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Destination Maternity to exceed last year's results

08 Jul '11

5 min read

Destination Maternity Corporation, the world's leading maternity apparel retailer, reported net sales for the month of June and announced that it expects its third quarter fiscal 2011 earnings to be near the low end of its prior earnings guidance range and to exceed last year's third quarter earnings. The Company also announced that it made a $10 million optional prepayment of its Term Loan during the third quarter of fiscal 2011.

Net sales for the month of June 2011 increased 4.6% to $42.9 million from $41.0 million reported for the month of June 2010.

The increase in total reported sales for June 2011 compared to June 2010 resulted primarily from: (1) increased sales due to the expansion of the Company's maternity apparel leased department relationship with Macy's; and (2) increased sales from the Company's licensed wholesale relationship; partially offset by (3) decreased sales related to the Company's continued efforts to close underperforming stores; and (4) the decrease in comparable retail sales.

Net sales for the third quarter of fiscal 2011 increased 3.3% to $146.7 million from $142.0 million reported for the third quarter of fiscal 2010.

The increase in total reported sales for the third quarter of fiscal 2011 compared to the third quarter of fiscal 2010 resulted primarily from: (1) increased sales due to the expansion of the Company's maternity apparel leased department relationship with Macy's; and (2) increased Internet sales; partially offset by (3) the decrease in comparable store sales; and (4) decreased sales related to the Company's continued efforts to close underperforming stores.

Ed Krell, Chief Executive Officer of Destination Maternity, noted, "We saw an improvement in our comparable retail sales performance for June 2011 compared to May 2011, although sales were still somewhat lower than planned, even with price promotional activity and additional markdowns taken to spur sales and manage inventory levels.

“With our continued tight management of expenses, we expect our earnings for the third quarter to be near the low end of our prior earnings guidance range, even with sales and gross margin being below plan. We expect our GAAP diluted earnings per share for the third quarter to be between $0.70 and $0.72 per share, near the low end of our prior earnings guidance range of $0.72 to $0.83 per share that we provided in our April 27, 2011 press release, and to be higher than last year's third quarter GAAP diluted earnings of $0.67 per share.

"Our total sales of $146.7 million for the third quarter were below the low end of our sales guidance range of $149.0 to $154.5 million, provided in our April 27 press release, driven largely by the comparable store sales decrease of 2.8%, which was at the low end of our guidance range of between a decrease of 2.8% and an increase of 1.1%, and a slower than planned ramp up of sales from our Macy's expansion.

“We recognize the continued difficult economic environment for the consumer, especially the moderate-priced consumer, although we remain focused on the things that we can control, not on external factors that we cannot control. Our key focus continues to be on turning around our sales performance through initiatives to enhance our merchandise assortments, merchandise presentation and customer experience.

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