Destination Maternity announces CEO transition; reports slump in Q1 sales
Moorestown, New Jersey-based maternity-wear retailer Destination Maternity Corporation announced declining first-quarter sales on Wednesday and revealed that it has begun searching for a new CEO following Marla Ryan’s decision to step down from the post, effective June 13, 2019.
Through a mutual agreement with the board, Ryan will remain at Destination Maternity in a new role as president of product design, sourcing and merchandising, and will also assist the company during its leadership transition.
While the retail group searches for Ryan’s replacement, it has created an interim office of the CEO, which consists of Ryan, CFO and COO Dave Helkey, and Lisa Gavales, who joined the company’s board in March, and will serve as chair of the office of the CEO.
Ryan first stepped into the role of CEO in May 2018, having joined the company’s board as a member of a completely new female-majority slate of directors elected earlier in the same month. The board overhaul followed weeks of heated exchanges between the then incumbent board members and a dissident group of stockholders pushing for change at the company.
Under Ryan’s leadership, Destination Maternity began implementing a new strategic plan, “Destination -> Forward”, focusing on streamlining the company’s cost structure and operations, as well as on driving product innovation.
David Goeke was appointed as the retailer’s first ever transformation officer to oversee the process, joining the company at the same time as Helkey, in January of this year.
On Wednesday the company also announced the appointment of chairman and CEO of Pirinate Consulting Group Gene Davis as the new chairman of its board of directors. Davis brings extensive retail experience to his new role, having previously served as the president and vice chairman of Emerson Radio Corporation, and CEO and vice chairman of Sport Supply Group.
The executive, who began his career as an attorney in 1980, specializes in difficult turnaround situations and maximizing shareholder value.
“Gene is a uniquely talented executive who brings highly relevant turnaround management and strategic planning experience that will be valuable to the board as we look to strengthen the business and drive long term shareholder value. We look forward to his immediate contributions,” commented Gavales in a release.
Destination Maternity Corporation, which operates through the Destination Maternity, A Pea in the Pod and Motherhood Maternity brands, reported net sales of $94.2 million for the first quarter ended May 4, 2019, representing an 8.7% decrease from the $103.2 million reported in the prior-year period.
This decline was due, in large part, to the net closure of 32 owned locations and 88 leased locations as part of the company’s transformation efforts, as well as a 7.2% decrease in comparable sales.
Destination Maternity’s quarterly net earnings totaled $0.1 million, or $0.01 per diluted share, down from net income of $0.2 million, or $0.02 per diluted share, in Q1 2018.
“We had a challenging start to the year with comparable store sales down 7.2% in the first quarter,” said Helkey in a release. “As we look ahead, we are committed to strengthening the underlying fundamentals of the business and driving long term, profitable growth. Due to the recently announced leadership transition, the board of directors is conducting a comprehensive review of the Company’s strategic initiatives to ensure that the company is pursuing an aggressive strategy that will drive real and sizeable change in the business.”
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