of fiscal 1996. The increase in
gross margin was due to improved sourcing of merchandise, including larger
volume discounts from suppliers, as well as changes in product mix and higher
selling prices. To a lesser degree, gross margin increased as certain related
fixed costs of merchandising were spread over increased sales. These
improvements were partially offset by an increased reserve for returns
consistent with the Company's recent growth and an increased inventory reserve
for obsolescence based upon management's evaluation of merchandise inventories
as of October 31, 1996 and anticipated inventory dispositions.

Selling, general and administrative expenses. Selling, general and
administrative expenses increased approximately $4.8 million, from $1.5
million in the first nine months of fiscal 1995 to $6.3 million in the first
nine months of fiscal 1996. Selling, general and administrative expenses
decreased as a percentage of net sales from 52.1% in the first nine months of
fiscal 1995 to 41.0% in the first nine months of fiscal 1996. The reduction in
selling, general and administrative expenses as a percentage of net sales was
due primarily to the leveraging of certain fixed costs over a larger revenue
base. The reduction was partially offset by a charge of approximately $270,000
in the first nine months of fiscal 1996 related to the processing of names of
catalog requesters through a third party service. The Company currently
processes the majority of the names of its catalog requesters in-house and
anticipates doing so in the future. In addition, the reduction was partially
offset by the Company's higher expenditures on corporate salaries and
additional information systems in anticipation of future sales growth.

COMPARISON OF FISCAL YEARS 1994 AND 1995

Net sales. Net sales increased approximately $5.6 million, from $139,000 in
fiscal 1994 to $5.7 million in fiscal 1995. The increase in net sales was due
primarily to the change in the Company's primary channel of distribution from
on-campus college representatives to direct mail and the corresponding
increase in the number of catalogs distributed. The Company increased catalog
mailings from approximately 25,500 catalogs in fiscal 1994 to approximately
1.7 million catalogs in fiscal 1995.

Gross margin. Gross margin increased from 36.0% in fiscal 1994 to 45.5% in
fiscal 1995. The increase in gross margin was due to the leveraging of certain
fixed costs over a larger revenue base, improved sourcing of merchandise,
including sourcing in larger quantities from a broader range of vendors, as
well as a change in merchandise mix to higher margin apparel and accessories.
The increase in gross margin in fiscal 1995 was partially offset by the
Company's decision to liquidate excess inventory through charitable donations
in the fourth quarter of fiscal 1995.

Selling, general and administrative expenses. Selling, general and
administrative expenses increased approximately $2.2 million, from $384,000 in
fiscal 1994 to $2.6 million in fiscal 1995. Selling, general and
administrative expenses decreased as a percentage of net sales from 276.3% in
fiscal 1994 to 45.4% in fiscal 1995. This reduction in selling, general and
administrative expenses as a percentage of net sales was due primarily to the
fact that revenues increased faster than expenses. The reduction in expenses
as a percentage of net sales was partially offset by a higher corporate
payroll and higher expenditures for management information systems and
telephone systems related to the Company's infrastructure growth.

INCEPTION THROUGH JANUARY 31, 1994

The Company was founded in September 1993 and distributed its first catalog
in March 1994. Accordingly, the Company had no net sales and an operating loss
of $33,000 in the interim period ended January 31, 1994.

17
<PAGE>

SELECTED QUARTERLY RESULTS OF OPERATIONS

The following table sets forth certain unaudited statements of operations
data for the seven quarters ended October 31, 1996, as well as such data
expressed as a percentage of the Company's total net sales for the periods
indicated. This data has been derived from unaudited financial statements
that, in the opinion of management, include all adjustments (consisting only
of normal recurring adjustments) necessary for fair presentation of such
information when read in conjunction with the Company's annual audited
financial statements and notes thereto.

<TABLE>
<CAPTION>
QUARTER ENDED
-------------------------------------------------------------------
FISCAL 1995 FISCAL 1996
------------------------------------- -----------------------------
APR. 30, JULY 31, OCT. 31, JAN. 31, APR. 30, JULY 31, OCTOBER 31,
1995 1995 1995 1996 1996 1996 1996
-------- -------- -------- -------- -------- -------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales............... $ 557 $ 744 $1,543 $2,808 $3,709 $4,663 $7,110
Cost of sales........... 278 398 777 1,625 1,725 2,233 3,463
----- ----- ------ ------ ------ ------ ------
Gross profit............ 279 346 766 1,183 1,984 2,430 3,647
Selling, general and
administrative
expenses............... 337 471 674 1,087 1,489 2,149 2,693
Interest income, net.... 7 6 5 7 9 11 4
----- ----- ------ ------ ------ ------ ------
Income (loss) before
provision for income
taxes.................. (51) (119) 97 103 504 292 958
Provision for income
taxes.................. -- -- -- 3 7 4 4
----- ----- ------ ------ ------ ------ ------
Net income (loss)....... $ (51) $(119) $ 97 $ 100 $ 497 $ 288 $ 954
===== ===== ====== ====== ====== ====== ======
Pro forma net income
(loss) (1)............. $ (30) $ (70) $ 58 $ 60 $ 297 $ 171 $ 567
===== ===== ====== ====== ====== ====== ======
<CAPTION>
PERCENTAGE OF TOTAL NET SALES
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales............... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales........... 49.9% 53.5% 50.4% 57.9% 46.5% 47.9% 48.7%
----- ----- ------ ------ ------ ------ ------
Gross profit............ 50.1% 46.5% 49.6% 42.1% 53.5% 52.1% 51.3%
Selling, general and
administrative
expenses............... 60.5% 63.3% 43.7% 38.7% 40.1% 46.0% 37.9%
Interest income, net.... 1.3% 0.8% 0.3% 0.2% 0.2% 0.2% 0.1%
----- ----- ------ ------ ------ ------ ------
Income (loss) before
provision for income
taxes.................. (9.1%) (16.0%) 6.2% 3.6% 13.6% 6.3% 13.5%
Provision for income
taxes.................. -- -- -- 0.1% 0.2% 0.1% 0.1%
----- ----- ------ ------ ------ ------ ------
Net income (loss)....... (9.1%) (16.0%) 6.2% 3.5% 13.4% 6.2% 13.4%
===== ===== ====== ====== ====== ====== ======
Pro forma net income
(loss) (1)............. (5.4%) (9.4%) 3.8% 2.1% 8.0% 3.7% 8.0%
===== ===== ====== ====== ====== ====== ======
</TABLE>
- --------

The Company is subject to seasonal fluctuations in its merchandise sales and
results of operations. The Company expects its net sales and results of
operations generally to be lower in the first and second quarters than in the
third and fourth quarters of each fiscal year (which include the back-to-
school and holiday seasons). The Company's quarterly results may fluctuate as
a result of numerous factors, including the timing, quantity and cost of
catalog mailings, the timing of sale circulars and liquidations, the timing of
merchandise deliveries, market acceptance of the Company's merchandise
(including new merchandise categories or products introduced), the mix of
products sold, the hiring and training of additional personnel, the timing of
inventory

18
<PAGE>

writedowns, the incurrence of other operating costs and factors beyond the
Company's control, such as general economic conditions and actions of
competitors. Accordingly, the results of operations in any quarter will not
necessarily be indicative of the results that may be achieved for a full
fiscal year or any future quarter. See "Risk Factors--Seasonal and Quarterly
Fluctuations."

LIQUIDITY AND CAPITAL RESOURCES

Since its inception, the Company has met its operating and cash requirements
through funds generated from operations and the private sales of equity
securities. All of the Company's working capital needs have been satisfied by
cash provided by operations since the third quarter of fiscal 1995. Cash
provided by operations in the first nine months of fiscal 1996 was $831,000
while cash used in operations was $367,000 during the first nine months of
fiscal 1995. This was primarily due to lower selling, general and
administrative expenses as a percentage of net sales and higher gross margins.
Cash provided by operations was $40,000 in fiscal 1995, as compared to cash
used in operations of $422,000 in fiscal 1994.

Cash used in investing in the first nine months of fiscal 1996 was $366,000
and $67,000 in the first nine months of fiscal 1995. Cash used in investing in
fiscal 1995 was $169,000 and $7,000 in fiscal 1994. The Company expects to
make capital expenditures of approximately $1.0 million to upgrade its
management information systems in the fourth quarter of fiscal 1996 and the
first quarter of fiscal 1997. The Company expects to make additional capital
expenditures of $750,000 for additional technology upgrades in the last three
quarters of fiscal 1997. The Company also anticipates capital expenditures of
at least $250,000 in property, plant and equipment, including leasehold
improvements and office equipment.

Cash and cash equivalents increased by approximately $465,000 from January
31, 1996 to October 31, 1996 primarily due to increased cash provided by
operations relative to cash used by operations and decreased by $29,000 from
January 31, 1995 to January 31, 1996. During the fiscal year prior to this
offering, the Company has operated as a limited liability company with taxes
paid by its members. In anticipation of its conversion to a Delaware
corporation, the Company, as part of the Reorganization, intends to make a
cash distribution to certain members of the limited liability company.
Following the Reorganization, the Company will not be a flow-through entity
and will be liable for applicable income taxes. See "Dividend Policy" and "The
Reorganization."

The Company has a revolving line of credit for seasonal working capital,
collateralized by all of the Company's assets other than inventory. The
maximum amount available under the line of credit is $1.5 million. The
interest rate on the line of credit is the lending bank's prime rate (8.25% at
October 31, 1996) plus 2%. The Company has not drawn on this line.

The Company believes that its cash on hand, together with cash generated by
operations and the proceeds of this offering, will be sufficient to meet its
capital and operating requirements through fiscal 1997. The Company's future
capital requirements, however, depend on numerous factors, including, without
limitation, the success of its marketing, sales and distribution efforts.
There can be no assurance that additional funds, if required, will be
available to the Company on favorable terms or at all.

INFLATION

The Company does not believe that inflation has had a material adverse
effect on net sales or results of operations. The Company has generally been
able to pass on increased costs related to inflation through increases in its
prices to customers.

RECENT ACCOUNTING PRONOUNCEMENTS

In March 1995, the Financial Accounting Standards Board (the "FASB") issued
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed of." SFAS

19
<PAGE>

No. 121 requires that long-lived assets and certain identifiable intangibles
to be held and used by an entity be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable, and is effective for fiscal years beginning after December 15,
1995. The adoption of SFAS No. 121 did not have an effect on the Company's
financial position or results of operations.

In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation," which is effective for the Company beginning February 1, 1996.
SFAS No. 123 requires expanded disclosures of stock-based compensation
arrangements with employees and encourages (but does not require) compensation
expense to be measured based on the fair value of the equity instrument
awarded. Companies are permitted, however, to continue to apply Accounting
Principles Board Opinion No. 25 ("APB No. 25"), which recognizes compensation
costs based on the intrinsic value of the equity instrument awarded. The
Company will continue to apply APB No. 25 to its stock-based compensation
awards to employees. The required disclosures of pro forma effects on net
income and earnings per share did not apply during the nine-month period ended
October 31, 1996 or prior years.

20
<PAGE>

BUSINESS

dELiA*s is a direct marketer of casual apparel and related accessories to
girls and young women, primarily between the ages of 10 and 24 (an age group
known as "Generation Y"). The Company believes that it is one of a limited
number of direct marketers distributing an apparel-based catalog exclusively
for this market and that its selection and presentation of merchandise have
contributed to a growing recognition of dELiA*s as a Generation Y fashion
resource. The Company's broad assortment of merchandise includes recognized
and emerging brands complemented by dELiA*s own branded products. Merchandise
ranges from basics, such as jeans, shorts and t-shirts to more fashion-
oriented apparel and accessories, such as woven and knit junior dresses,
swimwear, sunglasses, watches, costume jewelry and cosmetics. The Company's
distinctive catalogs, with their eye-catching layouts accented by creative
"catch phrases," are designed to express a culture and attitude unique to
dELiA*s. Each catalog carries a broad array of merchandise typically presented
in coordinated outfits that can be purchased for under $100.

dELiA*s mailed its first catalog in March 1994 and mailed approximately 1.7
million in fiscal 1995. The Company plans to increase catalog mailings from an
anticipated 7 million in fiscal 1996 to approximately 18 million in fiscal
1997. As of October 31, 1996, the Company's proprietary database had grown to
over one million house names, including approximately 200,000 customers who
had made at least one purchase from the Company within the preceding 24
months. The Company's customers are located in all 50 states, as well as
Japan, with sales to customers in any single state comprising not more than
12% of total sales in the first nine months of fiscal 1996.

THE GENERATION Y MARKET

With the large "baby boom" generation maturing and having children, the
younger segments of the U.S. population have been increasing in recent years.
This increase follows a period of decline in the teen population, which the
Company believes contributed to a less favorable market for teen-focused
retailers. According to the U.S. Census Bureau, Generation Y (ages 10 to 24
years) currently numbers more than 55 million people and is expected to grow
by 12% to approximately 62 million by 2005. These children of the "baby boom"
generation are larger in number and growing more rapidly as a group than the
generation ahead of them.

HISTORICAL AND PROJECTED U.S. POPULATION OF 10 TO 24 YEAR-OLDS

LOGO

21
<PAGE>

The teen population (ages 12 to 19) represents the core of Generation Y. The
increase in the U.S. teen population has been accompanied by an increase in
the amount of money teens spend. According to one independent consumer
research firm, total teen spending in 1995 was $109 billion, an increase of
10% from 1994. Another independent research firm estimated that, in 1995,
apparel accounted for 34% of teen spending (ages 13 to 17) on the following
categories of goods and services: apparel, food, video/electronics,
stationery/school items, entertainment, toys/games, sporting goods, personal
care products and reading material; apparel was the largest single category of
such spending.

The Company believes that the members of Generation Y are influenced by new
media and information sources and that new consumer brands have emerged that
have become the choice of Generation Y. Although a variety of retailers and
catalogers offer teen merchandise, the Company believes that a limited number
of national retailers or catalogers cater exclusively to the Generation Y
market. The Company believes that in addition to creating a cultural
environment that caters to teen purchasers, retailers and catalogers must be
accessible to this population, many of whom are too young to drive, have
working parents with limited time to take them shopping or do not have
convenient access to teen-focused retailers. Based on these factors, the
Company believes that Generation Y is a large and underserved market that
represents a significant direct marketing opportunity.

GROWTH STRATEGY

The Company's goal is to be the leading direct marketer of casual fashion
apparel, related accessories and other products to Generation Y girls and
young women and to build on its recognition as a fashion resource. Key
elements of the Company's strategy to accomplish its goal include the
following:

Grow Core Catalog Business. dELiA*s believes that significant opportunities
exist to penetrate further its target market through the increased use of
catalogs. The Company's proprietary database consists of approximately one
million house names, compared to a total estimated Generation Y female
population of over 25 million. The Company intends to increase the number of
catalogs mailed from an anticipated 7 million in fiscal 1996 to approximately
18 million in fiscal 1997, and to expand the number of editions of its
catalogs. The Company believes it can use its proprietary database to develop
targeted mailings to specific customer segments. It also may broaden the range
of products offered in its catalogs (including additional dELiA*s-branded
products). In addition, the Company recently began to distribute catalogs in
Japan and plans to increase its distribution of catalogs in Japan in fiscal
1997. The Company is also exploring distribution opportunities in other
international markets.

Focus on Brand Name Merchandise. The Company believes teens are very brand-
conscious, and wear branded apparel to project an image to their peers. The
Company monitors leading young women's magazines (including Sassy, Seventeen
and YM), television channels (such as MTV) and other trend-setting media to
identify brands and styles that it believes are attracting the attention of
the teen market. A typical dELiA*s catalog features merchandise from a diverse
group of more than 50 vendors. Brands currently offered through dELiA*s
catalogs include nationally recognized names, such as Dickie's, Kenneth Cole
and Vans, as well as brands recognized within the teen market, including Free
People (Urban Outfitters) and Roxy (Quiksilver). dELiA*s also strives to
obtain merchandise from emerging designers, a strategy the Company believes
differentiates dELiA*s from other retailers and helps to establish dELiA*s as
a fashion resource for girls and young women. Emerging brands currently
featured in dELiA*s catalogs include Dollhouse, Lip Service, Little Earth
Products, Madhouse, Yak Pak and 26 Red Sugar.

Develop and Leverage the dELiA*s Brand Identity. The Company believes the
dELiA*s brand stands for fresh, progressive teen style and that the Company
has become a fashion resource for Generation Y girls and young women. The
dELiA*s brand identity is comprised of several components, including up-to-
date merchandise offerings, dELiA*s-branded products, the promotion of
emerging brands and dELiA*s distinctive catalog design. dELiA*s reaches out to
its target audience through its colorful, high-impact

22
<PAGE>

catalogs, which are designed to resemble a youthful fashion digest and to
enhance the dELiA*s brand identity. The Company believes that successfully
establishing strong relationships with its target customers through its
catalogs will enable dELiA*s to leverage its name and database to develop
additional distribution channels and complementary product offerings in the
future. These opportunities may include developing a non-traditional, youth-
oriented magazine (or 'zine), developing other traditional or electronic
publishing ventures and opening a retail store.

Build Proprietary Customer Database. The Company believes the dELiA*s
proprietary customer database, which includes demographic data as well as
purchasing patterns and preferences, would be difficult for competitors to
replicate primarily because it consists mostly of names of persons who
specifically requested the dELiA*s catalog and which may not be available
through purchased or rented lists. The Company also believes this proprietary
database offers opportunities for cross-marketing, sales of new products and
the development of additional distribution channels. The database of over one
million house names includes approximately 200,000 customers who have made at
least one purchase in the preceding 24 months. During the first nine months of
fiscal 1996, approximately 800,000 new names were added to the Company's
database. The database has been developed primarily through referrals, word-
of-mouth, returns of catalog request cards and targeted classified advertising
in selected magazines, including Sassy, Seventeen and YM. The Company believes
over 90% of the names in the database have been derived from these sources.
The Company believes that its database yields response rates that exceed
average response rates for the consumer catalog industry.

Invest in Customer Service Infrastructure. During fiscal 1996, the Company
has made significant investments in integrated, state-of-the-art telephone and
management information systems. These systems allow teleservice
representatives to provide real-time product availability and order status
information to customers and to monitor sales patterns and inventory levels
more closely. In addition, the Company has expanded its customer service
operations, including an increase in the number of its teleservice
representatives from approximately 50 on February 1, 1996 to approximately 240
on October 31, 1996. The Company focuses on hiring and training energetic,
service-oriented teleservice representatives who can understand and relate to
dELiA*s customers, with the goals of providing a convenient shopping
experience, offering useful product information and promoting customer
loyalty.

MERCHANDISING AND MARKETING

dELiA*s offers a carefully edited assortment of recognized and emerging
brands of teen apparel and accessories, complemented by dELiA*s-branded
merchandise. The Company believes teens are very brand-conscious, particularly
in their apparel choices, and rely on their favorite brands to help them
project an image to their peers. The Company monitors leading young women's
magazines (including Sassy, Seventeen and YM), television channels (such as
MTV) and other trend-setting media to identify brands and styles that it
believes are attracting the attention of the teen market. The Company's buyers
regularly attend apparel shows and meet with vendors and, in some cases, the
editorial staffs of young women's magazines, to stay abreast of popular
brands, fashions and styles.

The Company's catalogs feature a broad assortment of merchandise, ranging
from basics, such as jeans, shorts and t-shirts to more fashion-oriented
apparel and accessories, such as woven and knit junior dresses, swimwear,
sunglasses, watches, costume jewelry and cosmetics to enable its customers to
fulfill many of their fashion needs. The Company presents coordinated outfits
in its catalogs that reflect dELiA*s style. Merchandise is presented in a
manner designed to encourage customers to create their own outfits. The
Company believes the presentation of coordinated outfits increases average
order size and enhances sales.

The following table sets forth the principal product categories offered by
dELiA*s and the percentage of the Company's net sales (through October 31,
1996) from its 1996 catalogs represented by each category.

23
<PAGE>

<TABLE>
<CAPTION>
PERCENTAGE OF SALES
FROM 1996 CATALOGS
PRODUCT CATEGORY (THROUGH OCTOBER 31, 1996)
---------------- --------------------------
<S> <C>
Apparel......................................... 71.3%
Footwear........................................ 16.1%
Accessories..................................... 7.2%
Cosmetics....................................... 5.4%
-----
100.0%
</TABLE>

In the fall of 1995, the Company began to market products under the dELiA*s
brand name. Currently dELiA*s-branded products consist primarily of cosmetics,
t-shirts and footwear. Approximately 14% of the Company's net sales (through
October 31, 1996) from its 1996 catalogs was attributable to dELiA*s-branded
products.

The Company seeks to develop strong relationships with numerous vendors and
designers in order to maintain ongoing access to recognized and emerging
brands. A typical dELiA*s catalog features merchandise from a diverse group of
more than 50 vendors. The Company believes the strong customer acceptance of
its catalog helps make the Company a preferred outlet for certain of its
vendors, some of whom occasionally provide the Company with merchandise on an
exclusive basis. Brands currently offered through dELiA*s catalogs include
nationally recognized names, such as Dickie's, Kenneth Cole and Vans, as well
as brands recognized within the teen market, including Free People (Urban
Outfitters) and Roxy (Quiksilver). dELiA*s also strives to obtain merchandise
from emerging designers, a strategy the Company believes differentiates
dELiA*s from other retailers and helps to establish dELiA*s as a fashion
resource for girls and young women. Emerging brands in the Company's catalog
currently include Dollhouse, Lip Service, Little Earth Products, Madhouse, Yak
Pak and 26 Red Sugar. Apparel produced by Urban Outfitters accounted for
approximately 24% of net sales in each of the spring 1996 and summer 1996
catalogs. The Company believes that a limitation on its ability to obtain
products from Urban Outfitters could have a material adverse effect on the
Company. No other supplier's products accounted for more than 8% of net sales
from the spring 1996 and summer 1996 catalogs. Six vendors accounted for
approximately 50% of the net sales generated by the Company's spring 1996
catalog, and five vendors accounted for approximately 53% of the net sales
generated by the Company's summer 1996 catalog. Approximately 30% of the
Company's gross sales derived from its early fall 1996 catalog were of
products the Company believes were manufactured outside the United States.

The Company believes its exposure to fashion risk is mitigated in part by
relatively short lead times associated with the purchasing of its merchandise
and by its ongoing monitoring of sales patterns. On average, approximately
three-quarters of stock-keeping units ("SKUs") in the Company's spring and
fall catalogs are carried over to the summer and winter catalogs,
respectively; approximately one-sixth of SKUs in the summer and winter
catalogs is carried over to the fall and spring catalogs, respectively. The
Company believes its close working relationships with vendors also enhance its
ability to identify fashion trends.

CATALOGS

dELiA*s catalogs are designed to create a distinctive and entertaining
shopping experience and to offer customers more than the typical apparel
catalog by combining the feel and editorial flair of a teen-focused fashion
magazine with the convenience of direct mail shopping. The catalogs are filled
with colorful, eye-catching layouts and creative "catch phrases." The catalogs
feature teen models whose expressions and poses convey the dELiA*s attitude.
For example, on a typical page, coordinated outfits featuring plaids and
stripes appear beside the editorial soundbite, "oPPositeS AtTract & AbsTrAcT &
DeTrAcT & SuBtRaCt & inTeRaCt. oK." Similarly, the headline on a page
featuring dELiA*s neon and metallic-colored makeup reads, "MakIn' uP Is nOt
hARd tO Do."

dELiA*s catalogs are created and produced in-house by the Company's
designers, with the assistance of free-lance photographers and production
artists. These in-house capabilities allow the Company to control its catalog
production schedule, decreasing the lead times necessary to produce catalogs
and reducing the costs

24
<PAGE>

of preparing pages for printing. These capabilities also provide the Company
with greater flexibility and creativity in catalog production and merchandise
selection.

In fiscal 1996, the Company intends to publish at least five seasonal
catalogs (spring, summer, fall, late fall and winter). A typical catalog,
which follows a magazine-type format, contains approximately 50 pages and 500
SKUs. The Company's four principal seasonal catalogs are mailed to persons
listed in the Company's proprietary database, as well as to persons from
rented lists. The Company mailed its late fall 1996 catalog and intends to
mail future supplemental catalogs to prior purchasers and selected catalog
requesters. In addition, the Company arranges for bulk distribution of its
catalogs on college campuses. In August 1996, the Company mailed its first
sale circular. This four-page circular featured over 200 SKUs. The Company may
from time to time in the future mail additional sale circulars. The Company
anticipates mailing seven catalog editions in fiscal 1997.

In fiscal 1996, the Company anticipates distributing approximately 7 million
catalogs in all 50 states. The Company intends to increase the number of
catalogs mailed to approximately 18 million in fiscal 1997. The Company
believes it can leverage its proprietary database to develop targeted mailings
to specific customer segments, and intends to begin more frequent mailings of
supplemental catalogs to repeat customers.

The Company recently began to distribute catalogs in Japan and intends to
increase its distribution of catalogs in Japan in fiscal 1997. These catalogs
are mailed directly to Japanese customers and are also being distributed
through an arrangement with a direct marketing division of Sony Corporation.

OPERATIONS

The primary components of the Company's operations, as described below,
include its proprietary database, teleservices and order entry, customer
service and returns and distribution and fulfillment.

Proprietary Database Development. The Company has developed its proprietary
customer database primarily through referrals, word-of-mouth, returns of
catalog request cards and targeted classified advertising in selected
magazines, including Sassy, Seventeen and YM. The Company believes over 90% of
the names in the database have been derived from these sources, which the
Company believes generate higher response rates than purchased or rented
lists. During the first nine months of fiscal 1996, approximately 800,000 new
names were added to the Company's database. As of October 31, 1996, the
Company's proprietary database had grown to over one million names, including
approximately 200,000 customers who had made at least one purchase from the
Company within the preceding 24 months. The Company's database contains a
person's name, gender, residence, age, family status and historical
transaction data (including, among other things, referral source, history of
orders, payment method, average order size and product purchase information).

Teleservices and Order Entry. The Company provides its customers with 24-
hour, seven-day-a-week, toll-free telephone access. Approximately 70% of the
Company's orders are received by phone and 30% by mail, facsimile and
electronic mail. Teleservice representatives process orders directly into the
Company's management information system, which provides customer order history
and information, product specifications, available substitutes and
accessories, expected ship date and order number. The teleservice
representatives are provided with a sales script, are versed in product sizes,
colors and features and are trained to cross-sell accessories and related
products and provide information about promotional items. Teleservice
representatives are trained to transfer calls to customer service personnel as
appropriate.

The Company believes its customers are particularly sensitive to the way
merchants and salespeople communicate with them. The Company strives to hire
energetic, service-oriented teleservice representatives who can understand and
relate to customers. Teleservice representatives, many of whom are college
students, participate in a training program, which includes a mentor system
for working with more experienced personnel. After training, teleservice
representatives are monitored to review performance and are re-trained
periodically. As teleservice representatives gain experience, they may be
trained and promoted in other areas, such as customer service.

25
<PAGE>

The Company currently has 120 in-house phone stations and recently installed
a new state-of-the-art telephone system. The Company anticipates upgrading its
management information systems in the fourth quarter of fiscal 1996 and plans
to continue to update the system in the future to support its growth. The
Company's approximately 240 (as of October 31, 1996) full- and part-time
teleservice representatives have the capacity to handle approximately 2,000
calls per hour. The Company also uses an outside teleservices provider for
overflow orders and orders placed between 3 a.m. and 7 a.m., Eastern Standard
Time. The Company processes telephone orders in an average of two to four
minutes, depending upon the nature of the order and whether the customer is a
first-time or repeat customer.

Customer Service and Returns. dELiA*s maintains a separate customer service
department. Customer service inquiries are principally concerned with order
and refund status. Customer service representatives are carefully screened,
specially trained and often promoted from within based on level of product
knowledge, service ability and order accuracy. The Company has a 45-day
unconditional return policy for its products. For each of fiscal 1995 and the
nine-month period ended October 31, 1996, customer returns were less than 17%
of gross sales. Return experience is closely monitored to identify trends in
product offerings, product defects and quality issues.

Distribution and Fulfillment. A majority of the Company's orders are shipped
within 24 hours of credit approval. In cases in which the order is placed
using another person's credit card and it exceeds a specified threshold, the
order is shipped only after the Company has received oral confirmation from
the cardholder. Customers generally receive orders within three to five
business days after shipping. During the first nine months of fiscal 1996,
approximately 90% of all shipments have been made through United Parcel
Service or the United States Postal Service. A shipping and handling fee is
charged on each customer order, based on the total price of the order. The
Company's fulfillment systems automatically determine the most cost effective
method of shipping each order.

dELiA*s currently uses an unaffiliated, third-party fulfillment contractor
to process and fulfill orders. The Company manages this process through two
on-site employees. The third-party contractor uses an integrated picking,
packing and shipping system via an on-line connection to the Company's in-
house server. The system monitors the in-stock status of each item ordered,
processes the order and generates warehouse selection tickets and packing
slips for order fulfillment operations. dELiA*s, through this contractor, is
currently making an average of 2,000 shipments a day (and the Company believes
that the contractor has the capacity to ship up to 10,000 orders a day).
During the first nine months of fiscal 1996, the Company shipped over 400,000
packages. The Company's agreement with the third-party contractor has a one-
year term and expires on April 30, 1997. The Company may consider performing
its own order processing and fulfillment operations in the future.

Because the Company generally purchases its merchandise prior to the receipt
of customer orders, inventory management is an increasingly important
component of the Company's operations. From time to time, the Company
purchases large quantities of merchandise to ensure availability or realize
volume savings. The Company has excess inventory in varying degrees over the
course of the year. Excess inventory is typically greater at the end of the
sales life of the Company's summer catalog (which typically carries over a
substantial number of SKUs from the spring catalog) and its winter catalog
(which carries over a substantial number of SKUs from the fall catalogs). When
the Company believes it has excessive inventory, the Company often runs
promotional sales of the excess items through programs targeted at phone-in
customers. In addition, in August 1996, the Company mailed its first sale
circular and may from time to time mail additional sale circulars in the
future. Products sold through promotional sales to phone-in customers and
through the Company's sales circular are typically discounted by 30% to 50%
from their standard retail prices. The Company also has used third-party
liquidators, tent sales and charitable donations to dispose of excess
inventory and may consider other liquidation options, including outlet stores,
in the future. The Company's net sales from excess inventory sold at a
discount to retail price in the first nine months of fiscal 1996 were
approximately $367,000, or less than 3% of the Company's net sales for that
period; the cost of those goods sold at a discount to retail price was
approximately $280,000. In addition, the Company had an inventory reserve of
$356,000 at October 31, 1996, which included the reserve against anticipated
losses due to liquidation of additional unsold inventory.

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<PAGE>

INTELLECTUAL PROPERTY

The dELiA*s name and logo have been registered by the Company with the U.S.
Patent and Trademark Office. Other applications for registration of the
Company's trademarks, including the daisy (" LOGO ") symbol, are currently
pending. The Company also uses the trademarks, trade names, logos and
endorsements of its suppliers with their permission. The Company is not aware
of any pending conflicts concerning its marks or its use of others'
intellectual property rights.

COMPETITION

The teen apparel and accessories industries are highly competitive, and the
Company expects competition in these markets to increase. The Company competes
for teen and young adult customers with traditional department store
retailers, alternative and vintage clothing stores located primarily in
metropolitan areas and mall-based teen-focused retailers, such as Gadzooks,
Hot Topic, Pacific Sunwear of California, Urban Outfitters and The Wet Seal.
To a lesser degree, the Company competes with other direct marketers, such as
Tweeds and J. Crew. Many of the Company's competitors are larger and have
substantially greater financial, distribution and marketing resources than the
Company. The Company believes the principal competitive factors in its
business are merchandise selection, customer service, brand image and price.

There are few barriers to entry in the teen apparel and accessories market
and the Company expects other catalogers, as well as additional store-based
retailers and apparel manufacturers, to enter this market. The Company also
could face competition from manufacturers of apparel and accessories
(including the Company's current vendors), who could market their products
directly to retail customers or make their products more readily available in
retail stores or through catalogs. In addition, competitors could enter into
exclusive distribution arrangements with the Company's vendors and deny the
Company access to their products.

EMPLOYEES

As of October 31, 1996, the Company had approximately 280 employees, of
which six held executive and administrative positions, six were employed in
finance and development, 15 were employed in supervisory sales and customer
service, 12 were employed in product acquisition and planning, 240 were
employed in teleservice operations and two were employed in catalog
production. None of the Company's employees is represented by a collective
bargaining unit. The Company considers its relations with its employees to be
good.

PROPERTIES

The Company leases its New York offices at 435 Hudson Street, New York, New
York, which occupy approximately 14,000 square feet. The lease expires in
2003. The Company believes its facilities are well-maintained and in good
operating condition. The Company expects to expand its New York offices to
accommodate anticipated growth. The Company's third-party fulfillment
contractor provides warehouse space near Lancaster, Pennsylvania to the
Company for inventory storage. The Company neither owns nor leases such
warehouse space; the cost of the warehouse space is included in the total fee
paid by the Company to the third-party fulfillment company.

LEGAL PROCEEDINGS

The Company is not involved in any legal proceedings that management
believes would have a material adverse effect on the Company's financial
position or results of operations.

