UNITED STATES
`
`SECURITIES AND EXCHANGE COMMISSION
`VVashington, D.C. 20549
`
`(Mark One)
`
`FORM 10-K
`
`ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
`OF 1934
`
`For the fiscal year ended September 30, 2012
`or
`
`Cl
`
`TRANSITION REPORT PURSUANT TO SECTION 13 OR l5(d) OF THE SECURITIES EXCHANGE
`ACT OF 1934
`
`For tl1e transition period from to
`Commission file number 0-21 196
`
`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 ofices)
`
`1 3-3 045573
`(IRS Employer
`Identification .\T0.)
`
`19123
`(Zip Code)
`
`(215) 873-2200
`(Registrant's telephone number, including area code)
`Securi ies registered pursuant to Section 12(b) of the Act:
`Name 01 each exchange on which registered
`Title of each class
`The NASDAQ Stock Market LLC
`Common Stock, par value $.01 per share
`Securi ies registered pursuant to Section 12(g) of the Act:
`Series B Junior Participating Preferred Stock Purchase Rights
`(Title of class)
`lndicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes El N 0
`Indicate by check mark if the Registrant is no required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes El No
`Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(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 cays. Yes
`No El
`Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
`Data File required to be submitted a11d posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period
`that the registrant was required to submit and post s11cl1 files). Yes
`No El
`l11dicate 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, i11 definitive proxy or information statements incorporated by reference i11 Part III of this Form 10-
`K or any amendment to this Form 10-K.
`Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated liler, a non-accelerated filer, or a smaller reporting
`company. See the 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
`Non—accelerated filer El
`Smaller reporting company El
`(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 voting and non-voting common equity held by non-affiliates computed using $18.57, the price at which
`the common equity was last sold as of March 31. 2012 (the last business day of the Registrant’s most recently completed second fiscal quarter),
`was approximately $241,000,000.
`On December 3. 2012, there were 13,487,694 shares of the Registrant’s common stock, $.01 par value, outstanding.
`DOCUMENTS INCORPORATED BY REFERENCE
`
`Portions of the Registrant’s Proxy Statement to be filed with the Securities and Exchange Commission in connection with the Annual
`Meeting of Stockholders, expected to be held in the second quarter of fiscal 2013, are incorporated by reference into Part III of this Form 10—K.
`
`Source: Destination Maternity Corp, 10—K, 12/14/2012 | Powered by Intelligize
`
`
`
`DMC Exhibit 2041_OO1
`
`Target v. DMC
`|PR2013-00530, 531, 532, 533
`
`

`
`Ourfiscal year ends on September 30. /lll references in this report to ourfiscalyears refer to thefiscalyear ended on September 30 in the
`year mentioned. For example, our ‘fiscal 2012" ended on September 30, 2012. Unless otherwise indicated, operating data referred to in this
`report is as ofSeptember 30, 2012. As used in this report, the term "retzzi l l«,7ct1tioI1.:"" includes our store.:' and leiised departments’ and e.x'clitde.:'
`locations where Kohl’s® sells our products under an exclusive product and license agreement, and internationalfranchise locations. As usedzn
`this report, “stores" means our s1‘and—al0ne stores in the United States, Puerto Rico and Canada which we operate.
`
`PART I.
`
`Item 1.
`Overview
`
`Business
`
`Destination Matemity Corporation (the “Company”, “we”, “u s”, “our”) is the leading designer and retailer of maternity apparel i11 the United
`States and is the only nationwide chain ofmaternity apparel specialty stores. As of September 30, 2012, we operate 2,008 retail location s, including
`625 stores in all 50 states, Puerto Rico and Canada, a11d 1,383 leased departments located within department stores and baby specialty stores
`throughout the United States and Puerto Rico. We are also the exclusive provider of maternity apparel to Kohl’s, which operates approximately
`1,146 stores throughout the United States. We operate our 625 stores under three retail nameplates: Motherhood Maternity‘‘“, A Pea in the Pod“?
`and l)estinatio11 Maternity®. ln addition to our 625 stores, we operate 1,383 maternity apparel departments, which we refer to as leased
`departments, within leading retailers such as l\/lacy’s®, Sears®, Gordmans® and Boseov’s®. We are the exclusive maternity apparel provider in each
`of our leased department relationships. In fiscal 2012 we also operated leased departments in Babies“R”Us® stores. However, in connection with
`our new broad-based partnership with Bed Bath & Beyond Inc. and its subsidiary, Buy Buy Baby, lnc., (which we announced in May 2012) we
`discontinued operation of our 124 remaining leased departments in Babies“R”Us in late October 2012 and opened leased departments in select
`buybuy BAB Y® stores. As of November 30, 2012 we operate 10 leased departments in buybuy BABY stores. As of August 25, 2012, Bed Bath &
`Beyond Inc. had 7l buybuy BABY stores. Over time, we expect to significantly increase the number of buybuy BABY stores in which we have a
`maternity apparel leased department.
