US: Destination Maternity lifts FY guidance on Q2 profit
- Swings to Q2 profit of $2.6m
- Sales edged up 0.8% to $131.1m
- Sees FY earnings up 34-56%
Maternity apparel retailer Destination Maternity Corporation today (28 April) lifted its full-year earnings guidance after beating expectations and swinging to a second quarter profit.
Profit for the three months to 31 March was $2.6m or $0.42 per share, compared with a year earlier when a $3.4m impairment charge pushed the company to a net loss of $1.9m or $0.32 per share.
"We continue to make significant progress in improving the profitability of our business, even in the face of a difficult sales environment," said CEO Ed Krell.
"Our improved earnings performance is driven primarily by our continued cost reduction initiatives and strong merchandise gross margin performance, as well as from the growth in sales of our leased and licensed department relationships and increased Internet sales."
Net sales edged up 0.8% to $131.1m from $130.1m last time, helped by higher revenues from the company's leased department and licensed relationships, including the relaunched Two Hearts Maternity collection in Sears and Kmart stores.
That said, same-store sales fell 6.5% during the quarter - which the retailer blamed on the difficult retail environment.
Ongoing restructuring and cost cuts of $1.1m were incurred in the second quarter, but Destination Maternity expects this to lead to $8m to $10m in savings for fiscal 2010.
The retailer, which operates 1,688 stores, expects full-year earnings to be 34% and 56% higher than last year, at $2.15 to $2.50 per share.
Net sales are seen in the range of $534.0m to $543.5m, which would be a rise of 0.5% to 2.3% on fiscal 2009. But same-store sales are likely to be down by between 3.0% and 4.7%, the company said.
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