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Destination Maternity Q4 net loss narrows

By Prachi Singh

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Business |REPORT

Destination Maternity Corporation comparable sales decreased 3.5 percent compared to a 1 percent decrease for the three month period ended January 31, 2015. Comparable sales decreased 1.5 percent, compared to a decrease of 4.4 percent for the twelve months ended January 31, 2015.

"Although we are disappointed in our current sales performance, we are pleased with the progress we've made at this stage of our turnaround in improving the infrastructure to enable long-term success. 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, Chief Executive Officer & President, adding, “Overall, fiscal 2015 was a transitional year for Destination Maternity in which we made improvements in our reported financial results.”

Net loss improves in Q4 and FY15

Gross margin was 49.8 percent, up from 38.4 percent in the prior year period. Excluding the inventory write down from the prior year, gross profit margin improved by 240 basis points. GAAP net loss improved to 3.1 million dollars compared to a net loss of 17 million dollars for the three months ended January 31, 2015; and adjusted net loss was 1.5 million dollars, or 0.11 dollar per diluted share, compared to adjusted net loss of 13.8 million dollars, or 1.02 dollars per diluted share.

GAAP net loss was 4.5 million dollars compared to net loss of 10.1 million dollars and adjusted net loss was 0.2 million dollars, or 0.01 dollar per diluted share, compared to adjusted net loss of 6.7 million dollars, or 0.50 dollar per diluted share, for the twelve months ended January 31, 2015.

Detailed review of the Q4 and FY results

Net sales were 118.3 million dollars compared with 121.2 million dollars for the comparable three month period ended January 31, 2015. The decrease resulted primarily from a decline in comparable sales and decreased sales related to the Company's continued efforts to close underperforming stores.

Net sales for the year were 498.8 million dollars compared with 510.6 million dollars for the comparable twelve month period ended January 31, 2015. The company said that decrease in sales resulted primarily from decreased sales related to the company's continued efforts to close underperforming stores and a decline in comparable sales.

Guidance for fiscal 2016

The company said that for fiscal 2016, it expects a comparable sales increase in the low, single digits, driven by the utilisation of its new tools and process related to merchandise planning, in-store visual marketing improvements, and improved product flow and inventory management.

Through Easter, first quarter fiscal 2016 comparable store sales were down in the mid-single digits; gross margin is expected to increase approximately 100 basis points, with essentially flat gross margin in the first quarter of fiscal 2016. The company plans to close 25 to 30 stores and open seven to 10 new stores.

Destination Maternity