`We also have expanded internationally and have entered into exclusive store franchise and product supply relationships in the Middle East,
`India and South Korea. As ofSeptember 30, 2012, we have 119 international franchised locations, comprised of 16 stand-alone stores in the Middle
`East, South Korea and India operated under the Destination Maternity retail nameplate, and 103 shop-in-shop locations in India and South Korea,
`in which we have a Company branded department operated under retail nameplates owned by our franchise partners. Finally, we also sell
`merchandise on the Internet, primarily through Desti11ationMaternity.com and our various brand—specific websites.
`We maintain 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 625 stores and certain of our leased departments, we offer n1ate1nity apparel
`under our two primary merchandise brands, Motherhood Maternity (“Motherhood” or “Motherhood Maternity") at value prices and A Pea in the
`Pod (“Pea” or “A Pea in the Pod”) at both contemporary and luxury prices. Our A Pea in the Pod Co11eeti0n® (“Pea Collection”) is the distinctive
`premier maternity apparel line within the A Pea in the Pod brand, featuring exclusive designer label product at luxury prices. We also have two
`additional value-priced matemity apparel brands: our Oh Baby by Motherhood® collection, which we sell exclusively through Kohl’s, and our Two
`Hea1’ts® Maternity by Destination Maternityg collection, available exclusively at Sears stores. Our brands are the exclusive maternity apparel
`offering in each of these chains.
`We believe that one of our key competitive advantages is our ability to fulfill, in a high-service store environment, all ofan expectant or
`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
`
`to
`
`Source: Destination Maternity Corp, 10—K, 12/14/2012 | Powered by Intelligize
`
`DMC Exhibit 2041_002
`
`Target v. DMC
`|PR2013-00530, 531, 532, 533
`
`

`
`maternity apparel. V\7e design and contract for the production of over 90% ofthe merchandise we sell using sewing factories located throughout
`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 o11r c11ston1ers and to increase average store sales and
`profitability. We believe the continued rollout ofour multi—brand store initiative provides the opportunity for us to improve store operating profit
`margins over time by reducing 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 Maternity 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 Destination Maternity stores are larger and have historically had higher average sales than our average store. Opening these Destination
`Maternity stores will typically involve closing two or more smaller stores and may result in one—time store closing costs resulting primarily from
`early lease terminations. In fiscal 2012 we closed 12 stores in connection with the opening of Destination Maternity nameplate stores and, from
`fiscal 2005 through fiscal 2012, we have closed 129 stores in connection with the opening of Destination Maternity nameplate stores.
`In recent years, in addition to having closed some stores in connection with the opening of Destination Maternity nameplate stores, we have
`also evaluated our retail store base to identify and, i11 many cases, close underperforming stores (referred to as “prunings”) where We can do so
`without disproportionate exit cost. These prunings typically add to our profitability by eliminating the operating expense of an underperforming
`store while also typically transferring some of the sales from the closed store to other stores and.’or leased departments we operate in that
`geographical area. I11 fiscal 2012 we closed 29 unI;ler'perforn1ing stores and, from fiscal 2005 through fiscal 2012, we have closed 263
`underperforming stores.
`We plan to open approximately 14 — 20 new retail stores during fiscal 2013, of which we expect approximately 7 — 10 will be new Destination
`Maternity combo or superstores. We estimate that we will close approximately 34 — 51 stores in fiscal 2013, with approximately 14 — 20 of these
`store closings related to the opening of new Destination Maternity stores, and the remainder of these store closings related to prunings.
`Currently, we operate 34 Motherhood stores in Canada and a Motherhood website under a Canadian URL (MotherhoodCanada.ca). In
`addition, we believe there is a significant opportunity to continue to develop intemational sales beyond Canada. We currently have franchise
`agreements in place in the Middle East, I11dia and South Korea. The initial franchise stores through o11r arrangement in the Middle Ea st opened
`during 2009 and, as of September 30, 2012. there are 13 of our franchise stores operating in the Middle East. Beginning during fiscal 2009, we began
`offering our Motherhood Maternity branded merchandise in maternity sl1op—in—shops located in our India franchisee’s Mom & Me® stores and in
`franchise stores. As of September 30. 2012, our merchandise is offered in 90 Mom & Me stores a11d one franchise store in India. Beginning during
`fiscal 2011, we began offering our Motherhood Maternity branded merchandise in maternity shop-in-shops located in our South Korea
`franchisee’s l\IeXtmom® stores and in franchise stores. As of September 30, 2012, our merchandise is offered in 13 Nextmom stores and two
`franchise stores in South Korea.
