Delia's shares rise as 2Q results improve

Shares of Delia's Inc. jumped on Friday after the teen marketing and retail company said its second-quarter loss narrowed as sales rose.

Shares rose 58 cents, or 31.5 percent, to $2.43 during midday trading. The stock has traded between $1.50 and $5.47 during the past 52 weeks.

The company operates catalogs and web sites for its three brands: Delia's, Alloy and CCS. It also operates Delia's retail stores.

For the quarter ended Aug. 2, the company's loss narrowed to $5 million, or 16 cents per share, from $5.1 million, or 16 cents per share. Analysts polled by Thomson Reuters, on average, predicted a loss of 17 cents per share.

Revenue rose 11 percent to $58.1 million from $52.4 million. Same-store sales, or sales in stores open at least one year, rose 5.2 percent.

"We are pleased with our important back-to-school selling period so far, with high single-digit (same-store sales) in July and continued strength thus far in August," said Robert Bernard, chief executive, in a statement.

C.L. King analyst Mark Montagna said the results show improved merchandise and execution and raised his rating to "Strong Buy" from "Neutral." He set a $4 target price on shares.

However, in a note to investors Friday he cautioned that "given the checkered past of Delia's, the 'Strong Buy' rating should be viewed as highly speculative as compared to much larger companies we cover."

He added that because the company's share price has sunk so much _ down about 32 percent since the beginning of the year _ compared with its store-growth opportunity and margin potential, "the stock could ultimately trade at a substantial premium to the group and surpass our target price."