UNITED STATES
`
`SECURITIES AND EXCHANGE COMMISSION
`Washington, D.C. 20549
`
`(Mark One)
`I21
`
`ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
`OF 1934
`
`For the fiscal year ended September 30, 2009
`or
`
`FORM 10-K
`
`U
`
`TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
`ACT OF 1934
`
`For the transition period from to
`Commission file number 0-2 1 1 96
`
`Destination Maternity Corporation
`(Exact name of Registrant as specified in its charter)
`
`Delaware
`(State or other jurisdiction
`of incorporation or organization)
`456 North Fifth Street,
`Philadelphia, PA
`(Address of principal executive offices)
`
`136045573
`(IRS Employer
`Identification No.)
`
`1 91 23
`(Zip Code)
`
`(215) 873-2200
`(Registrant's telephone number, including area code)
`Securities registered pursuant to Section l2(b) of the Act:
`Name of each exchange on which registered
`Title of each class
`The NASDAQ Stock Market LLC
`Common Stock, par value $.01 per share
`Securities registered pursuant to Section l2(g) of the Act:
`Series B Junior Participating Preferred Stock Purchase Rights
`(Title of class)
`I11dicate by check mark if the Registrant is a well—known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes El No
`Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes El No
`Indicate by cl1eck mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or lS(d) of the Securities Exchange
`Act of 1934 duri11g the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been
`subject to such filing requirements for the past 90 days. Yes
`No El
`Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every I11teractive
`Data File required to be submitted and posted pursuant to Rule 405 of Regulation S—T during the preceding 12 months (or for such shorter period
`that thc rcgistrant was required to submit and post such filcs). Ycs El No El
`Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S—K is not contained herein and will not be
`contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-
`K or any amendment to this Form 10-K.
`I11dicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
`company. See fl1e definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
`Large accelerated filer El
`Accelerated filer El
`Non-accelerated filer El
`Smaller reporting company
`(Do not check if a smaller
`reporting company)
`Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes El No
`The aggregate market value of the voti11g a11d non-voting con11non equity held by non-affiliates computed using $6.31, the price at which the
`common equity was last sold as of March 31, 2009 (the last business day of the Registrants most recently completed second fiscal quarter), was
`approximately $37,000,000.
`On December 7, 2009, there were 6,192,911 shares of the Registrant’s common stock, S.01 par value, outstanding.
`DOCUMENTS INCORPORATED BY REFERENCE
`Portions of the Registrant’s Proxy Statement to be filed with the Commission in connection with the Annual Meeting of Stockholders
`scheduled to be held on January 22, 2010 are incorporated by reference into Part III of this Form 10-K.
`
`Source: DESTINATION MATERNITY CORP., 10-K, 12/14/2009 I Powered by Intelligize
`
`
`
`DMC Exhibit 2040_OO1
`
`Target v. DMC
`|PR2013-00530, 531, 532, 533
`
`

`
`Our fiscal year ends on September 30. /lll references in t/zis report to ourfiscal years refer to tlzefiscalyear ended on September 30 in the
`year mentioned. For example, our "fiscal 2009" ended on September 30, 2009. Unless otherwise indicated, operating data referred to in this
`report is as ofSeptember 30, 2009. As used in this report, “retai l locations" include our stores and leziseal departments and exclude local/'r.7n.:'
`where Kohl’s® sells our products under an exclusive product and license agreement, andinternationalfianchise locations.
`
`PART I.
`
`Item 1.
`Overview
`
`Business
`
`We are the leading designer and retailer ofmaternity apparel in tlie United States and are the only nationwide chain of maternity specialty
`stores. As of September 30, 2009, we operate 1,084 retail locations, including 724 stores in all 50 states, Puerto Rico, Guam and Canada, and 360
`leased departments located within department stores and baby specialty stores throughout the United States. We are also the exclusive provider
`of maternity apparel to Kohl’s, which operates approximately 1,059 stores throughout the United States. We operate our 724 stores under three
`retail nameplates: Motherhood Maternity®, A Pea in the Pod® and Destination Maternityg‘. In addition to our 724 stores, we operate 360 maternity
`apparel departments, which we refer to as leased departments, within leading retailers such as Sears®, Kma1t®, Macy’s®, Bloomingdale’s®,
`Babies“R”Us®, Bosc ov’s® and Gordmans®. We are the exclusive maternity apparel provider in each of our leased department relationships. In
`October 2009, we re—launched our Two Hearts Maternity by Destination Maternity” collection, available exclusively at Sears and Kmart stores. As
`of November 30, 2009, we operate maternity apparel departments in 522 Scars locations and 101 Kmart locations. The Two Hearts Matemity
`collection was previously offered in Sears stores from April 2004 through June 2008. We also are expanding internationally and have entered into
`exclusive store fra11chise and product supply relationships in India and the Middle East. Finally, we also sell merchandise on the Internet, primarily
`through DestinationMatemity.com and our various bra11d-specific websites.
