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Destination Maternity slips into Q2FY16 GAAP net loss
31
Aug '15
For the second fiscal quarter ended August 1, 2015, US based maternity apparel retailer Destination Maternity Corporation slipped in to a GAAP net loss vis-à-vis GAAP net income in the prior fiscal second quarter.

For the second quarter of fiscal 2016, the retailer reported a GAAP net loss of $2.7 million, or $0.20 per share, as against GAAP net income of $0.3 million, or $0.02 per diluted share in the fiscal ago quarter.

The second quarter of current fiscal includes a one-time pretax cash benefit of $4.1 million or $2.5 million net of tax from the termination of a superstore lease and other charges.

While, the second quarter of fiscal 2015 included other charges of $0.4 million, net of tax, related to the relocations of the Company's headquarters and distribution facilities and other charges.

“On an adjusted basis, for the second quarter of fiscal 2016, the company reported a net loss of $1.7 million, or $0.12 per share,” the retailer said in a press release.

This compares to an adjusted loss of $0.3 million, or $0.02 per share for the three months ended August 2, 2014.

Net sales for the reporting quarter amounted to $119.3 million compared with $120.8 million for the comparable period of earlier fiscal.

“The slight dip in sales resulted from to efforts to close underperforming stores and decreased licensed sales, partially offset by an increase in comparable sales,” it explained.

Comparable sales increased 2.0 per cent, a turnaround, when compared to a 5.9 per cent decrease for the three month period ended August 2, 2014.

“The improvement in comparable sales was driven by increased transactions resulting in higher unit sales,” the clothing retailer informed.

Gross margin dropped to 46.4 per cent in the quarter under review from 49.8 per cent in the corresponding quarter of earlier fiscal.

“The year-over-year decrease in gross margin is consistent with expectations and reflects price promotional and markdown activity to more aggressively manage inventory,” the company observed.

Selling, general and administrative expenses were $61.6 million, or 51.7 per cent versus $60.2 million, or 49.8 per cent of net sales for the second quarter of previous fiscal.

“The increase in SG&A reflects higher expenses for corporate headquarters rent, increased healthcare costs and increased variable incentive compensation expense,” it noted.

This was substantially offset by cost reductions resulting from the company's continued closure of underperforming stores, and lower marketing and advertising expense.

For the reporting period, store closing, asset impairment and asset disposal activity was $4.0 million of income compared to expense of $0.4 million for the preceding fiscal's same quarter.

During the second quarter of fiscal 2016, Destination Maternity received a one-time cash benefit of $4.1 million from the termination of a superstore lease. (AR)

Fibre2Fashion News Desk – India

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