Mothers Day

Mothers Work Inc. (Philadelphia) reported a 33 percent hike in net income for its second quarter of 2004 ended March 31, 2004.

However, net income for the first six months of fiscal 04 was down 36 percent, a fact the company attributed to aggressive markdowns on oversupplies of certain merchandise.

Quarterly net sales increased 13.0 percent and same-store sales were up 0.2 percent. The company opened 22 new locations in the quarter and closed 17.

Net sales for the first six months of the year increased 8.4 percent, though same-sales decreased 2.7 percent. During those six months, the maternity apparel retailer opened 49 new locations and closed 23 locations, with 11 of these store closings related to the openings of new multi-brand combination stores and first Maternitymall Superstore.

“We are pleased that we realized a significant improvement in our sales trend for the second quarter compared to the first quarter, as our comparable store sales increased 0.2 percent during the second quarter after a decrease of 5 percent during the first quarter,” said president and coo Rebecca Matthias. “This slight increase for the second quarter was also better than our Jan. 27, 2004, guidance of a planned comparable store sales decline of 2 percent to 3 percent for the quarter, and was achieved despite the increased competitive pressures in the maternity apparel market over the past year. We currently face maternity competition in approximately 1,000 more competitor locations than a year ago.

“Although we are pleased with our sales results for the quarter, our effort to drive product cost down by ordering large quantities of key items on long lead times contributed to fashion misses,” Matthias said. “We therefore decided to take aggressive markdowns to clear these styles and to enable us to bring in additional new ‘fashion-right’ styles for spring. This led to significantly lower-than-planned gross margin as a percentage of sales and lower than planned second quarter earnings. We have now improved our lead time for key items and reduced our commitment to individual items to increase our fashion flow and decrease our merchandising risk.”

Matthias said the company’s plans for fiscal 2004 capital expenditures remain between $15 million and $18 million, primarily for new store openings, expanding and relocating selected stores and store remodelings. The company expects to open 100 to 110 new stores (excluding new leased department locations), including approximately 20 to 25 planned multi-brand stores, and close approximately 50 stores, with approximately 30 of these planned store closings related to the openings of new multi-brand stores, including the Maternitymall Superstore. Opening these multi-brand stores will typically involve closing two or more smaller stores and consolidating their business into one.

“Beginning last year, we have tested several combination store concepts under our Mimi Maternity brand, carrying a wide selection of both Mimi and Motherhood product and, in certain cases, A Pea in the Pod product,” Matthias noted. “We have been very encouraged by the initial results of our ‘combo’ stores in terms of their ability to drive increased sales and their potential to reduce store operating expense percentages. Based on our success with our initial combo stores, we opened additional two-brand combo stores, and also developed the concepts of a ‘triplex’ store, carrying all three of our brands, and a maternity ‘superstore’ concept which would include elements beyond apparel. As of March 31, 2004, we have 12 two-brand combo stores, 2 triplex stores and one maternity superstore.”

The company opened its first Maternitymall Superstore in March in Danbury, Conn., a nearly-4000-square-foot test store carrying all three of its brands plus a greatly expanded line of nursing accessories, fertility-related products and maternity-related exercise gear, books, and body and nutritional products. The store also has a dedicated “learning center” area for maternity-related classes, as well as a “relax area” for husbands and shoppers alike, and an inside play area for the pregnant mom’s toddlers and young children.