Destination Maternity cuts losses as new strategic plan kicks off
Moorestown, New Jersey-based maternity apparel company Destination Maternity Corporation managed to cut costs and slash its net loss in the third quarter despite slipping sales, as its recently announced multi-year strategy begins to take hold.
The company’s net sales decreased 3.7% to $92.8 million in the third quarter ended November 3, 2018, down from $96.4 million in the prior-year period. The decline was driven by a net closure of 27 company-owned stores and 12 leased locations during Q3 undertaken as part of Destination Maternity’s “Destination -> Forward” strategy, as well as by a comparable sales decrease of 2.6%.
While total e-commerce revenues remained largely flat, mobile sales increased 29% year over year, representing 54% of total online sales in the quarter.
Despite its falling revenues, Destination Maternity cut its net loss from $7.5 million to $4.1 million in Q3, thanks in large part to the fact that its strategic initiatives allowed it to reduce selling, general and administrative expenses by 8.7% over the course of the period.
“Our third quarter results illustrate our continued discipline in right-sizing the organization, rationalizing expenses and improving profitability as part of our multi-year strategic plan, Destination -> Forward,” said Destination Maternity CEO Marla Ryan in a release.
“We remain encouraged by our progress to date and our future. As such, we continue to believe our stock is undervalued and both management and the Board will be purchasing additional shares when our trading window opens,” Ryan concluded.
Year to date, Destination Maternity reported a decrease of 2.9% in net sales, which totaled $292.5 million, compared to $301.1 million in the equivalent nine-month period in the previous year, while comparable sales decreased 0.5%.
The company’s net loss for the period reduced from $11.4 million to $7.9 million.
As Destination Maternity continues to optimize its retail network, the company has lowered its full-year 2019 sales outlook and now expects to see revenues of between $387 million and $391 million.
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