`
`In July 2008, we announced that we were streamlining our merchandise brands and store nameplates and implementing cost reductions in
`order to simplify our business model, reduce our overhead costs and improve and tighten our merchandise assortments to drive the best possible
`results both iii the near tenn a11d in the long term. Pursuant to our strategic restructuring, we rebranded our Mimi Maternity‘? merchandise brand
`under our A Pea in the Pod brand beginning with the Spring 2009 collection. Also beginning with the Spring 2009 collection, we rebranded our
`existing luxury-priced A Pea in the Pod merchandise assortment as the A Pea in the Pod Collection” to emphasize its exclusive designer brand
`position. We also streamlined our store nameplates, by renaming our single—brand Mimi Maternity stores as A Pea in the Pod, and by renaming our
`multi-brand Mimi Maternity stores as Destination Maternity. In connection with the strategic restructuring we also reduced our corporate and field
`management headcount, and during fiscal 2009 we began to implement actions to achieve further cost reductions. The obj ectives of our
`restructllring a11d cost reduction program are to improve and simplify critical processes, consolidate activities and infiastructure, and reduce our
`expense structure to be more appropriately aligned with our generation of revenue. We feel strongly that the strategic restructuring and
`streamlining of our merchandise brands and store nameplates and our other cost reduction initiatives are helping to improve our near—term and
`long-term profitability by simplifying our brand structure, reducing our cost structure, and leveraging both our renowned A Pea in the Pod luxury
`brand and our growing multi-brand Destination Maternity store nameplate. These initiatives resulted in approximate pretax savings of $1 2 million in
`fiscal 2009, with increnlental pretax savings of approximately $5 million projected for fiscal 2010. We project total annualized pretax savings of
`approximately $22 to $25 million in fiscal 2011 as a result of our cost reduction initiatives, which includes the savings realized in fiscal 2009 plus the
`incremental projected savings for fiscal 2010.
`
`On December 8, 2008, we changed our corporate name from “Mothers Work, Inc.” to “Destination Maternity Corporation” (the “Company”).
`The corporate name change was undertaken as an extension of our previously announced strategic restructuring and streamlining of our
`merchandise brands and store nameplates.
`
`to
`
`Source: DESTINATION MATERNITY CORP., 10-K, 12/14/2009 I Powered by Intelligize
`
`DMC Exhibit 2040_002
`
`Target v. DMC
`|PR2013-00530, 531, 532, 533
`
`

`
`OL1r Nasdaq® symbol also changed from “MWRK” to “DEST” coincident with the name change. Our comprehensive focus on the needs of all
`maternity customers is epitomized by our Destination Maternity multi-brand store concept, which includes both our moderate-priced Motherhood
`Maternity brand and our luxury—priced A Pea in the Pod brand, and provides the broadest range of maternity apparel products, accessories and
`services available to the maternity customer for all of her lifestyle needs. With Destination Maternity effectively having become our umbrella
`brand, we believe the name “Destination Maternity Corporation” better aligns our corporate name with our merchandise brands, our store
`narneplates, and our overall business scope.