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<PAGE>

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

Executive officers and directors of the Company and their ages as of
November 20, 1996 are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Stephen I. Kahn................ 31 Chairman of the Board, Chief Executive
Officer, President and Director
Christopher C. Edgar........... 31 Executive Vice President, Chief Operating
Officer and Director
Evan Guillemin................. 31 Chief Financial Officer, Treasurer and
Secretary
S. Roger Horchow............... 68 Director
Sidney S. Kahn................. 59 Director
Geraldine Karetsky............. 55 Director
Joseph J. Pinto................ 63 Director
</TABLE>

Stephen I. Kahn has served as President and Chief Executive Officer of
dELiA*s and as a member of the board of managers of dELiA*s LLC since co-
founding the Company in 1993 and has served as Chairman of the board of
directors since October 1996. Prior to that, he worked at PaineWebber Group,
Inc., first as a management associate (from 1988 to 1989) and then as an
associate in the merchant banking group (from 1989 to 1993). In the merchant
banking group, he was involved in the acquisition, marketing and restructuring
of the firm's portfolio investments, including apparel and retailing
properties. He also served as a director of Hawthorne Broadcasting Corp., a
PaineWebber portfolio company engaged in the ownership and operation of radio
stations. Mr. Kahn holds a B.A. from Yale College, an M.A. from Oxford
University and an M.B.A. from Columbia Business School.

Christopher C. Edgar has served as Executive Vice President of dELiA*s and
as a member of the board of managers of dELiA*s LLC since co-founding the
Company in 1993, presently serves as dELiA*s Chief Operating Officer and
joined the board of directors of the Company in October 1996. Mr. Edgar
oversees catalog publishing, marketing, merchandising and inventory
management. From 1992 to 1993, Mr. Edgar was a Nicholson Fellow and student in
the doctoral program in comparative literature at Columbia University. From
1989 to 1992, he worked as an analyst for SNL Securities, a financial industry
information service, and as a journalist for the Charlottesville Observer.
Mr. Edgar received a B.A. from Yale College and an M.A. from Columbia
University.

Evan Guillemin has served as Chief Financial Officer of dELiA*s since July
1996. Prior to joining the Company, he served briefly as an associate with,
and later a director of acquisitions for, K-III Communications Corporation, a
media investment company. From 1992 to 1994, he was executive vice president
of The New York Observer Co., with responsibility for the sales, marketing and
finance for that company's regional newspaper group. Prior to that, he helped
start SDC Publishing Co., a financial publishing unit of Thomson Corporation,
where he served as an editor and managed new product development and
acquisitions from 1989 to 1992. Mr. Guillemin received a B.A. from Yale
College and an M.B.A. from Harvard Business School.

S. Roger Horchow joined the board of directors of the Company in October
1996. He was the founder and chairman of the Horchow Collection, a direct
marketer of specialty home and fashion products, from 1971 until 1990. Mr.
Horchow was vice president of mail order for Neiman Marcus Group, Inc. from
1969 to 1971. Mr. Horchow has been a director of Fieldcrest Cannon, Inc., a
manufacturer of home-furnishing textile products, since 1994. He is also a
director of Public Radio International, White House Endowment Fund,
Smithsonian Institution and serves on the Board of Governors of the Yale
University Art Gallery. He has been chairman of R. Horchow Productions, Inc.,
a theatrical production company, since 1990. Mr. Horchow received a B.A. from
Yale College.

Sidney S. Kahn has served as a member of the board of managers of dELiA*s
LLC since its founding and joined the Company's board of directors in October
1996. He has been a private investor specializing in venture capital
investments since 1987. From 1977 to 1987 he was a senior officer of E.F.
Hutton & Co., Inc., a wholly-owned subsidiary of the E.F. Hutton Group, Inc.,
and from 1966 to 1977 he was a managing

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<PAGE>

director and partner of Lehman Brothers. He has been a director of Orion
Network Systems, Inc., an operator of satellite-based communications systems
services, since 1990 and a number of privately held corporations, including
Telogy Networks, Inc., a communications software developer. He received a B.A.
from Yale College and is a member of the Board of Governors of the Yale
University Art Gallery.

Geraldine Karetsky has served as a member of the board of managers of
dELiA*s LLC since 1994 and joined the Company's board of directors in October
1996. She is a private investor and venture capitalist. She received a B.A.
from Smith College.

Joseph J. Pinto joined the board of directors of the Company in November
1996. He is a private investor. Since 1981, Mr. Pinto has been a director and
officer of Sefinco Ltd. (and a predecessor), the U.S.-based private investment
affiliate of Entrecanales Y Tavora SA, a Spanish conglomerate with interests
in construction and merchant banking. Sefinco's investments have included
Loehmann's, Inc., a specialty retailer of women's fashion apparel, on whose
board Mr. Pinto served from 1988 to 1992. From 1973 to 1981, Mr. Pinto was
chairman of the finance committee of Sea Containers Ltd., a container lessor
of which Mr. Pinto was a founder and a director from 1967 to 1986. From 1961
to 1973, he was engaged in merchant banking in France and Spain with Pinto &
Co., a family-owned investment firm. Mr. Pinto received a B.A. from Yale
College.

Sidney S. Kahn is Stephen I. Kahn's father. Ms. Karetsky is Stephen I.
Kahn's aunt and Sidney S. Kahn's sister. There are no other family
relationships among the directors and executive officers of the Company.

KEY EMPLOYEES

Charlene Benson has been Creative Director of dELiA*s since the fall of
1994. Prior to joining the Company, she was art director of Mademoiselle from
1991 to 1994. She has received awards from the Society of Publications for her
work in US magazine, GQ and The Sunday New York Times.

Karen Christensen has been a Senior Vice President and Controller of the
Company since January 1995. Prior to joining the Company, Ms. Christensen
practiced law with the firm of Certilman Balin Adler & Hyman in 1994. From
1993 to 1994, she was a director of international sales at Masten-Wright
Incorporated, an international marketing firm. From 1990 to 1993, she attended
law school.

Ilka Eberly has been Buying Manager of dELiA*s since July 1996. Prior to
joining the Company, Ms. Eberly was a divisional merchandise manager of Urban
Outfitters, where she worked from 1990 to 1996.

Lisa Higgins joined dELiA*s in 1994 as one of the original buyers and is
currently Senior Vice President of Merchandising of the Company. Prior to
joining the Company, Ms. Higgins worked in the retailing division of Esprit
from 1990 until 1992. From 1992 to 1994, Ms. Higgins was an officer and
director of a non-profit institution in Colorado.

Robert Karetsky has been a Senior Vice President of dELIA*s since October
1994. Prior to joining the Company, he worked in a variety of capacities in
education. Mr. Karetsky is the son of Geraldine Karetsky, a nephew of Sidney
S. Kahn and a cousin of Stephen I. Kahn.

Mary Obert has been Merchandise Production Manager of dELiA*s since August
1996. Prior to joining the Company, she was a production designer at Planet
Claire from 1995 to 1996 and a production manager and assistant designer at
Living Doll from 1992 to 1995. Prior to 1992, Ms. Obert was an assistant
designer at Urban Outfitters and Betsey Johnson.

Julie Scott has been Vice President of International Marketing of dELiA*s
since September 1996. Between 1990 and 1996, she worked in client acquisitions
at Abacus Direct Corp., a database marketing company, as well as in licensing
and sales in Japan at a variety of companies including Marvel Comics, Calvin
Klein, Hermes and Dentsu.

Kent Trowbridge has been Senior Vice President and Director of Operations of
dELiA*s since February 1995. From 1994 to 1995, Mr. Trowbridge was a market
strategist at Josephthal, Lyon and Ross. From 1993

29
<PAGE>

to 1994, he was a research analyst and money manager at Sherwood Securities.
From 1992 to 1993, he was an independent financial consultant. From 1991 to
1992, he worked for Warreck, Inc., a marketer of mass-transit vehicle
advertising space.

Seth Walter has served as Vice President of Inventory Management of dELiA*s
since November 1995. Prior to joining the Company, Mr. Walter was an inventory
manager at Williams-Sonoma, where he worked from 1990 to 1995.

BOARD COMMITTEES

Audit Committee. Prior to the completion of this offering, the board of
directors established an audit committee, a majority of whose members are
directors who are neither members of the Company's management nor members of
the Kahn family. The audit committee will make recommendations concerning the
engagement of independent public accountants, review with the independent
public accountants the plans and results of the audit engagement, approve
professional services provided by the independent public accountants, review
the independence of the independent public accountants, consider the range of
audit and non-audit fees and review the adequacy of the Company's internal
accounting controls.

Compensation Committee. Prior to the completion of this offering, the board
of directors established a compensation committee. The compensation committee
will approve the salaries and other benefits of the executive officers of the
Company and administer certain compensation plans of the Company. In addition,
the compensation committee will consult with the Company's management
regarding pension and other benefit plans and compensation policies and
practices of the Company.

BOARD ELECTIONS

The Company's board of directors is divided into three classes. Directors of
each class are elected at the annual meeting of stockholders held in the year
in which the term for the class expires and will serve thereafter for three
years. See "Description of Capital Stock--Anti-Takeover Effect of Provisions
of the Certificate of Incorporation and Bylaws." The terms of each of the
current directors of the Company are as follows: term expiring in 1997--S.
Roger Horchow and Joseph J. Pinto; term expiring in 1998--Sidney S. Kahn and
Geraldine Karetsky; and term expiring in 1999--Christopher C. Edgar and
Stephen I. Kahn.

DIRECTOR COMPENSATION

The Company intends to pay its directors who are not employees of the
Company $1,500 for each directors' meeting and each committee meeting attended
(plus reimbursement for out-of-pocket expenses). Under the Company's 1996
Stock Incentive Plan (the "Incentive Plan"), each non-employee director who is
not a member of the Kahn family will be granted, effective at the completion
of this offering, an option to purchase 40,000 shares of Common Stock at an
exercise price per share equal to the initial public offering price. All
options granted to non-employee directors will become exercisable at the rate
of 20% on each of the first five anniversaries of the date of grant, assuming
the non-employee director is a director on those dates, and all such options
generally will cease to be exercisable ten years from the date of grant. Upon
a Change of Control (as defined in the Incentive Plan) and, in the case of
directors elected prior to November 15, 1996 who are neither members of the
Company's management nor members of the Kahn family, upon a termination of
directorship other than for cause or as a result of a refusal to stand for re-
election, all options (which have not yet expired) will automatically become
exercisable. Directors who are employees of the Company will not be
compensated for services as directors. See "Management--1996 Stock Incentive
Plan."

EXECUTIVE COMPENSATION

Stephen I. Kahn, the Company's Chairman of the Board, President and Chief
Executive Officer received $20,000 in salary in fiscal 1995. He did not
receive any other compensation from the Company in fiscal 1995, and did not
receive any compensation in fiscal 1994 or the period from September 9, 1993
(inception) to January 31, 1994. The aggregate dollar value of all perquisites
and other personal benefits, securities or

30
<PAGE>

property awarded to, earned by or paid to Mr. Kahn did not exceed the lesser
of $50,000 or 10% of his total annual salary during any fiscal year. No
officer of the Company received $100,000 or more in salary and bonus in fiscal
1995. In fiscal 1996, the annual salary rate of the Company's executive
officers has been as follows: Mr. Kahn $35,000, Mr. Edgar $50,000 and
Mr. Guillemin $50,000. No bonuses have been paid in fiscal 1996.

EMPLOYMENT AGREEMENTS

Messrs. Kahn and Edgar (the "Executives") have entered into three-year
agreements with the Company providing for the continuation of their employment
as Chairman of the Board and President and as Chief Operating Officer and
Executive Vice President, respectively, at minimum salaries of $100,000 a year
for each Executive, subject to annual upward adjustment in proportion to the
increase in the consumer price index plus such increases in salary and such
bonuses as the board of directors may from time to time approve. If an
Executive dies, or, as a result of disability, is unable to perform
substantially all his duties for a period of nine consecutive months, the
Company may terminate his employment (not earlier than 30 days and not later
than 90 days after the expiration of the nine-month period), in which event
the Executive (or his heirs or estate) will be entitled to his salary for the
remainder of the term of the agreement. Evan Guillemin has entered into an
employment agreement with the Company providing for the continuation of his
employment as Chief Financial Officer, at a salary of $100,000 a year, on
substantially the same terms and conditions as Messrs. Kahn and Edgar, except
that the term of Mr. Guillemin's agreement will expire on July 31, 2001.

RESTRICTED STOCK PLAN

Under the Company's Restricted Stock Plan, the Company has outstanding
restricted stock awards to 12 employees covering an aggregate of 704,794
shares of Common Stock. Each such employee will be entitled to retain his
shares, without consideration, if he continues to be employed after the 30th
month following the date of grant; if such employment terminates earlier for
any reason, the employee will forfeit all his rights to the restricted stock.
Until the employee is entitled to retain his shares, Stephen I. Kahn is
entitled to vote all such shares and the employee has no rights as a
stockholder in respect of those shares. The Company will not make any
additional awards under the Restricted Stock Plan.

STOCK OPTION AGREEMENT

Mr. Guillemin and the Company have entered into a stock option agreement,
pursuant to which the Company has granted Mr. Guillemin an option to purchase
up to an aggregate of 250,000 shares of Common Stock at the price per share to
the public in this offering (the "Exercise Price"). The option becomes
exercisable as to 50,000 shares on each of July 21, 1997, 1998, 1999, 2000 and
2001. If Mr. Guillemin's employment terminates before July 21, 2001 as a
result of his death or disability, or if the Company terminates his employment
other than for cause or if the Company effects a Constructive Discharge (as
defined in Mr. Guillemin's employment agreement) of Mr. Guillemin, the option
will become exercisable as to all 250,000 shares; if Mr. Guillemin's
employment terminates other than as set forth above, the portion of the option
that is not exercisable at the date of termination will not thereafter become
exercisable. During the 30-day period beginning on the fourth anniversary of
the termination of Mr. Guillemin's employment for any reason, the Company may
purchase all the shares previously purchased by Mr. Guillemin pursuant to the
option and terminate all further rights under the option in exchange for an
amount equal to (i) the product of (A) the Average Price of a Share (as
defined in the stock option agreement) and (B) the sum of (1) the number of
shares being purchased plus (2) the number of shares subject to the option
being terminated, reduced by (ii) the product of the Exercise Price and the
number of shares subject to the option being terminated. Upon a merger,
consolidation or sale of substantially all the assets of the Company, the
option will become immediately exercisable as to 50% of the shares as to which
the option has not yet become exercisable, with the balance of the option not
then exercisable becoming exercisable in equal amounts on each July 21
thereafter through July 21, 2001. Finally, if Mr. Guillemin's employment
terminates before July 22, 1997, Stephen I. Kahn will have the option to
purchase from Mr. Guillemin 100,000 shares of Common Stock for $50,000.

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<PAGE>

1996 STOCK INCENTIVE PLAN

A maximum of 1,250,000 shares of Common Stock may be issued or used for
reference purposes pursuant to the Incentive Plan. No awards will have been
made under the Incentive Plan prior to this offering. At the time of this
offering, an option to purchase 40,000 shares of Common Stock at an exercise
price equal to the initial public offering price will be granted to each non-
employee director of the Company who is not a member of the Kahn family. See
"--Director Compensation." In addition, options to purchase an aggregate of
181,000 shares of Common Stock will be granted to 15 employees of the Company
at the time of this offering. The maximum number of shares of Common Stock
subject to each of stock options or stock appreciation rights that may be
granted to any individual under the Incentive Plan is 100,000 for each fiscal
year of the Company during the term of the Incentive Plan. If a stock
appreciation right is granted in tandem with a stock option, it shall apply
against the individual limits for both stock options and stock appreciation
rights, but only once against the maximum number of shares available under the
Incentive Plan.

The Incentive Plan provides for the following types of awards to eligible
employees: (i) stock options, including incentive stock options and non-
qualified stock options; (ii) stock appreciation rights, in tandem with stock
options or freestanding; and (iii) restricted stock. In addition, the
Incentive Plan provides for the non-discretionary award of stock options to
non-employee directors of the Company. Awards may be granted singly, in
combination or in tandem, as determined by a committee of the board of
directors.

Under the Incentive Plan, the committee may grant awards in the form of
incentive stock options or non-qualified stock options. The committee will
determine the number of shares subject to the option, the term of the option
(which may not exceed ten years, or, in the case of an incentive stock option
granted to a ten percent stockholder of the Company, five years), the exercise
price per share of stock subject to the option, the vesting schedule (if any)
and the other material terms of the option. Generally, no option may have an
exercise price less than the fair market value of the Common Stock at the time
of grant (or, in the case of an incentive stock option granted to a ten
percent stockholder of the Company, 110% of fair market value).

The option price upon exercise may, to the extent determined by the
committee at or after the time of grant, be paid in cash, in shares of Common
Stock, in shares of restricted stock valued at fair market value on the
payment date as determined by the committee (without regard to any forfeiture
restrictions applicable to restricted stock), by a reduction in the number of
shares of Common Stock issuable upon exercise of the option or by such other
method as is approved by the committee. If an option is exercised by delivery
of shares of restricted stock, the shares of Common Stock acquired pursuant to
the exercise of the option will generally be subject to the same restrictions
as were applicable to such restricted stock. All options may be made
exercisable in installments, and the exercisability of options may be
accelerated by the committee. The committee may at any time offer to buy an
option previously granted on such terms and conditions as the committee shall
establish. The committee may in its discretion reprice options or substitute
options with lower exercise prices in exchange for outstanding options that
are not incentive stock options, provided that the exercise price of
substitute options or repriced options may not be less than the fair market
value at the time of such repricing or substitution. Options may also, at the
discretion of the committee, provide for "reloads," whereby a new option is
granted for the same number of shares as the number of shares of Common Stock
or restricted stock used to pay the option price upon exercise.

The Incentive Plan also authorizes the committee to award shares of
restricted stock. Upon the award of restricted stock, the recipient has all
rights of a stockholder with respect to the shares, including the right to
receive dividends currently, unless otherwise specified by the committee at
the time of grant. Unless otherwise determined by the committee at grant,
payment of dividends, if any, will be deferred until the date the relevant
share of restricted stock vests.

Recipients of restricted stock are required to enter into a restricted stock
award agreement with the Company which states the restrictions to which the
shares are subject and the date or dates or criteria on which such
restrictions will lapse. Within the limits of the Incentive Plan, the
committee may provide for the lapse of such restrictions in installments in
whole or in part or may accelerate or waive such restrictions at any time.

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<PAGE>

The Incentive Plan also authorizes the committee to grant stock appreciation
rights ("SARs") either with a stock option ("Tandem SARS") or independent of a
stock option ("Non-Tandem SARs"). A SAR is a right to receive a payment either
in cash or Common Stock as the committee may determine, equal in value to the
excess of the fair market value of a share of Common Stock on the date of
exercise over the reference price per share of Common Stock established in
connection with the grant of the SAR. The reference price per share covered by
an SAR will be the per share exercise price of the related option in the case
of a Tandem SAR and will be not less than the per share fair market value of
the Common Stock on the date of grant (or any other date chosen by the
committee) in the case of a Non-Tandem SAR subject to any exception that
applies to stock options.

A Tandem SAR may be granted at the time of the grant of the related stock
option or, if the related stock option is a non-qualified stock option, at any
time thereafter during the term of the stock option. A Tandem SAR generally
may be exercised only at the times and to the extent the related stock option
is exercisable. A Tandem SAR is exercised by surrendering the same portion of
the related option. A Tandem SAR expires upon the termination of the related
stock option.

A Non-Tandem SAR will be exercisable as provided by the committee and will
have such other terms and conditions as the committee may determine. A Non-
Tandem SAR may have a term no longer than ten years from its date of grant. A
Non-Tandem SAR is subject to acceleration of vesting or immediate termination
upon termination of employment in certain circumstances.

The committee also is authorized to grant "limited SARS," either as Tandem
SARs or Non-Tandem SARS. Limited SARs would become exercisable only upon the
occurrence of a Change of Control (as defined in the Incentive Plan) or such
other event as the committee may designate at the time of grant or thereafter.

Unless determined otherwise by the committee at the time of grant, upon a
Change of Control, all vesting and forfeiture conditions, restrictions and
limitations in effect with respect to any outstanding award will immediately
lapse and any unvested awards will automatically become 100% vested. However,
unless otherwise determined by the committee at the time of grant, no
acceleration of exercisability will occur with regard to certain options the
committee reasonably determines in good faith prior to a Change of Control
will be honored or assumed or new rights substituted therefor by a successor
immediately following the Change of Control.

The Incentive Plan provides for nondiscretionary awards of options to
purchase Common Stock to each non-employee director. See "--Director
Compensation."

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Compensation policies and decisions, including those relating to salary,
bonuses and benefits of executive officers, have been set or made by the board
of directors since the formation of the Company. Upon completion of this
offering, the board of directors will create a compensation committee, which
will recommend to the board the compensation to be paid to the Company's
executive officers. See "--Board Committees" above.

33
<PAGE>

CERTAIN TRANSACTIONS

From March 8, 1995 until immediately prior to the Reorganization, the
Company has been a limited liability company, the members of which, rather
than the Company itself, have been responsible for payment of taxes on the
Company's income. Upon the Reorganization, the Company became a C corporation,
which will be responsible for the payment of taxes. The Company has made non-
interest-bearing loans to Stephen I. Kahn and Christopher C. Edgar, each of
whom is a director and officer of the Company, in amounts estimated to equal
the taxes on the portion of the income of the Company that was attributed to
them by virtue of their respective ownership interests in the Company during
its existence as a limited liability company. Those loans, each of which was
for an amount less than $60,000, will be repaid by Mr. Kahn and Mr. Edgar upon
the completion of this offering. In addition, the Company has made a non-
interest-bearing loan in the amount of $50,000 to Evan Guillemin to finance
Mr. Guillemin's acquisition of an equity interest in the Company.

In connection with the Reorganization, certain existing members of dELiA*s
LLC received a portion of the LLC Distribution. See "Dividend Policy" and "The
Reorganization."

34
<PAGE>

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth information, with respect to the Company's
Common Stock beneficially owned by (i) each person known by the Company to be
the beneficial owner of more than 5% of the shares of Common Stock, (ii) each
director individually, (iii) each executive officer individually and (iv) all
executive officers and directors as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR OWNED AFTER
TO THE OFFERING THE OFFERING
----------------------- SHARES -----------------------
NAME AND ADDRESS NUMBER PERCENT OFFERED (1) NUMBER PERCENT
- ---------------- ------------ ---------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C>
5% STOCKHOLDERS
- ---------------
Stephen I. Kahn (2)..... 8,901,789 89.0% 200,000 8,626,789 71.9%
435 Hudson Street
New York, New York
10014
Geraldine Karetsky (3).. 1,423,460 14.2 15,000 1,408,460 11.7
1660 Silverking Drive
Aspen, Colorado 81611
Sidney S. Kahn (3)...... 1,191,704 11.9 40,000 1,151,704 9.6
14 East 60th Street
New York, New York
10022
Christopher C. Edgar 769,204 7.7 75,000 694,204 5.8
(4)....................
435 Hudson Street
New York, New York
10014
Robert Karetsky......... 662,927 6.6 20,000 642,927 5.4
435 Hudson Street
New York, New York
10014
OTHER EXECUTIVE OFFICERS
AND DIRECTORS
- ------------------------
Evan Guillemin (5)...... 99,091 1.0 -- 99,091 0.9
435 Hudson Street
New York, New York
10014
S. Roger Horchow (6).... * * -- * *
5722 Chatham Hill Road
Dallas, Texas 75225
Joseph J. Pinto (6)..... * * -- * *
767 Fifth Avenue
New York, New York
10153
Directors and executive
officers as a group
(7 individuals)........ 9,770,084 97.7 350,000 9,420,084 78.5
</TABLE>
- --------
* Less than 1%.

(1) In the event that the Underwriters exercise the over-allotment option, up
to an additional 352,500 shares of Common Stock may be sold as follows:
the Company, 52,500 shares; Stephen I. Kahn, 175,000 shares; Sidney S.
Kahn, 50,000 shares; Geraldine Karetsky, 25,000 shares; Christopher C.
Edgar, 25,000 shares; and Robert Karetsky, 25,000 shares.

(2) Includes 4,103,738 shares of Common Stock (3,903,738 shares after this
offering) directly owned by Mr. Kahn and 4,798,051 shares (4,723,051 after
this offering) that Mr. Kahn has the sole power to vote pursuant to the
Family Stockholders Agreement and agreements with certain employee holders
of restricted stock, of which Mr. Kahn also has the shared power to
restrict the disposition of 1,625,515 of those shares (1,605,515 after
this offering). See "-- Family Stockholders Agreement" and "Management--
Restricted Stock Plan."

(3) Includes 147,422 shares of stock owned as trustees for The Ruth Kahn Trust
f/b/o Sidney S. Kahn, which Sidney S. Kahn and Geraldine Karetsky have the
shared power to dispose of.

(4) Does not include 60,705 shares of Common Stock owned by Mr. Edgar subject
to the Restricted Stock Plan, which Mr. Edgar does not have the power to
vote or to dispose of.

35
<PAGE>

(5) Does not include 250,000 shares of Common Stock issuable pursuant to a
stock option agreement between Mr. Guillemin and the Company. Pursuant to
that agreement, Mr. Guillemin's option does not begin to become
exercisable until July 21, 1997. See "Management--Stock Option Agreement."

(6) Does not include 40,000 shares of Common Stock issuable pursuant to an
option that will be granted upon the completion of this offering. See
"Management--Director Compensation."

FAMILY STOCKHOLDERS AGREEMENT

Certain members of Stephen I. Kahn's family and trusts for the benefit of
such persons (the "Family Holders") and Stephen I. Kahn have entered into a
stockholders agreement with the Company (the "Family Stockholders Agreement")
which, subject to certain exceptions, prohibits the Family Holders from
transferring the shares of Common Stock they will own upon the completion of
the Reorganization for a period of two years from the date of the
Reorganization. Thereafter, the Family Holders will be able to transfer such
shares in accordance with the limitations imposed on "affiliates" under Rule
144 under the Securities Act. The Family Stockholders Agreement will permit
each of the Family Holders to cause the Company to register shares of Common
Stock concurrently with offerings of Common Stock by Stephen I. Kahn. The
Company will generally be required to bear the expenses of all such
registrations, except underwriting discounts and commissions. In addition, the
Family Stockholders Agreement gives Stephen I. Kahn the right to vote all the
shares of Common Stock owned by the Family Holders on all matters that come
before the stockholders of the Company. The Family Holders (not including
Stephen I. Kahn), collectively, will own 33.5% of the outstanding Common Stock
upon the completion of this offering. The Family Stockholders Agreement will
expire on the tenth anniversary of the Reorganization.

36
<PAGE>

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 50,000,000 shares of
Common Stock having a par value of $.01 per share and 1,000,000 shares of
Preferred Stock having a par value of $.01 per share.

The following description of the Company's capital stock and certain
provisions of the Company's certificate of incorporation and bylaws is
qualified in its entirety by the provisions of the certificate of
incorporation and bylaws (which are included as exhibits to the Registration
Statement of which this Prospectus is a part) and the General Corporation Law
of the State of Delaware.

COMMON STOCK

There will be 12,000,000 shares of Common Stock outstanding after the
completion of this offering. In addition, an aggregate of 1,500,000 shares of
Common Stock are reserved for issuance under the Incentive Plan and a non-plan
stock option agreement between the Company and an executive.

All outstanding shares of Common Stock are, and the shares offered hereby
will be, fully paid and nonassessable. The holders of Common Stock are
entitled to one vote for each share held of record on all matters voted upon
by stockholders and may not cumulate votes. Thus, the owners of a majority of
the Common Stock outstanding may elect all of the directors if they choose to
do so, and the owners of the balance of such shares would not be able to elect
any directors. Subject to the rights of holders of any future series of
undesignated Preferred Stock that may be designated, each share of outstanding
Common Stock is entitled to participate equally in any distribution of net
assets made to the stockholders in liquidation, dissolution or winding up of
the Company and is entitled to participate equally in dividends as and when
declared by the board of directors. There are no redemption, sinking fund,
conversion or preemptive rights with respect to the shares of Common Stock.
All shares of Common Stock have equal rights and preferences.

PREFERRED STOCK

The board of directors is authorized, subject to certain limitations
prescribed by law, without further stockholder approval, to issue from time to
time up to an aggregate of 1,000,000 shares of Preferred Stock in one or more
series with such designations and such powers, preferences and rights, and
such qualifications, limitations or restrictions (which may differ with
respect to each series) as the board may fix by resolution.

The board of directors is empowered to set the terms of such shares
(including terms with respect to redemption, sinking fund, dividend,
liquidation, preemptive, conversion and voting rights and preferences).
Accordingly, the board of directors, without stockholder approval, may issue
shares of Preferred Stock with terms (including terms with respect to
redemption, sinking fund, dividend, liquidation, preemptive, conversion and
voting rights and preferences) that could adversely affect the voting power
and other rights of holders of the Common Stock.

At present, no shares of Preferred Stock are outstanding and the Company has
no present plans to issue any shares of Preferred Stock.

The undesignated Preferred Stock may have the effect of discouraging an
attempt, through the acquisition of a substantial number of shares of Common
Stock, to acquire control of the Company with a view to effecting a merger,
sale or exchange of assets or a similar transaction. For example, the board of
directors could issue such shares as a dividend to holders of Common Stock or
place such shares privately with purchasers who may side with the board of
directors in opposing a takeover bid. The anti-takeover effects of the
undesignated Preferred Stock may deny stockholders the receipt of a premium on
their Common Stock and may also have a depressive effect on the market price
of the Common Stock.

37
<PAGE>

CERTAIN PROVISIONS OF DELAWARE LAW

The Company is subject to the provisions of section 203 of the General
Corporation Law of the State of Delaware. Subject to certain exceptions,
section 203 prohibits a publicly-held Delaware corporation from engaging in a
"business combination" with an "interested stockholder" for a period of three
years after the date of the transaction in which the person became an
interested stockholder, unless the interested stockholder attained such status
with the approval of the board of directors or unless the business combination
is approved in a prescribed manner. A "business combination" includes mergers,
asset sales and other transactions resulting in a financial benefit to the
interested stockholder. Subject to certain exceptions, an "interested
stockholder" is a person who, together with affiliates and associates, owns,
or within three years did own, 15% or more of the corporation's voting stock.

ANTI-TAKEOVER EFFECT OF PROVISIONS OF THE CERTIFICATION OF INCORPORATION AND
BYLAWS

Certain provisions of the certificate of incorporation and bylaws could
discourage potential acquisition proposals and could delay or prevent a change
in control of the Company. These provisions are intended to enhance the
likelihood of continuity and stability in the composition of the board of
directors and in the policies formulated by the board of directors and to
discourage certain types of transactions that may involve an actual or
threatened change of control of the Company, such as an unsolicited
acquisition proposal. Because these provisions could have the effect of
discouraging a third party from acquiring control of the Company, they may
inhibit fluctuations in the market price of shares of Common Stock that could
otherwise result from actual or rumored takeover attempts and, therefore could
deprive stockholders of an opportunity to realize a takeover premium. These
provisions also may have the effect of limiting the price that certain
investors might be willing to pay in the future for shares of the Company's
Common Stock and of preventing changes in the management of the Company.

Restrictions on Certain Business Combinations. The Company's certificate of
incorporation provides that if stockholder approval is required for the
adoption of any agreement for the merger or consolidation of the Company with
another corporation or for the sale, lease, transfer or exchange of all or
substantially all the assets of the Company, then the affirmative vote of the
holders of at least 66 2/3% of the shares entitled to vote on the matter will
required to approve such action.

Election and Removal of Directors. The Company's board of directors is
divided into three classes of directors serving staggered terms. One class of
directors will be elected at each annual meeting of stockholders for a three-
year term. See "Management--Board Elections." At least two annual meetings of
stockholders, instead of one, generally will be required to change the
majority of the Company's board of directors. Any director may be removed with
or without cause at any time by the affirmative vote of the holders of at
least 66 2/3% of the shares entitled to vote at a special meeting of
stockholders called for that purpose and the vacancies thus created may be
filled at that same meeting by the affirmative vote of the holders of at least
66 2/3% of the shares entitled to vote at such meeting. Ordinary vacancies in
the board of directors may also be filled by the affirmative vote of the
holders of at least 66 2/3% of the shares entitled to vote in the election of
directors.

Vote Required to Amend or Repeal Certain Provisions of the Certificate of
Incorporation and Bylaws. The General Corporation Law of the State of Delaware
provides generally that the affirmative vote of a majority of the shares
entitled to vote on any matter is required to amend a corporation's
certificate of incorporation or bylaws, unless a corporation's certificate of
incorporation or bylaws, as the case may be, requires a greater percentage.
The Company's certificate of incorporation requires the affirmative vote of
the holders of at least 66 /2///3/% of the shares entitled to vote in the
election of directors to amend or repeal certain of its provisions. A vote of
not fewer than 66 2/3% of the holders of shares entitled to vote in the
election of directors is required to amend or repeal the Company's bylaws. The
bylaws may also be amended or repealed by a vote of not fewer than 66 2/3% of
the board of directors, provided that the board of directors may not amend or
repeal any bylaw adopted by the stockholders of the Company. Any such vote
would be in addition to any separate class vote that might in the future be
required pursuant to the terms of any Preferred Stock that might be
outstanding at the time any such amendments are submitted to stockholders.

38
<PAGE>

Stockholder Meetings. Only a majority of the Company's board of directors
(excluding those directors affiliated with or elected by an interested
stockholder), the chairman of the board, the vice chairman of the board or the
president of the Company will be able to call an annual or special meeting of
stockholders. In addition, stockholders may take any action by written
consent.

Requirements for Advance Notification of Stockholder Nomination and
Proposals. The Company's certificate of incorporation establishes advance
notice procedures with regard to stockholder proposals and the nomination,
other than by or at the direction of the board of directors or a committee
thereof, of candidates for election as directors.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock will be The Bank of
New York.

