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Destination Maternity to cut jobs after the CEO stepped down

Destination Maternity had 1,100 full-time and 2,300 part-time employees as of Feb. 2, 2019, according to its most recent annual report.

A new display at Destination Maternity in Cherry Hill, New Jersey, Monday, February 4, 2019 shows business professional maternity clothes.
A new display at Destination Maternity in Cherry Hill, New Jersey, Monday, February 4, 2019 shows business professional maternity clothes.Read moreMARGO REED / Staff Photographer

Destination Maternity announced Tuesday that the company would be cutting jobs in what it describes as a “reduction in force,” as “part of the company’s effort to become a more efficient and profitable organization."

Moorestown-based Destination Maternity did not disclose how many employees would be affected by this announcement and a company spokesperson declined to elaborate Tuesday morning. The company, which sells clothing under Motherhood Maternity, A Pea in the Pod, and Destination Maternity brands, had 1,100 full-time and 2,300 part-time employees as of Feb. 2, according to its most recent annual report.

This announcement comes less than two weeks after Marla Ryan stepped down as the company’s CEO. Until a new CEO is chosen, the company appointed Lisa Gavales to head a new unit called “Office of the Chief Executive Officer."

The company said this staffing reduction would mostly affect “the company’s product pipeline teams” and would generate $4 million of cost savings.

“This reduction in force is a very difficult, but necessary step for the Company,” Gavales said in a release. “We are streamlining our teams, and sharpening our product offering to focus on the key items that are most important and relevant to our new moms and moms2be. While challenging, this is a critical step in helping to position the business as a more nimble and profitable organization in the future.”

Destination Maternity estimates this reduction in force will lead to a severance of about $1.3 million to $1.5 million during the second quarter of 2019.

Even though Destination Maternity is the largest retailer in the maternity field, it has been struggling to maintain its relevance in the market as pregnant women turn to mass merchants or subscription services to find what they need.

When Ryan was CEO, Destination Maternity saw falling comparable-store sales in three out of the last four quarters. Destination Maternity reported earlier this month that comparable-store sales in the first quarter fell 7.2 percent and e-commerce sales fell 12.5 percent.

The stock was trading at $1.30 Tuesday morning, down from over $6 a share in mid-2018.

While sales in the maternity-wear industry fell 1.6 percent from 2013 to 2018, many “niche and upscale maternity wear businesses have flourished,” according to a 2018 report from the research group IBISWorld.

Still, Destination Maternity has about a quarter of the market share in an industry with $1.2 billion in revenue, the IBISWorld report said, which did not include online sales.