Destination Maternity Reports Sales for July 2010

PHILADELPHIA, Aug. 5 /PRNewswire-FirstCall/ -- Destination Maternity Corporation (Nasdaq: DEST), the world's leading maternity apparel retailer, today reported that net sales for the month of July 2010 increased 4.0% to $40.0 million from $38.5 million reported for the month of July 2009.  Comparable retail sales (which consists of comparable store sales and Internet sales) for the month of July 2010 increased 1.4% on a reported basis, and decreased approximately 0.8% after adjusting for the calendar timing shift. During July 2010, comparable store sales decreased 0.3% (and decreased approximately 2.6% after adjusting for the calendar timing shift), while Internet sales increased 40.2%.  For July 2009 the Company's comparable retail sales decreased 8.7% on a reported basis, and decreased approximately 9.3% after adjusting for the calendar timing shift.  The increase in total reported sales for July 2010 compared to July 2009 resulted primarily from increased sales due to the re-launch of the exclusive Two Hearts® Maternity collection in Sears® and Kmart® stores in October 2009, the favorable "days adjustment" calendar timing shift, and increased Internet sales, partially offset by the decrease in comparable store sales.

Ed Krell, Chief Executive Officer of Destination Maternity, noted, "Our July sales results were somewhat weaker than originally planned, but improved in the latter half of the month and ended the month near the high end of our recent guidance.  Our reported comparable store sales decrease of 0.3% for the month was near the high end of our guidance range of flat to a decrease of 2.0%, which we provided in our July 28, 2010 press release, and our Internet sales increase of 40.2% was higher than our guidance range of an increase between 25% and 35% provided in that release.  Also, it is important to note that our inventory remains in good control and our merchandise gross margin this July was higher than last July, driven by reduced product costs, despite higher markdown levels.

"As we have indicated previously, although we are pleased with our continued progress in improving the profitability of our company, by no means are we satisfied or complacent, especially with regard to our sales performance, and we are keenly focused on initiatives to drive profitable sales growth, as evidenced by the re-launch of our business with Sears, the planned expansion into some additional Sears and Kmart locations, the expansion of our Internet sales, the launch of international franchise arrangements in the Middle East and India, and the introduction of two exclusive maternity apparel lines with supermodel Heidi Klum.  Furthermore, on June 28, 2010 we announced the significant expansion of our maternity apparel leased department relationship with Macy's®, to occur in February 2011, through which we will expand from our current 113 Macy's locations to over 615 Macy's locations throughout the United States, offering a mix of Motherhood Maternity® and A Pea in the Pod® branded merchandise.  This expansion with Macy's will deepen our position as the leading maternity apparel retailer in the world."

During July 2010, the Company opened its 25th Destination Maternity Superstore and closed three stores, including two store closings related to the Superstore opening.  As of the end of July 2010, the Company operates 700 stores, 978 leased department locations and 1,678 total retail locations, compared to 728 stores, 357 leased department locations and 1,085 total retail locations operated at the end of July 2009.  The increase in leased department locations at the end of July 2010 versus the end of July 2009 predominantly reflects the opening of 623 Sears and Kmart leased department locations in connection with the October 2009 re-launch of the Two Hearts Maternity collection.

Days Adjustment Calendar Shift

Destination Maternity reports sales on a calendar month basis, rather than on a "4-5-4 retail fiscal calendar" where each fiscal week and fiscal month starts on a Sunday and ends on a Saturday.  Thus, for each calendar month, there is a "days adjustment calendar shift" which may help or hurt reported calendar month sales, comparable retail sales and comparable store sales due to different days of the week typically contributing more sales than other days of the week.  For July 2010, there was one more Saturday and one less Wednesday compared to July 2009.  The Company estimates this calendar shift favorably impacted its reported comparable retail sales for July 2010 by approximately 2.2 percentage points.  For July 2009, there was one more Friday and one less Tuesday compared to July 2008, which the Company estimates favorably impacted its reported comparable retail sales for July 2009 by approximately 0.6 percentage points.

Destination Maternity Corporation is the world's largest designer and retailer of maternity apparel.  In the United States and Canada, as of July 31, 2010, Destination Maternity operates 1,678 retail locations, including 700 stores, predominantly under the tradenames Motherhood Maternity®, A Pea in the Pod®, and Destination Maternity®, and sells on the web through its DestinationMaternity.com and brand-specific websites.  Destination Maternity also distributes its Oh Baby by Motherhood® collection through a licensed arrangement at Kohl's® stores throughout the United States and on Kohls.com.  In addition, Destination Maternity is expanding internationally and has entered into exclusive store franchise and product supply relationships in India and the Middle East.

The Company cautions that any forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) contained in this press release or made from time to time by management of the Company, including those regarding net sales, comparable retail sales, comparable store sales, other results of operations, liquidity and financial condition, and various business initiatives, involve risks and uncertainties, and are subject to change based on various important factors.  The following factors, among others, in some cases have affected and in the future could affect the Company's financial performance and actual results and could cause actual results to differ materially from those expressed or implied in any such forward-looking statements: the continuation of economic recovery of the retail industry in general and of apparel purchases in particular, our ability to successfully manage our various business initiatives, the success of our international expansion, our ability to successfully manage and retain our leased department and licensed relationships and marketing partnerships, future sales trends in our existing store base and through the Internet, unusual weather patterns, changes in consumer spending patterns, raw material price increases, overall economic conditions and other factors affecting consumer confidence, demographics and other macroeconomic factors that may impact the level of spending for maternity apparel,  expense savings initiatives, our ability to anticipate and respond to fashion trends and consumer preferences, unanticipated fluctuations in our operating results, the impact of competition and fluctuations in the price, availability and quality of raw materials and contracted products, availability of suitable store locations, continued availability of capital and financing, our ability to hire and develop senior management and sales associates, our ability to develop and source merchandise, our ability to receive production from foreign sources on a timely basis, potential stock repurchases, potential debt prepayments, changes in market interest rates, war or acts of terrorism and other factors set forth in the Company's periodic filings with the Securities and Exchange Commission, or in materials incorporated therein by reference.

SOURCE Destination Maternity Corporation