`
`We believe we have maintained our leading position across all major price points of maternity apparel through our four distinct merchandise
`brands, which enable us to reach a broad range of maternity customers. Through our 724 stores and certain of our leased departments, we offer
`maternity apparel under our two primary merchandise brands, Motherhood Maternity (“Motherhood”) at value prices and A Pea in the Pod
`(“Pea”) at both contemporary and luxury prices. Our A Pea in the Pod Collection (“Pea Collection”) is the distinctive premier maternity line within
`the A Pea in the Pod brand, featuring exclusive designer label product at luxury prices. We also have an additional value-priced rrraterrrity apparel
`brand, our Oh Baby by MotherhoodTM collection, which we sell exclusively through Kohl’s, and is the exclusive maternity apparel offering in this
`chain. Additionally, in October 2009, we re—launched our Two Hearts Maternity by Destination Maternity collection, available exclusively at Sears
`and Kmart stores.
`
`We believe that one of our key conrpetitive advantages is our ability to fulfill, in a lrigh-service store environment, all of an expectant and
`nursing mother’s clothing needs, including casual and career wear, formal attire, lingerie, sportswear and outerwear, in sizes that cover all
`trimesters of the maternity cycle. We believe that our vertically—integrated business model enables us to offer the broadest assortment of in—stock,
`fashionable maternity apparel. We design and contract for the production of approximately 90% of the merchandise we sell using sewing factories
`located through out the world, predominantly outside of the United States.
`In recent years, we have developed and introduced new multi-brand store concepts to offer merchandise from our various brands in a single
`location, in order to provide a broader product assortment at multiple price ranges to our customers and to increase average store sales and
`profitability. We believe the continued rollout of our multi-brand store initiative provides the opportunity for us to improve store operating profit
`margins over time by redrrcing store operating expense percentages through economies of scale, and may increase overall sales in the
`geographical markets they serve. Our multi-brand stores are operated under our Destination Maternity nameplate, which includes Destination
`Maternity combo stores (carrying Motherhood Matemity and A Pea in the Pod merchandise) and Destination Maternity superstores, which also
`carry both our Motherhood and Pea merchandise brands, as well as a significant array of maternity—related products and customer service features.
`These multi-brand stores are larger and have historically had higher average sales than our average store. Opening these multi-brand stores will
`typically involve closing two or r11ore smaller stores and may frequently resrrlt ir1 one-time store closing costs resulting primarily from early lease
`terminations.
`
`13 will be new Destination
`17 new retail stores during fiscal 2010, of which we expect approximately 7
`We plan to open approximately l2
`Maternity combo or superstores, with the balance primarily under the Motherhood brand. We estimate that We will close approximately 29 — 47
`stores in fiscal 2010, with approximately 17 — 28 of these store closings related to the opening of new Destination Maternity stores.
`Currently, we operate 38 Motherhood stores in Canada and we operate a Motherhood web site under a Canadian URL
`(MotherhoodCanada.ca). In addition, we believe there is a significant opportunity to develop international sales beyond Canada. We currently
`have franchise agreements in place in the Middle East and in India to expand our business internationally. The initial franchise stores through our
`arrangement in the Middle East opened during 2009, with the first Middle East franchise store opening in 360 Mall in South Surra, Kuwait in July
`2009 under our A Pea in the Pod retail nameplate, and the second Middle East franchise store opening in Al Bairaq Mall in Firrtas, Kuwait in
`October 2009 under our Motherhood Maternity retail nameplate. Additionally, beginning during fiscal 2009, our Motherhood Maternity branded
`merchandise is available in our lndia franchisee’s new Mom & Me""" stores. As of September 30, 2009, our merchandise is offered in seven Mom &
`Me stores in India.
`
`Source: DESTINATION MATERNITY CORP., 10-K, 12/14/2009 I Powered by Intelligize
`
`DMC Exhibit 2040_003
`
`Target v. DMC
`|PR2013-00530, 531, 532, 533
`
`

`
`We believe that our customers, particularly first-time mothers, are entering a new life stage that drives widespread changes in purchasing
`needs and behavior, thus making our maternity customer and her family a highly-valued demographic for a range of consumer products and
`services companies. As a result, we have been able to expand and leverage the relationship we have with our customers and generate incremental
`revenues and earnings by offering other value-added baby and parent-related products and services through a variety of marketing partnership
`programs utilizing our extensive opt-in customer database and various in-store marketing initiatives.