`
`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 custom er 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 a11d 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.
`The Company was founded in l982 as a mail-order matemity apparel catalog. We began operating retail stores in 1985 and completed our
`initial public offering in 1993. To address multiple price points in maternity apparel and improve operating productivity, we acquired Motherhood
`and A Pea in the Pod in 1995 and
`
`Source: Destination Maternity Corp, 10—K, 12/14/2012 | Powered by Intelligize
`
`DMC Exhibit 2041_003
`
`Target v. DMC
`|PR2013-00530, 531, 532, 533
`
`

`
`eSpeeialty Brands, LLC, or iMaternityTM, in October 2001. Since the acquisitions ofMotherhood 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. On December 8, 2008, we changed our corporate name from “Mothers Work,
`Inc.” to “Destination Maternity Corporation” and our Nasdaq® symbol from “,\lWRlC’ to “DJ:'S'l'” coincident with the name change.
`
`Industry Overview
`We are unaware of any reliable external data on the size ofthe maternity apparel business. We believe that there is an opportunity to grow
`our business by selling maternity clothes to those pregnant women who currently purchase loose-lilting or larger-sized non-maternity clothing as
`a substitute or partial substitute for maternity wear. We also believe that our business can grow by reducing the amount of “hand-me-down” and
`“borrowing” associated with matemity apparel, particularly in the Value—priced segment. Additionally, although we are not wholly unaffected by
`external factors (such as fluctuations in the birth rate), we believe that the demand for maternity apparel is relatively stable when compared to non-
`matemity apparel. Expectant mothers continue to need to replace most of th eir wardrobe and the current rate of approximately four million United
`States births per year has remained relatively stable over the last decade, although the number ofbirths has declined by approximately 8.8% in the
`United States from 2007 to mid-"012, the period of latest available information. 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 onc’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 in the Ifnited States and are the only
`nationwide chain of maternity apparel 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. In addition, we have a leading
`position across all major price points ofmaternity apparel through our retail store nameplates 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 our maternity crrstomers 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 nameplates in the United States to expand internationally. As of September 30, 2012, we operate 34 stores in Canada and we have ll9
`international franchised locations, comprised of 16 stand-alone stores in the Middle East, South Korea and lndia operated under our Destination
`Maternity retail nameplate, and 103 shop-in-shop locations in India and South Korea, in which we l1ave a Company branded department operated
`Linder retail nameplates owned by our franchise partners.
`We ofler a comprehensive assortment of maternity apparel and accessories. A primary consideration for expectant mothers shopping for
`nraternity clothes is product assortment, as pregnant women typically need to replace almost their entire wardrobe. We believe that we offer 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 integrated. We design and contract manufacture over 90% of the merchandise we sell. We believe that vertical integration
`enables us to offer the broadest assortment ofmaternity apparel, to respond quickly to fashion trends and to optimize in-stock levels. We combine
`our in-house design expertise, domestic and international sourcing capabilities, a rapid inventory replenishment process and extensive proprietary
`systems to enhance operational and financial results.
`
`Source: Destination Maternity Corp, 10—K, 12/14/2012 | Powered by Intelligize
`
`DMC Exhibit 2041_O04
`
`Target v. DMC
`|PR2013-00530, 531, 532, 533
`
`

`
`We utilize a rapid inventory replenishment system. \7\7e are able to offer a wide selection of merchandise in 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 locations through our Philadelphia, Pennsylvania distribution centers to meet the individualized needs ofour retail
`locations. Our stores receive shipments from our distribution centers between one and seven times per week. This enables us to maintain a high
`percentage in-stock merchandise position in each of our 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 our
`point—of—sale systems, our merchandise analysis and planning systems, 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 enable us to offer a broad product assortment, rapidly replenish inventory in our retail
`locations, and respond quickly to fashion trends.
`We are able to obtain prime real estate locations. We 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 real estate management
`and procure111e11t capabilities. We are the only maternity apparel retailer to provide mall operators with differently priced retail concepts, depending
`on the mall’s target demographics. We are also able to provide a Destination Maternity 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, 2012, we operate 1,383 leased departments within leading retailers such as Macy's, Sears, Gordmans and
`Boscov’s. We are also the exclusive provider of maternity apparel to Kohl’s pursuant to an exclusive licensed relationship. V\7e 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. In fiscal 2012, we also operated leased departments in Babies“R”Us stores.
