Destination Maternity Reports Preliminary Sales for August 2011

PHILADELPHIA, Sept. 1, 2011 /PRNewswire/ -- Destination Maternity Corporation (Nasdaq: DEST), the world's leading maternity apparel retailer, today reported that preliminary net sales for the month of August 2011 increased 4.7% to $44.9 million from $42.9 million reported for the month of August 2010.  Comparable retail sales data (which consists of comparable store sales and Internet sales) for the months of August 2011 and 2010 is included in the table below.

The increase in total reported sales for August 2011 compared to August 2010 resulted primarily from: (1) increased sales due to the expansion of the Company's maternity apparel leased department relationship with Macy's®, (2) increased Internet sales and (3) increased international sales; partially offset by (4) the decrease in comparable store sales and (5) decreased sales related to the Company's continued efforts to close underperforming stores.

Ed Krell, Chief Executive Officer of Destination Maternity, noted, "Our August sales performance showed improvement versus our July performance, including a stronger second half of August compared to the first half of August, even with the negative impact from Hurricane Irene during the last few days of the month.  Thus, although we are not satisfied with our sales performance, we are encouraged by the improved sales trend and we are cautiously optimistic that we can continue to see an improved sales trend in the upcoming Fall selling months.  Also, we estimate that the cannibalization impact of our February 2011 leased department expansion with Macy's hurt our August 2011 comparable retail sales by between 1 and 2 percentage points.

"As we have previously stated, we recognize the continued difficult economic environment for the consumer, especially the moderate-priced consumer, although we remain focused on the things that we can control, not on external factors that we cannot control.  Our key focus continues to be on turning around our sales performance through initiatives to enhance our merchandise assortments, merchandise presentation and customer experience."  

During August 2011, the Company opened one new Destination Maternity multi-brand store and closed five stores, including two store closings related to the Destination Maternity store opening and two store closings representing stores that remained closed as of August 31, 2011 due to Hurricane Irene.  As of the end of August 2011, the Company operates 656 stores, 1,693 leased department locations and 2,349 total retail locations (which excludes two stores and five total retail locations that remained closed as of August 31, 2011 due to Hurricane Irene), compared to 701 stores, 976 leased department locations and 1,677 total retail locations operated at the end of August 2010.  The Company was forced to temporarily close 219 retail locations (consisting of 73 stores and 146 leased department locations) for at least one full day because of Hurricane Irene, with many related additional partial day closures.  As of August 31, 2011, all of these affected locations have reopened, other than five locations that remain closed.  The increase in leased department locations at the end of August 2011 versus the end of August 2010 predominantly reflects the opening of 517 leased department locations during the second quarter of fiscal 2011 for our Macy's expansion, and the opening of an additional 217 Sears® and Kmart® leased department locations in September and October 2010.  The Company previously announced that it will discontinue offering maternity apparel in leased departments in Kmart locations by the end of calendar year 2011.  Kmart represents only a small portion of the overall sales generated by the Company's leased department relationship with Sears and Kmart through the Company's agreement with Sears Holdings Corporation.  The Company will continue to operate leased departments in Sears stores throughout the United States.  As of the end of August 2011, the Company operates 295 leased department locations in Kmart stores and 527 leased department locations in Sears stores.

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 typically a "days adjustment calendar shift" which may help or hurt reported calendar month sales and comparable retail sales due to different days of the week typically contributing more sales than other days of the week.  For August 2011, there was one more Wednesday and one less Sunday compared to August 2010.  The Company estimates this calendar shift unfavorably impacted its reported comparable retail sales for August 2011 by approximately 0.3 percentage points.  For August 2010, there was one more Tuesday and one less Saturday compared to August 2009.  The Company estimates this calendar shift unfavorably impacted its reported comparable retail sales for August 2010 by approximately 2.4 percentage points.

Destination Maternity Corporation is the world's largest designer and retailer of maternity apparel.  In the United States and Canada, as of August 31, 2011, Destination Maternity operates 2,349 retail locations, including 656 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 exclusive store franchise and product supply relationships in India, the Middle East and South Korea.  As of August 31, 2011, Destination Maternity has 61 international franchised locations, including 48 shop-in-shop locations and 13 Destination Maternity branded stores.

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 changes in management, 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 the 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 business and its 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, the continuation of the regular quarterly cash dividend, the trading liquidity of our common stock, 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

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