39
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, 12,000,000 shares of Common Stock will be
outstanding and 1,500,000 shares of Common Stock will be reserved for issuance
upon the exercise of outstanding stock options pursuant to the Incentive Plan
and a non-plan stock option agreement between the Company and an executive.
The 2,350,000 shares of Common Stock sold in this offering will be freely
tradeable without restriction under the Securities Act, except for any shares
purchased by an "affiliate" of the Company (as that term is defined under the
rules and regulations of the Securities Act), which will be subject to the
resale limitations of Rule 144 under the Securities Act. The remaining
9,650,000 outstanding shares of Common Stock are "restricted securities" for
purposes of Rule 144 (the "Restricted Securities") and may not be resold in a
public distribution, except in compliance with the registration requirements
of the Securities Act or pursuant to a valid exemption from registration
(including pursuant to Rule 144).

There has been no public market for the Common Stock prior to this offering.
The Company cannot predict the effect, if any, sales of shares of Common Stock
or the availability of shares for sale will have on the market price from time
to time. Nevertheless, sales of substantial amounts of Common Stock in the
public market following completion of this offering could adversely affect the
market price of the Common Stock and the Company's ability to raise additional
equity capital.

SALES OF RESTRICTED SHARES

None of the outstanding shares held by the Company's existing stockholders
will be eligible for resale in the public market pursuant to Rule 144
immediately after this offering. Moreover, all of the Restricted Securities
are subject to lock-up commitments, pursuant to which these shares may not be
sold publicly during the Lock-Up Period without the prior written consent of
Hambrecht & Quist LLC. These shares consist of an aggregate of 7,400,396
shares that are subject to Lock-Up Agreements with Hambrecht & Quist LLC and
an aggregate of 4,723,051 shares that are subject to restrictions on transfer
contained in the Restricted Stock Plan or the Family Stockholders Agreement,
which the Company has agreed with Hambrecht & Quist LLC not to waive during
the Lock-Up Period (without the prior written consent of Hambrecht & Quist
LLC). Thus, none of the outstanding shares held by the Company's existing
stockholders will be eligible for sale prior to the expiration or waiver of
the Lock-Up Period. Thereafter, all the Restricted Securities may be resold in
the public market only in compliance with the registration requirements of the
Securities Act or pursuant to a valid exemption from registration, including
pursuant to Rule 144. The Restricted Securities will begin to be eligible for
sale under Rule 144 after the second anniversary of the Reorganization.

In general, under Rule 144(e), as currently in effect, a stockholder (or
stockholders whose shares are aggregated), including an affiliate, who has
beneficially owned for at least two years shares of Common Stock that are
treated as "restricted securities" would be entitled to sell publicly, within
any three-month period, up to the greater of 1% of the then outstanding shares
of Common Stock (120,000 shares, immediately after the completion of this
offering) or the average weekly reported trading volume in the Common Stock
during the four calendar weeks preceding the date on which notice of sale is
given, provided certain requirements are satisfied. In addition, affiliates of
the Company must comply with additional requirements of Rule 144 in order to
sell shares of Common Stock (including shares acquired by affiliates in this
offering). Under Rule 144, a stockholder deemed not to have been an affiliate
of the Company at any time during the 90 days preceding a sale by him, and who
has beneficially owned for at least three years shares of Common Stock that
are treated as "restricted securities," would be entitled to sell those
shares, without regard to the foregoing requirements.

See "Principal and Selling Stockholders."

REGISTRATION RIGHTS

Pursuant to the Family Stockholders Agreement, stockholders holding
4,018,257 shares of Common Stock after this offering have certain rights to
have such shares registered for resale under the Securities Act. See
"Principal and Selling Stockholders--Family Stockholders Agreement."

40
<PAGE>

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below, through their representatives, Hambrecht & Quist LLC
and Oppenheimer & Co., Inc. (collectively, the "Representatives"), have
severally agreed to purchase from the Company and the Selling Stockholders the
following respective numbers of shares of Common Stock:

<TABLE>
<CAPTION>
NUMBER
NAME OF SHARES
---- ---------
<S> <C>
Hambrecht & Quist LLC............................................
Oppenheimer & Co., Inc...........................................
---------
Total........................................................ 2,350,000
=========
</TABLE>

The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent, including the absence of any
material adverse change in the Company's business and the receipt of certain
certificates, opinions and letters from the Company, its counsel and
independent auditors. The nature of the Underwriters' obligations is such that
they are committed to purchase all shares of Common Stock offered hereby if
any of such shares are purchased.

The Underwriters propose to offer the shares of Common Stock directly to the
public at the initial public offering price set forth on the cover page of
this Prospectus and to certain dealers at such price less a concession not in
excess of $. per share. The Underwriters may allow and such dealers may re-
allow a concession not in excess of $. per share to certain other dealers.
After the initial public offering of the shares, the offering price and other
selling terms may be changed by the Representatives.

The Company and the Selling Stockholders have granted to the Underwriters an
option, exercisable no later than 30 days after the date of this Prospectus,
to purchase up to 352,500 additional shares of Common Stock at the initial
public offering price, less the underwriting discount, set forth on the cover
page of this Prospectus. To the extent that the Underwriters exercise this
option, each of the Underwriters will have a firm commitment to purchase
approximately the same percentage thereof that the number of shares of Common
Stock to be purchased by it shown in the above table bears to the total number
of shares of Common Stock offered hereby. The Company and the Selling
Stockholders will be obligated, pursuant to the option, to sell shares to the
Underwriters to the extent the option is exercised. The Underwriters may
exercise such option only to cover over-allotments made in connection with the
sale of shares of Common Stock offered hereby.

The offering of the shares is made for delivery when, as and if accepted by
the Underwriters and subject to prior sale and to withdrawal, cancellation or
modification of the offering without notice. The Underwriters reserve the
right to reject an order for the purchase of shares in whole or in part.

The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act, and to contribute to payments the Underwriters may be required
to make in respect thereof.

The Selling Stockholders and other stockholders of the Company, including
the executive officers and directors, who will own in the aggregate 9,650,000
shares of Common Stock after this offering, have agreed that they will not,
without the prior written consent of Hambrecht & Quist LLC, offer, sell or
otherwise dispose of any shares of Common Stock, options or warrants to
acquire shares of Common Stock or securities exercisable for or convertible
into shares of Common Stock owned by them during the 180-day period following
the effective date of this Prospectus. The Company has agreed that it will
not, without prior written consent of Hambrecht & Quist LLC, offer, sell or
otherwise dispose of any shares of Common Stock, options or warrants to
acquire shares of Common Stock or securities exchangeable for or convertible
into shares of

41
<PAGE>

Common Stock during the 180-day period following the effective date of this
Prospectus, except that the Company may grant options under its stock plans
and issue securities under, or pursuant to the exercise of options granted
under, its stock plans. Hambrecht & Quist LLC in its sole discretion may
release any of the shares subject to the lock-up at any time without notice.
See "Shares Eligible for Future Sale."

The Representatives have informed the Company that the Underwriters do not
intend to confirm sales of Common Stock offered hereby to any accounts over
which they have discretionary authority.

Prior to this offering, there has been no public market for the Common
Stock. The initial public offering price of the Common Stock was determined by
negotiation among the Company, the representatives of the Selling Stockholders
and the Representatives. Among the factors considered in determining the
initial public offering price were prevailing market and economic conditions,
revenues and earnings of the Company, market valuations of other companies
engaged in activities similar to the Company, estimates of the business
potential and prospects of the Company, the present state of the Company's
business operations, the Company's management and other factors deemed
relevant. The estimated initial public offering price range set forth on the
cover of this Prospectus is subject to change as a result of market conditions
and other factors.

LEGAL MATTERS

Certain matters with respect to the legality of the shares of the Common
Stock offered hereby have been passed upon for the Company by Proskauer Rose
Goetz & Mendelsohn LLP, New York, New York. Certain legal matters relating to
this offering will be passed upon for the Underwriters by Sidley & Austin,
Chicago, Illinois.

EXPERTS

The financial statements as of July 31, 1996 and for the six months in the
period ended July 31, 1996 included in this Prospectus have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report
appearing herein, and have been so included in reliance upon the report of
such firm given upon their authority as experts in accounting and auditing.

The financial statements as of January 31, 1996 and 1995 and for each of the
two fiscal years in the period ended January 31, 1996 and for the period
September 9, 1993 (inception) to January 31, 1994 included in this Prospectus
have been audited by Richard A. Eisner & Company, LLP, independent auditors,
as stated in their reports appearing herein, and have been so included in
reliance upon the reports of such firm given upon their authority as experts
in accounting and auditing.

On August 30, 1996, the Company engaged Deloitte & Touche LLP as its
independent public accountant to audit the Company's financial statements. The
decision to change accountants was approved by the managers of dELiA*s LLC.
Richard A. Eisner & Company, LLP's report on the financial statements for the
Company's two most recent fiscal years did not contain an adverse opinion or a
disclaimer of opinion, and was not qualified or modified as to uncertainty,
audit scope or accounting principles. During the Company's two most recent
fiscal years and all subsequent interim periods preceding the engagement of
Deloitte & Touche LLP, there were no disagreements with Richard A. Eisner &
Company, LLP on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure which, if not resolved to
the satisfaction of Richard A. Eisner & Company, LLP, would have caused it to
make a reference to the subject matter of the disagreement in connection with
its report. During the Company's two most recent fiscal years and all
subsequent interim periods prior to engaging Deloitte & Touche LLP, the
Company did not consult with Deloitte & Touche LLP regarding the application
of accounting principles to a specified transaction, either completed or
proposed, or the type of audit opinion that might be rendered on the Company's
financial statements.

42
<PAGE>

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 under the Securities Act
with respect to the Common Stock offered hereby. This Prospectus does not
contain all the information set forth in the Registration Statement and the
exhibits and schedules filed therewith. For further information with respect
to the Company and the Common Stock offered hereby, reference is made to such
Registration Statement and to the exhibits and schedules filed therewith.
Statements contained in this Prospectus regarding the contents of any contract
or other document referred to are not necessarily complete, and in each
instance reference is made to the copy of such contract or document filed as
an exhibit to the Registration Statement, each such statement being qualified
in all respects by such reference. The Registration Statement, including the
exhibits and schedules thereto, may be inspected without charge at the
principal office of the Commission, 450 Fifth Street, N.W., Washington, DC
20549, the New York Regional Office located at 7 World Trade Center, Suite
1300, New York, New York 10048, and the Chicago Regional Office located at 500
West Madison Street, Suite 1400, Chicago, Illinois 60661, and copies of all or
any part thereof may be obtained at prescribed rates from the Commission's
Public Reference Section at its principal office. The Commission maintains a
World Wide Web site that contains reports, proxy and information statements
and other information regarding registrants that file electronically with the
Commission. The address of the Commission's World Wide Web site is
http://www.sec.gov.

43
<PAGE>

DELIA*S INC.

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Reports............................................ F-2
FINANCIAL STATEMENTS:
Balance Sheets as of January 31, 1995 and 1996, July 31, 1996, and
October 31, 1996 (Unaudited)............................................ F-4
Statements of Operations for the period September 9, 1993 (inception) to
January 31, 1994,
fiscal years ended January 31, 1995 and 1996, six months ended July 31,
1995 (Unaudited) and 1996, and nine months ended October 31, 1995 and
1996 (Unaudited)........................................................ F-5
Statements of Stockholders' Equity for the period September 9, 1993
(inception) to January 31, 1994, fiscal years ended January 31, 1995 and
1996, six months ended July 31, 1996, and three months ended October 31,
1996 (Unaudited)........................................................ F-6
Statements of Cash Flows for the period September 9, 1993 (inception) to
January 31, 1994,
fiscal years ended January 31, 1995 and 1996, six months ended July 31,
1995 (Unaudited) and 1996, and nine months ended October 31, 1995 and
1996 (Unaudited)........................................................ F-7
Notes to Financial Statements............................................ F-8
</TABLE>

F-1
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders ofdELiA*s Inc.
New York, New York

We have audited the accompanying balance sheet of dELiA*s Inc. (the
"Company") as of July 31, 1996, and the related statements of operations,
stockholders' equity, and cash flows for the six months then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company at July 31, 1996, and the
results of its operations and its cash flows for the six months then ended in
conformity with generally accepted accounting principles.

Deloitte & Touche LLP

October 4, 1996 December 18, 1996 as to Note 10

New York, New York

F-2
<PAGE>

REPORT OF INDEPENDENT AUDITORS

Board of Directors and Stockholders
dELiA*s Inc.
New York, New York

We have audited the accompanying balance sheets of dELiA*s Inc. as at
January 31, 1995 and January 31, 1996 and the related statements of
operations, stockholders' equity and cash flows for the years then ended and
for the period from September 9, 1993 (inception) to January 31, 1994. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements enumerated above present fairly, in
all material respects, the financial position of dELiA*s Inc. at January 31,
1995 and January 31, 1996, and results of its operations and its cash flows
for the years then ended and for the period from September 9, 1993 (inception)
to January 31, 1994 in conformity with generally accepted accounting
principles.

Richard A. Eisner & Company, LLP

New York, New York
August 14, 1996

With respect to the first paragraph of Note 10a

December 18, 1996

F-3
<PAGE>

DELIA*S INC.

BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
JANUARY 31, PRO FORMA
-------------- JULY 31, OCTOBER 31, OCTOBER 31,
1995 1996 1996 1996 1996
------ ------ -------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents... $ 704 $ 675 $1,343 $1,140
Receivables................. -- 27 108 82
Receivables from related
parties.................... -- -- 50 61
Merchandise inventories..... 90 221 1,515 3,712
Prepaid expenses and other
current assets............. 67 101 158 1,085
------ ------ ------ ------
Total current assets...... 861 1,024 3,174 6,080
------ ------ ------ ------
PROPERTY AND EQUIPMENT--Net... 6 166 381 484
OTHER ASSETS.................. 3 76 71 337
------ ------ ------ ------
TOTAL ASSETS.................. $ 870 $1,266 $3,626 $6,901
====== ====== ====== ======
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES
Accounts payable............ $ -- $ 63 $1,009 $2,391
Accrued expenses and other
current liabilities........ 35 137 556 1,364
Sales return allowance...... -- 25 106 153
Liabilities due to
customers.................. -- 76 161 226
Income taxes payable........ -- 3 -- --
------ ------ ------ ------
Total current
liabilities.............. 35 304 1,832 4,134
------ ------ ------ ------
DEFERRED CREDITS.............. -- -- 21 18
COMMITMENTS AND CONTINGENCIES
(Note 12)
STOCKHOLDERS' EQUITY:
Preferred Stock, par value
$.01 per share;
Authorized--1,000,000
shares;
Shares issued and
outstanding--none......... -- -- -- -- --
Common Stock, par value $.01
per share;
Authorized--50,000,000
shares
Issued and outstanding--
8,196,995, 9,196,115 and
10,000,000 shares,
respectively.............. 82 92 100 100 100
Note receivable from
stockholder............... -- -- (50) (50) (50)
Deferred compensation...... -- -- (191) (169) (169)
Additional paid-in capital.. 1,118 1,208 1,467 1,467 1,467
Retained
earnings/(deficit)......... (365) (338) 447 1,401 0
------ ------ ------ ------ -----
Total stockholders'
equity................... 835 962 1,773 2,749 1,348
------ ------ ------ ------ -----
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY......... $ 870 $1,266 $3,626 $6,901
====== ====== ====== ======
</TABLE>

See Notes to Financial Statements

F-4
<PAGE>

DELIA*S INC.

STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
SEPTEMBER 9, FISCAL YEAR SIX MONTHS
1993 ENDED ENDED NINE MONTHS
(INCEPTION) TO JANUARY 31, JULY 31, ENDED OCTOBER 31,
JANUARY 31, -------------- ------------------ -----------------------
1994 1995 1996 1995 1996 1995 1996
-------------- ------ ------ ----------- ------ ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
NET SALES........................ $ -- $ 139 $5,652 $1,301 $8,372 $2,844 $15,482
COST OF SALES.................... -- 89 3,078 676 3,958 1,453 7,421
------ ------ ------ ------ ------ ------ -------
GROSS PROFIT..................... -- 50 2,574 625 4,414 1,391 8,061
------ ------ ------ ------ ------ ------ -------
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES......... 34 384 2,569 808 3,638 1,482 6,331
INTEREST INCOME, NET............. 1 2 25 13 20 18 24
------ ------ ------ ------ ------ ------ -------
INCOME (LOSS) BEFORE PROVISION
FOR INCOME TAXES................ (33) (332) 30 (170) 796 (73) 1,754
PROVISION FOR INCOME TAXES....... -- -- 3 -- 11 -- 15
------ ------ ------ ------ ------ ------ -------
NET INCOME (LOSS)................ $ (33) $ (332) $ 27 $ (170) $ 785 $ (73) $ 1,739
====== ====== ====== ====== ====== ====== =======
Pro Forma Income Data (Unaudited)
Income (Loss) before provision
for income taxes as reported... $ (33) $ (332) $ 30 $ (170) $ 796 $ (73) $ 1,754
Pro forma provision (benefit)
for income taxes............... (14) (130) 12 (68) 328 (29) 719
------ ------ ------ ------ ------ ------ -------
Pro forma net income (loss)..... $ (19) $ (202) $ 18 $ (102) $ 468 $ (44) $ 1,035
====== ====== ====== ====== ====== ====== =======
Pro forma net income (loss) per
share.......................... $(0.00) $(0.02) $ 0.00 $(0.01) $ 0.05 $(0.00) $ 0.10
====== ====== ====== ====== ====== ====== =======
Shares used in the calculation
of pro forma net income (loss)
per share...................... 10,000 10,000 10,000 10,000 10,000 10,000 10,000
====== ====== ====== ====== ====== ====== =======
</TABLE>

See Notes to Financial Statements

F-5
<PAGE>

DELIA*S INC.

STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
COMMON STOCK NOTE
----------------- RECEIVABLE ADDITIONAL RETAINED TOTAL
NUMBER OF FROM DEFERRED PAID-IN EARNINGS/ STOCKHOLDERS'
SHARES AMOUNT STOCKHOLDER COMPENSATION CAPITAL (DEFICIT) EQUITY
---------- ------ ----------- ------------ ---------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, SEPTEMBER 9,
1993 (INCEPTION)....... -- $ -- $ -- $ -- $ -- $ -- $ --
Issuance of common
stock.................. 2,822,480 28 -- -- 172 -- 200
Net loss................ -- -- -- -- -- (33) (33)
---------- ----- ----- ----- ------ ------ ------
BALANCE, JANUARY 31,
1994................... 2,822,480 28 -- -- 172 (33) 167
Issuance of common
stock.................. 5,374,515 54 -- -- 946 -- 1,000
Net loss................ -- -- -- -- -- (332) (332)
---------- ----- ----- ----- ------ ------ ------
BALANCE, JANUARY 31,
1995................... 8,196,995 82 -- -- 1,118 (365) 835
Issuance of common
stock.................. 999,120 10 -- -- 90 -- 100
Net income.............. -- -- -- -- -- 27 27
---------- ----- ----- ----- ------ ------ ------
BALANCE, JANUARY 31,
1996................... 9,196,115 92 -- -- 1,208 (338) 962
Issuance of common
stock.................. 803,885 8 (50) (217) 259 -- --
Net income.............. -- -- -- -- -- 785 785
Deferred compensation
expense................ -- -- -- 26 -- -- 26
---------- ----- ----- ----- ------ ------ ------
BALANCE, JULY 31, 1996.. 10,000,000 100 (50) (191) 1,467 447 1,773
Net income.............. -- -- -- -- -- 954 954
Deferred compensation
expense................ -- -- -- 22 -- -- 22
---------- ----- ----- ----- ------ ------ ------
BALANCE, OCTOBER 31,
1996 (UNAUDITED)....... 10,000,000 $ 100 $ (50) $(169) $1,467 $1,401 $2,749
========== ===== ===== ===== ====== ====== ======
</TABLE>

See Notes to Financial Statements

F-6
<PAGE>

DELIA*S INC.

STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
SEPTEMBER 9,
1993 FISCAL YEAR ENDED SIX MONTHS ENDED NINE MONTHS ENDED
(INCEPTION) TO JANUARY 31, JULY 31, OCTOBER 31,
JANUARY 31, ------------------- ------------------- -----------------------
1994 1995 1996 1995 1996 1995 1996
-------------- --------- -------- ----------- ------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net income (loss)...... $(33) $ (332) $ 27 $(170) $ 785 $(73) $1,739
Adjustments to
reconcile net income
(loss) to net cash
(used in)
provided by operating
activities
Depreciation and
amortization........ -- 1 14 4 29 10 49
Inventory reserves
for obsolescence.... -- 6 25 -- 207 -- 325
Compensation expense
related
to issuance of
Restricted Stock.... -- -- -- -- 26 -- 48
Changes in operating
assets
and liabilities:
Receivables......... -- -- (27) -- (81) (7) (55)
Receivables from
related parties.... -- -- -- -- (50) -- (61)
Merchandise
inventories........ (16) (80) (156) (223) (1,501) (669) (3,816)
Prepaid expenses and
other current
assets............. (17) (50) (34) (9) (57) (26) (984)
Other assets........ (1) (2) (78) (28) 1 (47) (262)
Accounts payable.... -- 35 63 134 946 453 2,328
Accrued expenses and
other current
liabilities........ -- -- 102 95 419 (23) 1,227
Sales return
allowance.......... -- -- 25 10 81 15 128
Liabilities due to
customers.......... -- -- 76 -- 85 -- 150
Income taxes
payable............ -- -- 3 -- (3) -- (3)
Deferred credits.... -- -- -- -- 21 -- 18
------ --------- -------- ----- ------- ---- ------
Net cash (used in)
provided by
operating activities... (67) (422) 40 (187) 908 (367) 831
------ --------- -------- ----- ------- ---- ------
CASH FLOWS FROM
INVESTING ACTIVITIES:
Capital expenditures... -- (7) (169) (50) (240) (67) (366)
------ --------- -------- ----- ------- ---- ------
CASH FLOWS FROM
FINANCING ACTIVITIES:
Issuance of common
stock................. 200 1,000 100 100 -- 100 --
------ --------- -------- ----- ------- ---- ------
INCREASE (DECREASE) IN
CASH
& CASH EQUIVALENTS..... 133 571 (29) (137) 668 (334) 465
CASH & CASH
EQUIVALENTS--
BEGINNING OF PERIOD.... -- 133 704 704 675 704 675
------ --------- -------- ----- ------- ---- ------
CASH & CASH
EQUIVALENTS--
END OF PERIOD.......... $ 133 $ 704 $ 675 $ 567 $ 1,343 $370 $1,140
====== ========= ======== ===== ======= ==== ======
SUPPLEMENTARY CASH FLOW
INFORMATION:
Income taxes paid...... $ -- $ -- $ -- $ -- $ 11 $ -- $ 15
====== ========= ======== ===== ======= ==== ======
Interest paid.......... $ -- $ -- $ -- $ -- $ 6 $ -- $ 20
====== ========= ======== ===== ======= ==== ======
</TABLE>

See Notes to Financial Statements

F-7
<PAGE>

DELIA*S INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 9, 1993 (INCEPTION) TO JANUARY 31, 1994, FISCAL YEARS ENDED JANUARY
31, 1995 AND 1996, SIX MONTHS ENDED JULY 31, 1995 AND 1996, AND NINE MONTHS
ENDED OCTOBER 31, 1995 AND 1996
(INFORMATION AS IT RELATES TO THE SIX MONTHS ENDED JULY 31, 1995 AND THE NINE
MONTHS ENDED OCTOBER 31, 1995 AND 1996 IS UNAUDITED)

1. BUSINESS AND BASIS OF PRESENTATION

dELiA*s Inc. (the "Company" or "dInc") is a direct marketer of casual
apparel and related accessories to teen girls and young women primarily
between the ages of 10 and 24. The Company offers a broad selection of
merchandise, presented in distinctively styled catalogs; the first catalog was
mailed in March 1994. The Company maintains a corporate headquarters,
telemarketing and customer service group in New York, New York and utilizes a
third-party fulfillment facility for processing merchandise in Lancaster,
Pennsylvania.

The Company is subject to seasonal fluctuations in its merchandise sales and
results of operations. The Company expects its sales and operating results
generally to be lower in the first and second quarters than in the third and
fourth quarters (which include the back-to-school and holiday seasons) of each
fiscal year.

The Company is a successor to a business originally founded in September
1993. In 1995, the successor business began to operate as a New York limited
liability company under the name dELiA*s LLC ("dLLC"). As a limited liability
company, dLLC was treated for income tax purposes as a partnership with taxes
on the income generated by dLLC paid by its members. In October 1996, dInc was
incorporated in Delaware. Prior to the completion of the initial public
offering described in this Prospectus (the "Offering"), dLLC and dInc engaged
in a reorganization transaction (the "Reorganization") pursuant to which dLLC
contributed its assets to dInc and dInc assumed, and agreed to pay, perform
and discharge, all liabilities of dLLC (except for income tax liabilities). In
connection with the Reorganization, dInc issued 10,000,000 shares of Common
Stock to dLLC, of which 704,794 shares are restricted under the Company's
Restricted Stock Plan. See Note 10c--1996 Restricted Stock Plan. A
distribution of cash and the shares of Common Stock of dInc was effected in
accordance with the dLLC operating agreement. The accompanying financial
statements and footnotes are presented to reflect the Reorganization as
described in Note 10a, which was accounted for on a basis similar to a pooling
of interests.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Fiscal Year--The Company's fiscal year ends on January 31.

b. Cash Equivalents--The Company considers all highly liquid investments,
with maturities of 90 days or less when purchased, to be cash equivalents.
Cash equivalents are stated at cost, which approximates market value.

c. Merchandise Inventories--Merchandise inventories, which are all finished
goods, are stated at the lower of cost (determined on a first-in, first-out
basis) or market value. At January 31, 1995, January 31, 1996, July 31, 1996
and October 31, 1996 (unaudited) inventory reserves for obsolescence were
$6,000, $31,000, $238,000 and $356,000, respectively.

d. Catalog Costs--Catalogs costs, which primarily consist of catalog
production and mailing costs, are capitalized and amortized over the expected
future revenue stream, which is principally from three to five months from the
date catalogs are mailed. The Company accounts for catalog costs in accordance
with the AICPA Statement of Position ("SOP") 93-7, "Reporting on Advertising
Costs." SOP 93-7 requires that the amortization of capitalized advertising
costs should be the amount computed using the ratio that current

F-8
<PAGE>

DELIA*S INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

period revenues for the catalog cost pool bear to the total of current and
estimated future period revenues for that catalog cost pool. Deferred catalog
costs as of January 31, 1995, January 31, 1996, July 31, 1996 and October 31,
1996 (unaudited) were $56,000, $93,000, $109,000 and $1,049,000, respectively.
Catalog costs, which are reflected in selling, general and administrative
expenses, for the fiscal years ended January 31, 1995 and 1996, for the six
month periods ended July 31, 1995 (unaudited) and 1996 and for the nine month
periods ended October 31, 1995 and 1996 (unaudited) were $162,000, $1,104,000,
$381,000, $1,409,000, $675,000 and $2,398,000, respectively.

e. Property and Equipment--Property and equipment are stated at cost.
Furniture, fixtures and equipment are depreciated by the straight-line method
over the estimated useful lives of the respective assets, ranging from 3 to 5
years. Leasehold improvements are amortized ratably over the lesser of the
remaining lease term or useful life of the improvement. See Note 3--Property
and Equipment.

f. Income Taxes--Prior to the Offering, the Company was a limited liability
company ("LLC") and each member's respective portion of dLLC's taxable income
or loss was reportable on such members own federal and state tax returns. As
an LLC, the Company was subject to the New York City income tax on
unincorporated businesses. As discussed in Note 10a--Reorganization, the
Company has effected a Reorganization that changed the income tax status of
the Company to a taxable C corporation. Subsequent to the Reorganization,
deferred income tax assets and liabilities will be recorded in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for
Income Taxes."

g. Deferred Credits--Deferred credits represent deferred rent that results
from the accounting for rent expense on a straight-line basis over the lease
term for leases with scheduled rent increases.

h. Revenue Recognition--Revenue is recognized when merchandise is shipped to
customers. The Company accrues a sales return allowance in accordance with its
return policy for estimated returns of merchandise subsequent to the balance
sheet date that relate to sales prior to the balance sheet date. At January
31, 1995, January 31, 1996, July 31, 1996 and October 31, 1996 (unaudited),
sales return allowances were $0, $25,000, $106,000 and $153,000, respectively.

i. Pro Forma Net Income Per Share--Pro forma net income per share is based
on the weighted average number of common shares and common share equivalents
outstanding. The common shares give effect to the issuance of 10,000,000
shares of Common Stock to dLLC as described in Note 10a--Reorganization. For
all periods presented, the number of common shares and common share
equivalents used in the calculation of pro forma net income per share was
10,000,000, which reflects the Reorganization as described in Note 10a. Common
stock issued at prices below the initial public offering price during the
twelve month period preceding the date of this Prospectus has been included as
outstanding as if the stock were outstanding for all periods presented.

F-9
<PAGE>

DELIA*S INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

j. Fair Value of Financial Instruments--The following disclosure about the
fair value of financial instruments is made in accordance with the
requirements of SFAS No. 107, "Disclosures About Fair Value of Financial
Instruments." The carrying amounts reported in the balance sheets for cash and
cash equivalents, receivables and accounts payable approximate fair value
because of the short-term maturity of those financial instruments.

k. Use of Estimates in the Preparation of Financial Statements--The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

l. Recent Accounting Pronouncements--In March 1995, the Financial Accounting
Standards Board (the "FASB") issued SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of."
SFAS No. 121 requires that long-lived assets and certain identifiable
intangibles to be held and used by an entity be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount
of an asset may not be recoverable, and is effective for fiscal years
beginning after December 15, 1995. The adoption of SFAS No. 121 did not have
an effect on the Company's financial position or results of operations.

In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation", which is effective for the Company beginning February 1, 1996.
SFAS No. 123 requires expanded disclosures of stock-based compensation
arrangements with employees and encourages (but does not require) compensation
expense to be measured based on the fair value of the equity instrument
awarded. Companies are permitted, however, to continue to apply Accounting
Principles Board Opinion No. 25 ("APB No. 25"), which recognizes compensation
costs based on the intrinsic value of the equity instrument awarded. The
Company will continue to apply APB No. 25 to its stock-based compensation
awards to employees. The required disclosures of pro forma effects on net
income and earnings per share did not apply during the nine month period ended
October 31, 1996 or during prior fiscal years.

m. Unaudited Interim Financial Statements--In the opinion of management, the
unaudited financial statements for the six months ended July 31, 1995 and the
nine months ended October 31, 1995 and 1996 are presented on a basis
consistent with the audited financial statements and reflect all adjustments,
consisting of only normal recurring adjustments, necessary for a fair
presentation of the results thereof. The results of operations for interim
periods are not necessarily indicative of the results to be expected for the
entire year.

n. Pro forma Stockholders' Equity--Pro forma Stockholders' Equity as of
October 31, 1996 (unaudited) represents stockholders' equity, after giving
effect to the portion of the LLC Distribution that depended on the Company's
results of operations from inception through October 31, 1996.

F-10
<PAGE>

DELIA*S INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

3. PROPERTY AND EQUIPMENT

Major classes of property and equipment are as follows:

<TABLE>
<CAPTION>
ESTIMATED JANUARY 31, JANUARY 31, JULY 31, OCTOBER 31,
USEFUL LIVES 1995 1996 1996 1996
------------- ----------- ----------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Furniture, fixtures and
equipment.............. 3-5 years $7,000 $139,000 $295,000 $367,000
Leasehold improvements.. Term of lease -- 37,000 121,000 175,000
------ -------- -------- --------
Total--at cost.......... 7,000 176,000 416,000 542,000
Less accumulated
depreciation and
amortization........... 1,000 10,000 35,000 58,000
------ -------- -------- --------
Total property and
equipment--net......... $6,000 $166,000 $381,000 $484,000
====== ======== ======== ========
</TABLE>

4. CREDIT AND FINANCING AGREEMENTS

At October 31, 1996, the Company had a line of credit agreement with a bank
providing for short-term loans of up to $1.5 million subject to bank approval.
Borrowings under the agreement are secured by all assets of the Company except
for merchandise inventories and bear interest at the prime rate plus two
percent (10.25 percent at October 31, 1996). The agreement expires on July 31,
1997. The agreement is personally guaranteed by three stockholders of the
Company. There were no funds borrowed under the agreement during the nine
month period ended October 31, 1996 or during the fiscal years ended January
31, 1996 and 1995.