`Ilowever, in connection with our new broad-based paltnership with Bed Bath & Beyond Inc. and its subsidiary. Buy Buy Baby, Inc., (which we
`announced in May 2012) we discontinued operation of o11r 124 remaining leased departments in Babies“R”Us in late October 2012 and opened
`leased departments in select buybuy BABY stores. As of November 30, 2012 we operate 10 leased departments in buybuy BABY stores. As of
`August 25, 2012, Bed Bath & Beyond Inc. had 71 buybuy BABY stores. Over time, we expect to significantly increase the number of buybuy
`BABY stores in which we have a maternity apparel leased department.
`We have a highly experienced management team We have a nianageinent team with significant experience i11 all aspects of the retail and
`apparel business, including our Chief Executive Officer (“CFO”), Ed Krell. who has served as a senior executive of the Company for over 10 years
`and has over 25 years of business experience encompassing apparel, retail, finance and overall management, and our President, Chris Daniel, who
`has over 20 years of wom en’s apparel merchandising experience.
`
`Source: Destination Maternity Corp, 10—K, 12/14/2012 | Powered by Intelligize
`
`DMC Exhibit 2041_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:
`
`A Pea in the Pod
`
`Brand
`Motherhood Maternity
`
`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 fun casual merchandise, including exclusive designer labels
`Two Hearts Maternity by Destination Select assortment of the latest fashions, offering great quality merchandise at
`Maternity
`value price points
`Oh Baby by Motherhood
`Select assortment of the latest fashions. offering great quality merchandise at
`value price points
`
`Typical
`Apparel
`Price Range
`
`$10 — S 45
`
`S18 — $395
`
`$ 8 — $ 36
`
`$ 8 — $ 36(1)
`
`(1) Kohl’s, which sells our Oh Baby by Motherhood brand under an exclusive product and license agreement, sets tl1e prices for this
`merchandise.
`
`Motherlmad Maternity. Our Motherhood Maternity brand serves the value-priced portion of the maternity apparel business, which has the
`greatest number of customers. The Motherhood brand is positioned with a broad assortment of quality fashion at everyday low prices. We believe
`that the Motherhood customer shops at n1oderate—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 (or “better”) portion and, through our A Pea iii the Pod
`Collection line, the luxury portion of the maternity apparel business. The Pea brand is generally positioned as contemporary, fashion-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 i11 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. In our stores which carry A Pea in the Pod
`brand mercharrdise, we also offer exclusive maternity versions of select styles fror11 well-known designer a11d 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
`when she is not expecting. We believe the Pea brand is the leadi11g luxury maternity brand in the United States. Publicity. including celebrities
`wearin g our clothes, is an important part of the marketing and positioning of the Pea brand.
`Two Hearts Maternity by Destination Maternity. Our Two Hearts Maternity by Destination Matemity collection is available at over 500
`Sears locations throughout the United States through an exclusive leased department relationship. This collection delivers the latest in career and
`casual sportswear as well as dresses, swimwear, lingerie and nursing-friendly sleepwear, all specially designed to compliment the pregnant
`silhouette, with most items selling for under $25.
`Oh Baby by Illatherhoozl. Our Oh Baby by Motherhood collection is available at over 1,100 Kol1l’s stores throughout the United States and
`on Kol1ls.co111. The O11 Baby by Motherhood collection is available at all Kohl’s stores under a11 exclusive product and license agreement. The
`collection features a moder11 assortment of quality fashions, with most items having initial prices (before price promotions) under $40.
`6
`
`Source: Destination ivlaternity Corp, 10~’v<, 12,/14;‘20:t2.
`
`| Powered by Intelligize
`
`DMC Exhibit 2041_O06
`
`Target v. DMC
`|PR2013-00530, 531, 532, 533
`
`

`
`Retail Nameplates
`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
`
`Mid-priced and moderate regional malls,
`strip and power centers, and central
`business districts
`
`B|'and(s) Carrier]
`
`Typical
`Apparel
`Price Range
`
`Motherhood
`
`$10 — $ 45
`
`Mid-priced and high—end regional malls,
`lifestyle centers, central business districts
`and some stand-alone stores in affluent
`street locations
`
`Pea (including, in
`some cases, Pea
`Collection)
`
`$18 ~ $395
`
`Average
`Size Sg. Ft.
