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Destination Maternity gives turnaround update; loses CFO


Destination Maternity says its turnaround efforts are working to drive long-term growth despite a decrease in same-store sales during the fourth quarter.

The company said that for the fourth quarter ended Jan. 30, same-store sales decreased 3.5%. The retailer's net loss improved to $3.1 million compared to a net loss of $17 million in the prior year quarter. Net sales were $118.3 million, compared with $121.2 million for the comparable three month in 2015.

"We are cautiously optimistic that our improved operating performance for the fourth quarter is evidence that our turnaround strategies are beginning to bear fruit," said Anthony M. Romano, CEO and president. "Although we did experience a decline in comparable sales of 3.5%, which was driven by mall traffic declines due to the challenging retail environment and unseasonably warm weather, on a positive note our merchandising and marketing initiatives resulted in increased average transaction value and conversion. In addition, our increased inventory discipline enabled us to end the year with inventory down 11% on a unit basis."

The company also announced Tuesday that it will be looking for a new CFO after the resignation of Judd P. Tirnauer, who plans to depart the company on April 22 to take a senior leadership role with Wet Seal.

For the full fiscal 2015 year, same store sales decreased 1.5%. The company's net loss was $4.5 million.

The company also announced it plans to discontinue its Two Hearts line, thus ending its relationship with Sears in June. In addition, the company's leased department relationship with Gordman's ended this month. Finally, the company decided it will phase out production of its Oh Baby by Motherhood line during fiscal 2016 after being informed that Kohl's has elected to scale back and ultimately discontinue its exclusive license with the company for this line in early fiscal 2017.

"Overall, fiscal 2015 was a transitional year for Destination Maternity in which we made improvements in our reported financial results as we continue to reduce inventory and apply better processes and practices to drive sales productivity and overall profitability. Looking ahead, we remain focused on our key initiatives, including our intense focus on elevating our Motherhood and A Pea in the Pod brands by having the right product, in the right places at the right time."

Looking ahead, the company expects same store sales to increase in the low, single digits in fiscal 2016. The company also plans to close 25 to 30 stores and open seven to 10 new stores.

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