Destination Maternity posts marginal hike in Q1 FY12 sales

06 Jan '12

5 min read

"We recognize the continued difficult overall 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 improving our sales performance through initiatives to enhance our merchandise assortments, merchandise presentation and customer experience.

We are encouraged by the early customer reaction and sales results for our Spring 2012 product lines, although we recognize that Spring product is not the primary driver of our total sales until we get to the February/March period.

"During the first quarter of fiscal 2012 we made a $5.0 million prepayment on our Term Loan and continued our regular quarterly cash dividend, after having initiated this regular quarterly cash dividend in the second quarter of fiscal 2011. Our debt prepayments and regular quarterly dividend payments demonstrate our confidence in the Company's financial strength, cash flow generation, and prospects for the future, and highlight our commitment to continue to drive shareholder value."

For the quarter ended December 31, 2011, the Company did not open any stores and closed two stores. As of December 31, 2011, the Company operates 656 stores, 1,405 leased department locations and 2,061 total retail locations, compared to 690 stores, 1,192 leased department locations and 1,882 total retail locations operated as of December 31, 2010.

The increase in leased department locations at the end of December 2011 versus the end of December 2010 predominantly reflects the opening of 517 leased department locations during the second quarter of fiscal 2011 for our Macy's expansion, and the closing of 291 Kmart leased department locations in October 2011. The Company previously announced that it would discontinue offering maternity apparel in leased departments in Kmart locations by the end of October 2011.

Kmart represented only a small portion of the overall sales generated by the Company's leased department relationship with Sears and Kmart through the Company's agreement with Sears Holdings Corporation. The Company continues to operate leased departments in Sears stores throughout the United States. As of December 31, 2011, the Company operates 530 leased department locations in Sears stores.

Sales Reporting
Beginning in fiscal 2012 (which began in October, 2011), consistent with the practice of an increasing number of retailers, the Company discontinued monthly sales reporting. The Company now reports net sales quarterly after the end of each of the Company's fiscal quarters (December, March, June and September).

Also, consistent with the practice of an increasing number of retailers, the Company includes sales from its Internet websites in its "comparable sales" performance statistic versus the prior year, the same way as previously included in its "comparable retail sales" figure.

Thus, beginning in fiscal 2012, the Company no longer reports a "comparable store sales" statistic which excludes Internet sales. Since the Company has numerous cross-channel marketing initiatives and since it aims to serve its customer in whichever channel she chooses to shop, the Company believes the inclusion of the sales from its Internet "stores" or websites is a more meaningful way of reporting the Company's comparable sales results.

Destination Maternity Corporation

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