`
`1,800
`
`2,100
`
`Destination Maternity
`
`Combo stores located in mid-priced
`regional malls and lifestyle centers
`
`Superstores located primarily in outdoor
`and power centers and central business
`districts
`
`Mid-priced regional malls
`Mid-priced a11d moderate regional malls
`
`Big box power centers
`Mid-priced a11d moderate regional malls
`
`Motherhood;
`Pea (including, in
`some cases, Pea
`Collection)
`
`$10 — $395
`
`Combo stores
`2,900
`
`Superstores
`6,200
`
`Motherhood; Pea
`Two Hearts
`Maternity by
`Destination
`Maternity
`Motherhood
`Motherhood
`
`$10 — $240
`$ 8 — $ 36
`
`$10 — $ 45
`$10 — $ 45
`
`Leased Departments:
`
`Macy’s
`Sears
`
`Gordmans
`Boscov’s
`
`buybuy BABY (1)
`Exclusive Licensed Relationsh ip:
`l<_ohl’s
`
`Big box power centers
`
`Motherhood; Pea
`
`$10 — $200
`
`Big box power centers
`
`Oh Baby by
`Motherhood
`
`$8—$36
`
`(2)
`
`(1)
`
`Beginning i11 late October 2012 our maternity apparel is available in leased departments in select buybuy BABY stores through our new
`broad-based partnership with Bed Batl1 & Beyond Inc. a11d its subsidiary, Buy Buy Baby, I11c.
`(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 merchandise.
`
`Source: Destination Maternity Corp, 10~i+<, 12/14;’2012.
`
`| Powered by Intelligize
`
`
`
`DMC Exhibit 2041_O07
`
`Target v. DMC
`|PR2013—OO530, 531, 532, 533
`
`

`
`The following table sets forth our store count by 11ameplate as of September 30, 2012.
`
`Motherhood Maternity
`A Pea in the Pod
`Destination Maternity:
`Combo stores
`Superstores
`Total Destination Maternity stores
`Total stores (1)
`
`Store
`Count as
`of
`September
`30, 2012
`507
`36
`
`50
`32
`82
`625
`
`(1)
`
`Excludes (i) leased departments, (ii) locations where Kol1l’s sells our products under an exclusive product and license agreement and
`(iii) international franchised locations.
`
`Major regional malls with several department stores and a wide range of price poi11ts may be able to accommodate a Destination Maternity
`store, or more than one maternity store. Our retail nameplates provide us with the ability to address multiple price alternatives at a given mall. As of
`September 30. 2012, we had two of our store concepts i11 nine major regional malls. Our preference is. over time and assuming we can obtain a
`suitable location under acceptable financial terms, to operate one larger-sized rnulti-brand store under the Destination Maternity nameplate in or
`near these malls, rather t11an two smaller single-brand stores.
`Motherhood Maternity Stores. Motherhood Matemity is our largest chain with 507 stores as of September 30, 2012. 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 mid-priced and moderate regional malls, strip and power centers, and central business districts. Motherhood stores include 84
`outlet locations that carry Motherhood-branded merchandise as well as some closeout merchandise. In fiscal 2012, we opened two new
`Motherhood outlets and closed 30 Motherhood stores and outlets, with eight of these store closings related to Destination Maternity store
`openings. As ofseptember 30, 2012, we operated 34 Motherhood stores in Canada and believe that market opportunities may permit us to open
`additional stores in Canada in the future.
`
`A Pea in the Pod Stores. As of September 30, 2012, we had 36 A Pea in the Pod stores, averaging approximately 2,100 square feet. 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, Water Tower Place, South Coast Plaza and Newbury Street. In fiscal 2012, we closed seven Pea stores,
`with four of these store closings related to Destination Maternity store openings.
`Destination [Maternity Stores. As of September 30, 2012, We had 82 Destination Maternity stores averaging approximately 4,200 square feet,
`including 50 Destination Maternity combo stores and 32 Destination Maternity superstores.
`Destmatiorz jtlatcrrzity Combo Stores. As of September 30, 2012. we had 50 Destination Maternity combo stores. Our combo stores are
`larger (average of approximately 2,900 square feet) than our single-brand stores, generally have higher average sales volume than our
`average store and provide the opportunity to improve store operating profit margins over time. A new combo store often involves closing
`two stores (often one Motherhood store and one Pea store), although we so111etir11es close only one store in a given geographical market ir1
`situations where we believe we can expand sales through replacing a single-brand store with a Destination Maternity combo store. Store
`closings will sometimes involve o11e—ti1ne store closing costs resulting primarily from early lease terminations. Based 011 our internal research.
`we believe that over the next several years we have the potential to expand the Destination Maternity combo store chain to 70 or more total
`Destination Matemity combo stores in the United States. In fiscal 2012, we opened two Destination Maternity combo stores and closed four
`Destination Maternity combo stores.
`
`Source: Destination ivlaternity Corp, 10~’v<, 12,»’1/W012.
`
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