`Destination Maternity Corporation (formerly Mothers Work, Inc.) was founded in 1982 as a mail—order maternity apparel catalog. We began
`operating retail stores in l985 and completed our initial public offering in l993. To address multiple price points in maternity apparel and improve
`operating productivity, we acquired Motherhood and A Pea in the Pod in 1995 and eSpecialty Brands, LLC, or iMaternityTM, in October 2001. Since
`the acquisitions of Motherhood and A Pea in the Pod, we have developed and grown these brands along with growing our Destination Maternity
`brand. Also, since the 1990s we have partnered with other retailers to sell our products through maternity apparel departments within their stores.
`
`Industry Overview
`We are unaware of any reliable external data on the size of the maternity apparel business. We believe that there is an opportunity to grow
`the industry, and our business, by selling maternity clothes to those pregnant women who currently purchase loose—fitting or larger—sized non-
`maternity clothing as a substitute for maternity wear. We also believe that our business can grow by reducing the amount of“hand-me-down” and
`“borrowing” associated with maternity apparel, particularly in the value-priced segment. F11rtl1er, we believe that the demand for maternity apparel
`is relatively stable when compared to non-maternity apparel. Expectant mothers continue to need to replace most of their wardrobe and the current
`rate of approximately four million United States births per year has remained relatively stable over the last decade. Also, although we are affected
`by fashion trends, we believe that maternity apparel is less fashion sensitive than women’s specialty apparel in general, as demand is driven
`primarily by the need to replace wardrobe basics as opposed to a desire to add to one’s wardrobe in order to meet current fashion trends.
`
`Our Competitive Strengths
`We are the leader in maternity apparel We are the leading designer and retailer of maternity apparel i11 the United States and are the only
`nationwide chain of maternity specialty stores. We believe that our brands are the most recognized in maternity apparel. We have established a
`broad distribution network, with stores in a wide range of geographic areas and retailing venues. I11 addition, we have a leading position across all
`major price points of maternity apparel through our retail store narneplates and our merchandise brands. Our exclusive focus on maternity apparel
`and our leadership position enable us to gain a comprehensive understanding of the needs of o11r maternity customers and keep abreast of fashion
`and product developments. We further enhance our leadership position, increase market penetration and build our brands by distributing our
`products under exclusive leased department and licensed relationships. We are also using the strength of our products, brands and store
`narneplates in the United States to expand internationally, having opened 38 stores in Canada over the past several years and recently beginning
`to develop franchise arrangements to further expand internationally.
`We ofler a comprehensive assortment of maternity apparel and accessories. A primary consideration for expectant mothers shopping for
`maternity clothes is product assortment, as pregnant women typically need to replace almost their entire wardrobe. We believe that we otter the
`widest selection of merchandise in the maternity apparel business. We also offer product for multiple seasons, as pregnant women’s clothing
`needs vary depending on their due date. Our ability to offer a broad assortment of product is due, in large part, to our vertically-integrated
`business model, which includes our extensive in-house design and contract manufacturing capabilities, as well as our rapid inventory
`replenishment system.
`We are vertically integruterl We design and contract manufacture approximately 90% of the merchandise we sell. We believe that vertical
`integration enables us to offer the broadest assortment of maternity apparel, to
`4
`
`Source: DESTINATION MATERNITY CORP., 10-K, 12/14/2009 I Powered by Intelligize
`
`DMC Exhibit 2040_O04
`
`Target v. DMC
`|PR2013-00530, 531, 532, 533
`
`

`
`respond quickly to fashion trends and to optimize in-stock levels. We combine our i11-house design expertise, domestic and international sourcing
`capabilities, a rapid inventory replenishment process and extensive proprietary systems to enhance operational and financial results.
`We utilize a rapid inventory replenishment system Wc are ablc to offcr a widc sclcction of merchandise i11 our retail locations due, in large
`part, to our rapid inventory replenishment system. Our proprietary inventory replenishment system enables us to offer our customers a much
`broader selection than any of our competitors, without dedicating retail space to “back—stock” storage. We coordinate the rapid replenishment of
`inventory for all of our retail locatio11s through our Philadelphia, Pennsylvania and Mississauga, Ontario distribution centers to meet the
`individualized needs of our retail locations. Our stores receive shipments from our distribution centers between two and seven times per week.
`This enables 11s to maintain a high percentage in-stock merchandise position in each of o11r stores.
