Retailer Destination Maternity Files for Chapter 11 Bankruptcy
Destination Maternity Corp. (DEST) on Monday filed for protection under Chapter 11 of the bankruptcy laws, as mall-based retailers continue to wither from the e-commerce assault.
In a filing with the U.S. Bankruptcy Court in Wilmington, Del., the Moorestown, N.J., maternity-apparel retailer reported $260 million in assets and $240 million in debts.
Destination Maternity’s net sales dropped 12% in the third quarter to $84.9 million from $96.4 million a year earlier. It reported a net loss of $3.5 million, narrowed from $4 million a year earlier.
The company said last month that it had hired investment bank Greenhill & Co. to review strategic alternatives.
“It has become clear to me that we need to take more prudent and decisive action to preserve liquidity and ensure a position in this business to drive profitable growth,” Destination Maternity interim CEO Lisa Gavales said in a conference call following the earnings report, according to The Wall Street Journal.
As of Aug. 3, the company had 937 retail locations, down 19% from 1,114 a year earlier. Of the 937 locations, it has 446 stores in the U.S., Canada and Puerto Rico and 491 departments leased within department stores and baby specialty stores in the U.S. and Canada.
And as of Feb. 2 Destination Maternity had 1,100 full-time and 2,300 part-time employees, according to its annual report. In late June the company said it would cut jobs to save as much as $4.5 million a year. It didn’t specify the number of job cuts.
The company’s shares closed at 18 cents, down 47%.