Destination CEO pleased with continued progress

07 Apr '11

5 min read

Destination Maternity Corporation, the world's leading maternity apparel retailer, reported net sales for the month of March 2011, and announced that it expects its second quarter fiscal 2011 earnings to be near the top end of its prior earnings guidance range and to significantly exceed last year's second quarter earnings.

Net sales for the month of March decreased 0.3% to $50.5 million from $50.7 million reported for the month of March 2010.

The slight decrease in total reported sales for March 2011 compared to March 2010 resulted primarily from: (1) decreased sales from the Company's licensed wholesale relationship, with a shift in shipments from March to April driven by the later timing of Easter this year versus last year; (2) the decrease in comparable store sales, and (3) decreased sales related to the Company's continued efforts to close underperforming stores, with these three effects largely offset by increased sales due to the expansion of the Company's maternity apparel leased department relationship with Macy's

The increase in total reported sales for the second quarter of fiscal 2011 compared to the second 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) decreased sales related to the Company's continued efforts to close underperforming stores, and (4) decreased sales from the Company's licensed wholesale relationship, with a shift in shipments from March to April driven by the later timing of Easter this year versus last year.

Ed Krell, Chief Executive Officer & President of Destination Maternity, noted, "We are pleased with the continued progress we are making in improving the profitability of our business. We expect our GAAP diluted earnings per share for the second quarter to be near the top end of our prior earnings guidance range of $0.30 to $0.355 per share that we provided in our January 27, 2011 press release (after adjusting to reflect our two-for-one stock split on March 1, 2011) and to be significantly higher than last year's second quarter GAAP diluted earnings of $0.21 per share (after adjusting to reflect the two-for-one stock split).

"Our comparable store sales decrease of 0.9% for the second quarter was near the top end of our guidance range of down 0.5% to down 2.5%, provided in our January 27 press release, and our comparable store sales decrease of 4.0% for the month of March was in line with our expectations, despite being adversely affected by unusually cool weather in several regions of the United States during March, which hurt sales of Spring merchandise.

“We had planned our March comparable store sales performance to be significantly weaker than February due to: (1) the much tougher sales comparison we faced in March versus February, with March 2010 sales having benefited from seasonably warm weather after February 2010 sales were significantly hurt by severe snowstorms and significantly colder weather compared to the prior year and, to a lesser extent (2) the projected cannibalization impact of our Macy's leased department expansion, which had its first full month of operation in March.

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