5. INTEREST INCOME--NET

Interest income--net consists of the following:

<TABLE>
<CAPTION>
SEPTEMBER 9,
1993 SIX MONTHS NINE MONTHS ENDED
(INCEPTION) TO FISCAL YEAR 1994 FISCAL YEAR 1995 ENDED JULY 31, OCTOBER 31,
JANUARY 31, ENDED ENDED ------------------- -----------------------
1994 JANUARY 31, 1995 JANUARY 31, 1996 1995 1996 1995 1996
-------------- ---------------- ---------------- ----------- ------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest income......... $1,000 $2,000 $25,000 $13,000 $26,000 $18,000 $ 44,000
Interest expense........ -- -- -- -- (6,000) -- (20,000)
------ ------ ------- ------- ------- ------- --------
Interest income--net.... $1,000 $2,000 $25,000 $13,000 $20,000 $18,000 $ 24,000
====== ====== ======= ======= ======= ======= ========
</TABLE>

F-11
<PAGE>

DELIA*S INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

6. INCOME TAXES

The provision for income taxes is comprised of the following:

<TABLE>
<CAPTION>
SIX MONTHS NINE MONTHS ENDED
SEPTEMBER 9, 1993 FISCAL YEAR 1994 FISCAL YEAR 1995 ENDED JULY 31, OCTOBER 31,
(INCEPTION) TO ENDED ENDED ------------------- -----------------------
JANUARY 31, 1994 JANUARY 31, 1995 JANUARY 31, 1996 1995 1996 1995 1996
----------------- ---------------- ---------------- ----------- ------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Federal:
Current............... $ -- $ -- $ -- $-- $ -- $ -- $ --
Deferred.............. -- -- -- -- -- -- --
----- ----- ------ ---- ------- ----- -------
Total federal....... -- -- -- -- -- -- --
----- ----- ------ ---- ------- ----- -------
State and local:
Current............... -- -- 3,000 -- 11,000 -- 15,000
Deferred.............. -- -- -- -- -- -- --
----- ----- ------ ---- ------- ----- -------
Total state and
local.............. -- -- 3,000 -- 11,000 -- 15,000
----- ----- ------ ---- ------- ----- -------
Total provision....... $ -- $ -- $3,000 $-- $11,000 $ -- $15,000
===== ===== ====== ==== ======= ===== =======
</TABLE>

Effective September 9, 1993 (date of inception), the Company's predecessor,
dELiA*s Ltd., elected S corporation status under applicable provisions of the
Internal Revenue Code. In 1995, dELiA*s Ltd. was succeeded by dLLC and was
treated as a partnership for income tax purposes. As such, dELiA*s Ltd. and
dLLC paid no federal or state income taxes as all taxable income was taxed
directly at the shareholder and membership level.

The effective income tax rates differed from the federal statutory income
tax rates as follows:

<TABLE>
<CAPTION>
SIX MONTHS NINE MONTHS ENDED
SEPTEMBER 9, 1993 FISCAL YEAR 1994 FISCAL YEAR 1995 ENDED JULY 31, OCTOBER 31,
(INCEPTION) TO ENDED ENDED --------------------- -----------------------
JANUARY 31, 1994 JANUARY 31, 1995 JANUARY 31, 1996 1995 1996 1995 1996
----------------- ---------------- ---------------- ----------- --------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Federal taxes at
statutory rates....... $(11,000) $(113,000) $ 10,000 $(58,000) $ 271,000 $(25,000) $596,000
State and local taxes
net of federal
benefit............... (2,000) (20,000) 5,000 (10,000) 53,000 (5,000) 117,000
Effect of S corporation
and LLC company
status................ 13,000 133,000 (12,000) 68,000 (313,000) 30,000 (698,000)
-------- --------- -------- -------- --------- -------- --------
$ -- $ -- $ 3,000 $ -- $ 11,000 $ -- $ 15,000
======== ========= ======== ======== ========= ======== ========
</TABLE>

F-12
<PAGE>

DELIA*S INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

PROFORMA PROVISION FOR INCOME TAXES (UNAUDITED)

The unaudited pro forma provision for income taxes represents estimated
income taxes that would have been reported had the Company filed its tax
returns as a taxable C corporation which reflects the reorganization described
in Note 13 for all periods presented.

The pro forma provision for income taxes is comprised of the following:

<TABLE>
<CAPTION>
SIX MONTHS NINE MONTHS ENDED
SEPTEMBER 9, 1993 FISCAL YEAR 1994 FISCAL YEAR 1995 ENDED JULY 31, OCTOBER 31,
(INCEPTION) TO ENDED ENDED -------------------- -----------------------
JANUARY 31, 1994 JANUARY 31, 1995 JANUARY 31, 1996 1995 1996 1995 1996
----------------- ---------------- ---------------- ----------- -------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
Federal:
Current................ $ -- $ -- $ -- $ -- $248,000 $ -- $333,000
Deferred............... (12,000) (109,000) 10,000 (58,000) 26,000 (25,000) 268,000
-------- --------- ------- -------- -------- -------- --------
Total federal........ (12,000) (109,000) 10,000 (58,000) 274,000 (25,000) 601,000
-------- --------- ------- -------- -------- -------- --------
State and local:
Current................ -- -- -- -- 49,000 -- 65,000
Deferred............... (2,000) (21,000) 2,000 (10,000) 5,000 (4,000) 53,000
-------- --------- ------- -------- -------- -------- --------
Total state and
local............... (2,000) (130,000) 12,000 (10,000) 54,000 (4,000) 118,000
-------- --------- ------- -------- -------- -------- --------
Total provision......... $(14,000) $(130,000) $12,000 $(68,000) $328,000 $(29,000) $719,000
======== ========= ======= ======== ======== ======== ========
</TABLE>

The tax effects of significant items comprising the Company's pro forma
federal and state net deferred tax asset as of January 31, 1996, July 31, 1996
and October 31, 1996 (unaudited) are as follows:

<TABLE>
<CAPTION>
JANUARY 31, JULY 31, OCTOBER 31,
1996 1996 1996
----------- -------- -----------
(UNAUDITED)
-----------
<S> <C> <C> <C>
Deferred tax assets:
Inventory reserves.................... $ 13,000 $ 97,000 $ 145,000
Sales return allowance................ 10,000 53,000 62,000
Deferred compensation expense......... -- 11,000 20,000
Depreciation.......................... 5,000 7,000 8,000
Net operating loss.................... 146,000 -- --
Other................................. -- 9,000 7,000
-------- -------- ---------
Total deferred tax assets............... 174,000 177,000 242,000
-------- -------- ---------
Deferred tax liabilities:
Catalog costs......................... (38,000) (82,000) (426,000)
-------- -------- ---------
Net deferred tax asset/(liability)...... $136,000 $ 95,000 $(184,000)
======== ======== =========
</TABLE>

F-13
<PAGE>

DELIA*S INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

7. STOCKHOLDERS' EQUITY

Effective upon the Reorganization, as described in Note 10a, the Company has
authorized 1,000,000 shares of preferred stock, $.01 par value per share, no
shares issued or outstanding; 50,000,000 shares of common stock, $.01 par
value per share, 8,196,995, 9,196,115 and 10,000,000 shares issued and
outstanding at January 31, 1995, January 31, 1996, July 31, 1996 and October
31, 1996 (unaudited), respectively.

Prior to January 31, 1996, the Company issued Class A Membership Interests
for capital contributions of $1,300,000, which upon the Reorganization
converted into 9,196,115 shares of Common Stock. During the six month period
ended July 31, 1996, the Company issued Class C Membership Interests for
capital contributions of $50,000, which upon the Reorganization converted into
99,091 shares of Common Stock.

During the six month period ended July 31, 1996, Class B restricted
membership interests were granted to certain employees at no cost to these
employees. The cost of restricted membership interests, based upon the
interests' fair market value at the award date in the amount of $217,000, was
credited to stockholders' equity and is being subsequently amortized against
earnings over the vesting period of 30 months. Deferred compensation expense
recognized during the six month period ended July 31, 1996 and nine month
period ended October 31, 1996 (unaudited) was $26,000 and $48,000,
respectively. Upon the Reorganization, the Class B restricted membership
interests converted into 704,794 shares of restricted common stock. See Note
10c--1996 Restricted Stock Plan. Also see Note 10e regarding the Family
Stockholders' Agreement.

8. RELATED PARTY TRANSACTIONS

Receivables from related parties as of July 31, 1996 and October 31, 1996
included (i) non-interest-bearing loans receivable from stockholders of
$50,000 and $61,000, respectively, related to certain stockholders' personal
income taxes attributable to income of the Company as a limited liability
company and (ii) non-interest-bearing loan receivable from a
stockholder/executive of the Company in the amount of $50,000 related to the
executive's capital contribution.

9. COMMITMENTS

As of October 31, 1996 the Company was obligated under various long-term
operating leases for office space and equipment requiring minimum annual
rentals. These operating leases expire on varying dates to 2003. At October
31, 1996 aggregate minimum rentals in future periods are as follows:

<TABLE>
<CAPTION>
FISCAL YEAR
ENDING
JANUARY 31,
-----------
<S> <C>
1997 (remainder).............................................. $ 51,000
1998.......................................................... 225,000
1999.......................................................... 185,000
2000.......................................................... 164,000
2001.......................................................... 151,000
Thereafter..................................................... 187,000
</TABLE>

In addition, the Company is obligated to pay a proportionate share of
increases in real estate taxes and other occupancy costs.

F-14
<PAGE>

DELIA*S INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Rent expense for the fiscal years ended January 31, 1995 and 1996, for the
six month periods ended July 31, 1995 (unaudited) and 1996 and for the nine
month periods ended October 31, 1995 and 1996 (unaudited) was $44,000,
$88,000, $17,000, $123,000, $36,000 and $232,000, respectively.

The Company has an agreement (the "Fulfillment Agreement") with a third-
party fulfillment contractor to provide warehouse space near Lancaster,
Pennsylvania for inventory storage and processing, including the fulfillment
of customer orders for merchandise. The Company neither owns nor leases such
warehouse space; the cost of the warehouse space is included in the fees paid
by the Company to the third-party fulfillment contractor under the terms of
the Fulfillment Agreement. The Fulfillment Agreement expires on April 30,
1997. At October 31, 1996, aggregate minimum payments in future periods under
the Fulfillment Agreement are as follows: $86,000 for the remainder of fiscal
year ending January 31, 1997 and $86,000 for fiscal year ending January 31,
1998.

10. SUBSEQUENT EVENTS

A. REORGANIZATION

As described in this Prospectus, on December 18, 1996, dLLC and dInc engaged
in a reorganization transaction (the "Reorganization") pursuant to which dLLC
contributed its assets to dInc. dInc assumed, and agreed to pay, perform and
discharge, all liabilities of dLLC (except for income tax liabilities). In
connection with the Reorganization, dInc issued 10,000,000 shares of Common
Stock to dLLC, of which 704,794 shares are restricted under the Company's
Restricted Stock Plan as described in Note 10c--1996 Restricted Stock Plan.

The Reorganization also resulted in the distribution to existing members of
dLLC of the LLC Distribution described below and the shares of Common Stock of
dInc received pursuant to the operating agreement. Prior to the completion of
the Offering, dLLC made a cash distribution (the "LLC Distribution") to
certain of its members in the amount of $4.0 million.

B. STOCK OPTION AGREEMENT AND EMPLOYMENT AGREEMENTS

Prior to the Offering, an executive entered into a stock option agreement
pursuant to which the Company has granted such executive an option to purchase
up to an aggregate of 250,000 shares of Common Stock at the price per share to
the public in this Offering (the "Exercise Price"). The option becomes
exercisable as to 50,000 shares on each of July 21, 1997, 1998, 1999, 2000 and
2001. If the executive's employment terminates before July 21, 2001 as a
result of his death or disability, or if the Company terminates his employment
other than for cause or if the Company effects a Constructive Discharge (as
defined in the executive's employment agreement) of the executive, the option
will become exercisable as to all 250,000 shares; if the executive's
employment terminates other than as set forth above, the portion of the option
that is not exercisable at the date of termination will not thereafter become
exercisable. During the 30-day period beginning on the fourth anniversary of
the termination of the executive's employment for any reason, the Company may
purchase all the shares previously purchased by the executive pursuant to the
option and terminate all further rights under the option in exchange for an
amount equal to (i) the product of (A) the Average Price of a Share (as
defined in the stock option agreement) and (B) the sum of (1) the number of
shares being purchased plus (2) the number of shares subject to the option
being terminated, reduced by (ii) the product of the Exercise Price and the
number of shares subject to the option being terminated. Upon a merger,
consolidation or sale of

F-15
<PAGE>

DELIA*S INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

substantially all the assets of the Company, the option will become
immediately exercisable as to 50% of the shares as to which the option has not
yet become exercisable, with the balance of the option not then exercisable
becoming exercisable in equal amounts on each July 21 thereafter through July
21, 2001. If the executive's employment terminates before July 22, 1997, a
stockholder/executive of the Company will have the option to purchase from the
executive 100,000 shares of Common Stock for $50,000.

Prior to the completion of the Offering, two executives of the Company
entered into three-year agreements with the Company providing for the
continuation of their employment at minimum salaries of $100,000 a year for
each executive, subject to annual upward adjustment in proportion to the
increase in the consumer price index plus such increases in salary and bonuses
as approved by the Board of Directors.

In July 1996, an executive of the Company entered into an agreement with the
Company providing for the continuation of his employment at a minimum salary
each year of $50,000 ($100,000 upon completion of the Offering) plus such
increases in salary and bonuses as approved by the Board of Directors. The
agreement terminates in July 2001.

C. 1996 RESTRICTED STOCK PLAN

Concurrent with the Reorganization, the Company approved and adopted the
1996 Restricted Stock Plan (the "Restricted Stock Plan") pursuant to which
704,794 shares of Common Stock were exchanged for restricted membership
interests in dLLC held by certain employees of the Company ("Restricted
Interest Holders"). Upon the issuance of such shares, no more shares were
available for issuance pursuant to the Restricted Stock Plan.

Under the provisions of the restricted stock agreements between each
Restricted Interest Holder and the Company, the restrictions on the shares
generally lapse 30 months from the grant date of the original restricted
membership interest in dLLC. If a Restricted Interest Holder's employment is
terminated prior to the 30th month for any reason, the Restricted Interest
Holder will forfeit all rights to the restricted stock. Within the limits of
the Restricted Stock Plan, the compensation committee may provide for the
lapse of such restrictions in installments in whole or in part or may
accelerate or waive such restrictions at any time.

In addition, the restricted stock agreements give an executive
officer/stockholder of the Company the right to vote all the shares of common
stock issued to the Restricted Interest Holders pursuant to such agreements on
all matters during the period in which such shares are subject to restrictions
on transfer.

D. 1996 STOCK INCENTIVE PLAN

Concurrent with the Reorganization, the Company approved and adopted the
1996 Stock Incentive Plan (the "Incentive Plan"), which provides for the
following types of awards to eligible employees: (i) stock options, including
incentive stock options and non-qualified stock options; (ii) stock
appreciation rights, in tandem with stock options or freestanding; and (iii)
restricted stock. Awards may be granted singly, in combination or in tandem,
as determined by a committee of the Company's board of directors.

Under the Incentive Plan, two independent non-employee directors will be
granted, at the time of the Offering, an option to purchase 40,000 shares each
of Common Stock at an exercise price per share equal to the initial public
offering price. All options granted to non-employee directors will become
exercisable at the

F-16
<PAGE>

DELIA*S INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

SEPTEMBER 9, 1993 (INCEPTION) TO JANUARY 31, 1994, FISCAL YEARS ENDED JANUARY
31, 1995 AND 1996, AND SIX MONTHS ENDED JULY 31, 1995 AND 1996
(INFORMATION AS IT RELATES TO THE SIX MONTHS ENDED JULY 31, 1995 IS UNAUDITED)

rate of 20% on each of the first five anniversaries of the date of grant,
assuming the non-employee director is a director on those dates, and all such
options generally will cease to be exercisable ten years from the date of
grant. Upon a Change of Control (as defined in the Incentive Plan), all
options (which have not yet expired) will automatically become exercisable.

In addition, options to purchase an aggregate of 181,000 shares of Common
Stock will be granted to fifteen employees of the Company at the time of the
Offering. These options granted to employees will become exercisable over a
period of one to five years after the date of the Offering. The exercise price
per share of the options that become exercisable one year after the date of
the Offering is equal to the initial public offering price. The exercise price
per share of the options that become exercisable between two and five years
after the date of the Offering is equal to the fair market value one year
prior to the date each option becomes exercisable.

The maximum number of shares of common stock that may be issued pursuant to
the Incentive Plan will be 1,250,000, of which no shares will have been issued
or used for reference purposes prior to the Offering. The maximum number of
shares of common stock subject to each of stock options or stock appreciation
rights that may be granted to any individual under the Incentive Plan will be
100,000 for each fiscal year of the Company during the term of the Incentive
Plan. If a stock appreciation right is granted in tandem with a stock option,
it shall apply against the individual limits for both stock options and stock
appreciation rights, but only once against the maximum number of shares
available under the Incentive Plan.

E. FAMILY STOCKHOLDERS' AGREEMENT

Concurrent with the Reorganization, certain stockholders (the "Family
Holders") and a stockholder/executive of the Company (the "Executive") entered
into a stockholders agreement with the Company (the "Family Stockholders
Agreement") which, subject to certain exceptions, prohibits the Family Holders
from transferring the shares of Common Stock they will own upon completion of
the Reorganization for a period of two years from the date of the
Reorganization. Thereafter, the Family Holders will be able to transfer such
shares in accordance with the requirements of Rule 144 under the Securities
Act. The Family Stockholders Agreement also permits each of the Family Holders
to cause the Company to register shares of Common Stock concurrently with
offerings of Common Stock by the Executive. The Company will generally be
required to bear the expenses of all such registrations, except underwriting
discounts and commissions. In addition, the Family Stockholders Agreement
gives the Executive the right to vote all of the shares of Common Stock owned
by the Family Holders on all matters that come before the stockholders of the
Company. The Family Holders collectively, will own 33.5 percent of the
outstanding Common Stock upon completion of the Offering. The Family
Stockholders Agreement will expire on the tenth anniversary of the completion
of the Reorganization.

F-17
<PAGE>

[PHOTOGRAPHS AND ART FROM DELIA*S CATALOGS.]
<PAGE>

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

NO DEALER, SALESPERSON OR OTHER
PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RE-
LIED UPON AS HAVING BEEN AUTHO-
RIZED BY THE COMPANY, ANY SELLING
STOCKHOLDER OR THE UNDERWRITERS.
THIS PROSPECTUS DOES NOT CONSTI-
TUTE AN OFFER TO SELL OR A SOLICI-
TATION OF AN OFFER TO BUY TO ANY
PERSON IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION
WOULD BE UNLAWFUL OR TO ANY PERSON
TO WHOM IT IS UNLAWFUL. NEITHER
THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF
THE COMPANY OR THAT THE INFORMA-
TION CONTAINED HEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO THE
DATE HEREOF.

-----------

TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................................................... 3
Risk Factors.......................................................... 5
Use of Proceeds....................................................... 11
Dividend Policy....................................................... 11
The Reorganization.................................................... 11
Capitalization........................................................ 12
Dilution.............................................................. 13
Selected Financial Data............................................... 14
Management's Discussion and Analysis of Financial Condition and
Results of Operations................................................ 15
Business.............................................................. 21
Management............................................................ 28
Certain Transactions.................................................. 34
Principal and Selling Stockholders.................................... 35
Description of Capital Stock.......................................... 37
Shares Eligible for Future Sale....................................... 40
Underwriting.......................................................... 41
Legal Matters......................................................... 42
Experts............................................................... 42
Additional Information................................................ 43
Index to Financial Statements......................................... F-1
</TABLE>

-----------

UNTIL , 1997 (25 DAYS AF-
TER THE DATE OF THIS PROSPECTUS),
ALL DEALERS EFFECTING TRANSACTIONS
IN THE COMMON STOCK, WHETHER OR
NOT PARTICIPATING IN THIS DISTRI-
BUTION, MAY BE REQUIRED TO DELIVER
A PROSPECTUS. THIS IS IN ADDITION
TO THE OBLIGATION OF DEALERS TO
DELIVER A PROSPECTUS WHENACTING AS
UNDERWRITERS AND WITH RESPECT TO
THEIRUNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

2,350,000 SHARES

[LOGO OF DELIA*S INC.]

COMMON STOCK

---------------
PROSPECTUS
---------------

HAMBRECHT & QUIST

OPPENHEIMER & CO., INC.

, 1996

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the estimated expenses and costs (other than
underwriting discounts and commissions) expected to be incurred by the Company
in connection with the issuance and distribution of the securities being
registered under this registration statement. Except for the SEC, NASD and
Nasdaq fees, all expenses have been estimated and are subject to future
contingencies.

<TABLE>
<S> <C>
SEC registration fee............................................. $ 9,787
NASD fee......................................................... 3,743
Nasdaq Entry Fee................................................. 47,500
Legal fees and expenses.......................................... 200,000
Printing and engraving expenses.................................. 120,000
Accounting fees and expenses..................................... 200,000
Blue sky fees and expenses....................................... 5,000
Transfer agent and registrar fees and expenses................... 10,000
Miscellaneous.................................................... 3,970
--------
Total........................................................ $600,000
========
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Company's bylaws provide that the Company shall indemnify each person
who was or is a party or is threatened to be made a party to or is involved in
any action, suit or proceeding, whether civil, criminal, administrative or
investigative (a "proceeding"), by reason of the fact that he, or a person of
whom he is the legal representative, is or was a director or officer of the
Company or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation or of a partnership, joint
venture, trust or other enterprise, including service with respect to employee
benefit plans, whether the basis of such proceeding is alleged action or
inaction in an official capacity or in any other capacity while serving as
director, officer, employee or agent, to the fullest extent permitted by the
General Corporation Law of the State of Delaware, as amended from time to
time, against all costs, charges, expenses, liabilities and losses (including
attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts
paid or to be paid in settlement) reasonably incurred or suffered by such
person in connection therewith, and that indemnification shall continue as to
a person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of his heirs, executors and administrators; provided,
however, that, subject to certain exceptions, the corporation shall indemnify
any such person seeking indemnification in connection with a proceeding (or
part thereof) initiated by that person, only if that proceeding (or part
thereof) was authorized by the board of directors. The right to
indemnification conferred in the bylaws is a contract right and includes the
right to be paid by the Company the expenses incurred in defending any such
proceeding in advance of its final disposition; provided, however, that, if
the General Corporation Law of the State of Delaware, as amended from time to
time, requires, the payment of such expenses incurred by a director or officer
in his capacity as a director or officer (and not in any other capacity in
which service was or is rendered by that person while a director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of a proceeding shall be made only upon delivery to
the Company of an undertaking, by or on behalf of such director or officer, to
repay all amounts so advanced, if it shall ultimately be determined that such
director or officer is not entitled to be indemnified under these bylaws or
otherwise.

In addition, Article NINTH of the Company's certificate of incorporation
provides that no director shall be personally liable for any breach of
fiduciary duty. Article NINTH does not eliminate a director's liability (i)

II-1
<PAGE>

for a breach of his or her duty of loyalty to the Company or its stockholders,
(ii) for acts of intentional misconduct, (iii) under Section 174 of the
General Corporation Law of the State of Delaware for unlawful declarations of
dividends or unlawful stock purchases or redemptions, or (iv) for any
transactions from which the director derived an improper personal benefit.

Section 145 of the General Corporation Law of the State of Delaware permits
a corporation to indemnify its directors and officers against expenses
(including attorney's fees), judgments, fines and amounts paid in settlements
actually and reasonably incurred by them in connection with any action, suit
or proceeding brought by third parties, if such directors or officers acted in
good faith and in a manner they reasonably believed to be in or not opposed to
the best interests of the corporation and, with respect to any criminal action
or proceeding, had no reason to believe their conduct was unlawful. In a
derivative action, i.e., one by or in the right of the corporation,
indemnification may be made only for expenses actually and reasonably incurred
by directors and officers in connection with the defense or settlement of an
action or suit, and only with respect to a matter as to which they shall have
acted in good faith and in a manner they reasonably believed to be in or not
opposed to the best interest of the corporation, except that no
indemnification shall be made if such person shall have been adjudged liable
to the corporation, unless and only to the extent that the court in which the
action or suit was brought shall determine upon application that the defendant
officers or directors are reasonably entitled to indemnity for such expenses
despite such adjudication of liability.

Section 102(b)(7) of the General Corporation Law of the State of Delaware
provides that a corporation may eliminate or limit the personal liability of a
director to the corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, provided that such provision shall not
eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or
a knowing violation of law, (iii) under Section 174 of the General Corporation
Law of the State of Delaware, or (iv) for any transaction from which the
director derived an improper personal benefit. No such provision shall
eliminate or limit the liability of a director for any act or omission
occurring prior to the date when such provision becomes effective.

The Underwriting Agreement provides for indemnification of directors and
officers of the Company by the Underwriters against certain liabilities.

The Company has agreed to indemnify the Selling Stockholders against certain
liabilities caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
and, if such indemnification is unavailable in respect of any such
liabilities, to contribute to the amount paid or payable by the Selling
Stockholders as a result of such liabilities.

Pursuant to Section 145 of the General Corporation Law of the State of
Delaware, the Company maintains directors' and officers' liability insurance
coverage.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

dELiA*s LLC subscribed for 10,000,000 shares of Common Stock prior to the
effectiveness of this Registration Statement. The issuance of such shares was
exempt from registration pursuant to Section 4(2) of the Securities Act.

Since their respective inceptions, dELiA*s Ltd. and dELiA*s LLC, the
predecessors of the Registrant, have issued the following unregistered
securities:

1. On September 23, 1993, November 23, 1993, December 30, 1993, July 18,
1994, August 29, 1994 and October 18, 1994, dELiA*s Ltd. issued common stock
equivalent to 5,644,960 shares of Common Stock to Stephen I. Kahn for a total
of $400,000 of cash.

II-2
<PAGE>

2. On December 5, 1994 and January 10, 1995, dELiA*s Ltd. issued common
stock equivalent to 459,732 shares of Common Stock to The Trust f/b/o Ruth
Kahn u/w/o Herman Kahn for $200,000 of cash.

3. On January 17, 1995, dELiA*s Ltd. issued common stock equivalent to
586,305 shares of Common Stock to Robert Karetsky for $100,000 of cash.

4. On January 17, 1995 and January 31, 1995, dELiA*s Ltd. issued common
stock equivalent to 1,505,998 shares of Common Stock to Geraldine Karetsky for
$500,000 of cash.

5. On March 8, 1995, dELiA*s LLC issued a membership interest equivalent to
769,204 shares of Common Stock to Christopher C. Edgar for no consideration.

6. On May 23, 1995, dELiA*s LLC issued a membership interest equivalent to
114,958 shares of Common Stock to Andrew K. Block for $50,000 of cash.

7. On June 7, 1995, dELiA*s LLC issued a membership interest equivalent to
114,958 shares of Common Stock to Bear Partners for $50,000 of cash.

8. On February 1, 1996, dELiA*s LLC issued membership interests equivalent
to an aggregate of 605,705 shares of Common Stock to a group of employees
pursuant to the dELiA*s LLC Restricted Interest Plan and individual Restricted
Interest Agreements dated February 1, 1996. The employees were Christopher C.
Edgar (60,705 shares), Elizabeth Higgins (173,409 shares), Karen Polikoff
(49,545 shares), Kent Trowbridge (198,182 shares), Karen Christensen (99,091
shares) and Seth Walter (24,773 shares). The employees did not make any
payment for their interests.

9. On February 1, 1996, dELiA*s LLC issued a membership interest equivalent
to 99,091 shares of Common Stock to Evan Guillemin in consideration for a non-
interest-bearing loan in the amount of $50,000.

10. On June 1, 1996, dELiA*s LLC issued membership interests equivalent to
an aggregate of 94,135 shares of Common Stock to a group of employees pursuant
to the dELiA*s LLC Restricted Interest Plan and individual Restricted Interest
Agreements dated June 1, 1996. The employees were Camille Korschun (19,818
shares), Jill Burdick (9,909 shares), Sam Wilk (14,864 shares), Irma Flores
(12,386 shares), Tsy-King Lam (12,386 shares) and Seth Walter (24,772 shares).
The employees did not make any payment for their interests.

11. On August 1, 1996, dELiA*s LLC issued a membership interest equivalent
to 4,954 shares of Common Stock to Ilka Eberly pursuant to the dELiA*s LLC
Restricted Interest Plan and a Restricted Interest Agreement dated August 1,
1996. Ms. Eberly, an employee, did not make any payment for her interest.

Each of the issuances of securities in the transactions described in
paragraphs 1 through 11 above were either exempt from registration pursuant to
Section 4(2) of the Securities Act or did not constitute a "sale" within the
meaning of the Securities Act.

ITEM 16. EXHIBITS

<TABLE>
<C> <S>
1.1* Form of Underwriting Agreement
2.1 Bill of Sale and Contribution and Assumption Agreement between dELiA*s
LLC and the Company
3.1* Certificate of incorporation of the Company
3.2 Bylaws of the Company
5 Opinion of Proskauer
Rose Goetz & Mendelsohn LLP re: validity of securities
10.1* Form of Employment Agreement between the Company and Stephen I. Kahn
10.2* Employment Agreement between the Company and Christopher C. Edgar
10.3* Employment Agreement between the Company and Evan Guillemin
</TABLE>

II-3
<PAGE>

<TABLE>
<C> <S>
10.4* Form of Family Stockholders Agreement among the Company, Stephen I. Kahn
and the persons listed on exhibit A thereto
10.5 1996 Stock Incentive Plan
10.6 Restricted Stock Plan
10.7* Stock Option Agreement between the Company and Evan Guillemin
10.8* Agreement dated April 11, 1996 between the Company and The Jay Group,
Inc.
10.9* Lease Agreement dated May 3, 1995 between the Company and The Rector,
Church-Wardens and Vestrymen of Trinity Church in the City of New-York
(the "Lease Agreement"); Modification and Extension of Lease Agreement
dated September 26, 1996
10.10 Form of Restricted Stock Agreements between the Company and holders of
Common Stock subject to the Restricted Stock Plan
16* Letter from Richard A. Eisner & Company, LLP respecting change in
certifying accountant
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Richard A. Eisner & Company, LLP
23.3 Consent of Proskauer Rose Goetz & Mendelsohn LLP (contained in opinion
to be filed as Exhibit 5)
24.3* Power of Attorney of each director other than Joseph J. Pinto
24.4* Power of Attorney of Joseph J. Pinto
27.1 Financial Data Schedule
</TABLE>
- --------

* Previously filed

ITEM 17. UNDERTAKINGS

The Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

The Registrant hereby undertakes to provide to the Underwriters at the
closing specified in the Underwriting Agreement (a form of which is filed
herewith as Exhibit 1.1) certificates in such denominations and registered in
such names as required by the Underwriters to permit prompt delivery to each
purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described in Item 14, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.

II-4
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE UNDERSIGNED
REGISTRANT CERTIFIES THAT IT HAS DULY CAUSED THIS AMENDMENT NO. 3 TO THE
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN THE CITY OF NEW YORK, STATE OF NEW YORK, ON THE
18TH DAY OF DECEMBER, 1996.

dELiA*s Inc.

/s/ Stephen I. Kahn
By: _________________________________
STEPHEN I. KAHN CHAIRMAN OF THE
BOARD AND CHIEF EXECUTIVE OFFICER

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 3 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES AND ON THE DATES INDICATED.

SIGNATURE TITLE DATE

/s/ Stephen I. Kahn Chairman of the
- ------------------------------------- Board, Chief December 18,
STEPHEN I. KAHN Executive Officer 1996
and Director
(principal
executive officer)

/s/ Evan Guillemin Chief Financial
- ------------------------------------- Officer, Secretary, December 18,
EVAN GUILLEMIN Treasurer and 1996
Director (principal
financial and
accounting officer)

* Executive Vice
- ------------------------------------- President, Chief December 18,
CHRISTOPHER C. EDGAR Operating Officer 1996
and Director

* Director
- ------------------------------------- December 18,
S. ROGER HORCHOW 1996

* Director
- ------------------------------------- December 18,
SIDNEY S. KAHN 1996

* Director
- ------------------------------------- December 18,
GERALDINE KARETSKY 1996

* Director
- ------------------------------------- December 18,
JOSEPH J. PINTO 1996

/s/ Evan Guillemin
*By: ________________________________
EVAN GUILLEMIN, Attorney-in-fact

II-5
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
1.1* Form of Underwriting Agreement
2.1 Form of Bill of Sale and Contribution and Assumption Agreement between
dELiA*s LLC and the Company
3.1* Certificate of incorporation of the Company
3.2 Bylaws of the Company
5 Opinion of Proskauer Rose Goetz & Mendelsohn LLP re: validity of
securities
10.1* Form of Employment Agreement between the Company and Stephen I. Kahn
10.2* Employment Agreement between the Company and Christopher C. Edgar
10.3* Employment Agreement between the Company and Evan Guillemin
10.4* Form of Family Stockholders Agreement among the Company, Stephen I.
Kahn and the persons listed on exhibit A thereto
10.5 1996 Stock Incentive Plan
10.6 Restricted Stock Plan
10.7* Stock Option Agreement between the Company and Evan Guillemin
10.8* Agreement dated April 11, 1996 between the Company and The Jay Group,
Inc.
10.9* Lease Agreement dated May 3, 1995 between the Company and The Rector,
Church-Wardens and Vestrymen of Trinity Church in the City of New-York
(the "Lease Agreement"); Modification and Extension of Lease Agreement
dated September 26, 1996
10.10 Form of Restricted Stock Agreements between the Company and holders of
Common Stock subject to the Restricted Stock Plan
16* Letter from Richard A. Eisner & Company, LLP respecting change in
certifying accountant
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Richard A. Eisner & Company, LLP
23.3 Consent of Proskauer Rose Goetz & Mendelsohn LLP (contained in opinion
to be filed as Exhibit 5)
24.3* Power of Attorney of each director other than Joseph J. Pinto
24.4* Power of Attorney of Joseph J. Pinto
27.1 Financial Data Schedule
</TABLE>
- --------

* Previously filed

<PAGE>

EXHIBIT 2.1

BILL OF SALE AND CONTRIBUTION AND ASSUMPTION AGREEMENT

Dated December 18, 1996
-----------------------

The parties to this bill of sale and contribution and assumption
agreement (this "Agreement") are DELIA'S LLC, a New York limited liability
company (the "Transferor"), and dELiA*s INC., a Delaware corporation (the
"Transferee").

