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`
`SECURITIES AND EXCHANGE COMMISSION
`
`UNITED STATES
`
`Washington, D.C. 20549
`
`FORM 10-K
`
`(Mark
`One)
`
`IZI
`
`ANN UAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
`OF 1934
`
`For the fiscal year ended September 30, 2008
`
`OI‘
`
`El
`
`TRANSITION REPORT PURSUANT TO SECTION 13 OR l5(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)
`
`1 3-3 04 55 73
`(IRS Employer Identification No.)
`
`456 North Fifth Street, Philadelphia, PA
`(Address of principal executive offices)
`
`19123
`(Zip Code)
`
`(215) 873-2200
`(Rcgistrant‘s tclcphonc number, including area code)
`
`Securities registered pursuant to Section l2(b) of the Act:
`
`Title of each class
`
`Common Stock, par value S.0l per share
`
`Name of each exchange on which registered
`Tl1e NASDAQ Stock Market LLC
`
`Securities registered pursuant to Section l2(g) of the Act:
`
`(Title of class)
`Series B Junior Participating Preferred Stock Purchase Rights
`
`Indicate by check mark if the Registrant is a well—known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes El No El
`
`Indicate by check mark ifthc Registrant is not rcquircd to filc reports pursuant to Section 13 or Section lS(d) of the Act. Ycs El .\lo |Z|
`
`Indicate by check mark whether the Registrant (l) l1as filed all reports required to be filed by Section 13 or l5(d) of the Securities Exchange Act of
`1934 during the preceding l2 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 |Z| 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,
`
`Source: DESTIN»'¥l'ION MSUERNITY CORR,
`
`lO~l<, 12;'15/20538 1 Powered by Intelligize
`
`
`
`DMC Exhibit 2o39_oo1
`
`Target v. DMC
`|PR2013—OO530, 531, 532, 533
`
`

`
`to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form l0—K or any
`amendment to this Form 10-K. El
`
`Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
`See definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule l2b-2 of the Exchange Act. (Check one):
`
`Large accelerated filer El
`
`Accelerated filer
`
`No11—accelerated filer El
`(Do not check rfa smaller reporting company)
`
`Smaller reporting company El
`
`Indicate by check mark whether the Registrant is a shell company (as defined in Rule l2b—2 of the Act). Yes El No |Z|
`
`The aggregate market value of the Voting and non-voting common equity held by non-afiiliates computed using $16.79, the price at which the
`common equity was last sold as of March 31, 2008 (the last business day of the Registrants most recently completed second fiscal quarter), was
`approximately $99,000,000.
`
`On December 8, 2008, there were 6,082,305 shares of the Registrants common stock, $.01 par Value, outstanding.
`
`DOCUMENTS INCORPORATED BY REFERENCE
`
`Portions of the Registrants Proxy Statement to be filed with the Commission in connection with the Annual Meeting of Stockholders scheduled to
`be held on January 23, 2009 are incorporated by reference i11to Part III of this Form 10-K.
`
`Source: DESTINATION MATERNITY CORP., 10-K, 12/15/2008 I Powered by Intelligize
`
`DMC Exhibit 2039_002
`
`Target v. DMC
`|PR2013-00530, 531, 532, 533
`
`

`
`PART I.
`
`Ourfiscalyear ends on September 30. All references in this report to ourfiscal years refer to thefiscal year ended on September 30 in the year
`mentioned. For example, our "]‘iscal 2008" ended on September 30, 2008. Unless otherwise indicated, operating data referred to in this report
`is as o/"September 30, 2008. As used in tlzis report, "retail locations" include our stores and leased departments and exclude locations where
`K0hl’.:® sells ourproolucn under an e.x'clusive product and license agreement.
`
`Item 1. Business
`
`Overview
`
`We are the leading designer and retailer ofmaternity apparel in the United States and are tl1c only nationwide chain ofmatcmity specialty stores.
`We operate l,032 retail locations, including 754 stores i11 all 50 states, Puerto Rico, Guam a11d Canada, and 278 leased departments located within
`department stores and baby specialty stores throughout the U.S. We are also the exclusive provider of maternity apparel to Kohl‘s®, which
`operates approximately 957 stores throughout the LIS. We operate our 754 stores under four retail nameplates: Motherhood Maternity®, Mimi
`Matemity®, A Pea in the Pod® and Destination Maternity®. In addition to our 754 stores, we operate 278 maternity apparel departments, which
`we refer to as leased departments, within leading retailers such as Macy‘s®, Bloomingdale's®, Babies "R" Us®, Boscov‘s® and Gordmans®. We
`are the exclusive maternity apparel provider in eacl1 of o11r leased department relationships. As we disclosed in September 2007, we were 11nable to
`reach terms on a renewal of our relationship with Sears® and, as a result, our relationship with Sears ended on June 20, 2008, resulting in the
`closure of our leased departments within Sears stores during June 2008. In October 2008, we announced our planned expansion into six key
`markets in the Middle East through an international franchise agreement. Our initial branded retail locations in the Middle East under this
`agreement are expected to open during 2009. We also sell merchandise on the lntcmet, primarily through DcstinationMatcrnity.com and our
`various brand-specific websites.
`
`In July 2008, we announced that we are 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 in the near term and in the long term. Pursuant to our strategic restructuring, we are rebranding our Mimi Maternity merchandise brand under
`our A Pea in the Pod brand beginning with the Spring 2009 collection. which initially debuted in November 2008. Also beginning with the Spring
`2009 collection, we are rebranding o11r existing l11x11ry-priced A Pea in the Pod merchandise assortment as the A Pea in the Pod CollectionTM to
`emphasize its exclusive designer brand position. We also plan on streamlining our store nameplates by January 2009, by renaming our single-brand
`Mimi Maternity stores as A Pea in the Pod, and by renaming our multi—brand Mimi Matemity stores as Destination Maternity. However, we
`anticipate that the storefront sign of certain of our existing Mimi stores will not be changed. either in situations where we are unable to obtain the
`required landlord consents to cha11ge the storefront sign, or because they are stores which we may close in the relatively near future. We feel
`strongly that the strategic restructuring and streamlining of our merchandise brands and store nameplates will help improve our long-tern1
`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 brand. We expect to realize approximately $5 million of annualized pre—tax expense savings
`from the cost reductions associated with our strategic restructuring actions. and we began to realize these savings in the fourth quarter of fiscal
`2008.
`
`On December 8, 2008, we Changed our corporate name fro111 "Mothers Work, Inc." to "Destination Matemity Co1‘po1‘ation" (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. The name change was accomplished through the merger of a newly-
`'72
`
`Source: DESTINATION MATERNITY CORP., 10-K, 12/15/2008 I Powered by Intelligize
`
`DMC Exhibit 2039_003
`
`Target v. DMC
`|PR2013-00530, 531, 532, 533
`
`

