Destination Maternity Corp. said Wednesday that cost-cutting initiatives and strong merchandise margins helped it turn a profit in the second quarter.
For the period ended March 31, the Philadelphia-based apparel retailer posted net income of $2.6 million, or 42 cents a diluted share, compared with a net loss of $1.9 million, or 32 cents, a year earlier. Stripping out goodwill impairment, restructuring and other onetime charges, the firm said it earned $3.8 million, or 61 cents, compared with a year-ago profit, exclusive of charges, totaling $1.8 million, or 30 cents.
The company produced a 0.8 percent jump in revenue for the quarter, which totaled $131.1 million versus $130.1 million.
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Quarterly comparable-store sales decreased 6.5 percent, while selling, general and administrative costs were reduced by 3.4 percent, or to $63.8 million from $66 million last year. Gross margin improved to 54.4 percent of sales from 53.7 percent, due mainly to reduced product costs.
“Overall, we feel very good about our company’s position and the actions we have taken and are continuing to take to improve the core profitability of our business and generate increased shareholder value even in the face of a difficult sales environment,” chief executive officer Edward Krell said on the company call.
However, Krell conceded he was “not at all satisfied” with the company’s comp performance. In order to remedy this, the retailer will continue to “refine” its merchandise assortments and add new collections, he said.
In the first half, profits grew to $3.9 million, or 62 cents a share, versus a year-ago net loss of $48.8 million, or $8.17, which included a $50.4 million charge.
For the third quarter, the retailer said before goodwill charges, it expects earnings per share of between $1.16 and $1.34 on sales in the $142 million to $147 million range. Excluding charges, annual EPS is expected to be in the $2.15 to $2.50 range, while revenue is projected to be between $534 million to $543.5 million.
Shares Wednesday closed at $31.51, up 50 cents, or 1.6 percent.