Destination Maternity seeks to streamline workforce

By

Robin Driver

Published
Jun 25, 2019

Hot on the heels of the maternity apparel retailer’s announcement that it is on the lookout for a new CEO, Destination Maternity Corporation announced on Monday that it will be conducting a reduction in force in an effort to streamline its operations and cut costs.

 
The staff cuts are expected to result in savings of between $4.0 million and $4.5 million on an annualized run-rate basis and will principally affect the Moorestown, New Jersey-based company’s product pipeline teams as the retailer seeks to reposition itself with a key-item-driven assortment focused on evergreen product.
 
“This reduction in force is a very difficult, but necessary step for the company,” said Lisa Gavales, chair of the office of the CEO, in a release. “We are streamlining our teams, and sharpening our product offering to focus on the key items that are most important and relevant to our new moms and moms2be. While challenging, this is a critical step in helping to position the business as a more nimble and profitable organization in the future.”

Destination Maternity expects the reduction in force to result in a one-time severance charge of $1.3 million to $1.5 million in the second quarter of 2019, with severance benefits being paid out ratably. The company has also pledged to provide affected employees with customary transition assistance.
 
The retailer, which operates under the Motherhood Maternity, A Pea in the Pod and Destination Maternity banners, has had a disappointing start to the year. The company reported net sales of $94.2 million for the first quarter ended May 4, 2019, down 8.7% from the prior-year period, while net earnings fell to $0.1 million, down from $0.2 million.
 
Destination Maternity Corporation currently operates 998 retail locations in the United States, Canada and Puerto Rico.