`We have proprietary systems that support our business. In order to support our vertically—integrated business model and inventory
`replenishment system, we have developed a fully integrated, proprietary enterprise resource planning (ERP) system. This system includes point-
`of-sale systems, our proprietary merchandise analysis and planning system, our materials requirement planning system, and our web-based, global
`sourcing and logistics systems. These systems also support our automated picking and sorting systems and other aspects of our logistics
`infrastructure. We believe that our proprietary systems are a critical competitive strength that enables us to offer a broad product assortment and
`respond quickly to fashion trends as well as helps us to reduce product costs and rapidly replenish inventory in our retail locations.
`We are able to obtain prime real estate locations. V\7e believe our ability to lease attractive real estate locations is enhanced due to the
`brand awareness of our concepts, our multiple price point approach, our highly sought after maternity customer and our dedicated in—house real
`estate management and procurement capabilities. Wc arc thc only matcrnity apparcl rctailcr to providc mall opcrators with diffcrcntly priccd rctail
`concepts, depending on the mall’s target demographics. We are also able to provide a multi-brand store for malls whose maternity customers seek
`a wide range of price alternatives. In addition, in the case of multi-mall operators, we have the flexibility to provide several stores across multiple
`malls. As a result, we have been able to locate stores in many of what we believe are the most desirable shopping malls in the country and are able
`to obtain attractive locations within these malls.
`
`We are able to enhance our leadership position by distributing our products under exclusive leased department and licensed
`relationships. As of September 30, 2009, we operate 360 leased departments within leading retailers such as Sears, Kmart, Macy’s, Bloomingdale’s,
`Babies“R”Us, Boscov’s and Gordrnans. I11 addition, in October 2009 we re-launched our leased department relationship with Sears and, as of
`November 30, 2009, we operate matemity apparel departments in 522 Sears locations and 101 Kmart locations. We are also the exclusive provider of
`matemity apparel to Kohl‘s pursuant to an exclusive licensed relationship. We believe that we have an opportunity to continue to increase the
`sales we generate from these ongoing relationships through expanding our relationships with our current partners as well as developing
`relationships with new partners. We see the re-launch of our Two l-learts Maternity by Destination Maternity collection in Sears and Kmart as an
`example of how we are continuing to enhance our leadership position through our leased department and licensed relationships.
`We have a highly experienced management team We have a management team with significant experience in all aspects of the retail and
`apparcl business, including our Chief]-ixccutivc Ofticcr (“CEO”), Edward (Ed) Krcll, who has scrvcd as a sc11ior executive of the Company for
`nearly eight years and has nearly 25 years ofbusiness experience encompassing apparel, retail, finance and overall management. In addition,
`although our co-founder Rebecca Matthias will retire as our President and Chief Creative Ofllcer on June 15, 2010, we have secured Ms. Matthias’
`availability to us through September 30, 2012 (first in a part-time employment capacity from June 15, 2010 to September 30, 2010, and thereafter in a
`consulting capacity through September 30, 2012).
`
`Source: DESTINATION MATERNITY CORP., 10-K, 12/14/2009 I Powered by Intelligize
`
`DMC Exhibit 2040_O05
`
`Target v. DMC
`|PR2013-00530, 531, 532, 533
`
`

`
`Merchandise Brands
`
`We believe that our brands are the most recognized brands in the maternity apparel business. We sell our merchandise under the following
`four distinct brands:
`
`Brand
`Motherhood Maternity
`
`A Pea in the Pod
`
`Brand Positioning
`Broad assortment of the latest fashions, offering great quality merchandise at everyday
`low prices
`
`Contemporary, fashion-forward and luxury, offering sophisticated career, as well as fiin
`casual merchandise, including exclusive designer labels
`
`Two Hearts Maternity by Destination
`Matemity (1)
`Oh Baby by Motherhood
`
`Select assortment of tl1c latest fashions, offering great quality merchandise at value
`price points
`Select assortment of tl1c latest fashions, offering great quality merchandise at value
`price points
`
`Typical
`Apparel
`Price Range
`S9 — $45
`
`$16 — $400
`
`S9 — $45
`
`S8 — $42 (2)
`
`(1)
`
`In October 2009, we re-launched our Two Hearts Matemity by Destination Maternity collection, available exclusively at Sears and Kmart
`stores. The Two Hearts Maternity collection was previously offered in Sears stores from April 2004 through June 2008.
