Destination Maternity Corporation (NASDAQ:DEST) Q4 2018 Earnings Conference Call - Final Transcript

Apr 16, 2019 • 09:00 am ET


Destination Maternity Corporation (NASDAQ:DEST) Q4 2018 Earnings Conference Call - Final Transcript


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Good day, ladies and gentlemen, and welcome to Destination Maternity Q4 2018 Earnings Conference Call. At this time all participants are in a listen-only mode. Following managements prepared remarks we will host the question-and-answer session and our instructions will be given at that time. (Operator Instructions) As a reminder, this conference call is being recorded for replay purposes.

It is now my pleasure to hand the conference over to Thomas McCracken, Senior Vice President of Finance. Sir, you may begin.

Thomas McCracken

Thank you operator. Good morning everyone, and welcome to Destination Maternity's fourth quarter fiscal 2018 earnings call. The earnings release that was disseminated this morning is available on the Investors section of our website.

The earnings release contains definitions of various financial terms as well as reconciliations of certain non-GAAP financial measures we will be discussing in today's call. If non-GAAP financial information is provided on this call, a reconciliation of the non-GAAP information to the most comparable GAAP financial measure is available in our press release.

This call will include certain forward-looking statements within the meaning of the federal securities laws. These statements relate to expectations, beliefs, projections, trends and other matters that are not historical facts and are subject to risks and uncertainties that might affect future events or results. Descriptions of these risks are set forth in the company's SEC filings.

Also, I would like to remind you that today's call cannot be reproduced in any form without the expressed written consent of Destination Maternity.

Joining me on the call today is Marla Ryan, our Chief Executive Officer and David Helkey, our Chief Financial Officer and Chief Operating Officer. Marla will open with some remarks, followed by additional commentary by Dave on our financial results. Afterward, Marla and Dave will be available to take your questions.

It is now my pleasure to turn the call over to Marla.

Marla A. Ryan

Thank you, Tom. Good morning everyone and welcome to our fourth quarter earnings call. Before I provide an update on our progress against our long-term strategic plan, I will provide some commentary on our fiscal 2018, Q4 results and fiscal 2019 Q1 results to date. In short, our fourth quarter results were both challenging and not acceptable. We experienced a comp sales decline of 5.8%, driven by soft conversion results in our e-commerce sites, challenging trends in store, and margin performance that was negatively impacted by an aggressive approach to right sizing our total inventory.

While there were external factors that impacted our business, including the temporary government shutdown, a highly competitive and promotional holiday season, along with several delayed shipments due to port congestion, there were a number of factors that we own. We are in the process of course correcting those. Specifically, our promotional cadence and marketing strategy. We acted too aggressively to right size our markdown inventory. While we expected a significant erosion in selling prices, sales were not incremental, and we traded our customer from regular price into markdowns.

Our promotional cadence moving forward is constructed