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Destination Maternity Corporation Reports Sales for August 2009

PHILADELPHIA, Sept. 3 /PRNewswire-FirstCall/ -- Destination Maternity Corporation (NASDAQ: DEST), the world's leading maternity apparel retailer, today reported sales for the month of August 2009. Net sales for the month of August 2009 decreased 2.1% to $43.8 million from $44.8 million reported for the month of August 2008. The decrease in total reported sales for August 2009 compared to August 2008 resulted from a decrease in comparable store sales, partially offset by increased sales from the Company's licensed and leased department relationships. A portion of the increase in August sales from the licensed relationship reflects a shift in the monthly timing of product shipments compared to last year. Comparable store sales for the month of August 2009 decreased 10.6% on a reported basis, and decreased approximately 9.1% after adjusting for the "days adjustment calendar timing shift." For August 2008, the Company's comparable store sales increased 7.2% on a reported basis and increased approximately 3.2% after adjusting for the calendar shift.

Ed Krell, Chief Executive Officer of Destination Maternity, noted, "Our overall sales for the month of August were in line with our expectations and we are pleased to be able to report just a modest 2.1% decrease in sales despite our comparable store sales decrease. We attribute our comparable store sales decrease to: (i) the continued extremely difficult overall retail environment; (ii) our strong comparable store sales last August; and (iii) our much lower level of remaining Spring and Summer inventory versus a year ago due to our tight inventory controls. In August 2008, our strong sales were largely driven by sales of marked down Spring and Summer merchandise, which helped sales but resulted in lower margins than planned. In contrast, with our much cleaner Spring and Summer inventory position versus a year ago, we had much lower clearance sales volume this August, which contributed to our sales decline, but enabled us to achieve significantly higher merchandise gross margin than last August, as we were able to be much less price promotional than a year ago. With our strong gross margin performance and continued tight management of expenses, we expect to generate fiscal fourth quarter earnings significantly improved from last year and in line with the guidance we provided in our July 29, 2009 press release, despite the continuing challenging sales environment we face."

During August 2009, the Company opened two stores, including one multi-brand store, and closed four stores. As of the end of August 2009, the Company operates 726 stores, 357 leased department locations and 1,083 total retail locations, compared to 756 stores, 282 leased department locations and 1,038 total retail locations operated at the end of August 2008.

Days Adjustment Calendar Timing Shift

Destination Maternity reports sales on a calendar month basis, rather than on a "4-5-4 retail fiscal calendar" where each fiscal week and fiscal month starts on a Sunday and ends on a Saturday. Thus, for each calendar month, there is a "days adjustment calendar timing shift" which may help or hurt reported calendar month sales and comparable store sales due to different days of the week typically contributing more sales than other days of the week. For August 2009, there was one more Monday and one less Friday compared to August 2008. The Company estimates this calendar shift, along with the later timing of Labor Day in 2009 (September 7) compared to 2008 (September 1), unfavorably impacted its reported comparable store sales for August 2009 by approximately 1.5 percentage points. The comparable store sales increase of 7.2% for August 2008 was favorably impacted by approximately 4 percentage points due to having five Saturdays and five Sundays in August 2008 compared to four Saturdays and four Sundays in August 2007 and due to the earlier timing of Labor Day in 2008 compared to 2007.

Destination Maternity Corporation is the world's largest designer and retailer of maternity apparel, using its quick response replenishment system to "give the customer what she wants, when she wants it." In the United States and Canada, Destination Maternity operates, as of August 31, 2009, 1,083 retail locations, including 726 stores, predominantly under the tradenames Motherhood Maternity®, A Pea in the Pod®, and Destination Maternity®, and sells on the web through its and brand-specific websites. Destination Maternity also distributes its Oh Baby by Motherhood™ collection through a licensed arrangement at Kohl's® stores throughout the United States and on, and, beginning in October 2009, will also offer its Two Hearts Maternity® by Destination Maternity collection in Sears® stores and certain Kmart® stores through a leased department relationship with Sears. In addition, Destination Maternity is expanding internationally and has entered into exclusive store franchise and product supply relationships in India and the Middle East.

The Company cautions that any forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) contained in this press release or made from time to time by management of the Company, including those regarding net sales, comparable store sales, other results of operations, liquidity and financial condition, and various business initiatives, involve risks and uncertainties, and are subject to change based on various important factors. The following factors, among others, in some cases have affected and in the future could affect the Company's financial performance and actual results and could cause actual results to differ materially from those expressed or implied in any such forward-looking statements: the impact of the current global economic slowdown on the retail industry in general and on apparel purchases in particular, our ability to successfully manage our various business initiatives, our ability to successfully implement our merchandise brand and retail nameplate restructuring, the success of our international expansion, our ability to successfully manage and retain our leased department and licensed relationships and marketing partnerships, future sales trends in our existing store base, unusual weather patterns, changes in consumer preferences and spending patterns, demographics and other macroeconomic factors that may impact the level of spending for maternity apparel, overall economic conditions and other factors affecting consumer confidence, expense savings initiatives, the impact of competition and fluctuations in the price, availability and quality of raw materials and contracted products, availability of suitable store locations, continued availability of capital and financing, goodwill impairment charges, ability to hire and develop senior management and sales associates, ability to develop and source merchandise, ability to receive production from foreign sources on a timely basis, potential stock repurchases, potential debt prepayments, changes in market interest rates, war or acts of terrorism and other factors set forth in the Company's periodic filings with the Securities and Exchange Commission, or in materials incorporated therein by reference.

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