Destination Maternity Corp., the Moorestown company, will close from 42 to 67 stores or leased shops by the end of 2019 as part of a multi-year strategic plan, CEO Marla Ryan announced Thursday.
Destination's shares on Nasdaq closed up 30 cents, or 6 percent, to $5.30, on Thursday.
The company also projected closing a total of 240 to 280 stores and leased shops by 2022. The company has a total of 480 stores in the United States and Canada and 634 leased shops in department and baby specialty stores, according to its most recent quarterly report. So the plan would lead to a reduction of up to 25 percent of its locations.
Ryan, who became chief executive in May, said she has spent her first several months developing a strategic plan that focuses on three priorities: "right-sizing our ship, optimizing our infrastructure, and focusing on product innovations and solutions."
The company's plan anticipates 2019 sales to be anywhere from no growth to 1.4 percent growth, from $377 million to $387 million. By 2022, the last year in the strategic plan, the company expects sales to be between $450 million and $475 million, driven by a 20 percent compound growth from 2019 e-commerce sales and a 6 percent growth from 2019 total sales.
This year's sales are projected to be between $390 million and $395 million, which is relatively flat compared with 2017, the executives told investors. This includes a 14.5 percent anticipated e-commerce sales growth.
Ryan also outlined what the company considered its progress over the last year, including signing a letter of intent to refinance its five-year debt with Bank of America, reducing its inventory and implementing a markdown strategy.
"We think this is an incredibly conservative and achievable plan," Ryan told investors on the call.
One investor, Trip Miller, partner of the Memphis-based hedge fund Gullane Capital Partners, said he was encouraged by the recently announced plan, especially because "this was a company that was at serious risk of bankruptcy."
Miller thinks Ryan is especially well-suited to lead the company because of her deep experience in the industry, including as a senior vice president of retail at Land's End from 2009 through 2017, senior positions at J. Crew, and merchandising and management roles at other companies, including American Eagle, Abercrombie & Fitch, and the Gap Inc. In moving forward, Miller expects the company to examine its current product selection and to what extent it engages with Amazon's marketplace.