- Prachi Singh |
Destination Maternity Corporation comparable sales decreased 5.4 percent, compared to a 1.1 percent decrease for the first quarter of fiscal 2015. Adjusted EBITDA before other charges was 13.2 million dollars compared to 12 million dollars for the first quarter of fiscal 2015.
Commenting on the results, Anthony M. Romano, Chief Executive Officer, President & Interim Chief Financial Officer stated, "For the first quarter, in a challenging environment that pressured sales, we are pleased to report a 10.2 percent increase in adjusted EBITDA before other charges. We remain focused on our key initiatives, including our efforts to elevate our Motherhood and A Pea in the Pod brands and streamline our distribution network while maintaining our expense and inventory discipline in our ongoing efforts to drive long-term profitable growth.”
First quarter financial results
Net sales were 124.4 million dollars compared with 141.6 million dollars for the comparable prior year quarter. The decrease resulted primarily from a decline in comparable sales and the reduction in leased store sales from exiting Gordmans and approximately half of the Sears locations, as well as decreased sales related to the company's continued efforts to close underperforming stores. In addition, the company's shipments to Kohl's declined as this licensed relationship will end by early fiscal 2017.
Gross margin for the first quarter of fiscal 2016 was 54.1 percent, up 370 basis points over the comparable prior year quarter gross margin of 50.4 percent. The improvement was a result of a reduction in price promotion and markdown activity as a result of better managed inventory, and lower levels of excess current season and aged merchandise.
GAAP net income improved 59.4 percent to 4 million dollars, or 0.30 dollar per diluted share, compared to net income of 2.5 million dollars, or 0.19 dollar per diluted share, for the first quarter of fiscal 2015; and adjusted net income was 4.5 million dollars or 0.33 dollar per diluted share, compared to adjusted net income of 3.7 million dollars or 0.27 dollar per diluted share, for the first quarter of fiscal 2015.
Updates guidance for fiscal 2016
Comparable sales are now expected to be flat for the full fiscal year with greater improvement in the second half of fiscal 2016; gross margin is expected to increase approximately 200 to 300 basis points year-over-year, as inventory productivity initiatives continue to generate more profitable sales. The company plans to open 7 to 10 new stores and close 25 to 35 stores.