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Filed by dELiA*s Inc.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Subject company: iTurf Inc.
Commission File No. for related registration statement: 333-44916
On September 8, 2000, dELiA*s Inc., a Delaware corporation, issued the following
press release:
CONTACT: Jim Cooper
EVP and Chief Financial Officer
(212) 807-9060
Investors: Stacey Bibi/Shannon Moody-
Froehlich/Bernadette Garfinkle
FOR IMMEDIATE RELEASE Media: Michael McMullan/Aeron Noe
Morgen-Walke Associates
(212) 850-5600
DELIA*S REPORTS SECOND QUARTER RESULTS
-- DELIA*S-BRANDED MULTI-CHANNEL SALES INCREASE 44% --
--DELIA*S DIRECT CHANNEL PRODUCES SECOND CONSECUTIVE QUARTER
OF DOUBLE-DIGIT PRODUCTIVITY GAINS--
New York, New York, September 8, 2000 -- dELiA*s Inc. (Nasdaq:DLIA), a
leading marketer to Generation Y, today announced financial results for the
second quarter and twenty-six weeks ended July 29, 2000.
Net sales for the second quarter increased 11.8% to $37.3 million from
$33.4 million in the second quarter of last year. The increase was driven by
higher retail sales, primarily in connection with the dELiA*s premier retail
concept, as well as an increase in direct marketing sales. dELiA*s-branded
multi-channel sales, which include sales from the dELiA*s catalog, dELiAs.cOm,
and dELiA*s retail stores, increased nearly 44% from the prior year to $23.4
million in the quarter. Gross margin as a percentage of sales increased 470
basis points to 43.4%, representing improvements in all channels. Second quarter
net loss was $10.5 million, or $0.72 per basic and diluted share, compared to
$6.1 million, or $0.42 per basic and diluted share for the
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same period a year ago. This net loss includes $5.7 million of iTurf losses
compared to $1.3 million last year, net of minority interest, primarily
attributable to increased marketing expenses.
Net sales for the six months ended July 29, 2000 increased 14.9% to
$86.4 million from $75.2 million in the prior year six-month period. Net loss
for the six-month period was $19.2 million, or $1.33 per diluted share, compared
to net income of $18.8 million, or $1.19 per diluted share for the same period
last year, which includes net one-time non-recurring income of $46.7 million
pre-tax. This net loss includes $11.1 million of iTurf losses, compared to $1.5
million last year, net of minority interest. Gross margin as a percentage of
sales increased 350 basis points to 45.7%.
Evan Guillemin, President of dELiA*s, stated, "The impressive strength
of the dELiA*s brand is evidenced by the 44% increase in dELiA*s-branded sales
in the second quarter. We believe our recently-announced decision to recombine
with iTurf enhances our ability to further build upon the strength of the brand
and grow this business more profitably and more quickly by managing the dELiA*s
catalog, e-commerce and retail channels together."
"In the direct channel, our second quarter results benefited not only
from the strong performance of the dELiA*s brand, but also from improved
operating expense control. We enjoyed substantial gross margin improvement
across all channels due to the success of several merchandising initiatives,
including a higher mix of dELiA*s branded merchandise as a percentage of sales.
Importantly, we were able to generate double-digit increases in productivity in
the direct channel for the second consecutive quarter, and are pleased to note
that we see that trend accelerating going forward. Our premier dELiA*s retail
concept continues to make significant progress as we expand our store base. We
ended the quarter with 28 premier stores, and entered the back-to-school season
with 30 stores up and running."
"At iTurf, revenue increased to $7.7 million in the second quarter,
driven by the strength of our e-commerce properties, as well as substantial
gains in advertising revenue over the prior year. User registrations have grown
to more than 9.5 million, and traffic remains strong across the network."
Mr. Guillemin concluded, "We are encouraged by our second quarter
results, and remain very excited about the company's future. Specifically, our
planned strategic recombination with
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iTurf, announced on August 16, 2000, will allow us to pursue a multi-channel
distribution strategy that is unique in the teen market and most effectively
capitalizes on the strength of the dELiA*s brand. We are already beginning to
more closely manage the dELiA*s catalog and e-commerce operations in tandem, and
expect to grow our branded commerce business more profitably across all channels
going forward. The combination also allows iTurf to focus its efforts on
aggressively growing advertising revenues and further expand its online
communities, which have already cultivated strong leadership positions in the
teen online space."
ABOUT DELIA*S
dELiA*s Inc. is a leading marketer of apparel, accessories, home furnishings and
athletic goods to consumers between the ages of 13 to 24. The Company offers
proprietary and other brands through various catalogs and retail stores and
provides on-line community, content and commerce services to Generation Y.
iTurf has filed a proxy/registration statement and other documents with the
United States Securities and Exchange Commission relating to the proposed merger
between iTurf and dELiA*s. The proxy/registration statement will be mailed to
shareholders of both companies after the SEC has declared the registration
statement effective. Shareholders are urged to read the proxy/registration
statement and other documents carefully because they will contain important
information about the merger. These documents are available for free from the
SEC's web site (www.sec.gov) and from dELiA*s and iTurf by contacting Morrow &
Co., Inc., 445 Park Avenue, New York, NY 10022.
dELiA*s, its executive officers and its board of directors will be soliciting
proxies from dELiA*s stockholders to vote in favor of the merger. dELiA*s
executive officers and board of directors include Stephen Kahn, Christopher
Edgar, Evan Guillemin, Jim Cooper, Clare Copeland, S. Roger Horchow, Geraldine
Karetsky and Joseph Pinto. For information about these directors and executive
officers, stockholders should refer to the proxy/registration statement filed by
iTurf on August 31, 2000, which is available for free from the SEC's web site
(WWW.SEC.GOV).
