Destination Maternity Reports Sales for May 2010

PHILADELPHIA, June 3 /PRNewswire-FirstCall/ -- Destination Maternity Corporation (Nasdaq: DEST), the world's leading maternity apparel retailer, today reported that net sales for the month of May 2010 increased 1.6% to $52.2 million from $51.3 million reported for the month of May 2009.  Comparable store sales for the month of May 2010 decreased 3.9% on a reported basis and decreased approximately 2.9% after adjusting for the "days adjustment calendar shift," which the Company estimates unfavorably impacted its reported comparable store sales by approximately 1 percentage point.  For May 2009 the Company's comparable store sales decreased 5.4% on a reported basis, and decreased approximately 5.7% after adjusting for the calendar timing shift.  The increase in total reported sales for May 2010 compared to May 2009 resulted primarily from increased sales from the Company's leased and licensed relationships, including sales due to the re-launch of the exclusive Two Hearts® Maternity collection in Sears® and Kmart® stores in October 2009, and to a lesser extent, increased Internet and international sales, partially offset by the decrease in comparable store sales.

Ed Krell, Chief Executive Officer of Destination Maternity, noted, "Our May comparable store sales results were within, although towards the lower end of, our expectation range consistent with our guidance for third quarter comparable store sales.  Although our comparable store sales were down modestly for the month, we are encouraged by the significant improvement in our sales trend in May compared to April, as well as our improved sales trend in the second half of May compared to the first half.  Also, it is important to note that our inventory remains in good control and our merchandise gross margin this May was higher than last May.  

"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 expansion of our international business, the increased focus on our Internet business, and the introduction in May of the summer collections for our two exclusive maternity apparel lines with supermodel Heidi Klum, Lavish By Heidi Klum™ for A Pea in the Pod® and Loved By Heidi Klum™ for Motherhood®.  Also, on May 24, 2010 we announced the hiring of Emilia Fabricant as our new President.  Emilia has significant experience leading women's fashion apparel brands, both in the moderate and luxury-priced markets, and she brings us the added bonus of having led a maternity apparel business and intimately knowing our mom-to-be customer.  With Emilia's talent, energy and drive, she will be a critical ingredient in our efforts to continue to grow our business in a profitable manner and to improve our sales performance."

During May 2010, the Company opened one Destination Maternity® multi-brand store and closed four stores, including two store closings related to the Destination Maternity store opening.  As of the end of May 2010, the Company operates 705 stores, 979 leased department locations and 1,684 total retail locations, compared to 730 stores, 357 leased department locations and 1,087 total retail locations operated at the end of May 2009.  The increase in leased department locations at the end of May 2010 versus the end of May 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 and comparable store sales due to different days of the week typically contributing more sales than other days of the week.  For May 2010, there was one more Monday and one less Friday compared to May 2009.  The Company estimates this calendar shift unfavorably impacted its reported comparable store sales for May 2010 by approximately 1 percentage point.  For May 2009, there was one more Sunday and one less Thursday compared to May 2008, which the Company estimates favorably impacted its reported comparable store sales for May 2009 by approximately 0.3 percentage points.

Destination Maternity Corporation is the world's largest designer and retailer of maternity apparel.  In the United States and Canada, as of May 31, 2010, Destination Maternity operates 1,684 retail locations, including 705 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 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, our ability to successfully implement our merchandise brand and retail nameplate restructuring, 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, 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, anticipated 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, goodwill impairment charges, 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