Mothers Work to Cut Jobs, Streamline Brand Names

July 1, 2008 11:41:59 AM PDT
Maternity apparel retailer Mothers Work Inc. wants to lose some baby fat. On Tuesday, the owner of A Pea in the Pod and Motherhood Maternity retail chains said it was cutting corporate jobs in Philadelphia and streamlining brands at its stores in a bid to become more efficient and save $5 million a year.

Mothers Work expects to incur about $900,000 in restructuring expenses - $700,000 in the fourth quarter and the rest in the first quarter of fiscal 2009.

President Rebecca Matthias said in a statement that the company is "simplifying our business model, cutting overhead costs and streamlining our merchandise assortments to drive the best possible results both during this difficult economic period and for the long term."

The retailer declined further comment and did not disclose the size of the job cuts.

Earlier this month, Mothers Work reported flat net sales of $54.2 million for May. Sales at stores open at least a year, a key barometer of retail performance, were up 4.3 percent compared with a decline of 3.6 percent a year ago.

But results did not include lackluster sales at 477 leased spaces within Sears stores, which closed in June. Retailers also benefited from having one extra Friday and Saturday this year compared with May 2007.

On Tuesday, the company said it would change the name of all its 92 Mimi Maternity stores, whose presentation Matthias said can be confusing to shoppers. Stores that carry a single label will be renamed A Pea in the Pod, a more upscale brand. Those that carry multiple labels will become Destination Maternity.

After the restructuring, there will be 79 A Pea in the Pod stores and 62 Destination Maternity stores.

The chain's 620 lower-priced Motherhood Maternity stores will not be affected, giving the company a total of 761 locations - the same number as before.

The retailer also will fold its Mimi Maternity merchandise into A Pea in the Pod and create an upscale label called A Pea in the Pod Collection, starting with the spring 2009 line.

The retailer said it remains comfortable with its third quarter and full year earnings projections. It also expects to post higher earnings in 2009. Mothers Work will report third quarter earnings on July 29.

Shares of Mothers Work rose by 15 cents to $10.22 in afternoon trading.


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