`(2) Kohl’s, which sells our Oh Baby by Motherhood brand under an exclusive product and license agreement, sets the prices for this
`merchandise.
`
`Motherhaod Illatemity. Our Motherhood Maternity brand serves the value-priced portion of the maternity apparel business, which has the
`greatest r1ur11ber of customers. Tl1e Motherhood brand is positioned with a broad assortment of quality fashion at everyday low prices. We believe
`that the Motherhood customer shops at moderate-priced department stores and discount stores when she is not expecting.
`A Pea in the Pad. Our A Pea in the Pod brand serves both the medium-priced portion and, through our A Pea i11 the Pod Collection line, the
`l11x11ry portion of the rnater11ity apparel business. The Pea brand is generally positioned as contemporary, fasl1ior1-forward and luxury, with prices
`ranging from affordable mid-priced to true luxury prices, offering the mom-to-be exceptional contemporary maternity pieces that reflect her
`uncompromising sense of style in both casual and career apparel. The Pea Collection is the distinctive premier maternity luxury line within the Pea
`brand, featuring a selection of extraordinary styles along with exclusive designer labels. l11 our stores which carry A Pea in the l’od brand
`merchandise, we also offer exclusive maternity versions of select styles from well-kn own designer and contemporary brands, where we have
`assisted in developing these maternity versions. We believe that the typical Pea customer shops at department stores and specialty apparel chains
`when she is not expecting, with the Pea Collection customer typically shopping at higher-end department stores and luxury designer boutiques
`whe11 not pregnant. We believe the Pea brand is the leading luxury maternity brand in the United States. Publicity, including celebrities wearing our
`clothes, is an important part of the marketing and positioning of the Pea brand.
`Twu Hearts Maternity by Destinutiun Maternity. Our Two Hearts Maternity by Destination Maternity collection was re-launched in
`October 2009 at over 600 Sears and Kmart locations throughout the United States through an exclusive leased department relationship. The new
`collectio11 delivers the latest in career and casual sportswear as well as dresses, swimwear, lingerie and 11ursing-friendly sleepwear, all specially
`designed to complement the pregnant silhouette, with most items priced 11r1der $25. The Two Hearts Matemity collection was previously offered ir1
`Sears stores from April 2004 through June 2008.
`Oh Baby by Motherhood. Our Oh Baby by Motherhood collection was launched in February 2005 at Kohl’s stores throughout the United
`States a11d o11 Kohls.co1n. The Oh Baby by Motherhood collection is
`
`Source: DESTINATION MAT'ERNITY CORR,
`
`‘lO~K, 1.?/'14/2089 | Powered by Intelligize
`
`DMC Exhibit 2040_O06
`
`Target v. DMC
`|PR2013-00530, 531, 532, 533
`
`

`
`available at all Kohl’s stores under an exclusive product and license agreement. The collection features a modern assortment of quality fashions,
`with most items having initial prices (before price promotions) under $40.
`
`Retail Nanleplates
`We sell maternity apparel through the stores, leased departments and licensed relationships identified in the table below.
`
`Store Nameplate
`Stores:
`
`Motherhood Maternity
`
`A Pea in the Pod
`
`Description of
`Target Location
`
`Brand(s) Carried
`
`Typical
`Apparel
`Prlce Range
`
`Average
`Size (Sq. Ft.)
