Destination Maternity reports Q4 loss, net sales drop 13 percent

Destination Maternity Corporation, for the fourth quarter ended February 2, 2019 reported net loss of 6.4 million dollars or 46 cents per diluted share compared to 10.2 million dollars or 73 cents per diluted share, for the fourth quarter of fiscal 2017. Net loss for fiscal 2018 was 14.3 million dollars or 1.03 dollars per diluted share compared to 21.6 million dollars or 1.57 dollars per diluted share, for fiscal 2017.

“Several factors represented significant headwinds for our business in the fourth quarter,” said Marla Ryan, Chief Executive Officer of Destination Maternity in a statement, adding, “Challenging conversion results on our ecommerce sites and in store drove a 5.8 percent comparable sales decline and our promotional cadence and more aggressive approach to rightsizing inventory negatively impacted margins.”

Destination Maternity’s Q4 and fiscal 2018 financial highlights

Operating loss for the fourth quarter was 5.4 million dollars compared to 7.8 million dollars in the fourth quarter of fiscal 2017, while adjusted net loss was 4.4 million dollars or 31 cents per diluted share compared to 5 million dollars or 36 cents per diluted share in the same quarter of 2017. Adjusted EBITDA before other charges and effect of change in accounting principle decreased to 0.3 million dollars from 0.6 million dollars for the fourth quarter of fiscal 2017.

For the full year, operating loss was 9.6 million dollars compared to 16 million dollars for fiscal 2017, while adjusted net loss was 6.7 million dollars or 48 cents per diluted share compared to 10.2 million dollars or 74 cents per diluted share. Adjusted EBITDA before other charges and effect of change in accounting principle increased 23 percent to 16 million dollars for fiscal 2018 from 13 million dollars for fiscal 2017.

Net sales for the fourth quarter decreased 13.1 percent to 91.3 million dollars, negatively impacted by the net closure of 29 company-owned locations and 83 leased lease locations, a decrease in comparable sales, and the 53rd week in fiscal 2017. Comparable sales for the quarter decreased 5.8 percent from last year. Gross margin rate was 48.4 percent, a decrease of 200 basis points from the comparable prior year gross margin.

Net sales for fiscal 2018 decreased 5.5 percent to 383.8 million dollars, while comparable sales decreased 1.8 percent from 2017. Gross margin for fiscal 2018 was 51.6 percent, a decrease of 100 basis points from fiscal 2017.

Destination Maternity updates FY19 guidance

Updating its outlook for fiscal 2019, Destination Maternity said that the company now expects total sales to be in the range of 370 million dollars to 380 million dollars, comparable retail sales to be in the range of down 1 percent to up 1 percent, gross margin rate to be in the range of 51.5 percent to 52 percent, adjusted EBITDA before other charges to be in the range of 17 million dollars to 22 million dollars and adjusted diluted EPS to be in the range of loss of 12 cents to earnings of 8 cents.

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