Ailing US retailer Destination Maternity has seen its share price jump after revealing it is analysing potential strategic alternatives in a bid to return to profitability through streamlining and investment in e-commerce.
In an update yesterday (16 October), the company, which is currently involved in a dispute with French children’s clothing retailer Orchestra-Prémaman, said it is working closely with all of its key advisors, including Guggenheim Securities, to explore “alternatives designed to maximise returns and value” for stockholders.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
Destination Maternity has been challenged by a number of factors such as weakness in the women’s speciality apparel retail space, as well as declining mall-based traffic, which led to a widening of losses in its second-quarter and falling sales. In addition, Orchestra-Prémaman, which made an unsolicited acquisition offer in 2015, has been seeking the resignation of the company’s four directors eligible for re-election, ahead of the AGM on 19 October.
New move to oust Destination Maternity directors
However interim CEO, Allen Weinstein, says he believes the infrastructure improvements implemented at the maternity wear retailer over the past three years have established a “solid foundation” on which the company can grow in its category.
In particular, investment in e-commerce boosted the channel’s comparable sales by 30.2% in the second quarter.
“Building from this strength, we will continue to maximise the connectivity between our digital and brick and mortar channels, creating a seamless, category-focused retail experience with a high level of personal service for our customer.”
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataThe company is set to open up ship-from-store fulfilment from all stores next month, roll out pick-up-from-store by the end of the calendar year, as well as short term initiatives such as reserve online/pickup in store, and online appointments for in-store visits.
Weinstein adds: “In addition to implementing operational initiatives, management has worked closely with the board to transform Destination into a more nimble, more efficient and more effective company by streamlining the organisational structure and business processes, and focusing resources to more directly benefit the customer.
“As we look to the future, we will continue to evaluate effective means of streamlining processes, such as the ongoing evaluation of our real estate portfolio, as part of our broader efforts to meaningfully improve financial results and generate shareholder value.”
