A disappointing third-quarter sales performance didn’t keep Destination Maternity Corp. from beating analysts’ earnings expectations Wednesday with a 27.6 percent jump in profits. Higher margins and lower overhead and interest costs propped up net income for the period ended June 30 to $8.7 million, or $1.39 a diluted share. This compares with a profit of $6.8 million, or $1.13 a share, in the year-ago quarter.
Excluding restructuring and other charges, income rose to $9.5 million, or $1.48 a diluted share, from $7.3 million, or $1.21 a share.
Sluggish demand for maternity clothes, driven by a depressed birth rate, as well as other economic headwinds, caused quarterly revenue to dip 0.3 percent to $142 million, from $142.5 million, the company said. Comparable-store sales fell 4.9 percent, but gross margin improved to 56.1 percent of sales, versus year-ago levels of 54.4 percent.
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On the company conference call, chief executive officer Ed Krell said, “We are not satisfied or complacent, especially with regard to our sales performance, and we have taken significant steps to help improve our sales performance in the future.”
In order to bolster the top line, the ceo noted the company has relaunched its business with Sears Holdings Corp., expanded its Internet sales, opened international franchises in the Middle East and India and introduced two exclusive maternity lines with Heidi Klum.
For the nine months, the retailer posted a profit of $12.5 million, or $2.05 a share, versus a loss of $42 million, or $7.02 a share. Revenues contracted 0.1 percent to $406.9 million from $407.4 million.
Before restructuring and other charges, the company expects fourth-quarter earnings of between 38 cents and 52 cents a share. Revenue is anticipated to be in the $123 million to $126 million range. Wall Street was looking for earnings per share of 48 cents on sales of $131.1 million.