Destination Maternity CEO out; Q2 sales slide
Destination Maternity is looking for a new chief executive.
The struggling maternity apparel retailer said that Anthony M. Romano is stepping down as president, CEO and board member as part of a mutual agreement, effective Sept. 7. Romano has served in the role since 2014, and, prior to that, was president and CEO of Charming Shoppes. His departure follows the recent termination of an agreement for Destination Maternity to be acquired by France's Orchestra-Prémaman.
Allen Weinstein, an independent director of Destination Maternity, will serve as interim CEO until a permanent replacement is found. Weinstein, a director of the company's board since January 2010, is currently executive chairman and a director of Villa, a privately owned footwear and apparel retailer
"Despite the investment of significant time, effort and resources into the proposed merger with Orchestra-Prémaman, it was ultimately not completed," said Romano. "Consequently, my fellow board members and I have reached a mutual decision that now would be a good time to make a change to allow for a fresh look at Destination Maternity.
Destination Maternity and Orchestra-Prémaman, a manufacturer and retailer of children's apparel and childcare products, entered into an agreement in December 2016. The deal was terminated in July, with the company citing, among other things, difficulties in satisfying French and U.S. regulators.
Destination Maternity has been struggling with sliding sales as online competition and decreased mall traffic impacted its revenues. On Wednesday, Destination Maternity reported net sales of $98.3 million for its second quarter, down from $106.5 million in the year-ago period. The decrease was attributed to the closure of underperforming stores, a 3.4% decline in comparable sales, and the exit of the company's relationship with Kohl's.
It reported a net loss of $2.8 million for the quarter, compared to a loss of $2.5 million in the year-ago quarter. On a per-share basis, losses, adjusted for one-time gains and costs, were 13 cents per share, compared to 14 cents last year.
The retailer incurred store closing, asset impairment and asset disposal expenses of $1.1 million in the quarter, compared to expenses of $0.4 million last year.
As of July 29, 2017 Destination Maternity operates 1,150 retail locations in the United States, Canada and Puerto Rico, including 507 stores, predominantly under the Motherhood Maternity, A Pea in the Pod and Destination Maternity banners, and 643 leased department locations. The company also sells merchandise on the Web through its websites.
In addition, Destination Maternity has international store franchise and product supply relationships in the Middle East, South Korea, Mexico, Israel and India. It has 210 international franchised locations, including 18 standalone stores operated under one of the Company's nameplates and 192 shop-in-shop locations.
Value retailer posts strong Q2 sales
99 Cents Only Stores reduced its loss in the second quarter amid increased operational efficiencies and surging sales.
The retailer reported a net loss of $33.6 million for the quarter ended July 28, compared to net loss of $35.1 million in the year-ago period. Net sales increased 8.9% to $540.5 million.
99 Cents Only Stores' reported second quarter gross margin of 28.8%, which was up 40 basis points year-over-year, driven primarily by a focus on reducing shrink and managing scrap, along with increased efficiency in its logistics network. On a year-to-date basis, the retailer's adjusted EBITDA of $26.4 million is up 42.3% compared to the same period a year ago.
"The second quarter offers further evidence of the progress we have continued to make in executing our turnaround plan," said Geoffrey Covert, president and CEO. "Our focused strategy of improving the company's operating performance is yielding encouraging results."
Same-store sales were up 9.0%, with a 4.7% increase in transaction count and a 4.1% increase in the average ticket. The increase in same-store sales was primarily driven by higher sales from seasonal, general merchandise and consumable categories, in part due to higher sales of above $1 products, better product assortment and improved store execution, according to the company.
"Sales from grocery and fresh offerings also increased, driven by better product availability, improved product assortment, as well as continued improvements in store in-stock levels," the company stated.
As of the end of the quarter, 99 Cents Only Stores operated 390 stores.
Former execs from GameStop, L Brands join Tailored Brands
Two experienced retail executives have joined the management team of the parent company of such brands as Men's Wearhouse and Jos.A. Bank.
Tailored Brands named Frank Hamlin as executive VP and chief marketing officer. He most recently served as chief marketing officer of GameStop Corp. where he oversaw the brand portfolio, loyalty, CRM and global omnichannel marketing strategy spanning over 7,400 stores and 40 million loyalty program members. Hamlin also was executive VP and general manager of marketing and e-commerce for Guitar Center,
In other appointments, Tailored Brands named Boris Sherman as executive VP and chief technology officer. He was most recently with L Brands, where he served as senior VP of omnichannel technology and oversaw all customer-facing digital, store, credit and call center technologies for the L Brands portfolio, which includes Victoria's Secret. Prior to L Brands, Sherman was VP, information technology for OfficeMax.
"We are very excited to welcome Frank and Boris to Tailored Brands," said Doug Ewert, CEO, Tailored Brands. "Frank brings us deep digital marketing expertise with proven ability to drive traffic, increase brand engagement and enhance customer loyalty programs. Boris is a strategic leader with more than 20 years of experience driving customer facing technologies that deliver business value. These executives have the leadership and technical expertise to help us achieve our vision of delivering the best omnichannel experience for men who want to look and feel their best."
Tailored Brands operates over 1,600 locations in the U.S. and Canada as well as branded e-commerce websites. Its brands include Men's Wearhouse, Jos. A. Bank, Joseph Abboud, Moores Clothing for Men and K&G.