• Q3 net income down 26.6% 
  • Sales down 5.3% to $138.8m
  • CEO "disappointed" with decreased earnings

Maternity wear retailer Destination Maternity admitted it was "disappointed" with a 26.6% fall in its third quarter net profit. 

Net income for the three months ended 30 June reached US$6.9m. Operating income declined 25.6% to $11.9m.

Net sales reached $138.8m, down 5.3% on the back of lower comparable sales, decreased sales from the company's licensed relationship and declined sales relating to closing under performing stores.

Comparable sales, including internet sales, fell 2.4%, compared to a 1.6% decrease the same period last year, impacted by a calendar shift with April having one less Friday and Saturday compared to the same month last year.

Gross margin was lower than planned because of increased price promotional activity and additional markdowns to boost sales and manage inventory levels.

CEO Ed Krell said: "We are disappointed that our sales and earnings for the third quarter were weaker than expected. Our sales for the quarter were lower than planned, as our strong early sales of spring/summer product in February and March did not continue into the April-June period. 

Looking forward, the company forecasts diluted earnings per common share to be between $0.17 and $0.28 per share for the fourth quarter. For fiscal 2012, the company expects diluted earnings per share to be in the range of $1.24 and $1.35 per share. 

"Our key focus continues to be improving our sales performance through initiatives to enhance our merchandise assortments, merchandise presentation and customer experience. Although we recognise the increasingly challenging macroeconomic environment of recent months, we remain focused on the things that we can control, not on external factors that we cannot control," Krell added.