Destination Maternity steeply trims Q4FY16 net loss

31 Mar '16
3 min read
Courtesy: Destination Maternity
Courtesy: Destination Maternity

For the fourth fiscal quarter ended January 30, 2016, apparel retailer Destination Maternity trimmed its net loss steeply from a fiscal ago quarter.

A press release from Destination Maternity said, GAAP net loss improved to $3.1 million in the reporting quarter compared to a net loss of $17.0 million for the three months ended January 31, 2015.

Adjusted net loss was $1.5 million, or $0.11 per diluted share as against adjusted net loss of $13.8 million, or $1.02 per diluted share, for the fourth quarter of fiscal 2015.

Comparable sales decreased 3.5 per cent vis-à-vis a 1.0 per cent decline for the three month period ended January 31, 2015.

For the quarter under review, gross margin was 49.8 per cent, up from 38.4 per cent in the prior fiscal period, which included a 9.0 per cent negative impact from the $10.9 million inventory write-down.

“Excluding the inventory write down from the prior year, gross profit margin improved by 240 basis points in the fourth quarter of fiscal 2016 versus the same quarter of previous fiscal,” the retailer said.

SG&A declined $3.1 million to $60.8 million for the reporting period or 51.4 per cent of net sales, an improvement of 130 basis points from the earlier fiscal's comparable quarter.

For full fiscal 2016, GAAP net loss was $4.5 million compared to net loss of $10.1 million for the twelve months ended January 31, 2015.

Adjusted net loss was $0.2 million or $0.01 per diluted share as against adjusted net loss of $6.7 million, or $0.50 per diluted share in fiscal 2015.

In fiscal 2016, comparable sales dropped 1.5 per cent vis-à-vis a dip of 4.4 per cent for the twelve months ended January 31, 2015.

In order to increase financial flexibility to execute its turnaround and position it for sustained profitable growth, the company entered into a new secured term loan agreement for $32 million due March 25, 2021.

“The proceeds were used to pay down existing borrowings under the company's credit line and in which Wells Fargo Bank and National Association arranged the financing,” Destination Maternity added.

In addition, as part of the transaction, the company has extended the term of its $70 million revolving credit facility with Wells Fargo through the maturity of the term loan.

In connection with the debt refinancing, the company's board of directors agreed to suspend the company's quarterly dividend.

“While dividends have been an important part of its historical shareholder returns, management believes the best return on capital today is through targeted reinvestment into the business,” the company noted.

In fiscal 2017, the company will complete the implementation of a new JDA product allocation tool, and will re-platform its ecommerce sites with Demandware.

These investments follow the company's 2016 projects, which included the move to a new state of the art distribution center in New Jersey and relocating headquarters also to New Jersey from Philadelphia. (AR)

Fibre2Fashion News Desk – India

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