Net sales for the four months ended January 31, 2015 at Destination Maternity, a maternity apparel retailer were $165.6 million compared with $170.6 million for the four months ended January 31, 2014.
“The decrease resulted from decline in sales related to our continued efforts to close underperforming stores and a dip in comparable sales, partially offset by increased international sales,” the retailer said.
The four month ended January 31, 2015 represents the transition period related to its previously announced fiscal year-end change from September 30 to the Saturday nearest January 31 of each year.
“Comparable sales for the reporting period too fell 2.0 per cent as against a 0.9 per cent decrease for the four months ended January 31, 2014,” according to a Destination Maternity press release.
Adjusting for the calendar shift, the Company's calendar-adjusted comparable sales slipped 2.7 per cent for the four months ended January 31, 2015 and fell 0.7 per cent for the four months ended January 31, 2014.
Gross margin for the four months ended January 31, 2015 dropped to 41.6 per cent from 52.8 per cent for the four months ended January 31, 2014.
“The decrease in gross margin reflects more price promotional and markdown activity than planned to spur sales and more aggressively manage inventory,” the retailer explained.
The decline also included a $10.9 million inventory write-down at January 31, 2015 for the planned disposal of certain out-of-season merchandise.
SG&A expenses for the reporting period rose 2.5 per cent to $86.7 million from $84.5 million for same period of prior year.
As a percentage of net sales, SG&A increased to 52.3 per cent as against 49.6 per cent for the four months ended January 31, 2014.
According to the retair, the hike in expense and expense percentage reflects, spending to drive increased sales, including corporate payroll, advertising and marketing.
Store closing, asset impairment and asset disposal expenses for the four months ended January 31, 2015 increased to $4.6 million from $0.2 million for the four months ended January 31, 2014.
During the four months ended January 31, 2015, the Company recorded pretax impairment charges of approximately $4.5 million.
Net loss for the period under review was $17.4 million compared to net income of $3.1 million for the four months ended January 31, 2014.
For the four month period ended January 31, 2015, the Company reported a loss of $1.28 per diluted share on a GAAP basis.
CEO Anthony Romano said, "Although our financial results for the transition period are challenging, it was successful and productive.”
He added, “Our core operating results were about where we expected, and we took some difficult but necessary actions to correct foundational issues in our business.”
“This will help improve our prospects for long term success, including an inventory write-down of approximately $11 million,” he observed.