Shares of Destination Maternity Corp. jumped more than 11 percent on Thursday after the Philadelphia-based retailer reported an unexpected first-quarter profit.
The company said for the first quarter ended Dec. 31, net income was $1.3 million, or 20 cents a diluted share, well above the loss of 19 cents to 38 cents projected by the company in November or the year-ago net loss of $46.9 million, or $7.86 a share. Stripping out pretax charges for both periods, including a $47 million impairment toll in the year-ago period, adjusted EPS was 62 cents versus 10 cents.
Revenue for the period edged up 0.8 percent to $133.8 million, from $134.8 million, as quarterly comparable-store sales declined 5.9 percent. Gross margin ramped up to 53.6 percent of sales from 50.3 percent.
“Our improved earnings performance is driven primarily by our continued cost reduction initiatives and strong merchandised gross margin performance,” chief executive officer Ed Krell said on the company call. “Given the continued weak economic environment and the uncertainty as to the timing of the recovery in consumer spending, we continue to plan our sales and inventory conservatively.”
Selling, general and administrative costs declined 3.1 percent to $63.9 million. The retailer also said it was able to amass pretax savings related to its restructuring and cost reduction program of about $12 million in fiscal 2009, leading to incremental pretax savings of roughly $6 million to $8 million in fiscal 2010.
For the year, Destination Maternity, which operates Motherhood Maternity, A Pea in the Pod and its namesake brand, estimated diluted earnings per share of between $2.10 and $2.45 a share, higher than its prior guidance of EPS of $1.58 to $2.11. Sales are expected to be between $536 million and $546.5 million, and comps are projected to decline between 2.5 percent and 4.5 percent.
As of Dec. 31, the company operated 721 stores and 980 leased departments.
Shares closed at $23.78, up $2.42, or 11.3 percent.