Destination Maternity shares up 13% on stellar earnings

Led by a chief executive steering a turnaround of the once-flagging company, Philadelphia apparel retailer Destination Maternity Corp. on Thursday announced better-than-expected earnings and said the momentum would continue as it expands its offerings at Macy's in the months ahead.

The report of $5.2 million in quarterly net income for the period ending Dec. 31, compared with $1.3 million a year earlier, came a day after the enterprise, which has headquarters on Spring Garden Street, initiated a cash dividend and announced a stock split for shareholders.

Executives also adjusted the company's guidance for the year by saying they expected even higher profits than previously forecast: $3.62 to $3.98 per share. In November, the company issued guidance for fiscal 2011 earnings at $3.52 to $3.87 per share.

Ed Krell, the onetime chief financial officer who was promoted to chief executive as the company's fortunes were falling in 2008 and who assumed the title of president when founder Rebecca Matthias retired last year, has presided over a sharp rebound.

Share prices have soared from single-digit territory in late 2008 to $45.57, up $4.96 (12.24 percent) at the close of trading Thursday on news of its first-quarter earnings.

"Initiating a regular quarterly cash dividend demonstrates the board's confidence in our company's financial strength and our prospects for the future," Krell said, "and highlights our strong commitment to continue to drive shareholder value."

Investors holding stock as of Feb. 16 would receive their first dividends on March 11. The 2-for-1 stock split takes effect in March.

The company has undergone a broad and deep restructuring. Before credit markets seized, it refinanced debt, reducing interest payments.

It has gone from holding a portfolio of many smaller stores under various names to fewer, larger ones selling its well-known clothing lines and other merchandise for pregnant women.

It has introduced larger, single locations named, simply, Destination Maternity. And it has streamlined its apparel lines to just two: A Pea in the Pod and Motherhood Maternity.

The company will expand the number of Macy's department stores where it began exclusively selling its maternity wares last year, fueling further financial growth.

The company announced its leased departments within Macy's in June. It will expand its current roster of 115 by adding 500 more in February.

"This expansion with Macy's will deepen our position as the leading maternity apparel retailer in the world," Krell said.

The company finished 2010 with net sales of $531.2 million and said Thursday it expects to log $560 to $570 million in revenue by the end of the 2011 fiscal year - a projected increase of between 5.4 percent and 7.3 percent.

Net sales for the quarter were $135.4 million, up from $133.8 million the same period a year ago, which it attributed to an increase in online sales and the opening of additional leased maternity departments in Sears and Kmart in September and October.