Mothers Work plans layoffs, other changes

Philadelphia maternity-apparel retailer Mothers Work Inc., struggling with declining profit, will lay off corporate staff, eliminate its Mimi Maternity fashion label, and rename a number of stores under a restructuring announced yesterday.

The publicly traded company, which runs Motherhood Maternity, Destination Maternity, and Pea in the Pod stores, said the streamlining was intended to untangle a confusing corporate structure and boost its turnaround strategy.

Company officials would not disclose how many employees would be laid off, but they said most would come from the corporate office in Philadelphia. The downsizing should reduce overhead $5 million, including savings from health benefits, said Rebecca Matthias, president and chief creative officer.

Besides eliminating its Mimi Maternity label, the company also will drop the Mimi Maternity name from 48 stores selling the line under that banner. Those stores will be renamed A Pea in the Pod and will sell only the company's Pea in the Pod label, which will absorb the mid-to-upscale maternity line. A luxury line called Pea in the Pod Collection will debut next spring.

Mothers Work will rename 44 other Mimi Maternity stores Destination Maternity. Currently, those 44 stores sell up to all three of the company's designer brands - Mimi Maternity, Motherhood Maternity, and Pea in the Pod - even though the store name is Mimi.

The idea, Matthias said in an interview, was to simplify what had become "a very complicated company" after years of growth and acquisitions made it the largest retailer and designer of maternity clothes.

"What we decided was that we could serve the market better, we could confuse our customer less, and be a more efficient business if we could streamline and go from three brands to two brands," Matthias said.

Mothers Work runs 761 stores in North America and is looking to open its first stores overseas, with a search ongoing for a senior manager of international business development. The company's sales last year totaled $581 million.

The price of Mothers Work's stock, listed on the Nasdaq, has dropped steeply. Over the last year it has ranged from a high of $32.24 a share to a low of $8.97, reached Friday. Shares closed yesterday at $10.38, up 31 cents.

Blaming the poor economy and a fashion trend that introduced pregnancy-friendly "baby doll" cuts into mainstream stores, the company reported a $400,000 loss last quarter, compared with a profit of $2.6 million a year earlier.

Matthias said that April and May sales had been encouraging and that she believed the company was on its way to reversing the downward trend.

"We think we have pretty much turned around," she said.