The Transferee wishes to acquire, and the Transferor wishes to
transfer, convey, assign, and contributes to the Transferee, all the assets,
properties, interests in properties and rights of the Transferor (other than the
Excluded Assets (as defined in Section 2)) in exchange for shares of 10,000,000
common stock of Transferee, and the Transferee wishes to assume all the
liabilities and obligations of the Transferor (other than the liabilities and
obligations specified in clauses (i) and (ii) of the proviso in Section 3).

Accordingly, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

SECTION 1. Transferor hereby transfers, assigns, conveys, and
contributes to the Transferee all the assets, properties, interests and rights
of the Transferor, of every kind and description, wherever located, other than
the Excluded Assets.

SECTION 2. Excluded from the assets, properties, interests in
properties and rights of the Transferor to be transferred, conveyed, assigned
and contributed pursuant to Section 1, are the following ("Excluded Assets"):

(a) the rights of the Transferor pursuant to this Agreement;

(b) $4,000,000 in cash;

(c) all refunds, credits and other rights of the Transferor in
respect of taxes on the Transferor's income attributable to the assets
transferred pursuant to this Agreement for any period ending on or before
the date hereof; and

(d) assets set forth on exhibit A.

<PAGE>

SECTION 3. The Transferee assumes, and agrees to pay, perform and
discharge, indemnify and hold the Transferor harmless from and against all
liabilities and obligations of the Transferor, whether actual or contingent,
known or unknown, arising out of any facts, events or circumstances on or before
the date of this Agreement; provided, however, that the liabilities and
-------- -------
obligations assumed do not include (i) any obligations or liabilities pursuant
to or arising under the Transferor's amended and restated operating agreement or
(ii) any liabilities or obligations arising from taxes on the Transferor's
income.

SECTION 4. Transferor hereby subscribes for 10,000,000 shares of
Common Stock (par value $.01 per share) of Transferee (the "Shares"). The
Corporation accepts the subscription and shall issue the Shares on the date
hereof.

SECTION 5. The parties will use all reasonable efforts to carry out
the purposes of this Agreement.

SECTION 6. No amendment to this Agreement shall be binding on either
party unless such amendment is in writing and executed by both parties.

SECTION 7. This Agreement shall be governed by the law of the state
of New York without regard to the conflict of laws rules of such state.

* * *

TRANSFEREE:
-----------

DELIA*S INC.

By:/s/Stephen I. Kahn
Name: Stephen I. Kahn
Title: President

TRANSFEROR:
-----------

DELIA'S LLC

By:/s/Stephen I. Kahn
Name: Stephen I. Kahn
Title: President

2
<PAGE>

EXHIBIT A

Transferor's company seals, minute books, membership interest books, articles of
organization, operating agreements, qualification to conduct business as a
foreign limited liability company, arrangements with registered agents relating
to foreign qualifications, taxpayer and other identification numbers, income tax
returns and such other books and records as pertain to the organization,
existence and equity capitalization of the Transferor (it being understood that
all of Transferor's other books and records are being transferred to the
Transferee).

<PAGE>

EXHIBIT 3.2

BYLAWS

dELiA*s Inc.

1. MEETINGS OF STOCKHOLDERS.
------------------------

1.1 Annual Meeting. The annual meeting of stock-holders shall be
--------------
held on the first Wednesday of May in each year, or as soon thereafter as
practicable, and shall be held at a place and time determined by the board of
directors.

1.2 Special Meetings. Special meetings of stockholders may be called
----------------
by resolution of the board of directors or the president and shall be called by
the president or secretary upon the written request (stating the purpose or
purposes of the meeting) of a majority of the directors then in office or of the
holders of a majority of the outstanding shares entitled to vote. Only business
related to the purposes set forth in the notice of the meeting may be transacted
at a special meeting.

1.3 Place and Time of Meetings. Meetings of the stockholders may be
--------------------------
held in or outside Delaware at the place and time specified by the board of
directors or the officers or stockholders requesting the meeting.

1.4 Notice of Meetings; Waiver of Notice. Written notice of each
--- ------------------------------------
meeting of stockholders shall be given to each
<PAGE>

stockholder entitled to vote at the meeting, except that (a) it shall not be
necessary to give notice to any stockholder who submits a signed waiver of
notice before or after the meeting, and (b) no notice of an adjourned meeting
need be given, except when required under section 1.5 below or by law. Each
notice of a meeting shall be given, personally or by mail, not fewer than 10 or
more than 60 days before the meeting and shall state the time and place of the
meeting, and, unless it is the annual meeting, shall state at whose direction or
request the meeting is called and the purposes for which it is called. If
mailed, notice shall be considered given when mailed to a stockholder at his
address on the Corporation's records. The attendance of any stockholder at a
meeting, without protesting at the beginning of the meeting that the meeting is
not lawfully called or convened, shall constitute a waiver of notice by him.

1.5 Quorum. At any meeting of stockholders, the presence in person
------
or by proxy of the holders of a majority of the shares entitled to vote shall
constitute a quorum for the transaction of any business. In the absence of a
quorum, a majority in voting interest of those present or, if no stockholders
are present, any officer entitled to preside at or to act as secretary of the
meeting, may adjourn the meeting until a quorum is present. At any adjourned
meeting at which a quorum is present, any action may be taken that might have
been taken at the meeting as originally called. No notice of an adjourned
meeting need be given, if the time and place are announced at the

- 2 -
<PAGE>

meeting at which the adjournment is taken, except that, if adjournment is for
more than 30 days or if, after the adjournment, a new record date is fixed for
the meeting, notice of the adjourned meeting shall be given pursuant to section
1.4.

1.6 Voting; Proxies. Each stockholder of record shall be entitled to
---------------
one vote for each share registered in his name. Corporate action to be taken by
stockholder vote, other than the election of directors, shall be authorized by a
majority of the votes cast at a meeting of stockholders, except as otherwise
provided by law or by section 1.8. Voting need not be by ballot, unless
requested by a majority of the stockholders entitled to vote at the meeting or
ordered by the chairman of the meeting. Each stockholder entitled to vote at
any meeting of stockholders or to express consent to or dissent from corporate
action in writing without a meeting may authorize another person to act for him
by proxy. No proxy shall be valid after three years from its date, unless it
provides otherwise.

1.7 List of Stockholders. Not fewer than 10 days prior to the date
--------------------
of any meeting of stockholders, the secretary of the Corporation shall prepare a
complete list of stockholders entitled to vote at the meeting, arranged in
alphabetical order and showing the address of each stockholder and the number of
shares registered in his name. For a period of not fewer than 10 days prior to
the meeting, the list shall be available during ordinary business hours for
inspection by any stockholder for any purpose germane to the meeting. During
this period, the list

- 3 -
<PAGE>

shall be kept either (a) at a place within the city where the meeting is to be
held, if that place shall have been specified in the notice of the meeting, or
(b) if not so specified, at the place where the meeting is to be held. The list
shall also be available for inspection by stockholders at the time and place of
the meeting.

1.8 Action by Consent Without a Meeting. Any action required or
-----------------------------------
permitted to be taken at any meeting of stockholders may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
stock having not fewer than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voting. Prompt notice of the taking of any such
action shall be given to those stockholders who did not consent in writing.

2. BOARD OF DIRECTORS.
------------------

2.1 Number, Qualification, Classification, Election and Term of
-----------------------------------------------------------
Directors. The business and affairs of the Corporation shall be managed by its
- ---------
board of directors. The number of directors constituting the board of directors
shall be determined from time to time by resolution of the board. Directors
need not be stockholders of the Corporation. One class of directors shall be
elected at each annual meeting of stockholders by a plurality of the votes cast.
The nomination,

- 4 -
<PAGE>

classification and term of directors shall be governed by the Corporation's
certificate of incorporation.

2.2 Quorum and Manner of Acting. A majority of the total number of
---------------------------
directors shall constitute a quorum for the transaction of business at any
meeting, except as provided in section 2.10. Action of the board of directors
shall be authorized by the vote of the majority of the directors present at the
time of the vote, if there is a quorum, unless otherwise provided by law or
these bylaws. In the absence of a quorum, a majority of the directors present
may adjourn any meeting from time to time until a quorum is present.

2.3 Place of Meetings. Meetings of the board of directors may be
-----------------
held in or outside Delaware.

2.4 Annual and Regular Meetings. Annual meetings of the board of
---------------------------
directors, for the election of officers and consideration of other matters,
shall be held either (a) without notice immediately after the annual meeting of
stockholders and at the same place, or (b) as soon as practicable after the
annual meeting of stockholders, on notice as provided in section 2.6. Regular
meetings of the board of directors may be held without notice at such times and
places as the board determines. If the day fixed for a regular meeting is a
legal holiday, the meeting shall be held on the next business day.

- 5 -
<PAGE>

2.5 Special Meetings. Special meetings of the board of directors
----------------
may be called by the chairman of the board or by a majority of the directors.

2.6 Notice of Meetings; Waiver of Notice. Notice of the time and
------------------------------------
place of each special meeting of the board of directors, and of each annual
meeting not held immediately after the annual meeting of stockholders and at the
same place, shall be given to each director by mailing it to him at his
residence or usual place of business at least three days before the meeting, or
by delivering or telephoning or telegraphing it to him at least two days before
the meeting. Notice of a special meeting also shall state the purpose or
purposes for which the meeting is called. Notice need not be given to any
director who submits a signed waiver of notice before or after the meeting or
who attends the meeting without protesting at the beginning of the meeting the
transaction of any business because the meeting was not lawfully called or
convened. Notice of any adjourned meeting need not be given, other than by
announcement at the meeting at which the adjournment is taken.

2.7 Board or Committee Action Without a Meeting. Any action
-------------------------------------------
required or permitted to be taken by the board of directors or by any committee
of the board may be taken without a meeting, if all the members of the board or
the committee consent in writing to the adoption of a resolution authorizing the
action. The resolution and the written consents by the members

- 6 -
<PAGE>

of the board of directors or the committee shall be filed with the minutes of
the proceedings of the board or the committee.

2.8 Participation in Board or Committee Meetings by Conference
----------------------------------------------------------
Telephone. Any or all members of the board of directors or any committee of the
- ---------
board may participate in a meeting of the board of directors or the committee by
means of a conference telephone or similar communications equipment allowing all
persons participating in the meeting to hear each other at the same time.
Participation by such means shall constitute presence in person at the meeting.

2.9 Resignation and Removal of Directors. Any director may resign
------------------------------------
at any time by delivering his resignation in writing to the president or
secretary of the Corporation, to take effect at the time specified in the
resignation, and if no time be specified, at the time of its receipt by the
president or secretary; the acceptance of a resignation, unless required by its
terms, shall not be necessary to make it effective. Any or all of the directors
may be removed at any time, either with or without cause, by vote of the
stockholders.

2.10 Vacancies. Any vacancy in the board of directors, including one
---------
created by an increase in the number of directors, may be filled for the
unexpired term by a majority vote of the remaining directors, though less than a
quorum.

2.11 Compensation. Directors shall receive such compensation as the
------------
board determines, together with reimbursement

- 7 -
<PAGE>

of their reasonable expenses in connection with the performance of their duties.
A director also may be paid for serving the Corporation in other capacities.

3. COMMITTEES.
----------

3.1 Executive Committee. The board of directors, by resolution
-------------------
adopted by a majority of the board, may designate an executive committee of one
or more directors, which shall have all the powers and authority of the board,
except as otherwise provided in the resolution, section 141(c) of the General
Corporation Law of the State of Delaware or any other applicable law. The
members of the executive committee shall serve at the pleasure of the board.
All action of the executive committee shall be reported to the board of
directors at its next meeting.

3.2 Other Committees. The board of directors, by resolution adopted
----------------
by a majority of the board, may designate other committees of one or more
directors, which shall serve at the pleasure of the board and have such powers
and duties as the board determines.

3.3 Rules Applicable to Committees. The board of directors may
------------------------------
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. In
case of the absence or disqualification of any member of a committee, the member
or members present at a meeting of the committee and not disqualified, whether
or not a quorum, may unanimously appoint

- 8 -
<PAGE>

another director to act at the meeting in place of the absent or disqualified
member. All action of a committee shall be reported to the board at its next
meeting. Each committee shall adopt rules of procedure and shall meet as
provided by those rules or by resolutions of the board of directors.

4. OFFICERS.
--------

4.1 Number; Security. The executive officers of the Corporation
----------------
shall be the president, one or more vice presidents (including an executive vice
president, if the board so determines), a secretary and a treasurer and such
other officers, including a chairman of the board, as the board of directors may
from time to time deem necessary. Any two or more offices may be held by the
same person. The board may require any officer, agent or employee to give
security for the faithful performance of his duties.

4.2 Election; Term of Office. The executive officers of the
------------------------
Corporation shall be elected annually by the board of directors, and each such
officer shall hold office until the next annual meeting of the board and until
the election of his successor, subject to the provisions of section 4.4.

4.3 Subordinate Officers. The board of directors may appoint
--------------------
subordinate officers (including assistant secretaries and assistant treasurers),
agents or employees, each of whom shall hold office for such period and have
such powers and duties as the board determines. The board of directors may
delegate to any

- 9 -
<PAGE>

executive officer or committee the power to appoint and define the powers and
duties of any subordinate officers, agents or employees.

4.4 Resignation and Removal of Officers. Any officer may resign at
-----------------------------------
any time by delivering his resignation in writing to the president or secretary
of the Corporation, to take effect at the time specified in the resignation, and
if no time be specified, at the time of its receipt by the president or
secretary; the acceptance of a resignation, unless required by its terms, shall
not be necessary to make it effective. Any officer elected or appointed by the
board of directors or appointed by an executive officer or by a committee may be
removed by the board either with or without cause, and in the case of an officer
appointed by an executive officer or by a committee, by the officer or committee
that appointed him or by the president.

4.5 Vacancies. A vacancy in any office may be filled for the
---------
unexpired term in the manner prescribed in sections 4.2 and 4.3 for election or
appointment to the office.

4.6 The Chairman of the Board. The chairman of the board, if one be
-------------------------
elected, shall preside at all meetings of the board of directors when present,
and preside as chairman at all meetings of stockholders. The chairman of the
board shall, in the absence or incapacity of the president, perform all duties
and functions and exercise all the powers of the president. The

- 10 -
<PAGE>

chairman of the board shall also have such other powers and perform such other
duties required by law or by these bylaws or as the board of directors may from
time to time determine.

4.7 The President. The president shall have general direction over
-------------
the day-to-day business of the Corporation, subject to the control and direction
of the board of directors. In the absence of the chairman of the board, the
president shall preside at all meetings of the board of directors and of
stockholders. The president shall, in the absence or incapacity of the chairman
of the board, perform all duties and functions and exercise all the powers of
the chairman of the board. The president shall also have such other powers and
perform such other duties required by law or by these bylaws or as the board of
directors may from time to time determine.

4.8 Vice President. Each vice president shall have such powers and
--------------
duties as the board of directors, the chairman of the board or the president
assigns to him.

4.9 The Treasurer. The treasurer shall be the chief financial
-------------
officer of the Corporation and shall be in charge of the Corporation's books and
accounts. Subject to the control of the board of directors, he shall have such
other powers and duties as the board of directors, the chairman of the board or
the president assigns to him.

4.10 The Secretary. The secretary shall be the secretary of, and
-------------
keep the minutes of, all meetings of the board

- 11 -
<PAGE>

of directors and stockholders, shall be responsible for giving notice of all
meetings of stockholders and the board of directors, and shall keep the seal
and, when authorized by the board, apply it to any instrument requiring it.
Subject to the control of the board of directors, he shall have such powers and
duties as the board of directors, the chairman of the board or the president
assigns to him. In the absence of the secretary from any meeting, the minutes
shall be kept by the person appointed for that purpose by the presiding officer.

4.11 Designated Officers. Either the chairman of the board or the
-------------------
president, or both, as the board of directors may designate, shall be the chief
executive officer of the Corporation. The officer so designated shall have
general and active supervision and direction over the business and affairs of
the Corporation and over its several officers, agents and employees, subject,
however, to the control and direction of the board of directors. The chief
executive officer shall also have such other powers and duties incident to the
designated position of chief executive officer as the board of directors may
from time to time by resolution determine. The board of directors may from time
to time designate officers to serve as chief financial officer, chief accounting
officer and other such designated positions and to fulfill the responsibilities
of such designated positions. Such designated officers shall also have such
other powers and duties incident to his designated position as the board of
directors may from time to time by resolution determine.

- 12 -
<PAGE>

4.12 Salaries. The board of directors may fix the officers'
--------
salaries, if any, or it may authorize the president to fix the salary of any
other officer.

5. SHARES.
------

5.1 Certificates. The Corporation's shares shall be represented by
------------
certificates in the form approved by the board of directors. Each certificate
shall be signed by the chairman of the board, the president or a vice president,
and by the secretary or an assistant secretary or the treasurer or an assistant
treasurer, and shall be sealed with the Corporation's seal or a facsimile of the
seal. Any or all of the signatures on the certificate may be a facsimile.

5.2 Transfers. Shares shall be transferable only on the
---------
Corporation's books, upon surrender of the certificate for the shares, properly
endorsed. The board of directors may require satisfactory surety before issuing
a new certificate to replace a certificate claimed to have been lost or
destroyed.

5.3 Determination of Stockholders of Record. The board of directors
---------------------------------------
may fix, in advance, a date as the record date for the determination of
stockholders entitled to notice of or to vote at any meeting of the
stockholders, or to express consent to or dissent from any proposal without a
meeting, or to receive payment of any dividend or the allotment of any rights,
or for the purpose of any other action. The record date may not be more

- 13 -
<PAGE>

than 60 or fewer than 10 days before the date of the meeting or more than 60
days before any other action.

6. INDEMNIFICATION AND INSURANCE.
-----------------------------

6.1 Right to Indemnification. Each person who was or is a party or
------------------------
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
"proceeding"), by reason of the fact that he, or a person of whom he is the
legal representative, is or was a director or officer of the Corporation or is
or was serving at the request of the Corporation as a director, officer,
employee or agent of another Corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to employee benefit
plans, whether the basis of such proceeding is alleged action or inaction in an
official capacity or in any other capacity while serving as director, officer,
employee or agent, shall be indemnified and held harmless by the Corporation to
the fullest extent permitted by the General Corporation Law of Delaware, as
amended from time to time, against all costs, charges, expenses, liabilities and
losses (including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement) reasonably incurred or
suffered by such person in connection therewith, and that indemnification shall
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of his heirs, executors and administrators;
provided, however, that, except as

- 14 -
<PAGE>

provided in section 6.2, the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
that person, only if that proceeding (or part thereof) was authorized by the
board of directors. The right to indemnification conferred in these by-laws
shall be a contract right and shall include the right to be paid by the
Corporation the expenses incurred in defending any such proceeding in advance of
its final disposition; provided, however, that, if the General Corporation Law
of Delaware, as amended from time to time, requires, the payment of such
expenses incurred by a director or officer in his capacity as a director or
officer (and not in any other capacity in which service was or is rendered by
that person while a director or officer, including, without limitation, service
to an employee benefit plan) in advance of the final disposition of a proceeding
shall be made only upon delivery to the Corporation of an undertaking, by or on
behalf of such director or officer, to repay all amounts so advanced, if it
shall ultimately be determined that such director or officer is not entitled to
be indemnified under these by-laws or otherwise. The Corporation may, by action
of its board of directors, provide indemnification to employees and agents of
the Corporation with the same scope and effect as the foregoing indemnification
of directors and officers.

6.2 Right of Claimant to Bring Suit. If a claim under section 6.1 is
-------------------------------
not paid in full by the Corporation within 30 days after a written claim has
been received by the Corporation, the

- 15 -
<PAGE>

claimant may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim and, if successful in whole or in part,
the claimant also shall be entitled to be paid the expense of prosecuting that
claim. It shall be a defense to any such action (other than an action brought to
enforce a claim for expenses incurred in defending any proceeding in advance of
its final disposition, where the required undertaking, if any, is required and
has been tendered to the Corporation) that the claimant has failed to meet a
standard of conduct that makes it permissible under Delaware law for the
Corporation to indemnify the claimant for the amount claimed. Neither the
failure of the Corporation (including its board of directors, its independent
legal counsel or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is permissible
in the circumstances because he has met that standard of conduct, nor an actual
determination by the Corporation (including its board of directors, its
independent counsel or its stockholders) that the claimant has not met that
standard of conduct, shall be a defense to the action or create a presumption
that the claimant has failed to meet that standard of conduct.

6.3 Non-Exclusivity of Rights. The right to indemnification and the
-------------------------
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this section 6 shall not be exclusive of any other
right any

- 16 -
<PAGE>

person may have or hereafter acquire under any statute, provision of the
certificate of incorporation, by-law, agreement, vote of stockholders or
disinterested directors or otherwise.

6.4 Insurance. The Corporation may maintain insurance, at its
---------
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another Corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against that expense,
liability or loss under Delaware law.

6.5 Expenses as a Witness. To the extent any director, officer,
---------------------
employee or agent of the Corporation is by reason of such position, or a
position with another entity at the request of the Corporation, a witness in any
action, suit or proceeding, he shall be indemnified against all costs and
expenses actually and reasonably incurred by him or on his behalf in connection
therewith.

6.6 Indemnity Agreements. The Corporation may enter into agreement
--------------------
with any director, officer, employee or agent of the Corporation providing for
indemnification to the fullest extent permitted by Delaware law.

7. MISCELLANEOUS.
-------------

- 17 -
<PAGE>

7.1 Seal. The board of directors shall adopt a corporate seal, which
----
shall be in the form of a circle and shall bear the Corporation's name and the
year and state in which it was incorporated.

7.2 Fiscal Year. The board of directors may determine the
-----------
Corporation's fiscal year. Until changed by the board of directors, the last day
of the Corporation's fiscal year shall be January 31.

7.3 Voting of Shares in Other Corporations. Shares in other
--------------------------------------
corporations held by the Corporation may be represented and voted by an officer
of this Corporation or by a proxy or proxies appointed by one of them. The
board of directors may, however, appoint some other person to vote the shares.

7.4 Amendments. The holders of shares entitled at the time to vote
----------
for the election of directors shall have the power to adopt, amend or repeal the
bylaws of the Corporation by a vote of not fewer than 66-2/3% of such shares,
and, except as otherwise provided by law, the board of directors shall have the
power to adopt, amend or repeal the bylaws by a vote of not fewer than 66-2/3%
of the board. However, any bylaw adopted by the stockholders may not be amended
or repealed by a vote of the board of directors.

7.5 Savings Clause. The provisions of Articles SIXTH, SEVENTH and
--------------
EIGHTH of the Corporation's certificate of incorporation are incorporated by
reference into these bylaws.

- 18 -
<PAGE>

If any such provisions are inconsistent with any other provisions of these
bylaws, such other provisions of these bylaws shall be deemed null and void and
have no force and effect and the provisions incorporated by reference in this
section shall be given full force and effect.

- 19 -

<PAGE>

EXHIBIT 5

PROSKAUER ROSE GOETZ & MENDELSOHN LLP
1585 BROADWAY
NEW YORK, NY 10036

December 18, 1996

The Board of Directors
dELiA*s Inc.
435 Hudson Street
New York, NY 10014

Ladies and Gentlemen:

You have requested our opinion in connection with the filing by
dELiA*s Inc., a Delaware corporation (the "Company"), with the Securities and
Exchange Commission of a Registration Statement on Form S-1 (the "Registration
Statement") under the Securities Act of 1933 (the "Securities Act") with respect
to 2,702,500 shares of common stock, $.01 par value per share, of the Company
("Common Stock"). The Registration Statement relates to the proposed issuance
and sale of 2,152,500 shares of Common Stock by the Company (the "Company
Shares") and the proposed sale by certain stockholders of the Company (the
"Selling Stockholders") of 550,000 shares of Common Stock (the "Selling
Stockholder Shares").

We have examined such records, documents and other instruments as we
have deemed relevant and necessary as a basis for the opinions hereinafter set
forth. We have also assumed without investigation the authenticity of any
document submitted to us as an original, the conformity to originals of any
document submitted to us as a copy, the authenticity of the originals of such
latter documents, the genuineness of all signatures and the legal capacity of
natural persons signing such documents.

Based upon the foregoing, it is our opinion that (a) the Company
Shares (to the extent issued and sold by the Company) have been duly authorized
and, when issued and delivered in accordance with the underwriting agreement as
described in the Registration Statement, will be legally
<PAGE>

The Board of Directors
January 17, 1996
Page 2

issued, fully paid and non-assessable and (b) the Selling Stockholder Shares are
duly authorized, legally issued, fully paid and non-assessable.

The foregoing opinion relates only to matters of the internal law of
the State of New York and the General Corporation Law of the State of Delaware
and does not purport to express any opinion on the laws of any other
jurisdiction.

We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" in the Prospectus contained in the Registration Statement. In so
doing, we do not admit that we are in the category of persons whose consent is
required under Section 7 of the Securities Act or the rules and regulations of
the Securities and Exchange Commission thereunder.

Very truly yours,

/s/ PROSKAUER ROSE GOETZ &
MENDELSOHN LLP

<PAGE>
Exhibit 10.5

dELiA*s INC.

1996 STOCK INCENTIVE PLAN
<PAGE>

TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>

Page
----
<S> <C> <C>

ARTICLE I. PURPOSE................................... 1

ARTICLE II. DEFINITIONS............................... 1

ARTICLE III. ADMINISTRATION............................ 4

ARTICLE IV. SHARE AND OTHER LIMITATIONS............... 7

ARTICLE V. ELIGIBILITY............................... 10

ARTICLE VI. EMPLOYEE STOCK OPTION GRANTS.............. 10

ARTICLE VII. RESTRICTED STOCK AWARDS................... 14

ARTICLE VIII. STOCK APPRECIATION RIGHTS................. 16

ARTICLE IX. NON-EMPLOYEE DIRECTOR STOCK OPTION GRANTS. 20

ARTICLE X. NON-TRANSFERABILITY....................... 22

ARTICLE XI. CHANGE IN CONTROL PROVISIONS.............. 22

ARTICLE XII. TERMINATION OR AMENDMENT OF THE PLAN...... 25

ARTICLE XIII. UNFUNDED PLAN............................. 26

ARTICLE XIV. GENERAL PROVISIONS........................ 26

ARTICLE XV. TERM OF PLAN.............................. 29

ARTICLE XVI. NAME OF PLAN.............................. 29

</TABLE>

i
<PAGE>

EXHIBIT 10.5

dELiA*s Inc.
1996 Stock Incentive Plan

ARTICLE I.

PURPOSE

The purpose of this dELiA*s Inc. 1996 Stock Incentive Plan, (the "Plan"),
is to enhance the profitability and value of dELiA*s Inc. (the "Company") for
the benefit of its stockholders by enabling the Company (i) to offer employees
of the Company and its Subsidiaries stock based incentives and other equity
interests in the Company, thereby creating a means to raise the level of stock
ownership by employees in order to attract, retain and reward such employees and
strengthen the mutuality of interests between employees and the Company's
stockholders and (ii) to make equity based awards to non-employee directors
thereby attracting, retaining and rewarding such non-employee directors and
strengthening the mutuality of interests between non-employee directors and the
Company's stockholders.

ARTICLE II.

DEFINITIONS

For purposes of this Plan, the following terms shall have the following
meanings:

2.1. "Award" shall mean any award under this Plan of any Stock Option,
Stock Appreciation Right or Restricted Stock. All Awards shall be confirmed
by, and subject to the terms of, a written agreement executed by the
Company and the Participant.

2.2. "Board" shall mean the Board of Directors of the Company.

2.3. "Cause" shall mean, with respect to a Participant's Termination
of Employment, unless otherwise determined by the Committee at grant, or,
if no rights of the Participant are reduced, thereafter, termination due to
a Participant's dishonesty, fraud, insubordination, willful misconduct,
refusal to perform services (for any reason other than illness or
incapacity) or materially unsatisfactory performance of his or her duties
for the Company as determined by the Committee in its sole discretion. With
respect to a Participant's Termination of Directorship, Cause shall mean an
act or failure to act that constitutes "cause" for removal of a director
under applicable Delaware law.
<PAGE>

2.4. "Change in Control" shall have the meaning set forth in
Article XI.

2.5. "Code" shall mean the Internal Revenue Code of 1986, as amended.
Any reference to any section of the Code shall also be a reference to any
successor provision.

2.6. "Committee" shall mean a committee of the Board appointed from
time to time by the Board. Solely to the extent required under Rule 16b-3
and Section 162(m) of the Code, such committee shall consist of two or more
non-employee directors, each of whom shall be a non-employee director as
defined in Rule 16b-3 and an outside director as defined under Section
162(m) of the Code. To the extent that no Committee exists which has the
authority to administer the Plan, the functions of the Committee shall be
exercised by the Board. If for any reason the appointed Committee does not
meet the requirements of Rule 16b-3 or Section 162(m) of the Code, such
noncompliance with the requirements of Rule 16b-3 or Section 162(m) of the
Code shall not affect the validity of the awards, grants, interpretations
or other actions of the Committee.

2.7. "Common Stock" means the Common Stock, $.01 par value per share,
of the Company.

2.8. "Disability" shall mean total and permanent disability, as
defined in Section 22(e)(3) of the Code.

2.9. "Effective Date" shall mean October __, 1996.

2.10. "Eligible Employees" shall mean the employees of the Company and
its Subsidiaries who are eligible pursuant to Section 5.1 to be granted
Awards under this Plan.

2.11. "Exchange Act" shall mean the Securities Exchange Act of 1934.

2.12. "Fair Market Value" for purposes of this Plan, unless otherwise
required by any applicable provision of the Code or any regulations issued
thereunder, shall mean, as of any date, the last sales price reported for
the Common Stock on the applicable date (i) as reported by the principal
national securities exchange in the United States on which it is then
traded, or (ii) if not traded on any such national securities exchange, as
quoted on an automated quotation system sponsored by the National
Association of Securities Dealers. If the Common Stock is not readily
tradable on a national securities exchange or any system sponsored by the
National Association of Securities Dealers, its Fair Market Value shall be
set in good faith by the Committee on the advice of a registered investment
adviser (as defined under the Investment Advisers Act

2
<PAGE>

of 1940). For purposes of the grant of any Award, the applicable date shall
be the date for which the last sales price is available at the time of
grant. For purposes of the exercise of any Stock Appreciation Right, the
applicable date shall be the date a notice of exercise is received by the
Committee or if not a day on which the applicable market is open, the next
day that it is open.

2.13. "Good Reason" shall mean, with respect to a Participant's
Termination of Employment unless otherwise determined by the Committee at
grant, or, if no rights of the Participant are reduced, thereafter, a
voluntary termination due to "good reason," as the Committee, in its sole
discretion, decides to treat as a Good Reason termination.

2.14. "Incentive Stock Option" shall mean any Stock Option awarded
under this Plan intended to be and designated as an "Incentive Stock
Option" within the meaning of Section 422 of the Code.

2.15. "Non-Qualified Stock Option" shall mean any Stock Option awarded
under this Plan that is not an Incentive Stock Option.

2.16. "Participant" shall mean the following persons to whom an Award
has been made pursuant to this Plan: Eligible Employees of the Company and
its Subsidiaries and non-employee directors of the Company; provided,
however, that non-employee directors shall be Participants for purposes of
the Plan solely with respect to awards of Stock Options pursuant to Article
IX.

2.17. "Restricted Stock" shall mean an award of shares of Common Stock
under the Plan that is subject to restrictions under Article VII.

2.18. "Restriction Period" shall have the meaning set forth in
Subsection 7.3(a) with respect to Restricted Stock for Eligible Employees.

2.19. "Retirement" with respect to a Participant's Termination of
Employment shall mean a Termination of Employment without Cause from the
Company by a Participant who has attained (i) at least age sixty-five (65);
or (ii) such earlier date after age fifty-five (55) as approved by the
Committee with regard to such Participant. With respect to a Participant's
Termination of Directorship, Retirement shall mean the failure to stand for
reelection or the failure to be reelected after a Participant has attained
age sixty-five (65).

2.20. "Rule 16b-3" shall mean Rule 16b-3 under Section 16(b) of the
Exchange Act as then in effect or any successor provisions.

2.21. "Section 162(m) of the Code" shall mean the exception for
performance-based compensation under Section 162(m) of the Code and any
Treasury regulations thereunder.

3
<PAGE>

2.22. "Stock Appreciation Right" shall mean the right pursuant to an
Award granted under Article IX. A Tandem Stock Appreciation Right shall
mean the right to surrender to the Company all (or a portion) of a Stock
Option in exchange for an amount in cash or stock equal to the excess of
(i) the Fair Market Value, on the date such Stock Option (or such portion
thereof) is surrendered, of the Common Stock covered by such Stock Option
(or such portion thereof), over (ii) the aggregate exercise price of such
Stock Option (or such portion thereof). A Non-Tandem Stock Appreciation
Right shall mean the right to receive an amount in cash or stock equal to
the excess of (x) the Fair Market Value of a share of Common Stock on of
the date such right is exercised, over (y) the aggregate exercise price of
such right, otherwise than on surrender of a Stock Option.

2.23 "Stock Option" or "Option" shall mean any Option to purchase
shares of Common Stock granted to Eligible Employees pursuant to Article
VI.

2.24. "Subsidiary" shall mean any corporation that is defined as a
subsidiary corporation in Section 424(f) of the Code.

2.25. "Ten Percent Stockholder" shall mean a person owning Common
Stock of the Company possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company as defined in
Section 422 of the Code.

2.26. "Termination of Directorship" shall mean, with respect to a non-
employee director, that the non-employee director has ceased to be a
director of the Company.

