Destination Maternity returns 1Q profit

Destination Maternity reported a first-quarter profit Thursday, mostly freed from huge write-downs for store closings and other charges tied to a poor economy. The company boosted its outlook for 2010, signaling that the worst may be over, and shares jumped 13 percent. Shares reached a 52-week high early in the day. While revenue dipped slightly, cost cuts helped produce net income of $1.3 million, or 20 cents per share, for the period ended Dec. 31. That compares with a loss of $45.3 million, or $7.86 per share, a year ago. Taking out goodwill impairment charges and other items, adjusted profit was 62 cents per share. The company had earlier forecast a 19 to 38 cent loss. Quarterly sales fell 1 percent to $133.8 million, which was in range of the retailer’s guidance. Retailers continue to struggle and sales at stores open at least a year fell 5.9 percent in the quarter for Destination.

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Destination projected $3.3 million in further restructuring cost during fiscal 2010, most of that occurring in the first quarter. “We continue to take aggressive actions to manage our business in this tough environment, and with our tight management of expenditures and inventory, we were able to continue to reduce expenses and were able to control markdown levels,” said CEO Ed Krell. For fiscal 2010, Destination Maternity now expects earnings of $2.10 to $2.45 per share, compared with a prior guidance for profit between $1.58 and $2.11 per share. It anticipates an adjusted profit in a range of $2.74 to $3.09 per share. The retailer, which runs Motherhood Maternity, A Pea in the Pod and its namesake stores, predicts annual sales in a range of $536 million to $546.5 million and a decline of 2.5 percent to 4.5 percent in sales at stores open at least a year. Destination Maternity Corp. forecasts second-quarter adjusted earnings between 33 cents and 45 cents per share on sales in a range of $129.5 million to $132 million. It anticipates sales at stores open at least a year will drop 5 percent to 7.5 percent.

Company shares rose $2.74 to $24.10.

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