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November 1, 2018

Destination Maternity to cut product and sourcing jobs

Jobs are at risk at US mum-and-baby retailer Destination Maternity after the firm announced plans to restructure its corporate product and sourcing teams.

By Hannah Abdulla

Jobs are at risk at US mum-and-baby retailer Destination Maternity after the firm announced plans to restructure its corporate product and sourcing teams.

The ailing US retailer yesterday (31 October) said it was restructuring its corporate product and sourcing teams to reduce costs as part of “an ongoing rationalisation of the company’s overall product mix and improvements in inventory efficiency.”

The company said the restructuring will yield net cost savings of $1.2m to $1.4m in fiscal year 2019. There will, however, be a $0.5m one-time severance charge during the third quarter.

“Recognising the need to focus our product assortment, rationalise costs and improve inventory efficiency, we completed an in-depth review of our product offer, overall inventory levels and distribution channels,” says Ryan. “Through this effort, we identified profitable solutions to improve our product mix and reduce inventory as we begin 2019. We also made the difficult decision to reduce headcount in our product and sourcing divisions to better rationalise resources and costs across the organisation.

The changes “will enable us to become a leaner and more nimble organisation. They will also allow us to reallocate more of our resources on becoming a digital flagship serving the needs of today’s millennial moms and ‘moms2be.’ While there is certainly more work ahead of us, I am encouraged by what we have achieved to date and the opportunities ahead.”

Destination Maternity did not respond to just-style’s request for comment on the size of the headcount reduction.

Last week the retailer posted a fall in second-quarter net sales to US$96.4m from $98.3m, impacted by the closure of 27 stores in the period. Net loss narrowed to US$1.6m from $1.8m a year earlier. 

Over the last year, it has been putting measures in place to return the business to profit. 

In January it appointed a second interim CEO. Former Lands’ End and JCrew exec, Marla Ryan, was then named as permanent CEO in June

Globally, brick-and-mortar retailers are witnessing a tough trading environment and are increasingly losing share to online players. Yesterday, UK-based mum-and-baby retailer Mothercare, announced a similar move to restructure its business, a move which sees 150 jobs at risk.

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