"We didn't have to take mark-downs, because we didn't have to compete with an irrational market. We believe that the over-supply conditions that plagued the maternity apparel business and punished us during our fiscal 2004 and 2005 have eased. We also had the right fashion, particularly in the spring/summer selling season," she added.
Third-quarter sales were $163.9 million, up 7.3%, compared with the same quarter a year ago. Comp store sales rose 6.4% in the same comparison.
Other contributors to third-quarter performance were internet sales and the company's affiliations with Sears and Kohl's. It markets the Two Hearts Maternity collection through leased departments in 562 Sears units and distributes the Oh Baby! By Motherhood collection through a licensing arrangement with Kohl's, which has 749 stores in 43 states.
During the nine months ended June 30, Mothers Work opened 12 stores, including three multi-brand units and closed 49 stores. Thirteen of the latter closed on account of multi-brand store openings. Three of the new stores are Destination Maternity Superstores, one of which is a 10,000-sf, three-level unit at the corner of 57th Street and Madison Avenue in Manhattan, which the company calls its "world flagship."
This year the company plans to have added 17 news stores, four of them multi-brand units, and closed between 57 and 60 of which 15 will be absorbed into multi-brand ones. When asked what eventual ratio of multi-brand versus single-brand units were anticipated, the company declined to provide a ratio, but said additional multi-brand units were a part of its growth strategy.
As of June 30, the company had 815 stores and 1,540 retail locations (including Kohl's and Sears), compared with 857 stores and 1,593 retail locations at the same time a year ago. On June 30, there were 11 Destination Maternity Superstores, 36 two-brand units and two three-brand units, giving multi-brand stores a 6% share of the total.
"We are optimistic about delivering significantly improved financial results for fiscal 2006," Matthias concluded. The forecast calls for net 2006 sales of between $599 million and $603 million, which would be about a 7%-increase over 2005. This includes the full-year impact of the Sears and Kohl's initiatives. It also assumes a comp-store sales increase of between 3.3% and 4% for the year and increases in internet sales.
For 2007, the company has set a net sales target of between $602 million and $620 million. The projection is based on comp-store sales of between flat and a 3%-increase. Following the conference call, shares of MWRK on the Nasdaq closed at $34.60, up more than 4.5% for the day.
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