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Destination Maternity Reports Sales And Provides Updated Earnings Guidance For Third Quarter Of Fiscal 2012

Stocks in this article: DEST

PHILADELPHIA, July 10, 2012 /PRNewswire/ -- Destination Maternity Corporation (Nasdaq: DEST), the world's leading maternity apparel retailer, today reported sales and provided updated earnings guidance for the third quarter of fiscal 2012 ended June 30, 2012.  The Company also announced that it made a $10 million optional prepayment of its Term Loan during the third quarter of fiscal 2012.

Net sales for the third quarter of fiscal 2012 decreased 5.3% to $138.8 million from $146.7 million reported for the third quarter of fiscal 2011.  Comparable sales (which include Internet sales) decreased 2.4% versus a comparable sales decrease of 1.6% for the third quarter of fiscal 2011.  The decrease in total reported sales for the third quarter of fiscal 2012 compared to the third quarter of fiscal 2011 resulted primarily from the decrease in comparable sales, decreased sales from the Company's licensed relationship and decreased sales related to the Company's continued efforts to close underperforming stores.

Net sales for the first nine months of fiscal 2012 decreased 0.8% to $412.7 million from $416.0 million reported for the first nine months of fiscal 2011.  Comparable sales decreased 1.1% versus a comparable sales decrease of 1.6% for the first nine months of fiscal 2011.

Ed Krell, Chief Executive Officer of Destination Maternity, noted, "Our sales for the third quarter of fiscal 2012 were lower than planned, as our strong early sales of Spring/Summer product in February and March did not continue into the April-June period.  Our gross margin was also lower than planned, due to increased price promotional activity and additional markdowns taken to spur sales and manage inventory levels.  With this lower than planned sales and gross margin, partially offset by our continued tight management of expenses, we expect our GAAP diluted earnings per share for the third quarter to be between $0.51 and $0.53 per share, below the low end of our prior earnings guidance range.  Our prior earnings guidance range for third quarter GAAP diluted earnings per share, as provided in our April 26, 2012 press release, was $0.57 to $0.70 per share. 

"Our total sales of $138.8 million for the third quarter were below the low end of our sales guidance range of $142 to $147 million provided in our April 26 press release, due to our comparable sales decrease of 2.4%, which was below the low end of our guidance range for comparable sales of flat to up 4.0% for the quarter.  Our reported comparable sales for the third quarter of fiscal 2012 were hurt by approximately 1.0 percentage points due to a calendar shift which helped March sales at the expense of April, with April 2012 having one less Friday and Saturday compared to April 2011.  Adjusting out this 'calendar shift' adverse impact, our days-adjusted comparable sales for the third quarter was a decrease of approximately 1.4%.  We continue to be pleased with the growth of our Internet sales, which increased 30% for the third quarter of fiscal 2012, on top of an 18% increase in the third quarter of fiscal 2011.

"Our key focus continues to be improving our sales performance through initiatives to enhance our merchandise assortments, merchandise presentation and customer experience.  Although we recognize the increasingly challenging macroeconomic environment of recent months, we remain focused on the things that we can control, not on external factors that we cannot control.  Over the past several months, we have made many changes to drive improvements in our merchandise assortments and the way these assortments are presented in store, and we are disappointed that the strong sales results we saw early in the Spring product selling season did not continue throughout the Spring/Summer product selling season.  We believe this weaker than planned third quarter sales may well have partially reflected a shift in demand for Spring/Summer product from the third quarter to the second quarter due to earlier than normal warm weather conditions in February and March, which had resulted in higher than planned second quarter sales.  However, we are cautiously optimistic that we will see the results of our efforts in an improved sales trend beginning in our fiscal fourth quarter, as we enter the selling season for our Fall 2012 merchandise assortments.

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