`
`Mid-priced and moderate regional malls,
`strip and power centers, and central
`business districts
`
`Motherhood
`
`$9 — $45
`
`1,800
`
`Mid-priced and high-end regional malls,
`lifestyle centers, central business districts
`and some stand-alone stores i11 affluent
`street locations
`
`Pea (including, in
`some cases, Pea
`Collection)
`
`$16 — $400
`
`1,900
`
`Destination Maternity
`
`Combo stores located in mid-priced
`regional malls and lifestyle centers
`
`Motherhood; Pea
`(including, in
`some cases. Pea
`Collection)
`
`$9 — $400
`
`Combo stores
`2,800
`
`Superstores
`6,700
`
`Leased Departments:
`Sears (1)
`
`Kmart (l)
`
`Macy’s
`Babies“R”Us
`Boscov‘s
`
`Gordirlans
`
`Exclusive Licensed Relatinnsh
`Kohl’s
`
`Superstores located primarily in outdoor
`and power centers and central business
`districts
`
`Mid-priced and moderate regional malls
`
`Moderate strip centers and freestanding
`locations
`
`Mid-priced regional malls
`
`Big box power centers
`
`Mid-priced and moderate regional malls
`Big box power’ centers
`
`Two Hearts
`Maternity by
`Destination
`Maternity
`Two Hearts
`Maternity by
`Destination
`Maternity
`Motherhood; Pea
`Motherhood
`
`Motherhood
`Motherhood
`
`$9 4 $45
`
`$9 4 $45
`
`$9 4 $150
`$9 4 $45
`
`$9 4 $45
`$9 4 $45
`
`Big box power centers
`
`Oh Baby by
`Motherhood
`
`$8 4 $42 (2)
`
`4
`
`4
`
`4
`4
`
`4
`4
`
`4
`
`Source: DESTINATION MATERNITY CORR, 10-K, 12‘./'14/2039 | Powered by Intelligize
`
`
`
`DMC Exhibit 2o4o_0o7
`
`Target v. DMC
`|PR2013—OO530, 531, 532, 533
`
`

`
`(I)
`
`In October 2009, we re-launched our Two Hearts Maternity by Destination Maternity collection, available exclusively at Sears and Kmart
`stores. Tl1e Two Hearts Maternity collection was previously offered i11 Sears stores fiom April 2004 through June 2008.
`(2) Kohl’s, which sells our Oh Baby by Motherhood brand under an exclusive product and license agreement, sets the apparel price range for
`this mercha11disc.
`
`The following table sets forth our store count by nameplate as of September 30, 2009.
`
`Motherhood Maternity
`A Pea in the Pod
`Destination Maternity
`Combo stores
`Superstores
`Total Destination Maternity stores
`Total stores
`
`Store
`Count as
`of
`September
`30. 2009
`591
`67
`
`44
`22
`66
`724
`
`Major regional malls with several department stores and a wide range of price points may be able to accommodate a inulti-brand store, or
`n1ore than o11e 111aternity store. Our retail 11an1eplates provide us with the ability to address multiple price alteinatives at a given mall. As of
`September 30, 2009, we had at least two of our store concepts in 16 major regional malls. Our preference is, over time and assuming we can obtain a
`suitable location u11der acceptable financial terms, to operate one larger—sized1nulti—brand store under the Destination Maternity nameplate in or
`near these malls, rather than two smaller single-brand stores.
`iMutherhuut1Muterni1j7 Stures. Motherhood Matemity is our largest chain with 591 stores as of September 30, 2009. Motherhood is
`positioned with a broad assortment of quality fashion at everyday low prices. Motherhood stores average approximately 1,800 square feet and are
`located primarily in n1id-priced and moderate regional malls, strip and power centers. and central business districts. Motherhood stores include 86
`outlet locations that carry Motherhood-branded merchandise as well as some closeoutmerchandise. I11 fiscal 2009, we opened nine new
`Motherhood stores and outlets a11d closed 34 Motherhood stores and outlets, with six of these store closings related to multi-brand store
`openings. As of September 30, 2009, we operated 38 Motherhood stores in Canada and believe that market opportunities may permit us to open
`additional stores in Canada in the future.
`
`A Peri in the P0r1St0res. As of September 30, 2009, we had 67 A Pea in the Pod stores, averaging approximately l,900 square feet. I11
`co11nection with our fiscal 2009 retail nameplate rebranding, several of our A Pea in the Pod stores may continue to carry the Mimi Maternity
`storefront sign for an indefinite period. Certain of the A Pea in the Pod stores are located in mid-priced regional malls, lifestyle centers and central
`business districts while others are located in upscale venues, including Beverly Hills, Oak Street, South Coast Plaza, Bal Harbour and Newbury
`Street. I11 fiscal 2009, we closed seven Pea stores, with two of these store closings related to multi-brand store openings.
`Destination Maternity Stores. As of September 30, 2009, we had 66 Destination Maternity stores averaging approximately 4.100 square feet,
`including 44 Destination \4aternity combo stores and 22 Destination Maternity superstores.
`Destination ft;/at