Destination Maternity Files for Bankruptcy, Closing 183 Stores

Destination  Maternity, owner of brands such as A Pea in the Pod and Motherhood, has filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the District of Delaware. The company plans to shutter 183 stores. The move comes after the Moorestown, N.J., retailer has struggled for years to regain its footing for in-store and online sales of its maternity apparel. Destination Maternity has failed to turn a profit in five years, and said in court filings that it had upwards of $260 million in assets and $244 million in liabilities. The company will use cash collateral from all its pre-petition secured lenders to remain in operation while seeking a new owner.

Total Retail's Take: This bankruptcy filing was expected. Destination Maternity has struggled in recent years for a number of reasons, including a lack stability in its leadership ranks; dissent among investors and leadership on how to turn the company around; a heavy debt load; and increased competition in the marketplace, both online and offline. To that last point, traditional brick-and-mortar retailers with healthier balance sheets, including Walmart, Target, and H&M, as well as online startups such as Hatch and Pink Blush began to invest in the maternity category, creating competition for Destination Maternity. If Destination Maternity is unable to find a buyer in its upcoming bankruptcy auction, liquidation is expected. My guess is the business and its assets will be sold off to one of its more well-heeled competitors, keeping the Destination Maternity name alive.