Destination Maternity Q1 net sales drop to $124.4 millionStaff writer ▼ | May 26, 2016
Destination Maternity Corporation announced financial results for the first quarter of fiscal 2016 ended April 30, 2016.
Maternity A decline in comparable sales
The decrease resulted primarily from a decline in comparable sales and, to a lesser extent, the reduction in leased store sales from exiting Gordmans and approximately half of the Sears locations, as well as decreased sales related to Destination Maternity's continued efforts to close underperforming stores.
In addition, Destination Maternity's shipments to Kohl's declined as this licensed relationship will end by early fiscal 2017.
Comparable sales decreased 5.4%, compared to a 1.1% decrease for the first quarter of fiscal 2015. The Company believes the primary drivers of the comparable sales decline were lower transactions and unit sales resulting from lower traffic, partially offset by an increase in average selling prices.
Gross margin for the first quarter of fiscal 2016 was 54.1%, up 370 basis points over the comparable prior year quarter gross margin of 50.4%. The improvement was a result of a reduction in price promotion and markdown activity as a result of better managed inventory, and lower levels of excess current season and aged merchandise.
Selling, general and administrative expenses (SG&A) for the first quarter of fiscal 2016 decreased 8.2% to $58.8 million, compared to $64.0 million for the first quarter of fiscal 2015.
The decline in SG&A dollars reflects management actions resulting in lower marketing and advertising expense, reduced store and home office payroll, and savings from Destination Maternity's continued closure of underperforming stores. As a percentage of net sales, SG&A increased to 47.2% for the first quarter of fiscal 2016 compared to 45.2% for the first quarter of fiscal 2015.
Other charges during the first quarter of fiscal 2016 were $0.7 million, primarily related to management and organizational changes, compared to $1.8 million in the first quarter of fiscal 2015, which included $0.8 million for management and organizational changes and $1.0 million for Destination Maternity's facilities relocations.
The Company incurred store closing, asset impairment and asset disposal expense of $0.6 million compared to expense of $1.0 million for the first quarter of fiscal 2015.
Adjusted EBITDA before other charges was $13.2 million compared to $12.0 million for the first quarter of fiscal 2015. Adjusted EBITDA before other charges is defined in the financial tables at the end of this press release.
GAAP net income was $4.0 million, or $0.30 per diluted share, an increase of 59.4% compared to net income of $2.5 million, or $0.19 per diluted share, for the first quarter of fiscal 2015.
Adjusted net income was $4.5 million, or $0.33 per diluted share, an increase of 21.6% compared to adjusted net income of $3.7 million, or $0.27 per diluted share, for the first quarter of fiscal 2015. ■