Destination Maternity Q2 net sales fall to 98.3 mn dollars

Destination Maternity Corporation’s net sales for the second quarter were 98.3 million dollars compared with 106.5 million dollars for the comparable prior year quarter. The company said, this decrease was driven by the closure of underperforming stores, a decline in comparable sales, and exit of the Kohl's relationship. Comparable sales for the quarter decreased 3.4 percent, compared to a 2.7 percent decrease for the second quarter of fiscal 2016.

Meanwhile, in a separate release, the company announced that Allen Weinstein, an independent director of the company has been appointed as Interim Chief Executive Officer after the board and Anthony M. Romano mutually agreed that Romano will step down from his role as president, chief executive officer and board member of the company.

Second quarter highlights

Comparable sales for the second quarter of fiscal 2017 included a 30.2 percent increase in e-commerce sales. Gross margin was 53 percent, up 150 basis points over the comparable prior year quarter gross margin of 51.5 percent.

Adjusted EBITDA before other charges was 4.1 million dollars compared to 3.3 million dollars for the second quarter of fiscal 2016. GAAP net loss was 2.8 million dollars or 0.20 dollar per diluted share, compared to 2.5 million dollars or 0.18 dollar per diluted share, for the second quarter of fiscal 2016. Adjusted net loss was 1.8 million dollars or 0.13 dollar per diluted share, compared to 2 million dollars or 0.14 dollar per diluted share, for the second quarter of fiscal 2016.

First half net sales decline to 204.7 mn dollars

For the first half, the company’s net sales were 204.7 million dollars compared to 231 million dollars for the six months ended July 30, 2016. The decrease in sales was again driven by a decline in comparable sales, the closure of underperforming stores, and the wind down of the Kohl's, Sears and Gordmans relationships. Comparable sales decreased 5.5 percent, compared to a 4.2 percent decrease for the six months ended July 30, 2016.

Gross margin for the period increased 80 basis points to 53.7 percent compared to 52.9 percent for the six months ended July 30, 2016. Adjusted EBITDA before other charges and change in accounting principle was 10.4 million dollars compared to 16.5 million dollars for the first half of fiscal 2016.

GAAP net loss was 3.9 million dollars or 0.28 dollar per diluted share, compared to GAAP net income of 1.5 million dollars or 0.11 dollar per diluted share, for the six months ended July 30, 2016. Adjusted net loss was 2.5 million dollars or 0.18 dollar per diluted share, compared to adjusted net income of 2.5 million dollars or 0.18 dollar per diluted share, for the six months ended July 30, 2016.

Allen Weinstein appointed interim Chief Executive

Destination Maternity appointed Allen Weinstein, an independent director of the company, as Interim Chief Executive Officer, effective at close of business September 7, 2017 after Romano’s resignation.

Additionally, Barry Erdos, an independent director, has been elected to succeed Arnaud Ajdler as non-executive board chair, effective immediately.

Interim CEO Allen Weinstein has served as a director of the Destination Maternity Board since January 2010. He is currently Executive Chairman and a Director of Villa, a privately owned footwear and apparel retailer. From August 2009 to August 2012, Weinstein served as the chief executive officer and a director of Body Central Corporation.

Prior to joining Body Central, he was the executive vice president-chief merchandising officer of The Cato Corporation from 2005 to 2009, having previously served as executive vice president, chief merchandising officer of the Cato Division since 1997. From 1995 to 1997, Weinstein was senior vice president-merchandising of Catherines Stores Corporation. From 1981 to 1995, he served as senior vice president of merchandising of Beall's, Inc.

Non-executive Chairman Barry Erdos has served as a director of the Destination Maternity Board since January 2010. He is currently a consultant in the retail industry, after having served as chief executive officer of F.A.O. Schwarz, Inc. from March 2009 until its acquisition by Toys "R" Us in May 2009, and prior to that having served as president, chief operating officer and a director of Bluefly, Inc.

Prior to joining Bluefly, Inc., Erdos held senior management positions with Build A Bear Workshop and Ann Taylor, Inc.

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