Retailer of maternity wear Destination Maternity filed for bankruptcy early this week due to heavy burden of debt and continuous struggle with better capitalized competitors. According to FactSet data market capitalization of Destination Maternity is $5 million and it has $260 million in assets and $244 million in debt. In its 2018 fiscal report it reported losses of $14.8 million after sales worth $383.8 million.
Destination Maternity retail chain which employs full time and part time employees’ of 1100 and 2300 respectively owns 458 stores across USA as per regulatory filings. Of these around 362 are stores of Motherhood Maternity along with 26 Pea in the Pod brand shops followed by 70 stores under brand Destination Maternity. The group has several stores across the globe some of which are self-owned while some are franchise stores. It also manages maternity related clothing divisions of big chains like Macy’s and BuyBuy Baby owned by Bed Bath & Beyond.
The firm is working with advisors of law firm Kirkland & Ellis and Berkeley Research Group to find a bankruptcy buyer and if it cannot then it will be forced to liquidate its business. The retail brand has multiple problems like heavy load of debt and fierce competition from large retailers which have the resources to set up online businesses and sell stock. Some of its biggest competitors are established retailers like Gap, Old Navy, Target, Walmart and H &M and online brands like Pink Blush, Zulily, Hatch and Asos.
Now new age retailers like Le Tote and R’ the Runway also moved into maternity clothing to take full benefits of their online sales infrastructure. But the changing demographics of USA shrunk the buyer group for these retailers as birthrate fell to its lowest level in 32 years during 2018. This is because millennials are either postponing childbirth or not having them at all. This sudden change has reduced bottom-lines of diaper makers like Kimberly-Clark and also manufacturer of baby healthcare products Johnson and Johnson.
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