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Destination Maternity Reports Preliminary Sales for August 2010

PHILADELPHIA, Sept. 2 /PRNewswire-FirstCall/ -- Destination Maternity Corporation (Nasdaq: DEST), the world's leading maternity apparel retailer, today reported that preliminary net sales for the month of August 2010 decreased approximately 2.3% to approximately $42.9 million from $43.8 million reported for the month of August 2009. Comparable retail sales data (which consists of comparable store sales and Internet sales) for the month of August 2010 and 2009 is included in the table below.

                                            August 2010      August 2009
                                            -----------      -----------
                                              % increase (decrease)
                                              ---------------------
    Reported Basis
    --------------
      Comparable retail sales                 (3.2)%         (9.4)%
      Comparable store sales                  (4.4)%        (10.6)%
      Internet sales                           20.5%          19.8%

    Adjusted for Calendar Timing Shift
    ----------------------------------
      Comparable retail sales                 (0.8)%         (8.0)%
      Comparable store sales                  (1.9)%         (9.1)%

The decrease in total reported sales for August 2010 compared to August 2009 resulted primarily from the unfavorable "days adjustment" calendar timing shift, the decrease in comparable store sales and decreased sales from the Company's licensed relationship, partially offset by increased sales due to the re-launch of the exclusive Two Hearts® Maternity collection in Sears® and Kmart® stores in October 2009, and increased Internet sales. A portion of the decrease in August sales from the licensed relationship reflects a shift in the monthly timing of product shipments compared to last year.

Ed Krell, Chief Executive Officer and President of Destination Maternity, noted, "Our overall sales for the month of August were in line with our expectations and in line with our sales guidance for our fiscal fourth quarter that we provided in our July 28, 2010 press release. Also, it is important to note that our inventory remains in good control and our merchandise gross margin this August was higher than last August, driven by reduced product costs, despite higher markdown levels.

"As we have indicated previously, although we are pleased with our continued progress in improving the profitability of our company, by no means are we satisfied or complacent, especially with regard to our sales performance, and we are keenly focused on initiatives to drive profitable sales growth, as evidenced by the re-launch of our business with Sears, the planned expansion into some additional Sears and Kmart locations, the expansion of our Internet sales, the launch of international franchise arrangements in the Middle East and India, and the introduction of two exclusive maternity apparel lines with supermodel Heidi Klum. Furthermore, on June 28, 2010 we announced the significant expansion of our maternity apparel leased department relationship with Macy's®, to occur in February 2011, through which we will expand from our current 113 Macy's locations to over 615 Macy's locations throughout the United States, offering a mix of Motherhood Maternity® and A Pea in the Pod® branded merchandise. This expansion with Macy's will deepen our position as the leading maternity apparel retailer in the world."

During August 2010, the Company opened one store and did not close any stores. As of the end of August 2010, the Company operates 701 stores, 976 leased department locations and 1,677 total retail locations, compared to 726 stores, 357 leased department locations and 1,083 total retail locations operated at the end of August 2009. The increase in leased department locations at the end of August 2010 versus the end of August 2009 predominantly reflects the opening of 623 Sears and Kmart leased department locations in connection with the October 2009 re-launch of the Two Hearts Maternity collection.

Days Adjustment Calendar Shift

Destination Maternity reports sales on a calendar month basis, rather than on a "4-5-4 retail fiscal calendar" where each fiscal week and fiscal month starts on a Sunday and ends on a Saturday. Thus, for each calendar month, there is a "days adjustment calendar shift" which may help or hurt reported calendar month sales, comparable retail sales and comparable store sales due to different days of the week typically contributing more sales than other days of the week. For August 2010, there was one more Tuesday and one less Saturday compared to August 2009. The Company estimates this calendar shift unfavorably impacted its reported comparable retail sales for August 2010 by approximately 2.4 percentage points. For August 2009, there was one more Monday and one less Friday compared to August 2008. The Company estimates this calendar shift, along with the later timing of Labor Day in 2009 (September 7) compared to 2008 (September 1), unfavorably impacted its reported comparable retail sales for August 2009 by approximately 1.4 percentage points.

Destination Maternity Corporation is the world's largest designer and retailer of maternity apparel. In the United States and Canada, as of August 31, 2010, Destination Maternity operates 1,677 retail locations, including 701 stores, predominantly under the tradenames Motherhood Maternity®, A Pea in the Pod®, and Destination Maternity®, and sells on the web through its DestinationMaternity.com and brand-specific websites. Destination Maternity also distributes its Oh Baby by Motherhood® collection through a licensed arrangement at Kohl's® stores throughout the United States and on Kohls.com. In addition, Destination Maternity is expanding internationally and has entered into exclusive store franchise and product supply relationships in India and the Middle East.

The Company cautions that any forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) contained in this press release or made from time to time by management of the Company, including those regarding net sales, comparable retail sales, comparable store sales, other results of operations, liquidity and financial condition, and various business initiatives, involve risks and uncertainties, and are subject to change based on various important factors. The following factors, among others, in some cases have affected and in the future could affect the Company's financial performance and actual results and could cause actual results to differ materially from those expressed or implied in any such forward-looking statements: the continuation of economic recovery of the retail industry in general and of apparel purchases in particular, our ability to successfully manage our various business initiatives, the success of our international expansion, our ability to successfully manage and retain our leased department and licensed relationships and marketing partnerships, future sales trends in our existing store base and through the Internet, unusual weather patterns, changes in consumer spending patterns, raw material price increases, overall economic conditions and other factors affecting consumer confidence, demographics and other macroeconomic factors that may impact the level of spending for maternity apparel, expense savings initiatives, our ability to anticipate and respond to fashion trends and consumer preferences, unanticipated fluctuations in our operating results, the impact of competition and fluctuations in the price, availability and quality of raw materials and contracted products, availability of suitable store locations, continued availability of capital and financing, our ability to hire and develop senior management and sales associates, our ability to develop and source merchandise, our ability to receive production from foreign sources on a timely basis, potential stock repurchases, potential debt prepayments, changes in market interest rates, war or acts of terrorism and other factors set forth in the Company's periodic filings with the Securities and Exchange Commission, or in materials incorporated therein by reference.

SOURCE Destination Maternity Corporation