2.27. "Termination of Employment" shall mean (i) a termination of
service (for reasons other than a military or personal leave of absence
granted by the Company) of a Participant from the Company and its
Subsidiaries; or (ii) when an entity which is employing a Participant
ceases to be a Subsidiary, unless the Participant thereupon becomes
employed by the Company or another Subsidiary.

2.28. "Transfer" or "Transferred" shall mean anticipate, alienate,
attach, sell, assign, pledge, encumber, charge or otherwise transfer.

2.29. "Withholding Election" shall have the meaning set forth in
Section 14.4.

4
<PAGE>

ARTICLE III.

ADMINISTRATION

3.1. The Committee. The Plan shall be administered and interpreted
-------------
by the Committee.

3.2. Awards. The Committee shall have full authority to grant,
------
pursuant to the terms of this Plan, (i) Stock Options, (ii) Stock
Appreciation Rights, both Tandem and Non-Tandem and (iii) Restricted Stock
to Eligible Employees. Stock Options shall be granted to non-employee
directors of the Company pursuant to Article IX. In particular, the
Committee shall have the authority:

(a) to select the Eligible Employees to whom Stock Options, Stock
Appreciation Rights and Restricted Stock may from time to time be
granted hereunder;

(b) to determine whether and to what extent Stock Options, Stock
Appreciation Rights and Restricted Stock or any combination thereof,
are to be granted hereunder to one or more Eligible Employees;

(c) to determine, in accordance with the terms of this Plan, the
number of shares of Common Stock to be covered by each Award to an
Eligible Employee granted hereunder;

(d) to determine the terms and conditions, not inconsistent with
the terms of this Plan, of any Award granted hereunder to an Eligible
Employee (including, but not limited to, the share price, any
restriction or limitation, any vesting schedule or acceleration
thereof, or any forfeiture restrictions or waiver thereof, regarding
any Stock Option or other Award, and the shares of Common Stock
relating thereto, based on such factors, if any, as the Committee
shall determine, in its sole discretion);

(e) to determine whether and under what circumstances a Stock
Option may be settled in cash, Common Stock and/or Restricted Stock
under Subsection 6.3(d);

(f) to determine whether, to what extent and under what
circumstances to provide loans (which shall be on a recourse basis and
shall bear a reasonable rate of interest) to Eligible Employees in
order to exercise Options under the Plan;

(g) to determine whether a Stock Appreciation Right is Tandem or
Non-Tandem; and

5
<PAGE>

(h) to determine whether to require an Eligible Employee, as a
condition of the granting of any Award, to not sell or otherwise
dispose of shares acquired pursuant to the exercise of an Option or as
an Award for a period of time as determined by the Committee, in its
sole discretion, following the date of the acquisition of such Option
or Award.

3.3. Guidelines. Subject to Article XII hereof, the Committee shall
----------
have the authority to adopt, alter and repeal such administrative rules,
guidelines and practices governing this Plan and perform all acts,
including the delegation of its administrative responsibilities, as it
shall, from time to time, deem advisable; to construe and interpret the
terms and provisions of this Plan and any Award issued under this Plan (and
any agreements relating thereto); and to otherwise supervise the
administration of this Plan. The Committee may correct any defect, supply
any omission or reconcile any inconsistency in this Plan or in any
agreement relating thereto in the manner and to the extent it shall deem
necessary to carry this Plan into effect, but only to the extent any such
action would be permitted under the applicable provisions of Rule 16b-3 (if
any) and the applicable provisions of Section 162(m) of the Code (if any).
The Committee may adopt special guidelines and provisions for persons who
are residing in, or subject to, the taxes of, countries other than the
United States to comply with applicable tax and securities laws. If and to
the extent applicable, this Plan is intended to comply with Section 162(m)
of the Code and the applicable requirements of Rule 16b-3 and shall be
limited, construed and interpreted in a manner so as to comply therewith.

3.4. Decisions Final. Any decision, interpretation or other action
---------------
made or taken in good faith by or at the direction of the Company, the
Board, or the Committee (or any of its members) arising out of or in
connection with the Plan shall be within the absolute discretion of all and
each of them, as the case may be, and shall be final, binding and
conclusive on the Company and all employees and Participants and their
respective heirs, executors, administrators, successors and assigns.

3.5. Reliance on Counsel. The Company, the Board or the Committee may
-------------------
consult with legal counsel, who may be counsel for the Company or other
counsel, with respect to its obligations or duties hereunder, or with
respect to any action or proceeding or any question of law, and shall not
be liable with respect to any action taken or omitted by it in good faith
pursuant to the advice of such counsel.

3.6. Procedures. If the Committee is appointed, the Board shall
----------
designate one of the members of the Committee as chairman and the Committee
shall hold meetings, subject to the By-Laws of the Company, at such times
and places as it shall deem advisable. A majority of the Committee members
shall constitute a quorum. All determinations of the Committee shall be
made by a majority of its members. Any decision or determination reduced to
writing and signed by all Committee members in accordance with the By-Laws
of the Company shall be fully effective as if it had been made by a vote at
a meeting duly called and held. The Committee shall keep minutes of its
meetings and shall make such rules and regulations for the conduct of its
business as it shall deem advisable.

6
<PAGE>

of its meetings and shall make such rules and regulations for the conduct of its
business as it shall deem advisable.

3.7. Designation of Consultants -- Liability.
---------------------------------------

(a) The Committee may designate employees of the Company and
professional advisors to assist the Committee in the administration of the
Plan and may grant authority to employees to execute agreements or other
documents on behalf of the Committee.

(b) The Committee may employ such legal counsel, consultants and
agents as it may deem desirable for the administration of the Plan and may
rely upon any opinion received from any such counsel or consultant and any
computation received from any such consultant or agent. Expenses incurred
by the Committee or Board in the engagement of any such counsel, consultant
or agent shall be paid by the Company. The Committee, its members and any
person designated pursuant to paragraph (a) above shall not be liable for
any action or determination made in good faith with respect to the Plan. To
the maximum extent permitted by applicable law, no officer of the Company
or member or former member of the Committee or of the Board shall be liable
for any action or determination made in good faith with respect to the Plan
or any Award granted under it. To the maximum extent permitted by
applicable law and the Certificate of Incorporation and By-Laws of the
Company and to the extent not covered by insurance, each officer and member
or former member of the Committee or of the Board shall be indemnified and
held harmless by the Company against any cost or expense (including
reasonable fees of counsel reasonably acceptable to the Company) or
liability (including any sum paid in settlement of a claim with the
approval of the Company), and advanced amounts necessary to pay the
foregoing at the earliest time and to the fullest extent permitted, arising
out of any act or omission to act in connection with the Plan, except to
the extent arising out of such officer's, member's or former member's own
fraud or bad faith. Such indemnification shall be in addition to any rights
of indemnification the officers, directors or members or former officers,
directors or members may have under applicable law or under the Certificate
of Incorporation or By-Laws of the Company or Subsidiary. Notwithstanding
anything else herein, this indemnification will not apply to the actions or
determinations made by an individual with regard to Awards granted to him
or her under this Plan.

7
<PAGE>

ARTICLE IV.

SHARE AND OTHER LIMITATIONS

4.1. Shares.
------

(a) General Limitation. The aggregate number of shares of Common
Stock which may be issued or used for reference purposes under this Plan or
with respect to which other Awards may be granted shall not exceed
1,250,000 shares (subject to any increase or decrease pursuant to Section
4.2) which may be either authorized and unissued Common Stock or Common
Stock held in or acquired for the treasury of the Company. If any Option or
Stock Appreciation Right granted under this Plan expires, terminates or is
cancelled for any reason without having been exercised in full or, with
respect to Options, the Company repurchases any Option pursuant to Section
6.3(f), the number of shares of Common Stock underlying the repurchased
Option, and/or the number of shares of Common Stock underlying any
unexercised Stock Appreciation Right or Option shall again be available for
the purposes of Awards under the Plan. If a Tandem Stock Appreciation Right
or a limited Stock Appreciation Right is granted in tandem with an Option,
such grant shall only apply once against the maximum number of shares of
Common Stock which may be issued under this Plan.

(b) Individual Participant Limitations. (i) The maximum number of
shares of Common Stock subject to any Option which may be granted under
this Plan to each Participant shall not exceed 100,000 shares (subject to
any increase or decrease pursuant to Section 4.2) during each fiscal year
of the Company.

(ii) There are no annual individual Participant limitations
on Restricted Stock.

(iii) The maximum number of shares of Common Stock subject
to any Stock Appreciation Right which may be granted under this Plan to
each Participant shall not exceed 100,000 shares (subject to any increase
or decrease pursuant to Section 4.2) during each fiscal year of the
Company. If a Tandem Stock Appreciation Right or limited Stock Appreciation
Right is granted in tandem with an Option it shall apply against the
Eligible Employee's individual share limitations for both Stock
Appreciation Rights and Options.

4.2. Changes.
-------

(a) The existence of the Plan and the Awards granted hereunder
shall not affect in any way the right or power of the Board or the
stockholders of the

8
<PAGE>

Company to make or authorize any adjustment, recapitalization,
reorganization or other change in the Company's capital structure or its
business, any merger or consolidation of the Company or Subsidiary, any
issue of bonds, debentures, preferred or prior preference stock ahead of or
affecting Common Stock, the dissolution or liquidation of the Company or
Subsidiary, any sale or transfer of all or part of its assets or business
or any other corporate act or proceeding.

(b) In the event of any such change in the capital structure or
business of the Company by reason of any stock dividend or distribution,
stock split or reverse stock split, recapitalization, reorganization,
merger, consolidation, split-up, combination or exchange of shares,
distribution with respect to its outstanding Common Stock or capital stock
other than Common Stock, sale or transfer of all or part of its assets or
business, reclassification of its capital stock, or any similar change
affecting the Company's capital structure or business and the Committee
determines an adjustment is appropriate under the Plan, then the aggregate
number and kind of shares which thereafter may be issued under this Plan,
the number and kind of shares or other property (including cash) to be
issued upon exercise of an outstanding Option or other Awards granted under
this Plan and the purchase price thereof shall be appropriately adjusted
consistent with such change in such manner as the Committee may deem
equitable to prevent substantial dilution or enlargement of the rights
granted to, or available for, Participants under this Plan or as otherwise
necessary to reflect the change, and any such adjustment determined by the
Committee shall be binding and conclusive on the Company and all
Participants and employees and their respective heirs, executors,
administrators, successors and assigns.

(c) Fractional shares of Common Stock resulting from any adjustment
in Options or Awards pursuant to Section 4.2(a) or (b) shall be aggregated
until, and eliminated at, the time of exercise by rounding-down for
fractions less than one-half ( 1/2) and rounding-up for fractions equal to
or greater than one-half ( 1/2). No cash settlements shall be made with
respect to fractional shares eliminated by rounding. Notice of any
adjustment shall be given by the Committee to each Participant whose Option
or Award has been adjusted and such adjustment (whether or not such notice
is given) shall be effective and binding for all purposes of the Plan.

(d) In the event of a merger or consolidation in which the Company
is not the surviving entity or in the event of any transaction that results
in the acquisition of substantially all of the Company's outstanding Common
Stock by a single person or entity or by a group of persons and/or entities
acting in concert, or in the event of the sale or transfer of all of the
Company's assets (all of the foregoing being referred to as "Acquisition
Events"), then the Committee may, in its sole discretion, terminate all
outstanding Options and Stock Appreciation Rights of Eligible Employees,
effective as of the date of the Acquisition Event, by delivering notice of
termination to each such Participant

9
<PAGE>

at least twenty (20) days prior to the date of consummation of the
Acquisition Event; provided, that during the period from the date on which
such notice of termination is delivered to the consummation of the
Acquisition Event, each such Participant shall have the right to exercise
in full all of his or her Options and Stock Appreciation Rights that are
then outstanding (without regard to any limitations on exercisability
otherwise contained in the Option or Award Agreements) but contingent on
occurrence of the Acquisition Event, and, provided that, if the Acquisition
Event does not take place within a specified period after giving such
notice for any reason whatsoever, the notice and exercise shall be null and
void.

Notwithstanding the foregoing and solely to the extent required by
Section 16 of the Exchange Act, at the discretion of the Committee, the
provisions contained in this subsection shall be adjusted as they apply to
Options and Stock Appreciation Rights granted to Eligible Employees within
six (6) months before the occurrence of an Acquisition Event if the holder
of such Award is subject to the reporting requirements of Section 16(a) of
the Exchange Act in such manner as determined by the Committee, including
without limitation, terminating Options and Stock Appreciation Rights at
specific dates after the Acquisition Event, in order to give the holder the
benefit of the Option.

If an Acquisition Event occurs, to the extent the Committee does not
terminate the outstanding Options and Stock Appreciation Rights pursuant to
this Section 4.2(d), then the provisions of Section 4.2(b) shall apply.

4.3. Purchase Price. Notwithstanding any provision of this Plan to the
--------------
contrary, if authorized but previously unissued shares of Common Stock are
issued under this Plan, such shares shall not be issued for a consideration
which is less than as permitted under applicable law.

ARTICLE V.

ELIGIBILITY

5.1. All employees of the Company and its Subsidiaries are eligible to be
granted Options, Stock Appreciation Rights and Restricted Stock under this Plan.
Eligibility under this Plan shall be determined by the Committee in its sole
discretion.

5.2. Non-employee directors of the Company are only eligible to receive an
Award of Stock Options in accordance with Article IX of the Plan.

10
<PAGE>

ARTICLE VI.

EMPLOYEE STOCK OPTION GRANTS

6.1. Options. Each Stock Option granted hereunder shall be one of two
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types: (i) an Incentive Stock Option intended to satisfy the requirements of
Section 422 of the Code or (ii) a Non-Qualified Stock Option.

6.2. Grants. The Committee shall have the authority to grant to any
------
Eligible Employee one or more Incentive Stock Options, Non-Qualified Stock
Options, or both types of Stock Options (in each case with or without Stock
Appreciation Rights). To the extent that any Stock Option does not qualify as an
Incentive Stock Option (whether because of its provisions or the time or manner
of its exercise or otherwise), such Stock Option or the portion thereof which
does not qualify, shall constitute a separate Non-Qualified Stock Option.

6.3. Terms of Options. Options granted under this Plan shall be subject
----------------
to the following terms and conditions, and shall be in such form and contain
such additional terms and conditions, not inconsistent with the terms of this
Plan, as the Committee shall deem desirable:

(a) Option Price. The option price per share of Common Stock
purchasable under an Incentive Stock Option shall be determined by the
Committee at the time of grant but shall not be less than 100% of the Fair
Market Value of the share of Common Stock at the time of grant; provided,
however, if an Incentive Stock Option is granted to a Ten Percent
Stockholder, the purchase price shall be no less than 110% of the Fair
Market Value of the Common Stock. The purchase price of shares of Common
Stock subject to a Non-Qualified Stock Option shall be determined by the
Committee but shall not be less than the 100% of the Fair Market Value of
the Common Stock at the time of grant. Notwithstanding the foregoing, if an
Option is modified, extended or renewed and, thereby, deemed to be the
issuance of a new Option under the Code, the exercise price of an Option
may continue to be the original exercise price even if less than the Fair
Market Value of the Common Stock at the time of such modification,
extension or renewal.

(b) Option Term. The term of each Stock Option shall be fixed by
the Committee, but no Stock Option shall be exercisable more than ten (10)
years after the date the Option is granted, provided, however, the term of
an Incentive Stock Option granted to a Ten Percent Stockholder may not
exceed five (5) years.

(c) Exercisability. Stock Options shall be exercisable at such
time or times and subject to such terms and conditions as shall be
determined by the Committee at grant. If the Committee provides, in its
discretion, that any Stock

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Option is exercisable subject to certain limitations (including, without
limitation, that it is exercisable only in installments or within certain
time periods), the Committee may waive such limitations on the
exercisability at any time at or after grant in whole or in part
(including, without limitation, that the Committee may waive the
installment exercise provisions or accelerate the time at which Options may
be exercised), based on such factors, if any, as the Committee shall
determine, in its sole discretion.

(d) Method of Exercise. Subject to whatever installment exercise
and waiting period provisions apply under subsection (c) above, Stock
Options may be exercised in whole or in part at any time during the Option
term, by giving written notice of exercise to the Company specifying the
number of shares to be purchased. Such notice shall be accompanied by
payment in full of the purchase price in such form, or such other
arrangement for the satisfaction of the purchase price, as the Committee
may accept. If and to the extent determined by the Committee in its sole
discretion at or after grant, payment in full or in part may also be made
in the form of Common Stock withheld from the shares to be received on the
exercise of a Stock Option hereunder, Common Stock owned by the Participant
(and for which the Participant has good title free and clear of any liens
and encumbrances) or Restricted Stock based, in each case, on the Fair
Market Value of the Common Stock on the payment date as determined by the
Committee (without regard to any forfeiture restrictions applicable to such
Restricted Stock). No shares of Common Stock shall be issued until payment,
as provided herein, therefor has been made or provided for. If payment in
full or in part has been made in the form of Restricted Stock, an
equivalent number of shares of Common Stock issued on exercise of the
Option shall be subject to the same restrictions and conditions, during the
remainder of the Restriction Period, applicable to the Restricted Stock
surrendered therefor.

(e) Incentive Stock Option Limitations. To the extent that the
aggregate Fair Market Value (determined as of the time of grant) of the
Common Stock with respect to which Incentive Stock Options are exercisable
for the first time by an Eligible Employee during any calendar year under
the Plan and/or any other stock option plan of the Company or any
Subsidiary or parent corporation (within the meaning of Section 424(e) of
the Code) exceeds $100,000, such Options shall be treated as Options which
are not Incentive Stock Options.

Should the foregoing provision not be necessary in order for the
Stock Options to qualify as Incentive Stock Options, or should any
additional provisions be required, the Committee may amend the Plan
accordingly, without the necessity of obtaining the approval of the
stockholders of the Company.

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(f) Buy Out and Settlement Provisions. The Committee may at any time
on behalf of the Company offer to buy out an Option previously granted,
based on such terms and conditions as the Committee shall establish and
communicate to the Participant at the time that such offer is made.

(g) Form, Modification, Extension and Renewal of Options. Subject to
the terms and conditions and within the limitations of the Plan, an Option
shall be evidenced by such form of agreement or grant as is approved by the
Committee, and the Committee may modify, extend or renew outstanding
Options granted under the Plan (provided that the rights of a Participant
are not reduced without his consent), or accept the surrender of
outstanding Options (up to the extent not theretofore exercised) and
authorize the granting of new Options in substitution therefor (to the
extent not theretofore exercised).

(h) Other Terms and Conditions. Options may contain such other
provisions, which shall not be inconsistent with any of the foregoing terms
of the Plan, as the Committee shall deem appropriate including, without
limitation, permitting "reloads" such that the same number of Options are
granted as the number of Options exercised, shares used to pay for the
exercise price of Options or shares used to pay withholding taxes
("Reloads"). With respect to Reloads, the exercise price of the new Stock
Option shall be the Fair Market Value on the date of the "reload" and the
term of the Stock Option shall be the same as the remaining term of the
Options that are exercised, if applicable, or such other exercise price and
term as determined by the Committee.

6.4. Termination of Employment. The following rules apply with regard to
-------------------------
Options upon the Termination of Employment of a Participant:

(a) Termination by Reason of Death. If a Participant's Termination
of Employment is by reason of death, any Stock Option held by such
Participant, unless otherwise determined by the Committee at grant or, if
no rights of the Participant's estate are reduced, thereafter, may be
exercised, to the extent exercisable at the Participant's death, by the
legal representative of the estate, at any time within a period of one (1)
year from the date of such death, but in no event beyond the expiration of
the stated term of such Stock Option.

(b) Termination by Reason of Disability. If a Participant's
Termination of Employment is by reason of Disability, any Stock Option held
by such Participant, unless otherwise determined by the Committee at grant
or, if no rights of the Participant are reduced, thereafter, may be
exercised, to the extent exercisable at the Participant's termination, by
the Participant (or the legal representative of the Participant's estate if
the Participant dies after termination) at any time within a period of one
(1) year from the date of such termination, but in no event beyond the
expiration of the stated term of such Stock Option.

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<PAGE>

(c) Termination by Reason of Retirement. If a Participant's
Termination of Employment is by reason of Retirement, any Stock Option held
by such Participant, unless otherwise determined by the Committee at grant,
or, if no rights of the Participant are reduced, thereafter, shall be fully
vested and may thereafter be exercised by the Participant at any time
within a period of one (1) year from the date of such termination, but in
no event beyond the expiration of the stated term of such Stock Option;
provided, however, that, if the Participant dies within such exercise
period, any unexercised Stock Option held by such Participant shall
thereafter be exercisable, to the extent to which it was exercisable at the
time of death, for a period of one (1) year (or such other period as the
Committee may specify at grant or, if no rights of the Participant's estate
are reduced, thereafter) from the date of such death, but in no event
beyond the expiration of the stated term of such Stock Option.

(d) Involuntary Termination Without Cause or Termination for Good
Reason. If a Participant's Termination of Employment is by involuntary
termination without Cause or for Good Reason, any Stock Option held by such
Participant, unless otherwise determined by the Committee at grant or, if
no rights of the Participant are reduced, thereafter, may be exercised, to
the extent exercisable at termination, by the Participant at any time
within a period of ninety (90) days from the date of such termination, but
in no event beyond the expiration of the stated term of such Stock Option.

(e) Termination Without Good Reason. If a Participant's Termination
of Employment is voluntary but without Good Reason and occurs prior to, or
more than ninety (90) days after, the occurrence of an event which would be
grounds for Termination of Employment by the Company for Cause (without
regard to any notice or cure period requirements), any Stock Option held by
such Participant, unless otherwise determined by the Committee at grant or,
if no rights of the Participant are reduced, thereafter, may be exercised,
to the extent exercisable at termination, by the Participant at any time
within a period of thirty (30) days from the date of such termination, but
in no event beyond the expiration of the stated term of such Stock Option.

(f) Other Termination. Unless otherwise determined by the Committee
at grant or, if no rights of the Participant are reduced, thereafter, if a
Participant's Termination of Employment is for any reason other than death,
Disability, Retirement, Good Reason, involuntary termination without Cause
or voluntary termination as provided in subsection (e) above, any Stock
Option held by such Participant shall thereupon terminate and expire as of
the date of termination, provided that (unless the Committee determines a
different period upon grant or, if, no rights of the Participant are
reduced, thereafter) in the event the termination is for Cause or is a
voluntary termination without Good Reason within ninety (90) days after
occurrence of an event which would be grounds for Termination of Employment
by the Company for Cause (without regard to

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<PAGE>

any notice or cure period requirement), any Stock Option held by the
Participant at the time of occurrence of the event which would be grounds
for Termination of Employment by the Company for Cause shall be deemed to
have terminated and expired upon occurrence of the event which would be
grounds for Termination of Employment by the Company for Cause.

ARTICLE VII.

RESTRICTED STOCK AWARDS

7.1. Awards of Restricted Stock. Shares of Restricted Stock may be issued
--------------------------
to Eligible Employees either alone or in addition to other Awards granted under
the Plan. The Committee shall determine the eligible persons to whom, and the
time or times at which, grants of Restricted Stock will be made, the number of
shares to be awarded, the price (if any) to be paid by the recipient (subject to
Section 7.2), the time or times within which such Awards may be subject to
forfeiture, the vesting schedule and rights to acceleration thereof, and all
other terms and conditions of the Awards.

7.2. Awards and Certificates. The prospective Participant selected to
-----------------------
receive a Restricted Stock Award shall not have any rights with respect to such
Award, unless and until such Participant has delivered a fully executed copy of
the Restricted Stock Award agreement evidencing the Award to the Company and has
otherwise complied with the applicable terms and conditions of such Award.
Further, such Award shall be subject to the following conditions:

(a) Purchase Price. The purchase price of Restricted Stock shall be
fixed by the Committee. Subject to Section 4.3, the purchase price for
shares of Restricted Stock may be zero to the extent permitted by
applicable law, and, to the extent not so permitted, such purchase price
may not be less than par value.

(b) Acceptance. Awards of Restricted Stock must be accepted within a
period of sixty (60) days (or such shorter period as the Committee may
specify at grant) after the Award date, by executing a Restricted Stock
Award agreement and by paying whatever price (if any) the Committee has
designated thereunder.

(c) Legend. Each Participant receiving a Restricted Stock Award
shall be issued a stock certificate in respect of such shares of Restricted
Stock, unless the Committee elects to use another system, such as book
entries by the transfer agent, as evidencing ownership of a Restricted
Stock Award. Such certificate shall be registered in the name of such
Participant, and shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Award, substantially in the
following form:

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<PAGE>

"The anticipation, alienation, attachment, sale, transfer,
assignment, pledge, encumbrance or charge of the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of the dELiA*s Inc. (the "Company") 1996 Stock Incentive Plan
and an Agreement entered into between the registered owner and the Company,
dated ________. Copies of such Plan and Agreement are on file at the
principal office of the Company."

(d) Custody. The Committee may require that any stock certificates
evidencing such shares be held in custody by the Company until the
restrictions thereon shall have lapsed, and that, as a condition of any
Restricted Stock Award, the Participant shall have delivered a duly signed
stock power, endorsed in blank, relating to the Common Stock covered by
such Award.

7.3. Restrictions and Conditions on Restricted Stock Awards. The shares of
------------------------------------------------------
Restricted Stock awarded pursuant to this Plan shall be subject to Article X and
the following restrictions and conditions:

(a) Restriction Period; Vesting and Acceleration of Vesting. The
Participant shall not be permitted to Transfer shares of Restricted Stock
awarded under this Plan during a period set by the Committee (the
"Restriction Period") commencing with the date of such Award, as set forth
in the Restricted Stock Award agreement and such agreement shall set forth
a vesting schedule and any events which would accelerate vesting of the
shares of Restricted Stock. Within these limits, based on service, or other
criteria determined by the Committee, the Committee may provide for the
lapse of such restrictions in installments in whole or in part, or may
accelerate the vesting of all or any part of any Restricted Stock Award.

(b) Rights as Stockholder. Except as provided in this subsection (b)
and subsection (a) above and as otherwise determined by the Committee, the
Participant shall have, with respect to the shares of Restricted Stock, all
of the rights of a holder of shares of Common Stock of the Company
including, without limitation, the right to receive any dividends, the
right to vote such shares and, subject to and conditioned upon the full
vesting of shares of Restricted Stock, the right to tender such shares.
Notwithstanding the foregoing, the payment of dividends shall be deferred
until, and conditioned upon, the expiration of the applicable Restriction
Period, unless the Committee, in its sole discretion, specifies otherwise
at the time of the Award.

(c) Lapse of Restrictions. If and when the Restriction Period
expires without a prior forfeiture of the Restricted Stock subject to such
Restriction Period, the certificates for such shares shall be delivered to
the Participant. All legends shall be removed from said certificates at the
time of delivery to the Participant except as otherwise required by
applicable law.

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<PAGE>

7.4. Termination of Employment for Restricted Stock. Subject to the
----------------------------------------------
applicable provisions of the Restricted Stock Award agreement and this Plan,
upon a Participant's Termination of Employment for any reason during the
relevant Restriction Period, all Restricted Stock still subject to restriction
will vest or be forfeited in accordance with the terms and conditions
established by the Committee at grant or thereafter.

ARTICLE VIII.

STOCK APPRECIATION RIGHTS

8.1. Tandem Stock Appreciation Rights. Stock Appreciation Rights may be
--------------------------------
granted in conjunction with all or part of any Stock Option (a "Reference Stock
Option") granted under this Plan ("Tandem Stock Appreciation Rights"). In the
case of a Non-Qualified Stock Option, such rights may be granted either at or
after the time of the grant of such Reference Stock Option. In the case of an
Incentive Stock Option, such rights may be granted only at the time of the grant
of such Reference Stock Option.

8.2. Terms and Conditions of Tandem Stock Appreciation Rights. Tandem
--------------------------------------------------------
Stock Appreciation Rights shall be subject to such terms and conditions, not
inconsistent with the provisions of this Plan, as shall be determined from time
to time by the Committee, including Article X and the following:

(a) Term. A Tandem Stock Appreciation Right or applicable portion
thereof granted with respect to a Reference Stock Option shall terminate
and no longer be exercisable upon the termination or exercise of the
Reference Stock Option, except that, unless otherwise determined by the
Committee, in its sole discretion, at the time of grant, a Tandem Stock
Appreciation Right granted with respect to less than the full number of
shares covered by the Reference Stock Option shall not be reduced until and
then only to the extent the exercise or termination of the Reference Stock
Option causes the number of shares covered by the Tandem Stock Appreciation
Right to exceed the number of shares remaining available and unexercised
under the Reference Stock Option.

(b) Exercisability. Tandem Stock Appreciation Rights shall be
exercisable only at such time or times and to the extent that the Reference
Stock Options to which they relate shall be exercisable in accordance with
the provisions of Article VI and this Article VIII.

(c) Method of Exercise. A Tandem Stock Appreciation Right may be
exercised by an optionee by surrendering the applicable portion of the
Reference Stock Option. Upon such exercise and surrender, the Participant
shall be entitled to receive an amount determined in the manner prescribed
in this Section 8.2. Stock Options which have been so surrendered, in whole
or in

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part, shall no longer be exercisable to the extent the related Tandem Stock
Appreciation Rights have been exercised.

(d) Payment. Upon the exercise of a Tandem Stock Appreciation Right
a Participant shall be entitled to receive up to, but no more than, an
amount in cash and/or Common Stock (as chosen by the Committee in its sole
discretion) equal in value to the excess of the Fair Market Value of one
share of Common Stock over the option price per share specified in the
Reference Stock Option multiplied by the number of shares in respect of
which the Tandem Stock Appreciation Right shall have been exercised, with
the Committee having the right to determine the form of payment.

(e) Deemed Exercise of Reference Stock Option. Upon the exercise of
a Tandem Stock Appreciation Right, the Reference Stock Option or part
thereof to which such Stock Appreciation Right is related shall be deemed
to have been exercised for the purpose of the limitation set forth in
Article IV of the Plan on the number of shares of Common Stock to be issued
under the Plan.

8.3. Non-Tandem Stock Appreciation Rights. Non-Tandem Stock Appreciation
------------------------------------
Rights may also be granted without reference to any Stock Options granted under
this Plan.

8.4. Terms and Conditions of Non-Tandem Stock Appreciation Rights. Non-
------------------------------------------------------------
Tandem Stock Appreciation Rights shall be subject to such terms and conditions,
not inconsistent with the provisions of this Plan, as shall be determined from
time to time by the Committee, including Article X and the following:

(a) Term. The term of each Non-Tandem Stock Appreciation Right shall
be fixed by the Committee, but shall not be greater than ten (10) years
after the date the right is granted.

(b) Exercisability. Non-Tandem Stock Appreciation Rights shall be
exercisable at such time or times and subject to such terms and conditions
as shall be determined by the Committee at grant. If the Committee
provides, in its discretion, that any such right is exercisable subject to
certain limitations (including, without limitation, that it is exercisable
only in installments or within certain time periods), the Committee may
waive such limitation on the exercisability at any time at or after grant
in whole or in part (including, without limitation, that the Committee may
waive the installment exercise provisions or accelerate the time at which
rights may be exercised), based on such factors, if any, as the Committee
shall determine, in its sole discretion.

(c) Method of Exercise. Subject to whatever installment exercise and
waiting period provisions apply under subsection (b) above, Non-Tandem
Stock Appreciation Rights may be exercised in whole or in part at any time
during

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<PAGE>

the option term, by giving written notice of exercise to the Company
specifying the number of Non-Tandem Stock Appreciation Rights to be
exercised.

(d) Payment. Upon the exercise of a Non-Tandem Stock Appreciation
Right a Participant shall be entitled to receive, for each right exercised,
up to, but no more than, an amount in cash and/or Common Stock (as chosen
by the Committee in its sole discretion) equal in value to the excess of
the Fair Market Value of one share of Common Stock on the date the right is
exercised over the Fair Market Value of one (1) share of Common Stock on
the date the right was awarded to the Participant.

8.5. Limited Stock Appreciation Rights. The Committee may, in its sole
---------------------------------
discretion, grant Tandem and Non-Tandem Stock Appreciation Rights either as a
general Stock Appreciation Right or as a limited Stock Appreciation Right.
Limited Stock Appreciation Rights may be exercised only upon the occurrence of a
Change in Control or such other event as the Committee may, in its sole
discretion, designate at the time of grant or thereafter. Upon the exercise of
limited Stock Appreciation Rights, except as otherwise provided in an Award
agreement, the Participant shall receive in cash or Common Stock, as determined
by the Committee, an amount equal to the amount (1) set forth in Section 8.2(d)
with respect to Tandem Stock Appreciation Rights or (2) set forth in Section
8.4(d) with respect to Non-Tandem Stock Appreciation Rights.

8.6. Termination of Employment. The following rules apply with regard to
-------------------------
Stock Appreciation Rights upon the Termination of Employment of a Participant.

(a) Termination by Death. If a Participant's Termination of Employment
is by reason of death, any Stock Appreciation Right held by such
Participant, unless otherwise determined by the Committee at grant or if no
rights of the Participant's estate are reduced, thereafter, may be
exercised, to the extent exercisable at the Participant's death, by the
legal representative of the estate, at any time within a period of one (1)
year from the date of such death or until the expiration of the stated term
of such Stock Appreciation Right, whichever period is the shorter.

