With shift in debt, Mothers Work profit up

Maternity apparel retailer Mothers Work Inc., Philadelphia, said today that a rise in same-store sales and the absence of a debt redemption charge a year ago helped fiscal third-quarter profit soar.

The company also predicted a fourth-quarter loss on charges.

Third-quarter profit jumped to $4.1 million, or 68 cents per share, from $1 million, or 17 cents per share, a year ago.

The company recorded a charge of a penny per share in the 2008 third quarter and recorded a 73-cent per share charge in the year-ago third quarter to pay off debt.

Excluding the loss on the debt extinguishment, adjusted profit in the third quarter declined to $4.2 million, or 69 cents per share, compared with profit of $5.5 million, or 90 cents per share, a year ago.

Sales declined to $152.2 million from $153.2 million, mostly because it closed leased department locations at Sears stores and shuttered underperforming stores.

During the quarter, same-store sales rose 2.4 percent. Same-store sales decreased 8.2 percent during the third quarter of fiscal 2007.

Same-store sales, or sales at stores open at least a year, is a key measure of retailer or restaurant performance, because it measures growth at existing stores rather than from newly opened ones.

"We are pleased with our strong sales performance for June and for the third quarter, despite the continued weak overall economic and retail environment," Rebecca Matthias, president and chief creative officer, said in a statement.

Meanwhile, the company said today that debt repurchase and restructuring should lead to a fourth-quarter loss between 30 cents and 46 cents per share.

Fourth-quarter sales are expected between $130.5 million and $134.4 million, based on an expected same-store sales increase of 1 percent to 4 percent for the quarter, Mothers Work said.

For fiscal 2008, the company expects sales between $564.5 million to $568.5 million, based on an expected same-store sales decline between 0.3 percent and a 0.5 percent gain.

Mothers Work projected gross margin for fiscal 2008 at 50.3 percent of total revenue, down from 51.6 percent in fiscal 2007, partly because of higher markdowns and cost inflation.

Mothers Work expects fiscal 2009 revenue between $556 million and $566 million and earnings per share between 60 cents and $1.

Excluding debt repurchase and restructuring charges, the company expects earnings between 63 cents per share and $1.03 for fiscal 2009.