Destination Maternity Plans Bankruptcy That Could Come Within Weeks - NBC 10 Philadelphia

Destination Maternity Plans Bankruptcy That Could Come Within Weeks

As with all bankruptcies, it remains possible Destination Maternity strikes a deal with a potential buyer or its lenders in order to avert filing for court protection

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    Destination Maternity Plans Bankruptcy That Could Come Within Weeks
    G. Gershoff/WireImage for Sally Fischer PR (File)
    FILE - A Destination Maternity storefront in New York.

    Destination Maternity, a leading retailer of maternity wear, is planning a bankruptcy filing that could come as soon as the next few weeks, as it deals with better-capitalized competition and an onerous debt load, people familiar with the matter told CNBC.

    The company is working with advisors at the law firm Kirkland & Ellis and Berkeley Research Group, one of the people said. It is trying to find a buyer in bankruptcy, but if it is unable, it will likely be forced to liquidate, that person said.

    As with all bankruptcies, it remains possible Destination Maternity strikes a deal with a potential buyer or its lenders in order to avert filing for court protection.

    Destination Maternity has a market capitalization of nearly $500 million and $35 million in net debt, according to FactSet. For fiscal 2018, it reported a net loss of $14.3 million on sales of $383.8 million.

    The retailer, which employs a little over 1,100 full-time and 2,300 part-time employees, owned 458 U.S. stores as of February, according to regulatory filings. The company has 362 Motherhood Maternity Stores, 26 Pea in the Pod stores and 70 Destination Maternity stores. It operates additional stores globally and through franchise deals.

    Destination Maternity also runs maternity apparel departments in stores that include Macy’s and Bed Bath & Beyond’s buybuy Baby.

    As the retailer has dealt with deteriorating finances and a heavy debt load, it has been facing fortified competition from larger retailers that have the resources to invest in their online businesses. Nationwide, that competition includes Gap and its Old Navy brand, H&M, Target and Walmart.

    It also faces increased competition from internet brands, like Asos, Pink Blush, Zulily and Hatch. Subscription retailers like Le Tote and Rent the Runway have pushed into maternity-wear, taking advantage of their existing e-commerce infrastructure.

    Meantime, its prime demographic is diminishing. The U.S. birthrate dropped to a 32-year low in 2018, according to the U.S. Department of Health and Human Services. That shift comes as millennials are having children later, or not at all. The drop has whacked companies from Huggies diaper-maker Kimberly-Clark to baby oil and bubble bath maker Johnson & Johnson.

    The people asked not to be named because the information is confidential. Destination Maternity declined to comment. Kirkland & Ellis and Berkeley Research Group weren’t immediately available for comment.

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