(b) Termination by Reason of Disability. If a Participant's Termination
of Employment is by reason of Disability, any Stock Appreciation Right held
by such participant, unless otherwise determined by the Committee at grant
or, if no rights of the Participant are reduced, thereafter, may be
exercised, to the extent exercisable at the Participant's termination, by
the Participant (or the legal representative of the Participant's estate if
the Participant dies after termination) at any time within a period of one
(1) year from the date of such termination or until the expiration of the
stated term of such Stock Appreciation Right, whichever period is the
shorter.

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<PAGE>

(c) Termination by Reason of Retirement. If a Participant's Termination
of Employment is by reason of Retirement, any Stock Appreciation Right held
by such Participant, unless otherwise determined by the Committee at grant
or, if no rights of the Participant are reduced, thereafter, shall be fully
vested and may thereafter be exercised by the Participant at any time
within a period of one (1) year from the date of such termination or until
the expiration of the stated term of such right, whichever period is the
shorter; provided, however, that, if the Participant dies within such one
(1) year period, any unexercised Non-Tandem Stock Appreciation Right held
by such Participant shall thereafter be exercisable, to the extent to which
it was exercisable at the time of death, for a period of one (1) year (or
such other period as the Committee may specify at grant or if no rights of
the Participant are reduced, thereafter) from the date of such death or
until the expiration of the stated term of such right, whichever period is
the shorter.

(d) Involuntary Termination Without Cause or Termination for Good
Reason. If a Participant's Termination of Employment is by involuntary
termination without Cause or for Good Reason, any Stock Appreciation Right
held by such participant, unless otherwise determined by the Committee at
grant or if no rights of the participant are reduced, thereafter, may be
exercised, to the extent exercisable at termination, by the Participant at
any time within a period of ninety (90) days from the date of such
termination or until the expiration of the stated term of such right,
whichever period is shorter.

(e) Termination Without Good Reason. If a Participant's Termination of
Employment is voluntary but without Good Reason and occurs prior to, or
more than ninety (90) days after, the occurrence of an event which would be
grounds for Termination of Employment by the Company for Cause (without
regard to any notice or cure period requirements), any Stock Appreciation
Right held by such Participant, unless greater or lesser exercise rights
are provided by the Committee at the time of grant or, if no rights of the
participant are reduced, thereafter, may be exercised, to the extent
exercisable at termination, by the Participant at any time within a period
of thirty (30) days from the date of such termination, but in no event
beyond the expiration of the stated term of such Stock Appreciation Right.

(f) Other Termination. Unless otherwise determined by the Committee at
grant, or, if no rights of the Participant are reduced thereafter, if a
Participant's Termination of Employment is for any reason other than death,
Disability, Retirement, Good Reason, involuntary termination without Cause
or voluntary termination as provided in subsection (e) above, any Stock
Appreciation Right held by such Participant shall thereupon terminate or
expire as of the date of termination, provided, that (unless the Committee
determines a different period upon grant, or, if no rights of the
Participant are reduced, thereafter) in the event the termination is for
Cause or is a voluntary

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<PAGE>

termination as provided in subsection (e) above, within ninety (90) days
after occurrence of an event which would be grounds for Termination of
Employment by the Company for Cause (without regard to any notice or cure
period requirement), any Stock Appreciation Right held by the Participant
at the time of the occurrence of the event which would be grounds for
Termination of Employment by the Company for Cause shall be deemed to have
terminated and expired upon occurrence of the event which would be grounds
for Termination of Employment by the Company for Cause.

ARTICLE IX.

NON-EMPLOYEE DIRECTOR STOCK OPTION GRANTS

9.1. Options. The terms of this Article IX shall apply only to Options
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granted to non-employee directors.

9.2. Grants. Without further action by the Board or the stockholders of the
------
Company, each non-employee director, other than Geraldine Karetsky and Sidney S.
Kahn, shall:

(a) subject to the terms of the Plan, be granted Options to purchase
40,000 shares of Common Stock upon (1) the date on which the offering price
in connection with the initial public offering of the Common Stock (the
"Offering") is agreed upon between the Company and the underwriters (the
"Price to the Public"); or (2) if later, as of the date the non-employee
director begins service as a director on the Board;

(b) notwithstanding the foregoing, if the Offering is not consummated
by February 28, 1997, no Options shall thereafter be granted and any
Options previously granted under Section 9.1(a) above shall become null and
void.

9.3. Non-Qualified Stock Options. Stock Options granted under this Article
---------------------------
IX shall be Non-Qualified Stock Options.

9.4. Terms of Options. Options granted under this Article shall be subject
----------------
to the following terms and conditions and shall be in such form and contain such
additional terms and conditions, not inconsistent with terms of this Plan, as
the Committee shall deem desirable:

(a) Option Price. The purchase price per share deliverable upon the
exercise of an Option granted pursuant to Section 9.2(a)(1) shall be the
Price to the Public and the purchase price per share deliverable upon the
exercise of an Option granted pursuant to Section 9.2(a)(2) shall be 100%
of the Fair Market

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<PAGE>

Value of such Common Stock at the time of the grant of the Option, or the
par value of the Common Stock, whichever is greater.

(b) Exercisability. Except as otherwise provided herein, twenty percent
(20%) of any Option granted under this Article IX shall be exercisable on
or after each of the five anniversaries following the date of grant,
provided that, notwithstanding anything in Section 9.5 to the contrary, any
Option granted to a non-employee director elected prior to November 15,
1996 shall fully vest upon a Termination of Directorship other than (i) for
Cause, or (ii) due to a director's refusal to stand for reelection. All
Options shall fully vest upon a Change in Control.

(c) Method for Exercise. A non-employee director electing to exercise
one or more Options shall give written notice of exercise to the Company
specifying the number of shares to be purchased. Common Stock purchased
pursuant to the exercise of Options shall be paid for at the time of
exercise in cash or by delivery of unencumbered Common Stock owned by the
non-employee director or a combination thereof or by such other method as
approved by the Board.

(d) Option Term. Except as otherwise provided herein, if not previously
exercised each Option shall expire upon the tenth anniversary of the date
of the grant thereof.

9.5. Termination of Directorship. The following rules apply with regard to
---------------------------
Options upon the Termination of Directorship:

(a) Death, Disability or Otherwise Ceasing to be a Director Other than
for Cause. Except as otherwise provided herein, upon the Termination of
Directorship, on account of Disability, death, Retirement, resignation,
failure to stand for reelection or failure to be reelected or otherwise
other than as set forth in (b) below, all outstanding Options then
exercisable and not exercised by the Participant prior to such Termination
of Directorship shall remain exercisable, to the extent exercisable at the
Termination of Directorship, by the Participant or, in the case of death,
by the Participant's estate or by the person given authority to exercise
such Options by his or her will or by operation of law, for the remainder
of the stated term of such Options.

(b) Cause. Upon removal, failure to stand for reelection or failure to
be renominated for Cause, or if the Company obtains or discovers
information after Termination of Directorship that such Participant had
engaged in conduct that would have justified a removal for Cause during
such directorship, all outstanding Options of such Participant shall
immediately terminate and shall be null and void.

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<PAGE>

(c) Cancellation of Options. No Options that were not exercisable
during the period such person serves as a director shall thereafter become
exercisable upon a Termination of Directorship for any reason or no reason
whatsoever, and such Options shall terminate and become null and void upon
a Termination of Directorship.

9.6. Changes. (a) The Awards to a non-employee director shall be subject to
-------
Sections 4.2(a), (b) and (c) of the Plan and this Section 9.6, but shall
not be subject to Section 4.2(d).

(b) If the Company shall not be the surviving corporation in any
merger or consolidation, or if the Company is to be dissolved or
liquidated, then, unless the surviving corporation assumes the Options or
substitutes new Options which are determined by the Board in its sole
discretion to be substantially similar in nature and equivalent in terms
and value for Options then outstanding, upon the effective date of such
merger, consolidation, liquidation or dissolution, any unexercised Options
shall expire without additional compensation to the holder thereof;
provided, that, the Committee shall deliver notice to each non-employee
director at least twenty (20) days prior to the date of consummation of
such merger, consolidation, dissolution or liquidation which would result
in the expiration of the Options and during the period from the date on
which such notice of termination is delivered to the consummation of the
merger, consolidation, dissolution or liquidation, such Participant shall
have the right to exercise in full effective as of such consummation all
Options that are then outstanding (without regard to limitations on
exercise otherwise contained in the Options) but contingent on occurrence
of the merger, consolidation, dissolution or liquidation, and, provided
that, if the contemplated transaction does not take place within a ninety
(90) day period after giving such notice for any reason whatsoever, the
notice, accelerated vesting and exercise shall be null and void and, if and
when appropriate, new notice shall be given as aforesaid.

ARTICLE X.

NON-TRANSFERABILITY

No Stock Option or Stock Appreciation Right shall be Transferable by the
Participant otherwise than by will or by the laws of descent and distribution.
All Stock Options and all Stock Appreciation Rights shall be exercisable, during
the Participant's lifetime, only by the Participant. Tandem Stock Appreciation
Rights shall be Transferable, to the extent permitted above, only with the
underlying Stock Option. Shares of Restricted Stock under Article VII may not
be Transferred prior to the date on which shares are issued, or, if later, the
date on which any applicable restriction lapses. No Award shall, except as
otherwise specifically provided by law or herein, be

23
<PAGE>

Transferable in any manner, and any attempt to Transfer any such Award shall be
void, and no such Award shall in any manner be liable for or subject to the
debts, contracts, liabilities, engagements or torts of any person who shall be
entitled to such Award, nor shall it be subject to attachment or legal process
for or against such person.

ARTICLE XI.

CHANGE IN CONTROL PROVISIONS

11.1. Benefits. In the event of a Change in Control of the Company (as
--------
defined below), except as otherwise provided by the Committee upon the grant of
an Award, the Participant shall be entitled to the following benefits:

(a) Subject to paragraph (c) below with regard to Options granted to
Eligible Employees, all outstanding Options and the related Tandem Stock
Appreciation Rights and Non-Tandem Stock Appreciation Rights of such
Participant granted prior to the Change in Control shall be fully vested
and immediately exercisable in their entirety. The Committee, in its sole
discretion, may provide for the purchase of any such Stock Options by the
Company for an amount of cash equal to the excess of the Change in Control
price (as defined below) of the shares of Common Stock covered by such
Stock Options, over the aggregate exercise price of such Stock Options. For
purposes of this Section 11.1, Change in Control price shall mean the
higher of (i) the highest price per share of Common Stock paid in any
transaction related to a Change in Control of the Company, or (ii) the
highest Fair Market Value per share of Common Stock at any time during the
sixty (60) day period preceding a Change in Control.

(b) The restrictions to which any shares of Restricted Stock of such
Participant granted prior to the Change in Control are subject shall lapse
as if the applicable Restriction Period had ended upon such Change in
Control.

(c) Notwithstanding anything to the contrary herein, unless the
Committee provides otherwise at the time an Option is granted to an
Eligible Employee hereunder or thereafter, no acceleration of
exercisability shall occur with respect to such Option if the Committee
reasonably determines in good faith, prior to the occurrence of the Change
in Control, that the Options shall be honored or assumed, or new rights
substituted therefor (each such honored, assumed or substituted option
hereinafter called an "Alternative Option"), by a Participant's employer
(or the parent or a subsidiary of such employer) immediately following the
Change in Control, provided that any such Alternative Option must meet the
following criteria:

24
<PAGE>

(i) the Alternative Option must be based on stock which is
traded on an established securities market, or which will be so traded
within thirty (30) days of the Change in Control;

(ii) the Alternative Option must provide such Participant with
rights and entitlements substantially equivalent to or better than the
rights, terms and conditions applicable under such Option, including, but
not limited to, an identical or better exercise schedule; and

(iii) the Alternative Option must have economic value
substantially equivalent to the value of such Option (determined at the
time of the Change in Control).

For purposes of Incentive Stock Options, any assumed or substituted
Option shall comply with the requirements of Treasury regulation
(S) 1.425-1 (and any amendments thereto).

(d) Notwithstanding anything else herein, the Committee may, in its
sole discretion, provide for accelerated vesting of an Award (other than a
grant to a non-employee director pursuant to Article IX hereof), upon a
Termination of Employment during the Pre-Change in Control Period. Unless
otherwise determined by the Committee, the Pre-Change in Control Period
shall be the one hundred eighty (180) day period prior to a Change in
Control.

11.2. Change in Control. A "Change in Control" shall be deemed to have
-----------------
occurred:

(a) upon any "person" as such term is used in Sections 13(d) and
14(d) of the Exchange Act (other than the Company, any trustee or other
fiduciary holding securities under any employee benefit plan of the
Company, any company owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as their ownership of
Common Stock of the Company, or as a group or individually Stephen I.
Kahn, his spouse and their issue and any trusts for the benefit of any of
them), becoming the owner (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing
fifty percent (50%) or more of the combined voting power of the Company's
then outstanding securities (including, without limitation, securities
owned at the time of any increase in ownership);

(b) a change in the composition of the Board of Directors of the
Company such that the individuals who, as of the date hereof, comprise the
Board (the "Incumbent Board") cease for any reason to constitute at least
a majority of the Board; provided, however, for purposes of this
subsection that any individual who becomes a member of an Incumbent Board
subsequent to

25
<PAGE>

the date hereof whose election, or nomination for election by the
Company's stockholders, was approved in advance or contemporaneously with
such election by a vote of at least a majority of those individuals who
are members of the Incumbent Board (or deemed to be such pursuant to this
proviso) shall be considered as though such individual were a member of
the Incumbent Board; but, provided further, that any such individual whose
initial assumption of office occurs as a result of either an actual or
threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person
other than the Board of Directors of the Company or actual or threatened
tender offer for shares of the Company or similar transaction or other
contest for corporate control (other than a tender offer by the Company)
shall not be so considered as a member of the Incumbent Board; or

(c) upon the merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in
the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than fifty
percent (50%) of the combined voting power of the voting securities of the
Company or such surviving entity outstanding immediately after such merger
or consolidation; provided, however, that a merger or consolidation
effected to implement a recapitalization of the Company (or similar
transaction) in which no person (other than those covered by the
exceptions in (a) above) acquires more than fifty percent (50%) of the
combined voting power of the Company's then outstanding securities shall
not constitute a Change in Control of the Company; or

(d) upon the stockholder's of the Company approval of a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's
assets other than the sale of all or substantially all of the assets of
the Company to a person or persons who beneficially own, directly or
indirectly, at least fifty percent (50%) or more of the combined voting
power of the outstanding voting securities of the Company at the time of
the sale.

ARTICLE XII.

TERMINATION OR AMENDMENT OF THE PLAN

12.1 Termination or Amendment. Notwithstanding any other provision of
------------------------
this Plan, the Board may at any time, and from time to time, amend, in whole or
in part, any or all of the provisions of the Plan, or suspend or terminate it
entirely,

26
<PAGE>

retroactively or otherwise; provided, however, that, unless otherwise required
by law or specifically provided herein, the rights of a Participant with respect
to Awards granted prior to such amendment, suspension or termination, may not be
impaired without the consent of such Participant and, provided further, without
the approval of the stockholders of the Company, if and to the extent required
by the applicable provisions of Rule 16b-3 or, if and to the extent required,
under the applicable provisions of Section 162(m) of the Code, or with regard to
Incentive Stock Options, Section 422 of the Code, no amendment may be made which
would (i) increase the aggregate number of shares of Common Stock that may be
issued under this Plan; (ii) increase the maximum individual Participant
limitations for a fiscal year under Section 4.1(b); (iii) change the
classification of employees and non-employee directors eligible to receive
Awards under this Plan; (iv) decrease the minimum option price of any Stock
Option; (v) extend the maximum option period under Section 6.3; (vi) change any
rights under the Plan with regard to non-employee directors; or (vii) require
stockholder approval in order for the Plan to continue to comply with the
applicable provisions, if any, of Rule 16b-3, Section 162(m) of the Code or,
with regard to Incentive Stock Options, Section 422 of the Code. In no event may
the Plan be amended without the approval of the stockholders of the Company in
accordance with the applicable laws or other requirements to increase the
aggregate number of shares of Common Stock that may be issued under the Plan,
decrease the minimum option price of any Stock Option, or to make any other
amendment that would require stockholder approval under the rules of any
exchange or system on which the Company's securities are listed or traded at the
request of the Company.

Except with respect to the award of Stock Options to non-employee directors
under Article IX, the Committee may amend the terms of any Award theretofore
granted, prospectively or retroactively, but, subject to Article IV above or as
otherwise specifically provided herein, no such amendment or other action by the
Committee shall impair the rights of any holder without the holder's consent.

ARTICLE XIII.

UNFUNDED PLAN

13.1. Unfunded Status of Plan. This Plan is intended to constitute an
-----------------------
"unfunded" plan for incentive compensation. With respect to any payments as to
which a Participant has a fixed and vested interest but which are not yet made
to a Participant by the Company, nothing contained herein shall give any such
Participant any rights that are greater than those of a general creditor of the
Company.

27
<PAGE>

ARTICLE XIV.

GENERAL PROVISIONS

14.1. Legend. The Committee may require each person receiving shares
------
pursuant to an Award under the Plan to represent to and agree with the Company
in writing that the Participant is acquiring the shares without a view to
distribution thereof. In addition to any legend required by this Plan, the
certificates for such shares may include any legend which the Committee deems
appropriate to reflect any restrictions on Transfer.

All certificates for shares of Common Stock delivered under the Plan shall
be subject to such stock transfer orders and other restrictions as the Committee
may deem advisable under the rules, regulations and other requirements of the
Securities and Exchange Commission, any stock exchange upon which the Common
Stock is then listed or any national securities association system upon whose
system the Common Stock is then quoted, any applicable Federal or state
securities law, and any applicable corporate law, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.

14.2. Other Plans. Nothing contained in this Plan shall prevent the Board
-----------
from adopting other or additional compensation arrangements, subject to
stockholder approval if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific cases.

14.3. No Right to Employment/Directorship. Neither this Plan nor the
-----------------------------------
grant of any Award hereunder shall give any Participant or other employee any
right with respect to continuance of employment by the Company or any
Subsidiary, nor shall they be a limitation in any way on the right of the
Company or any Subsidiary by which an employee is employed to terminate his
employment at any time. Neither this Plan nor the grant of any Award hereunder
shall impose any obligations on the Company to retain any Participant as a
director nor shall it impose on the part of any Participant any obligation to
remain as a director of the Company.

14.4. Withholding of Taxes. The Company shall have the right to deduct
--------------------
from any payment to be made to a Participant, or to otherwise require, prior to
the issuance or delivery of any shares of Common Stock or the payment of any
cash hereunder, payment by the Participant of, any Federal, state or local taxes
required by law to be withheld. Upon the vesting of Restricted Stock, or upon
making an election under Code Section 83(b), a Participant shall pay all
required withholding to the Company.

The Committee may permit, as it decides to approve in its sole discretion,
any such withholding obligation with regard to any Participant to be satisfied
by reducing the number of shares of Common Stock otherwise deliverable or by
delivering shares of Common Stock already owned. Any fraction of a share of
Common Stock required

28
<PAGE>

to satisfy such tax obligations shall be disregarded and the amount due shall be
paid instead in cash by the Participant.

14.5. Listing and Other Conditions.
----------------------------

(a) If the Common Stock becomes listed on a national securities
exchange or system sponsored by a national securities association, the
issue of any shares of Common Stock pursuant to an Award shall be
conditioned upon such shares being listed on such exchange or system. The
Company shall have no obligation to issue such shares unless and until
such shares are so listed, and the right to exercise any Option with
respect to such shares shall be suspended until such listing has been
effected.

(b) If at any time counsel to the Company shall be of the opinion
that any sale or delivery of shares of Common Stock pursuant to an Award
is or may in the circumstances be unlawful or result in the imposition of
excise taxes on the Company under the statutes, rules or regulations of
any applicable jurisdiction, the Company shall have no obligation to make
such sale or delivery, or to make any application or to effect or to
maintain any qualification or registration under the Securities Act of
1933, as amended, or otherwise with respect to shares of Common Stock or
Awards, and the right to exercise any Option shall be suspended until, in
the opinion of said counsel, such sale or delivery shall be lawful or will
not result in the imposition of excise taxes on the Company.

(c) Upon termination of any period of suspension under this Section
14.5, any Award affected by such suspension which shall not then have
expired or terminated shall be reinstated as to all shares available
before such suspension and as to shares which would otherwise have become
available during the period of such suspension, but no such suspension
shall extend the term of any Option.

14.6. Governing Law. This Plan shall be governed and construed in
-------------
accordance with the laws of the State of Delaware (regardless of the law that
might otherwise govern under applicable Delaware principles of conflict of
laws).

14.7. Construction. Wherever any words are used in this Plan in the
------------
masculine gender they shall be construed as though they were also used in the
feminine gender in all cases where they would so apply, and wherever any words
are used herein in the singular form they shall be construed as though they were
also used in the plural form in all cases where they would so apply.

14.8. Other Benefits. No Award payment under this Plan shall be deemed
--------------
compensation for purposes of computing benefits under any retirement plan of the
Company or its subsidiaries nor affect any benefits under any other benefit plan
now

29
<PAGE>

or subsequently in effect under which the availability or amount of benefits is
related to the level of compensation.

14.9. Costs. The Company shall bear all expenses included in
-----
administering this Plan, including expenses of issuing Common Stock pursuant to
any Awards hereunder.

14.10. No Right to Same Benefits. The provisions of Awards need not be
-------------------------
the same with respect to each Participant, and such Awards to individual
Participants need not be the same in subsequent years.

14.11. Death/Disability. The Committee may in its discretion require the
----------------
transferee of a Participant to supply it with written notice of the
Participant's death or Disability and to supply it with a copy of the will (in
the case of the Participant's death) or such other evidence as the Committee
deems necessary to establish the validity of the transfer of an Award. The
Committee may also require that the agreement of the transferee to be bound by
all of the terms and conditions of the Plan.

14.12. Section 16(b) of the Exchange Act. All elections and transactions
---------------------------------
under the Plan by persons subject to Section 16 of the Exchange Act involving
shares of Common Stock are intended to comply with any applicable condition
under Rule 16b-3. The Committee may establish and adopt written administrative
guidelines, designed to facilitate compliance with Section 16(b) of the Exchange
Act, as it may deem necessary or proper for the administration and operation of
the Plan and the transaction of business thereunder.

14.13. Severability of Provisions. If any provision of the Plan shall be
--------------------------
held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions hereof, and the Plan shall be construed and enforced
as if such provisions had not been included.

14.14. Headings and Captions. The headings and captions herein are
---------------------
provided for reference and convenience only, shall not be considered part of the
Plan, and shall not be employed in the construction of the Plan.

ARTICLE XV.

TERM OF PLAN

No Award shall be granted pursuant to the Plan on or after the tenth
anniversary of the earlier of the date the Plan is adopted or the date of
stockholder approval, but Awards granted prior to such tenth anniversary may
extend beyond that date.

30
<PAGE>

ARTICLE XVI.

NAME OF PLAN

This Plan shall be known as the dELiA*s Inc. 1996 Stock Incentive Plan.

<PAGE>

EXHIBIT 10.6

- --------------------------------------------------------------------------------

dELiA*s Inc.

RESTRICTED STOCK PLAN

(Formerly known as the dELiA*s LLC Restricted Interest Plan)

- --------------------------------------------------------------------------------

Amended and Restated Effective as of December 18, 1996

<PAGE>

Table of Contents
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>

I. PURPOSE OF THE PLAN...................................... 1

II. DEFINITIONS.............................................. 1

III. EFFECTIVE DATE.......................................... 3

IV. ADMINISTRATION........................................... 4
A. Duties of the Committee............................ 4
B. Advisors........................................... 4
C. Indemnification.................................... 4
D. Determinations..................................... 4

V. RESTRICTED STOCK; ADJUSTMENT UPON CERTAIN EVENTS......... 4
A. Restricted Stock to be Delivered; Fractional Shares 4
B. General Limitation................................. 5
C. Adjustments; Recapitalization, Etc. ............... 5

VI. TERMS OF RESTRICTED STOCK................................ 5
A. Issuance........................................... 5
B. Restricted Stock and Certificates.................. 5
1. Legend........................................ 6
2. Custody....................................... 6
3. Buy Out and Settlement Provisions............. 6
C. Restrictions and Conditions........................ 6
1. Restriction Period............................ 6
2. Vesting....................................... 6
3. Acceleration of Vesting....................... 7
4. Rights as Stockholder......................... 7
5. Lapse of Restrictions......................... 8
D. Non-Competition and Other Provisions............... 8

VII. EFFECT OF TERMINATION OF EMPLOYMENT..................... 8

VIII. NONTRANSFERABILITY...................................... 8

IX. TERMINATION, AMENDMENT AND MODIFICATION................. 9

X. GENERAL PROVISIONS...................................... 9
A. Right to Terminate Employment...................... 9
B. Purchase for Investment............................ 9
C. Trusts, Etc. ...................................... 10

</TABLE>

i
<PAGE>

<TABLE>
Page
----
<S> <C> <C>
D. Notices................................ 10
E. Severability of Provisions............. 10
F. Payment to Minors, Etc................. 10
G. Headings and Captions.................. 10
H. Controlling Law........................ 11
I. Other Benefits......................... 11
J. Costs.................................. 11
K. Section 16(b) of the Exchange Act...... 11

XI. WITHHOLDING TAXES............................. 11
</TABLE>

ii
<PAGE>

dELiA*s Inc.

RESTRICTED STOCK PLAN

I. PURPOSE OF THE PLAN
-------------------

Prior to the reorganization of dELiA*s LLC (the "Reorganization"),
dELiA*s LLC adopted the dELiA*s LLC Restricted Interest Plan (the "Restricted
Interest Plan"), effective February 1, 1996, under which certain of its
employees were granted restricted class B membership interests in dELiA*s LLC.
The purpose of the dELiA*s Inc. (the "Company") Restricted Stock Plan (the
"Plan"), which is an amendment and restatement of the Restricted Interest Plan,
is to continue in effect, and make certain adjustments to, the outstanding
restricted interest awards made under the Restricted Interest Plan to certain
employees of the Company in order to reflect the Reorganization. No new awards
are available under the Plan.

II. DEFINITIONS
-----------

In addition to the terms defined elsewhere herein, for purposes of the
Plan, the following terms will have the following meanings when used herein with
initial capital letters:

A. "Agreement" means the separate agreement between a Participant
and the Company (in a form to be determined by the Committee) which continues
the obligations under the "restricted interest agreement" entered into between
the Participant and dELiA*s LLC pursuant to the Restricted Interest Plan and
adjusts each Participant's Award thereunder into Restricted Stock.

B. "Award" means a restricted Class B membership interest award made
to a Participant under the Restricted Interest Plan which is adjusted hereunder
into an award of Restricted Stock to reflect the Reorganization. Such Award
shall be confirmed by, and subject to, the terms of the Agreement.

C. "Board" means the Board of Directors of the Company.

D. "Cause" means that the Committee shall have determined that (i)
the Participant shall have committed fraud or any felony in connection with the
Participant's duties as an employee of the Company, or willful misconduct or any
act of disloyalty, dishonesty, fraud or breach of trust or confidentiality as to
the Company or the commission of any other act which causes or may reasonably be
expected to cause economic or reputational injury to the Company; (ii) a
Termination of Employment would be deemed to be for Cause under any employment
agreement between the Company and the Participant; or (iii) any other reason as
the Committee shall in good faith determine. Cause shall be deemed to exist as
of the date any of the above

1
<PAGE>

events occur even if the Committee's determination is later and whether or not
such determination is made before or after Termination of Employment.

E. "Code" means the Internal Revenue Code of 1986, as amended, and
all regulations promulgated thereunder.

F. "Common Stock" means the common stock, $.01 par value, of the
Company.

G. "Company" means dELiA*s Inc., a corporation organized under the
laws of the State of Delaware.

H. "Committee" means a committee of the Board appointed from time to
time by the Board. Solely to the extent required under Rule 16b-3 under the
Exchange Act ("Rule 16b-3"), such committee shall consist solely of two or more
"non-employee directors" as defined in Rule 16b-3. To the extent that no
Committee exists which has the authority to administer the Plan, the functions
of the Committee shall be exercised by the Board. If for any reason the
appointed Committee does not meet the requirements of Rule 16b-3, such
noncompliance shall not affect the validity of the awards, grants,
interpretations or other actions of the Committee.

I. "Competitive Activity" means (i) being employed by, consulting to
or being a director of any business, or engaging directly or indirectly in any
business activity or enterprise, that is competitive with any activity conducted
by the Company, or of the division that the Participant is or was employed by;
(ii) soliciting for employment or consulting, employing or retaining, or
assisting another Person to employ or retain, directly or indirectly, any
employees of the Company or any Person who was an employee of the Company in the
prior twelve months; provided, however, that employing or retaining, or
assisting another Person to employ or retain, any Person whose employment with
the Company has been terminated without Cause or any Person that is non-exempt
under the Federal Fair Labor Standards Act, 29 USC (S) 213(a)(1), shall not be
considered Competitive Activity; (iii) soliciting, contacting, or otherwise
doing business with any Person that at any time in the prior twelve months has
sold or contributed goods or services to the Company or has been a customer,
client, agent, broker or dealer of or for the Company; or (iv) such other
activity as the Committee in its sole discretion shall determine.

J. "Disability" means a permanent and total disability, rendering a
Participant unable to perform the duties performed by the Participant for the
Company by reason of physical or mental disability, as determined by the
Committee in its sole discretion. A Disability shall only be deemed to occur at
the time of the determination by the Committee of the Disability.

K. "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and all rules and regulations promulgated thereunder.

L. "Key Employee" means any individual who is an officer or other
valuable employee of the Company, as determined by the Committee in its sole
discretion. A Key Employee may, but need not, be an officer of the Company.

2
<PAGE>

M. "Participant" means a Key Employee who was selected to participate
in, and who received and Award under, the Restricted Interest Plan. A
Participant shall include such Key Employee and his or her heirs, executors,
administrators, legal representatives, estate or designated beneficiary, as the
context may require.

N. "Person" means any individual or entity, and the heirs,
executors, administrators, legal representatives, successors and assigns of such
Person as the context may require.

O. "Restricted Stock" means the restricted class B membership
interests granted to a Participant under the Restricted Interest Plan, which are
adjusted to reflect the Reorganization and are converted to shares of Common
Stock subject to the restrictions under Article VI of the Plan.

P. "Restriction Period" shall have the meaning set forth in Section
VI(C) hereof.

Q. "Retirement" means a Termination of Employment at or after age 65
(or, with the consent of the Committee, before age 65 but after age 45).

R. "Securities Act" means the Securities Act of 1933, as amended,
and all rules and regulations promulgated thereunder.

S. "Termination of Employment" with respect to a Participant means
that a Key Employee is no longer actively employed by the Company on a full-time
basis, irrespective of whether or not such Key Employee is receiving salary
continuance pay, is continuing to participate in other employee benefit programs
or is otherwise receiving severance type payments. A Termination of Employment
shall not include a leave of absence approved for purposes of the Plan by the
Committee. For purposes of the Plan, a full-time employee is an individual who
is scheduled to work at least thirty (30) hours per week.

T. "Transfer" or "Transferred" means anticipate, alienate, attach,
sell, assign, pledge, encumber, charge or otherwise transfer.

III. EFFECTIVE DATE
--------------

The Plan shall become effective on December 18, 1996 (the "Effective
Date"), subject to its approval and adoption by the stockholders of the Company
solely to the extent required by any applicable rule of a national securities
exchange or system sponsored by the National Association of Securities Dealers
or applicable law.

3
<PAGE>

IV. ADMINISTRATION
--------------

A. Duties of the Committee. The Committee shall have full authority
-----------------------
to administer and interpret the Plan and to decide any questions and settle all
controversies and disputes that may arise in connection with the Plan; to
establish, amend and rescind rules for carrying out the Plan; to select
Participants in the Plan; and to make all other determinations and to take all
such steps in connection with the Plan and any Restricted Stock as the
Committee, in its sole discretion, deems necessary or desirable. The Committee
shall not be bound to any standards of uniformity or similarity of action,
interpretation or conduct in the discharge of its duties hereunder, regardless
of the apparent similarity of the matters coming before it. Any determination,
action or conclusion of the Committee shall be final, conclusive and binding on
all parties.

B. Advisors. The Committee may employ such legal counsel,
--------
consultants and agents as it may deem desirable for the administration of the
Plan, and may rely upon any advice or opinion received from any such counsel or
consultant and any computation received from any such consultant or agent.
Expenses incurred by the Committee in the engagement of such counsel, consultant
or agent shall be paid by the Company.

C. Indemnification. To the maximum extent permitted by applicable
---------------
law, no officer of the Company shall be liable for any action or determination
made in good faith with respect to the Plan or any Award. To the maximum extent
permitted by applicable law or the Certificate of Incorporation or By-Laws of
the Company, each officer shall be indemnified and held harmless by the Company
against any cost or expense (including reasonable fees of counsel reasonably
acceptable to the Company) or liability (including any sum paid in settlement of
a claim with the approval of the Company), and advanced amounts necessary to pay
the foregoing at the earliest time and to the fullest extent permitted, arising
out of any act or omission to act in connection with the Plan, except to the
extent arising out of such officer's own fraud or bad faith. Such
indemnification shall be in addition to any rights of indemnification the
officers may have under applicable law or under the Certificate of Incorporation
or By-Laws of the Company. Notwithstanding anything else herein, this
indemnification will not apply to the actions or determinations made by any
Participant with regard to any Award.

D. Determinations. Each determination, interpretation or other
--------------
action made or taken pursuant to the provisions of the Plan by the Committee
shall be final, conclusive and binding for all purposes and upon all persons,
including, without limitation, the Company, officers and other employees of the
Company, and the respective heirs, executors, administrators, personal
representatives and other successors in interest of each of the foregoing.

