Destination Maternity considers sale in wake of tough Q2

Press enter to search
Close search
Open Menu

Destination Maternity considers sale in wake of tough Q2

By Dan Berthiaume - 09/17/2019
The nation’s largest maternity wear retailer is reviewing all its strategic options.

Destination Maternity Corp. reported a net loss of $3.5 million in the second quarter of fiscal 2019, down slightly from the $4 million net loss it reported the same quarter a year earlier. However, net sales fell 12% to $84.9 million from $96.4 million, while same-store sales plummeted 11.9% and e-commerce sales dropped 6.4%.

At direction of its board of directors, Destination Maternity is reviewing strategic alternatives expected to include, but not limited to, a sale or merger of the company. Other alternatives being considered include pursuing unspecified “value-enhancing” initiatives as a standalone company, as well capital structure optimization and/or the sale or disposition of corporate assets. Greenhill & Co. is serving as financial advisor.

Destination Maternity, which is withdrawing financial guidance for the remainder of fiscal 2019, said the net closure of six corporate stores and 55 leased stores, as well as a decrease in same-store and e-commerce sales, negatively impacted net sales performance. The retailer also said declining net sales offset any financial benefit from cost savings initiatives and reduced promotions.

“While we continue to believe we have a compelling business and remain focused on delivering long-term profitable growth, challenges persist and more needs to be done,” said Dave Helkey, CFO, Destination Maternity. “As part of our ongoing review of the company’s strategic initiatives, our board of directors has announced that it has engaged Greenhill & Co. to commence a comprehensive review of strategic alternatives. We believe that it is in the best interests of our shareholders to conduct a thorough evaluation of all options reasonably available to the company to position the business for success.”

As of August 3, 2019, Destination Maternity operates 937 retail locations, including 446 stores in the U.S., Canada and Puerto Rico, and 491 leased departments located within department stores and baby specialty stores throughout the U.S. and Canada.