Forward-looking statements in this press release, including but not limited to
those related to consummation of the proposed merger, expectations relating to
future financial performance, synergies resulting from the proposed merger, the
divestiture of non-core assets and the expansion and growth of each company's
businesses are made pursuant to the Safe Harbor provisions of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements generally
relate to future results or events. The terms "believes," "expects," "intends,"
"anticipates" or "plans" and similar expressions are intended to identify some
of the forward-looking statements contained in this press release.
Forward-looking statements involve a number of risks, uncertainties and other
factors beyond iTurf's and dELiA*s control, which may cause material differences
in actual results, performance or other expectations. These factors include, but
are not limited to, the condition of the financial markets generally; the risk
that dELiA*s and iTurf's businesses will not be integrated successfully after
the proposed
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merger; costs related to the proposed merger; the risk that dELiA*s or iTurf
stockholders will fail to approve the merger or that litigation will delay or
prevent the transaction's consummation; the ability of dELiA*s and iTurf to
divest non-core assets on satisfactory terms or at all; access to financing to
fund operations and the expansion strategies of each business; increases in the
cost of materials, printing, paper, postage, shipping and labor; timing and
quantity of catalog and electronic mailings; decreases in the rate of response
to catalog and electronic mailings; each company's ability to leverage
investments made in infrastructure to support expansion; acceptance of new
retail concepts; availability of acceptable store sites and lease terms; ability
to open new stores; possibility of increasing comparable store sales; adverse
weather conditions and other factors affecting retail store sales; levels of
competition; iTurf's ability to sell advertising; changes in the growth rate of
Internet usage and online user traffic levels; levels of demand for Internet
advertising; the ability to retain key personnel; the ability of computer
systems to scale with growth in online traffic; difficulties in integrating
acquisitions of new businesses and technology; general economic conditions;
changes in the growth rate of Internet usage and online user traffic levels,
general economic conditions and other factors affecting retail sales; dELiA*s
ability to anticipate and respond to fashion trends; each company's dependence
on third parties; and other factors detailed elsewhere in this press release, in
iTurf's most recent registration statement on Form S-4 and in iTurf's and
dELiA*s most recent annual reports on Form 10-K and quarterly reports on Form
10-Q filed with the Securities and Exchange Commission.
(Tables to follow)
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DELIA*S INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THIRTEEN WEEKS TWENTY-SIX WEEKS
ENDED ENDED
7/31/99 7/29/00 7/31/99 7/29/00
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $ 33,375 $ 37,295 $ 75,187 $ 86,352
Cost of sales (a) 20,450 21,122 43,473 46,914
-------- -------- -------- --------
Gross profit 12,925 16,173 31,714 39,438
Selling, general and
administrative expenses 23,908 33,542 47,658 72,545
Noncash compensation -- 1,601 -- 1,601
Restructuring charge -- -- 22,907 --
Gain on subsidiary initial public offering -- -- (70,091) --
Interest and other income, net (1,027) (414) (1,167) (1,081)
Minority interest (493) (4,687) (485) (8,588)
-------- -------- -------- --------
Income (loss) before
provision for income taxes (9,463) (13,869) 32,892 (25,039)
Provision (benefit) for income taxes (3,399) (3,376) 14,120 (5,800)
-------- -------- -------- --------
Net income (loss) $ (6,064) $(10,493) $ 18,772 $(19,239)
======== ======== ======== ========
PER SHARE DATA:
Basic net income (loss) per share $ (0.42) $ (0.72) $ 1.31 $ (1.33)
======== ======== ======== ========
Diluted net income (loss) per share $ (0.42) $ (0.72) $ 1.19 $ (1.33)
======== ======== ======== ========
Shares used in the calculation of basic
net income (loss) per share 14,330 14,535 14,280 14,519
Shares used in the calculation of
diluted net income (loss) per share 14,330 14,535 15,790 14,519
</TABLE>
(a) First half 1999 cost of sales includes approximately $500,000 in
charges related to the closing and conversion of Screeem! stores.
-more-
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DELIA*S INC.
SELECTED CONSOLIDATED BALANCE SHEET DATA
(IN THOUSANDS)
<TABLE>
<CAPTION>
JANUARY 29, 2000 JULY 29, 2000
---------------- -------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets
Cash and investments $ 57,878 $ 39,141
Merchandise inventories 28,322 30,696
Deferred tax assets 12,063 14,488
Prepaid expenses and other current assets 15,014 15,796
-------- --------
Total current assets 113,277 100,121
Property and equipment - net 35,483 37,539
Long-term investments 11,024 2,002
Goodwill and other assets 24,256 34,578
-------- --------
Total assets $184,040 $174,240
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $ 21,643 $ 20,808
Accrued restructuring 1,685 1,363
Current portion of long term debt and bank loan payable 3,000 14,852
Other current liabilities 2,997 3,637
-------- --------
Total current liabilities 29,325 40,660
Long-term debt and capital leases 6,756 1,254
Deferred tax liability 23,901 21,586
Other long-term liabilities 403 426
Minority interest 40,734 43,710
Stockholders' equity 82,921 66,604
-------- --------
Total liabilities and stockholders' equity $184,040 $174,240
======== ========
</TABLE>
DELIA*S INC.
SELECTED OPERATING DATA
(IN THOUSANDS, EXCEPT RETAIL STORE DATA)
<TABLE>
<CAPTION>
JULY 31, 1999 JULY 29, 2000
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<S> <C> <C>
Total Buyers 6,250 7,175
Total House Names 11,400 13,000
Total Retail Stores 50 55
</TABLE>
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