V. RESTRICTED STOCK; ADJUSTMENT UPON CERTAIN EVENTS
------------------------------------------------

A. Restricted Stock to be Delivered; Fractional Shares. Any
---------------------------------------------------
Restricted Stock to be issued under the Plan shall be made available in a manner
that adjusts for, and recognizes the effects of, the Reorganization on the
restricted class B membership interest awards.

4
<PAGE>

Fractional shares resulting from adjustment pursuant to Section V(C) shall be
issued pursuant to the terms of the Plan.

B. General Limitation. Subject to adjustment as provided in this
------------------
Article V, the maximum number of shares of Common Stock with respect to which
Restricted Stock may be issued under the Plan shall not exceed 704,794.

C. Adjustments; Recapitalization, Etc. The existence of the Plan
-----------------------------------
and any Restricted Stock issued hereunder shall not affect in any way the right
or power of the Company to make or authorize any adjustment, recapitalization,
reorganization or other change in the Company's capital structure or its
business, any merger or consolidation of the Company, the liquidation of the
Company, any sale or transfer of all or part of its assets or business or any
other Company act or proceeding. The Committee may make or provide for such
adjustments in the maximum number of shares of Common Stock specified in Section
V(B), in the number of shares of Common Stock covered by outstanding Restricted
Stock issued hereunder, or such other adjustments in the number of shares of
Common Stock, kind of Restricted Stock received, or type or kind of Awards as
the Committee in its sole discretion may determine is equitably required to
prevent dilution or enlargement of the rights of Participants or to otherwise
recognize the effect that otherwise would result from any distribution,
recapitalization or other change in the capital structure of the Company,
merger, consolidation, spin-off, reorganization, partial or complete
liquidation, or any other Company transaction or event having an effect similar
to any of the foregoing.

VI. TERMS OF RESTRICTED STOCK
-------------------------

A. Issuance. The eligible Key Employees to whom Restricted Stock
--------
will be issued under the Plan shall be those Key Employees who received prior
Awards under the Restricted Interest Plan. Based solely on the grant of
restricted class B membership interests made under the Restricted Interest Plan,
the Committee shall determine the number of shares of Restricted Stock to be
issued, the time or times within which such Restricted Stock may be subject to
forfeiture, the vesting schedule and rights to acceleration thereof, and all
other terms and conditions of the Restricted Stock.

B. Restricted Stock and Certificates. The Participants receiving
---------------------------------
Restricted Stock shall not have any rights with respect to such Restricted
Stock, unless and until such Participant has delivered a fully executed copy of
the Restricted Stock Agreement to the Company and has otherwise complied with
the applicable terms and conditions of such Restricted Stock Agreement and the
Plan. Notwithstanding the foregoing, if a Participant refuses to deliver a
fully executed Restricted Stock Agreement, the Participant's "restricted
interest agreement" under the Restricted Interest Plan shall continue in effect
but shall be deemed to apply to Restricted Stock instead of restricted class B
membership interests. Further, Restricted Stock shall be subject to the
following conditions:

5
<PAGE>

1. Legend. Each Participant receiving Restricted Stock shall be
------
issued a certificate in respect of such Restricted Stock, which shall be in such
form approved by the Committee, unless the Committee elects to use another
system, such as book entries by the transfer agent, as evidencing ownership of
Restricted Stock. Such certificate shall be registered in the name of such
Participant, and shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Restricted Stock, substantially
in the following form:

"The anticipation, alienation, attachment, sale, transfer, assignment,
pledge, encumbrance or charge of the shares of dELiA*s Inc. (the
"Company") common stock represented hereby are subject to the terms
and conditions (including forfeiture) of the dELiA*s Inc. Restricted
Stock Plan and an Agreement entered into between the Participant and
the Company dated __________, 199_. Copies of such Plan and Agreement
are on file at the principal office of the Company."

2. Custody. The Committee shall require that the certificates
-------
evidencing such Restricted Stock be held in custody by the Company or its duly
designated agent until the restrictions thereon shall have lapsed, and that, as
a condition thereof, the Participant shall deliver any documents relating to the
Common Stock covered by such Restricted Stock that the Committee requires in
order to arrange custody of such Common Stock including a duly signed stock
power, endorsed in blank, relating to the Common Stock covered by such Award.

3. Buy Out and Settlement Provisions. The Committee may at any
---------------------------------
time on behalf of the Company offer to buy out any Restricted Stock previously
issued, based on such terms and conditions as the Committee shall establish and
communicate to the Participant at the time that such offer is made.

C. Restrictions and Conditions. Any Restricted Stock issued
---------------------------
pursuant to the Plan shall be subject to Article VIII and the following
restrictions and conditions:

1. Restriction Period. The Participant shall not be permitted
------------------
to Transfer Restricted Stock issued under the Plan during the period commencing
on the date the Award was made to the Participant under the Restricted Interest
Plan (the "Restriction Period"), as set forth in the Agreement and such
Agreement may set forth a vesting schedule and any events that would accelerate
the vesting of the Restricted Stock. Within these limits, based on service,
performance and/or such other factors or criteria as the Committee may determine
in its sole discretion, the Committee may provide for the lapse of such
restrictions in installments in whole or in part, or may accelerate the vesting
of all or any part of any Restricted Stock and/or waive the deferral limitations
for all or any part of such Restricted Stock.

2. Vesting. Except with respect to a Change of Control as set
-------
forth in Section VI(C)(3) below and except as may be set forth in the Agreement,
the Restricted Stock of a Participant shall vest fully on the thirty month
anniversary of the date of the Award to such Participant under the Restricted
Interest Plan.

6
<PAGE>

3. Acceleration of Vesting. Unless the Committee determines
-----------------------
otherwise at the time of issuance as set forth in the Agreement, Restricted
Stock under the Plan shall become fully vested immediately upon a Change of
Control. For this purpose, a "Change of Control" shall be deemed to have
occurred upon:

(a) an acquisition after the Effective Date by any individual,
entity, or group of ownership of all the Company's assets, including, but not
limited to, by merger, consolidation or by purchase; excluding, however, the
following: (x) any such acquisition by the Company or (y) any such acquisition
by an employee benefit plan (or related trust) sponsored or maintained by the
Company; or

(b) the approval of the Board of (i) a complete liquidation of the
Company or (ii) the sale or other disposition of the assets of the Company,
including a merger or consolidation (hereinafter referred to as a
"Disposition"); excluding, however, such a Disposition to a corporation or other
business entity (hereinafter referred to as "Entity") with respect to which,
following such Disposition, (x) 70% or more of the combined voting power of the
then outstanding voting securities of or interests in such Entity entitled to
vote generally in the election of directors will be then beneficially owned,
directly or indirectly, by the individuals and entities who were beneficial
owners of the outstanding voting securities of the Company immediately prior to
such Disposition, (y) no Person (other than the Company and any employee benefit
plan (or related trust) of the Company or such Entity and any Person
beneficially owning, immediately prior to such Disposition, directly or
indirectly, 70% or more of the combined voting power of the Company will
beneficially own, directly or indirectly, 70% or more of the combined voting
power of the then outstanding voting securities or interests of such Entity
entitled to vote generally in the election of directors or managers, and (z)
individuals who were directors of the Company will constitute at least a
majority of the members of the board of directors or other governing or managing
body of such Entity.

4. Rights as Stockholder. Except as specifically set forth
---------------------
herein or the Agreement, a Participant covered by an Award shall have no rights
as a stockholder of the Company with respect to any shares of Restricted Stock
including, without limitation, the right to vote such shares, unless and until
the Restricted Period lapses and the Participant is fully vested in such shares.
Stephen I. Kahn, the President, Chief Executive Officer and Chairman of the
Board, shall have the sole authority and right to vote the shares of Restricted
Stock during the Restriction Period and until all vesting requirements with
respect thereto have been fulfilled. The Participant shall execute such
documents and take such further actions with respect to the exercise of voting
rights appurtenant to shares of Restricted Stock as the Committee, in its sole
discretion, determines necessary. With respect to any Restricted Stock, in no
event shall the Participant receive any other shares, securities, moneys or
property representing a distribution in respect of any Restricted Stock or
resulting from a reclassification or other like changes of the Restricted Stock,
or otherwise received in exchange therefor, and any rights issued to the
Participant in respect of the Restricted Stock (collectively, "RS Property")
until and unless the Restriction Period expires. During the Restriction Period,
such RS Property shall be deemed credited to a book-entry account held on behalf
of the Participant but shall be subject to the same restrictions, including
those under this subsection (4) and subsection (2) above, as the Restricted

7
<PAGE>

Stock with regard to which they are issued and shall herein be encompassed
within the term "Restricted Stock." From and after the date of transfer of the
Restricted Stock to the Participant, RS Property shall not bear any interest.

5. Lapse of Restrictions. If and when the Restriction Period
---------------------
expires without a prior forfeiture of the Restricted Stock subject to such
Restriction Period, the certificates for such shares of Common Stock shall be
delivered to the Participant. All legends shall be removed from said
certificates at the time of delivery to the Participant, except for legends
permitted or required to be placed thereon under applicable law.

D. Non-Competition and Other Provisions. In consideration of the
------------------------------------
issuance of any Restricted Stock as well as the grant of restricted membership
interests made under the Restricted Interest Plan, by accepting the Restricted
Stock the Key Employee agrees during employment and, in the event any Restricted
Stock vests, for a period ending one year following the date of the Key
Employee's Termination of Employment, not to engage in any Competitive Activity,
except to the extent consented to by the Committee in writing. Each Key
Employee who received an Award acknowledges that the Company will suffer
irreparable harm in the event such Key Employee engages in any Competitive
Activity during this period, and agrees that in addition to its remedies at law,
the Company shall be entitled to injunctive relief as a consequence of a
violation or threatened violation of this covenant. The Committee will have the
discretion to impose in a Key Employee's Agreement such other conditions,
limitations and restrictions as it determines are appropriate in its sole
discretion, including any waivers of rights which a Key Employee may have.

VII. EFFECT OF TERMINATION OF EMPLOYMENT
-----------------------------------

Except with respect to a Change of Control and except as set forth in
the Agreement and the Plan, upon a Participant's Termination of Employment for
any reason (including, without limitation, Disability or Retirement) during the
relevant Restriction Period, all Restricted Stock still subject to restriction
shall be forfeited in accordance with the terms and conditions established by
the Committee at issuance or thereafter.

VIII. NONTRANSFERABILITY
------------------

No Restricted Stock may be Transferred prior to the date on which any
applicable restriction thereon lapses. No Restricted Stock shall, except as
otherwise specifically provided by law or herein, be Transferable in any manner,
and any attempt to Transfer such Restricted Stock shall be void, and no such
Restricted Stock shall in any manner be liable for or subject to the debts,
contracts, liabilities, engagements or torts of any person who shall be entitled
to such Restricted Stock, nor shall it be subject to attachment or legal process
for or against such person.

8
<PAGE>

IX. TERMINATION, AMENDMENT AND MODIFICATION
---------------------------------------

The Plan shall terminate at the close of business on the tenth
anniversary of the original effective date of the Restricted Interest Plan,
i.e., February 1, 2006 (the "Termination Date"), unless terminated sooner as
hereinafter provided, and no Restricted Stock shall be issued under the Plan on
or after that date. The termination of the Plan shall not terminate any
outstanding Restricted Stock that by their terms continue beyond the Termination
Date. At any time prior to the Termination Date, the Committee may amend or
terminate the Plan or suspend the Plan in whole or in part.

The Committee may at any time, and from time to time, amend, in whole
or in part, any or all of the provisions of the Plan, or suspend or terminate it
entirely, retroactively or otherwise; provided, however, that, unless otherwise
-------- -------
required by law or specifically provided herein, the rights of a Participant
with respect to any Restricted Stock issued prior to such amendment, suspension
or termination, may not be materially impaired without the consent of such
Participant and, provided further, solely to the extent required by applicable
law, without the approval of stockholders of the Company, no amendment may be
made which would (i) increase the number of shares of Common Stock that may be
issued under the Plan (except by operation of Article V); or (ii) extend the
maximum Restriction Period.

The Committee may amend the terms of any Restricted Stock issued,
prospectively or retroactively, but, subject to Article VI above or as otherwise
provided herein, no such amendment or other action by the Committee shall
materially impair the rights of any Participant without the Participant's
consent.

X. GENERAL PROVISIONS
------------------

A. Right to Terminate Employment. Neither the adoption of the Plan
-----------------------------
nor the issuance of any Award hereunder shall impose any obligation on the
Company to continue the employment of any Participant, nor shall it impose any
obligation on the part of any Participant to remain in the employ of the
Company.

B. Purchase for Investment. If the Committee determine that the law
-----------------------
so requires, the holder of any Restricted Stock issued hereunder shall, upon any
vesting or conversion thereof, execute and deliver to the Company a written
statement, in form satisfactory to the Company, representing and warranting that
such Participant is purchasing or accepting the Restricted Stock then acquired
for such Participant's own account and not with a view to the resale or
distribution in violation of the Securities Act, that no subsequent offer for
sale, sale, transfer or assignment of any such interests shall be made unless it
is first registered under the Securities Act or an exemption from registration
is available (and then it may be sold only in compliance with all applicable
state securities laws), and that a legend may be placed on any certificates
representing the Restricted Stock to that effect and that a stop transfer order
may be placed against it.

9
<PAGE>

C. Trusts, Etc. Nothing contained in the Plan and no action taken
------------
pursuant to the Plan (including, without limitation, the issuance of any
Restricted Stock thereunder) shall create or be construed to create a trust of
any kind, or a fiduciary relationship, between the Company and any Participant
or the executor, administrator or other personal representative or designated
beneficiary of such Participant, or any other persons. Any reserves that may be
established by the Company in connection with the Plan shall continue to be part
of the general funds of the Company, and no individual or entity other than the
Company shall have any interest in such funds until paid to a Participant. If
and to the extent that any Participant or such Participant's executor,
administrator or other personal representative, as the case may be, acquires a
right to receive any payment from the Company pursuant to the Plan, such right
shall be no greater than the right of an unsecured general creditor of the
Company.

D. Notices. Any notice to the Company required by or in respect of
-------
the Plan will be addressed to the Company at 435 HUDSON STREET, NEW YORK, NEW
YORK 10014 Attention: STEPHEN KAHN, or such other place of business as shall
become the Company's principal executive offices from time to time. Each
Participant shall be responsible for furnishing the Committee with the current
and proper address for the mailing to such Participant of notices and the
delivery to such Participant of agreements, any Restricted Stock and payments.
Any such notice to the Participant will, if the Company has received notice that
the Participant is then deceased, be given to the Participant's personal
representative if such representative has previously informed the Company of his
status and address (and has provided such reasonable substantiating information
as the Company may request) by written notice under this Section. Any notice
required by or in respect of the Plan will be deemed to have been duly given
when delivered in person or when dispatched by telegram or one business day
after having been dispatched by a nationally recognized overnight courier
service or three business days after having been mailed by United States
registered or certified mail, return receipt requested, postage prepaid. The
Company assumes no responsibility or obligation to deliver any item mailed to
such address that is returned as undeliverable to the addressee and any further
mailings will be suspended until the Participant furnishes the proper address.

E. Severability of Provisions. If any provisions of the Plan shall
--------------------------
be held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions of the Plan, and the Plan shall be construed and
enforced as if such provisions had not been included.

F. Payment to Minors, Etc. Any benefit payable to or for the
-----------------------
benefit of a minor, an incompetent person or other person incapable of receipt
thereof shall be deemed paid when paid to such person's guardian or to the party
providing or reasonably appearing to provide for the care of such person, and
such payment shall fully discharge the Committee, the Company and their
employees, agents and representatives with respect thereto.

G. Headings and Captions. The headings and captions herein are
---------------------
provided for reference and convenience only. They shall not be considered part
of the Plan and shall not be employed in the construction of the Plan.

10
<PAGE>

H. Controlling Law. The Plan shall be construed and enforced
---------------
according to the laws of the State of Delaware.

I. Other Benefits. No payment under the Plan shall be considered
--------------
compensation for purposes of computing benefits under any retirement plan of the
Company nor affect any benefits under any other benefit plan now or subsequently
in effect under which the availability of benefits is related to the level of
compensation.

J. Costs. The Company shall bear all expenses included in
-----
administering the Plan, including expenses of issuing any Restricted Stock.

K. Section 16(b) of the Exchange Act. The Committee may establish
---------------------------------
guidelines designed to facilitate compliance with Section 16(b) of the Exchange
Act, as it may deem necessary or proper for the administration and operation of
the Plan.

XI. WITHHOLDING TAXES
-----------------

The Company shall have the right to deduct from any payment to be made
to a Participant or to otherwise require, prior to the issuance or delivery of
any Restricted Stock, or the payment of any cash hereunder, payment by the
Participant to the Company of any federal, state or local taxes required by law
to be withheld. Upon the vesting of Restricted Stock or upon making an election
pursuant to Code Section 83(b), a Participant shall pay all required withholding
to the Company. The Company may make such provisions and take such steps as it
may deem necessary or appropriate for the withholding of all federal, state and
local taxes required by law to be withheld, including, but not limited to (i)
deducting the amount to be withheld from any other amount then or thereafter
payable to the Participant, his or her beneficiary or estate, and (ii) requiring
a Participant, his or her beneficiary or estate to pay the Company the amount
required to be withheld as a condition of releasing any Common Stock.

The Committee may permit, as it decides to approve in its sole
discretion, any such withholding obligation with regard to any Participant to be
satisfied by reducing the number of shares of Common Stock otherwise deliverable
or by delivery of shares of Common Stock already owned.

<PAGE>

EXHIBIT 10.10

RESTRICTED STOCK AGREEMENT
--------------------------

THIS AGREEMENT, made as of the 18th day of December 1996, by and
between dELiA*s Inc., a Delaware corporation with its principal office at 435
Hudson Street, New York, New York 10014 (the "Company"), and the person
identified on Schedule A attached hereto (the "Executive").

WHEREAS, on February 1, 1996, the Executive was granted a restricted
class B membership interest in dELiA*s LLC (the "Restricted Interest Award")
under the dELiA*s LLC Restricted Interest Plan (the "Restricted Interest Plan"),
subject to the terms and conditions of the restricted interest agreement entered
into by and between the Executive and dELiA*s LLC on such date;

WHEREAS, pursuant to Section V(C) of the Restricted Interest Plan, the
President has the authority to adjust the Executive's Restricted Interest Award
to recognize the effects of the reorganization of dELiA*s LLC (the
"Reorganization");

WHEREAS, pursuant to the Reorganization the Restricted Interest Plan
was amended and restated by the Company as the dELiA*s Inc. Restricted Stock
Plan (the "Plan");

WHEREAS, subject to the Executive's acceptance of the terms and
conditions set forth herein (the "Agreement"), which shall supersede and replace
the restricted interest agreement, the President has determined that the
Executive's Restricted Interest Award shall be adjusted to reflect the
Reorganization and shall be converted to an award of Restricted Stock; and

WHEREAS, the Committee and/or the Board has approved the terms and
conditions of this Agreement.

NOW, THEREFORE, the Company and the Executive agree as follows:

1. Conversion to Restricted Stock.
------------------------------

Subject to the restrictions, terms and conditions of the Plan and this
Agreement and pursuant to the Reorganization, the Company hereby converts the
Executive's Restricted Interest Award into an award of Restricted Stock in the
number of shares as set forth on Schedule A (the "Conversion"). While the
restrictions are in effect, the Award shall be referred to herein as the
"Restricted Stock."

As previously agreed to by the Executive in the Restricted Interest
Plan in consideration of the previous grant of the Restricted Interest and in
consideration of the
<PAGE>

Conversion, the Executive agrees during employment and, in the event any
Restricted Stock vests, for a period ending one year following the date of the
Executive's Termination of Employment, not to engage in any Competitive Activity
(as defined in Section II(I) of the Plan) except to the extent consented to by
the Committee in writing. The Executive acknowledges that the Company will
suffer irreparable harm in the event such Executive engages in any Competitive
Activity during this period, and agrees that in addition to its remedies at law,
the Company shall be entitled to injunctive relief as a consequence of a
violation or threatened violation of this covenant.

2. Restrictions on Transfer.
------------------------

The Executive shall not sell, transfer, pledge, hypothecate, assign or
otherwise dispose of any Restricted Stock, except as set forth in the Plan or
this Agreement. Any attempted sale, transfer, pledge, hypothecation, assignment
or other disposition of the Restricted Stock in violation of the Plan or this
Agreement shall be void and of no effect and the Company shall have the right to
disregard the same on its books and records.

3. Restricted Stock.
----------------

3.1 Retention of Certificate. Promptly after the date of this
------------------------
Agreement, the Company shall issue a certificate representing the Restricted
Stock. The certificate shall be registered in the Executive's name and shall
bear any legend required under the Plan and applicable law. Such certificate
shall be held in custody by the Company (or its designated agent) until the
restrictions thereon shall have lapsed. The Executive shall have delivered to
the Company any documents relating to the Restricted Stock that the Committee
requires in order to arrange custody of such Restricted Stock. In no event
shall the Executive receive any other awards, securities, moneys or property
representing a distribution in respect of any Restricted Stock, or resulting
from a reclassification or other like changes of the Restricted Stock, or
otherwise received in exchange therefor, and any rights issued to the Executive
in respect of the Restricted Stock (collectively "RS Property") until and unless
the Restriction Period expires except as the Company may in its sole and
absolute discretion otherwise decide. During the Restriction Period, such RS
Property shall be deemed credited to a book-entry account held on behalf of the
Executive, but shall be subject to the same restrictions, including those under
Sections 3.1 and 3.3, as the Restricted Stock with regard to which they are
issued and shall herein be encompassed within the term "Restricted Stock."

3.2 Rights with Regard to Restricted Stock. Until the
--------------------------------------
Restriction Period expires, the Restricted Stock shall be subject to the
restrictions set forth in Section VI(C) of the Plan. From and after the date of
transfer of the Restricted Stock to the Executive, (i) the Executive will not be
entitled to delivery of the certificate representing the Restricted Stock or
receive any RS Property until the Restriction Period shall have expired and
unless all other vesting requirements with respect thereto shall have been
fulfilled, (ii) the Executive will not be entitled to vote the shares of
Restricted Stock, until the Restriction Period shall have expired and unless all
other vesting requirements with respect thereto shall

2
<PAGE>

have been fulfilled, (iii) the Company (or its designated agent) will retain
custody of the certificate representing the Restricted Stock and the other RS
Property during the Restriction Period, (iv) no RS Property shall bear interest
during the Restriction Period, and (v) the Executive may not sell, assign,
transfer, pledge, exchange, encumber or dispose of the Restricted Stock during
the Restriction Period. The Executive hereby acknowledges that, pursuant to the
terms and conditions of the Plan, Stephen I. Kahn, the President, Chief
Executive Officer and Chairman of the Board of the Company, will have the sole
authority and right to vote the shares of Restricted Stock during the
Restriction Period and until all vesting requirements with respect thereto shall
have been fulfilled. The Executive agrees to execute such documents and take
such further actions with respect to the exercise of voting rights appurtenant
to shares of Restricted Stock as the Committee, in its sole discretion,
determines necessary.

3.3 Vesting. Except with respect to a Change of Control as
-------
defined in Section VI(C)(3) of the Plan, the Restricted Stock shall become 100%
vested and cease to be Restricted Stock (but shall remain subject to the other
terms of this Agreement) if the Executive has been continuously employed by
dELiA*s LLC or the Company from the date of the grant of the Restricted Interest
Award, as set forth on the first page hereof, through and including the thirty
month anniversary of the date of the Award (the "Vesting Date").

There shall be no proportionate or partial vesting in the period prior
to the Vesting Date and all vesting shall occur only on the Vesting Date,
provided that in the event of a Change of Control all Restricted Stock shall
immediately become fully vested (the period beginning with the date of grant and
ending on the Vesting Date shall be referred to herein as the "Restriction
Period.") When any Restricted Stock becomes vested, the Company shall promptly
issue and deliver to the Executive a new certificate registered in the name of
the Executive for such Common Stock without the legend set forth in Section 4
hereof and deliver to the Executive any other related RS Property.

3.4 Forfeiture.
----------

In the event that the employment of the Executive with the Company is
terminated by the Company for Cause or the Executive voluntarily terminates
employment with the Company, the Executive shall forfeit to the Company, without
compensation other than repayment of the amount paid to the Company for such
Award (if any), all unvested Restricted Stock.

3.5 Adjustments. This Award of Restricted Stock shall not
-----------
affect in any way the right or power of the Company to make or authorize any
adjustment, recapitalization, reorganization or other change in the capital
structure or the business of the Company, any merger or consolidation of the
Company, the liquidation of the Company, any sale or transfer of all or part of
its assets or business or any other corporate act or proceeding. The Committee
may make or provide for such adjustments in the maximum numbers of shares of
Common Stock specified in Section V(B) of the Plan, in the numbers of shares of
Common Stock covered by outstanding Restricted Stock issued hereunder, or such

3
<PAGE>

other adjustments in the numbers of shares of Common Stock, kind of Restricted
Stock received or type or kind of Awards as the Committee in its sole discretion
may determine is equitably required to prevent dilution or enlargement of rights
of Participants or to otherwise recognize the effect that otherwise would result
from any distribution, recapitalization or other change in the capital structure
of the Company, merger, consolidation, spin-off, reorganization, partial or
complete liquidation, or any other Company transaction or event having an effect
similar to any of the foregoing.

3.6 Special Incentive Compensation. The Executive acknowledges
------------------------------
that the Conversion hereunder, any distributions paid with respect to the
Restricted Stock and any other RS Property will not be taken into account as
"salary" or "compensation" or "bonus" in determining the amount of any payment
under any pension, retirement or profit-sharing plan of the Company or any life
insurance, disability or other benefit plan of the Company.

3.7 Delivery Delay. The delivery of any certificate
--------------
representing any share of Common Stock or other RS Property may be postponed by
the Company for such period as may be required for it to comply with any
applicable federal or state law and the Company is not obligated to issue or
deliver any share of Common Stock if, in the opinion of counsel for the Company,
the issuance of such share of Common Stock shall constitute a violation by the
Executive or the Company of any provisions of any law or of any regulations of
any governmental authority.

4. All certificates representing any Restricted Stock shall have
endorsed thereon the following legend:

"THE ANTICIPATION, ALIENATION, ATTACHMENT, SALE, TRANSFER, ASSIGNMENT,
PLEDGE, ENCUMBRANCE OR CHARGE OF THE SHARES OF DELIA*S INC. (THE "COMPANY")
COMMON STOCK REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS
(INCLUDING FORFEITURE) OF THE DELIA*S INC. RESTRICTED STOCK PLAN AND AN
AGREEMENT ENTERED INTO BETWEEN THE PARTICIPANT AND THE COMPANY DATED AS OF THE
______ DAY OF __________ 1996. COPIES OF SUCH PLAN AND AGREEMENT ARE ON FILE AT
THE PRINCIPAL OFFICE OF THE COMPANY."

5. Representations.
---------------

The Conversion and this Agreement are being made by the Company in
reliance upon the following express representations and warranties of the
Executive.

The Executive acknowledges, represents and warrants that:

(a) he understands that no public trading market exists for
any Restricted Stock;

4
<PAGE>

(b) he is accepting the Restricted Stock for his own account
and not with a view to resale or distribution;

(c) he understands that no Restricted Stock may be
transferred prior to the date on which any applicable restriction
lapses; and

(d) he may not offer, market, issue, grant, sell, assign,
transfer, bequeath or otherwise encumber or dispose of all or a
portion of his Restricted Stock without the consent of the Committee,
which consent may be given or withheld in the Committee's sole
discretion.

6. Not an Employment Agreement.
---------------------------

The Conversion hereunder does not constitute an agreement by the
Company to continue to employ the Executive during the entire, or any portion of
the, term of this Agreement, including but not limited to any period during
which any Restricted Stock is outstanding.

7. Power of Attorney.
-----------------

The Company, its successors and assigns, is hereby appointed the
attorney-in-fact, with full power of substitution, of the Executive for the
purpose of carrying out the provisions of this Agreement and taking any action
and executing any instruments which such attorney-in-fact may deem necessary or
advisable to accomplish the purposes hereof, which appointment as attorney-in-
fact is irrevocable and coupled with an interest. The Company, as attorney-in-
fact for the Executive, may in the name and stead of the Executive, make and
execute all conveyances, assignments and transfers of any Restricted Stock,
related RS Property and other property provided for herein, and the Executive
hereby ratifies and confirms all that the Company, as said attorney-in-fact,
shall do by virtue hereof. Neverthe less, the Executive shall, if so requested
by the Company, execute and deliver to the Company all such instruments as may,
in the judgment of the Company, be advisable for the purpose.

8. Miscellaneous.
-------------

8.1 This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective heirs, legal representatives,
successors and assigns.

8.2 No modification or waiver of any of the provisions of this
Agreement shall be effective unless in writing and signed by the party against
whom it is sought to be enforced.

8.3 This Agreement may be executed in one or more counterparts,
all of which taken together shall constitute one contract.

5
<PAGE>

8.4 The failure of any party hereto at any time to require
performance by another party of any provision of this Agreement shall not affect
the right of such party to require performance of that provision, and any waiver
by any party of any breach of any provision of this Agreement shall not be
construed as a waiver of any continuing or succeeding breach of such provision,
a waiver of the provision itself, or a waiver of any right under this Agreement.

8.5 The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall in no way restrict or
modify any of the terms or provisions hereof.

8.6 The Company shall pay all fees and expenses necessarily
incurred by the Company in connection with the Plan and this Agreement and will
from time to time use its reasonable efforts to comply with all laws and
regulations which, in the opinion of counsel to the Company, are applicable
thereto.

8.7 All notices, consents, requests, approvals, instructions and
other communications provided for herein shall be in writing and validly given
or made when delivered, or on the second succeeding business day after being
mailed by registered or certified mail, whichever is earlier, to the persons
entitled or required to receive the same, at the addresses set forth at the
heading of this Agreement or to such other address as either party may designate
by like notice. Notices to the Company shall be addressed to the Company at 435
Hudson Street, New York, New York 10014, Attention: Chief Financial Officer.

8.8 This Agreement and the Conversion are subject to all the
restrictions, terms and provisions of the Plan which are incorporated herein by
reference. In the event of an inconsistency between any provision of the Plan
and this Agreement, the terms of the Plan shall control. The capitalized terms
in this Agreement that are not otherwise defined shall have the same meaning as
set forth in Article II of the Plan.

8.9 This Agreement shall be governed and construed and the legal
relationships of the parties determined in accordance with the internal laws of
the State of Delaware (regardless of the law that might otherwise govern under
applicable Delaware principles of conflict laws).

6
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.

dELiA*s Inc.

By_________________________________
(Title)

___________________________________
Executive

7
<PAGE>

SCHEDULE A
----------

Name and Address of Executive Number of Shares
- ----------------------------- ----------------

<PAGE>

EXHIBIT 23.1

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Registration Statement of dELiA*s Inc. on Form S-
1 of our report dated October 4, 1996 (December 18, 1996 as to Note 10)
appearing in the Prospectus, which is part of this Registration Statement.

We also consent to the reference to us under the headings "Selected Financial
Data" and "Experts" in such Prospectus.

Deloitte & Touche llp

New York, New York

December 18, 1996

<PAGE>

EXHIBIT 23.2

CONSENT OF INDEPENDENT AUDITORS

We consent to the inclusion in this Registration Statement on Form S-1 (No.
333-15153) of our report on our report dated August 14, 1996 (with respect to
the first paragraph of Note 10a, December 18, 1996) on our audits of the
financial statements of dELiA*s Inc. as at January 31, 1995 and January 31,
1996 and for the years then ended and for the period from September 9, 1993
(inception) to January 31, 1994. We also consent to the reference of our firm
under the captions "Experts" and "Selected Financial Data" in the Prospectus.

Richard A. Eisner & Company, LLP

New York, New York

December 18, 1996

<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS AS OF JANUARY 31, 1996 AND FOR THE FISCAL YEAR THEN ENDED AND
FINANCIAL STATEMENTS AS OF OCTOBER 31, 1996 AND FOR THE NINE MONTH PERIOD THEN
ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C> <C>
<PERIOD-TYPE> 12-MOS 9-MOS
<FISCAL-YEAR-END> JAN-31-1996 JAN-31-1996
<PERIOD-START> FEB-01-1995 FEB-01-1996
<PERIOD-END> JAN-31-1996 OCT-31-1996
<CASH> 675 1,140
<SECURITIES> 0 0
<RECEIVABLES> 27 82
<ALLOWANCES> 0 0
<INVENTORY> 221 3,712
<CURRENT-ASSETS> 1,024 6,080
<PP&E> 176 542
<DEPRECIATION> 10 58
<TOTAL-ASSETS> 1,266 6,901
<CURRENT-LIABILITIES> 304 4,134
<BONDS> 0 0
0 0
0 0
<COMMON> 92 100
<OTHER-SE> 870 2,649
<TOTAL-LIABILITY-AND-EQUITY> 1,266 6,901
<SALES> 5,652 15,482
<TOTAL-REVENUES> 5,652 15,482
<CGS> 3,078 7,421
<TOTAL-COSTS> 3,078 7,421
<OTHER-EXPENSES> 2,569 6,331
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 20
<INCOME-PRETAX> 30 1,754
<INCOME-TAX> 3 15
<INCOME-CONTINUING> 30 1,754
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 18 1,035
<EPS-PRIMARY> 0.002 0.104
<EPS-DILUTED> 0.002 0.104

</TABLE>