- Prachi Singh |
For its first quarter, Destination Maternity Corporation said net income was 0.1 million dollars or 1 cent per diluted share compared to 0.2 million dollars or 2 cent per diluted share for the first quarter of fiscal 2018. Net sales decreased 8.7 percent to 94.2 million dollars, while comparable sales decreased 7.2 percent from the first quarter of fiscal 2018. Meanwhile, the company has also announced that Marla Ryan is stepping down as chief executive officer but will assume a new role as President of product design, sourcing and merchandising. For FY19, the company expects annual adjusted EBITDA guidance to be in the 13 million dollars to 17 million dollars range.
“We had a challenging start to the year with comparable store sales down 7.2 percent in the first quarter,” said Dave Helkey, Chief Financial Officer of Destination Maternity in a statement, adding, “We were successful in mitigating a significant portion of the impact on the bottom line with a 110 basis point improvement in margins and a 6.5 percent reduction in SG&A expenses, but know there is more work to be done.”
Marla Ryan steps down as the company’s CEO
After Ryan’s resignation as the company’s CEO, the Destination Maternity board has created an Office of the CEO on an interim basis, which the company said, will provide ongoing leadership and oversight of the day-day operations of the company while a search is conducted for a new CEO.
The interim Office of the CEO is comprised of Lisa Gavales, a member of the board of directors, Marla Ryan, now President of product design, sourcing and merchandising and Dave Helkey, current CFO and COO. Gavales, the company added, will serve as Chair of the Office of the CEO.
The company added that sales were negatively impacted by the net closure of 32 owned locations and 88 leased lease locations as well as a decrease in comparable sales. Operating income was 1.6 million dollars for the first quarter compared to 1.4 million dollars in the first quarter of fiscal 2018. Adjusted net income was 0.6 million dollars or 4 cents per diluted share compared 1 million dollars or 7 cents per diluted share. Adjusted EBITDA decreased to 6.7 million dollars from 7.9 million dollars for the first quarter of fiscal 2018. Gross margin rate was 54.8 percent, an increase of 110 basis points from the comparable gross margin in the first quarter of fiscal 2018.
Destination Maternity adds new board member
Destination Maternity also announced that Gene Davis will join its board of directors, effective June 13, 2019, serving as Chairman of the Destination Maternity board of directors.
“We are thrilled to be adding Gene to the board,” said Gavales, adding, “Gene is a uniquely talented executive who brings highly relevant turnaround management and strategic planning experience that will be valuable to the Board as we look to strengthen the business and drive long term shareholder value. We look forward to his immediate contributions.”
The company said that currently, Davis serves as the Chairman and Chief Executive Officer of Pirinate Consulting Group, LLC, a privately held consulting firm specializing in turnaround management, merger and acquisition consulting, hostile and friendly takeovers, proxy contests and strategic planning advisory services for domestic and international public and private business entities.
Earlier, he was the president, vice chairman and a director of Emerson Radio Corporation, a consumer electronics company, from 1990 to 1997 and was the chief executive officer and vice chairman of Sport Supply Group, Inc., a direct-mail marketer of sports equipment, from 1996 to 1997. Davis began his career in 1980 as an attorney and international negotiator with Exxon Corporation and Standard Oil Company (Indiana) and was in private practice from 1984 to 1998. He is and has also been a director of several private and public companies in various industries.