"Although we were able to deliver earnings for the quarter within our most recent guidance range, and higher than our previous guidance range provided in November, we aren't satisfied with our financial results for the quarter," said Rebecca Matthias, president and COO, during Wednesday's earnings conference call. "We recognize the continued impact on our results of the dramatically increased competitive pressures in the maternity apparel business."
The company ended the quarter with 880 stores and 1,111 total retail locations, compared with 870 stores and 1,027 total retail locations at the end of December 2003. In its first quarter, Mothers Work opened 12 stores, including four "multi-brand stores" (superstores), and closed 15 stores, with eight of these store closings related to multi-brand store openings. "We're actively working to continue to refine our maternity superstore concept and to find additional suitable locations for it," Matthias noted.
Besides striving for a large breadth of merchandise at Mothers Work superstores, the company is also experimenting with differentiating the concept in other ways. For example, the most recently opened Destination Maternity Superstore, in Charlotte, NC, includes a Edamame maternity spa, the first of its kind for Mothers Work. "The superstore model will capture the sales of several of our smaller traditional stores that we close in the area, reducing store operating expense percentages," said Matthias.
The company is also expanding its collaboration with other retailers. Its Two Hearts maternity collection, available only Sears locations, will be expanded from its current 72 Sears stores to over 550 beginning this year. This brand, owned by Mothers Work, will replace the existing maternity apparel lines in those locations and will eventually become Sears' only maternity apparel offering. Also, in February, the company's Oh Baby! by Motherhood collection will launch at Kohl's. It too will replace the existing maternity apparel lines at that chain.
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