Maternity apparel retailer Mothers Work Inc yesterday (24 July) posted an 89% slump in third quarter profit, blaming slumping same-store stales and debt refinancing charges for the earnings decline.
For the three months to 30 June, net income fell to $1.0m, or $0.17 per share, from $8.8m, or $1.54 per share, in the same period last year.
Excluding the one-time charge of $7.3m, or 73 cents per share, profits for the quarter would have totalled $5.5m.
Net sales for the third quarter dropped 6.5% to $153.2m from $163.9m on an 8.3% decline in comparable store sales, but was partially offset by increased licensing and marketing sales.
Profits for the fiscal nine-month period plunged 47% to $5m, from $9.7m in the prior year period. Net sales fell 3.1% to $445.6m from $460m last time.
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By GlobalDataPresident and chief operating officer Rebecca Matthias said lower third-quarter sales triggered by a “difficult economic and retail environment,” cooler than usual weather and competing apparel fuelled a 4% drop in same-store sales during the period.
Mothers Work said it will open 29 new stores (10 multi-branded) and close 46 this year to phase in its new key Destination Maternity Superstore banner. It will also expand its leased department-store locations and step up marketing efforts in an attempt to boost sales and shore up its business.
At the end of June 2007, the company operated a total of 1,599 retail locations.
The Philadelphia-based company also warned that 2007 operating income could fall 10%-18% to $24.8m-$27.4m, hurt by a difficult retail market and growing competition.
