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Destination Maternity Will Shutter Up To 174 Stores By 2020, Shift To Evergreen Product Model

Destination Maternity Will Shutter Up To 174 Stores By 2020, Shift To Evergreen Product Model

Destination Maternity plans to close 117 stores and leased shops by the end of fiscal 2018 and another 42 to 57 locations by the end of fiscal 2019, in early February 2020. The move is part of a larger cost-cutting and business renewal effort called “Destination -> Forward.”

Unprofitable stores and oversaturated markets are the prime targets for closures in the longer term: Destination Maternity will close a total of 240 to 280 stores through fiscal 2022. As of Aug. 8, 2018 the company operated 480 stores in the U.S. and Canada. The retailer expects to save between $2.3 million and $2.5 million from lease renewal negotiations this year alone.

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Destination Maternity will pursue technology investments as another way to improve its balance sheet. Destination -> Forward calls for between $4 million and $6 million in capital for key investments in technology upgrades, and Destination Maternity ultimately hopes to make 42% of its sales digitally by fiscal 2022, with revenue from the channel reaching up to $200 million.

Simplifying its product line also is expected to boost profitability. Destination Maternity successfully reduced the SKU count in a 15-store test, resulting in sales growth and improved margins at these locations.

These changes will help the company shift away from a seasonal model as the retailer plans to make 70% to 80% of its product selection “evergreen” in fiscal 2019 — a move designed to help offset the discontinued categories by producing $12 million in sales. Destination Maternity also will put an emphasis on revitalizing its core products with innovative new offerings that are forecast to drive an additional $10 million in sales by fiscal 2022.

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