Destination Maternity Corporation Announces Strategic Plan for Long-Term Growth and Profitability

Destination Maternity Corporation (NASDAQ: DEST) (the “Company”) today announced the Company’s multiyear strategic plan, Destination -> Forward, which focuses on driving profitable growth and long-term shareholder value. The Company anticipates the plan will help achieve FY 2022 goals of:

• Adjusted EPS of $1.20 to $1.60
• Adjusted EBITDA of $42 million to $51 million, representing 20%+ annual growth
• SG&A declining 42% to 45% of sales, down 1000 bps from 53.8% in FY 2017
• Revenue of $450 million to $475 million with e-Commerce growth of 20%+ annually
• Generate $29 million to $36 million in adjusted free cash flow

A full review of the Company’s multiyear outlook through FY 2022 is provided in an investor presentation posted to the Company’s investor relations website. Destination Maternity will host an investor conference call at 9:30 am ET today to discuss Destination -> Forward and the Company’s multiyear financial outlook.

“Since becoming CEO of Destination Maternity, we have conducted a rigorous assessment of the entire enterprise aimed at identifying areas to rationalize expenses, accelerate revenue growth, and improve profitability,” said Marla Ryan, CEO of Destination Maternity. “Destination -> Forward is the result of this effort and provides a comprehensive blueprint for cost reduction, infrastructure optimization and innovative solutions to meet the unique needs of new moms and moms2be. I look forward to working closely with the Board and all our employees as we continue to implement this strategic plan. Destination -> Forward will help us return the business to a sustainable growth trajectory and drive shareholder value.”

Destination -> Forward: Roadmap to FY 2022

Destination -> Forward focuses on transforming the iconic Destination Maternity brand into a more nimble organization that generates profitability and long-term shareholder value. Key priorities of the plan include:

• Right Size the Ship: Reduce costs & stabilize the business
• Optimize Infrastructure: Simplify & strengthen organization for future growth
• Product Innovation and Solutions: Trusted solution specialist

Financial Outlook

The Company provided the following financial guidance for FY 2018, FY 2019, and FY 2022. Full year company comparable sales are on a 52-week basis.

Guidance Metric		Full Year Fiscal 2018		Full Year Fiscal 2019		Full Year Fiscal 2022
Total Revenue		$390 million to $395 million		$377 million to $387 million		$450 million to $475 million
Company comparable sales		0.0% - 1.0%		0.0% - 1.4%		(6%+ CAGR in total sales vs. FY'19)
E-Commerce growth		14.5%		15.1%		(20%+ CAGR in ecomm sales vs. FY'19)
SG&A		$202 million to $206 million		$191 million to $195 million		$195 million to $209 million
Adjusted EBITDA b/f other charges		$16.9 million to $18.9 million		$19.0 million to $23.6 million		$42.0 million to $51.0 million
Adjusted EPS - Diluted		($0.38) to ($0.29)		($0.03) to $0.15		$1.20 to $1.60
Adjusted Free Cash Flow		$0.2 million to $1.5 million		$12.0 million to $15.6 million		$29.0 million to $36.0 million

Conference Call