`
`formed. wholly—owned subsidiary, DM Newco, Ine.. into Mothers Work, Inc. Our 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
`mrrlti-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 ofmaternity 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 nameplates, and our overall business scope.
`
`After giving effect to our merchandise brand and store nameplate rebranding. we expect that we will maintain our leading position across all major
`price points of nraternity apparel tlrrorrglr our three distinct merchandise brands, which enable 11s to reach a broad range of nraternity customers.
`Through our 754 stores and certain of our leased departments and giving effect to our merchandise rebranding, 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 matemity line within the Pea brand, featuring
`exclusive designer label product at luxury prices. We also have an additional value-priced maternity apparel brand, our Oh Baby by Motherhoodm
`collection, which we sell exclusively through Kohl's, a_nd is the exclusive maternity apparel offering in this chain.
`
`We believe that one of our key competitive advantages is our ability to fulfill, in a high-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 sophisticated 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 throughout the world, predominantly outside of the U.S.
`
`In fiscal 2003, we began to develop and introduce, on a limited basis, new multi-brand store concepts that 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. After giving effect to our store nameplate rcbranding, our multi-brand stores will predominately be operated under our
`Destination Maternity nameplate, which will include two-branded Destination Maternity combo stores (carrying Motherhood and Pea
`nrerchandise) and Destination lvlaternity superstores, which also carry both of our principal rnerchandise brands, as well as a significant array of
`matemity-related products and customer service features. These multi-brand stores are larger and have historically had higher average sales than
`our average store. The continued rollout of our 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. Opening these multi-brand stores will typically involve closing two or more smaller stores and may frequently
`result in one-time store closing costs resulting primarily from early lease terminations.
`
`We plan to open approximately 14 — 18 new retail stores during fiscal 2009, of which we expect approximately 4 — 7 will be new Destination
`Maternity combo or superstores, with the balance primarily under the Motherhood brand. We estimate that we will close approximately 45 — 55
`stores in fiscal 2009, with approximately 8 — l2 of these store closings related to the opening of new Destination Maternity stores.
`
`Currently, we operate 36 Motherhood stores ir1 Canada and we operate a Motherhood website rrnder a Canadian URL (Motherl1oodCar1ada.ca). In
`addition, we believe there is a significant opportunity to develop international sales beyond Canada. Our initial branded retail locations through
`
`Source: DESTINATION MATERNITY CORP., 10-K, 12/15/2008 I Powered by Intelligize
`
`DMC Exhibit 2039_O04
`
`Target v. DMC
`|PR2013-00530, 531, 532, 533
`
`

`
`our initial franchise agreement in the Middle East are expected to open during 2009. We are currently evaluating other international sales
`opportunities.
`
`VVe believe that our customers, particularly first-ti111e mothers, are e11teri11g a new life stage that drives widespread changes in purchasing needs
`and behavior, thus making our maternity customer a11d 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 V\7o1'k, Inc.) was founded by Dan and Rebecca Matthias in 1982 as a mail-order maternity
`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 a11d A Pea in the Pod in 1995 and eSpecialty Brands, LLC, or
`iMatemityT’V', 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 Mimi and Destination Maternity brands. Also, since the 1990s we have partnered with other retailers to sell our products through
`n1ater11ity apparel departments within their stores.
`
`Industry Overview
`
`We are unaware of any reliable external data on the size of the maternity apparel business. However, based on our own analysis, we believe that
`there are approximately $1.2 billion of maternity clothes sold each year in tlie U.S. 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 matemity wear. V\7e 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. Further, we believe that the demand for maternity apparel is relatively
`stable when compared to non—mater11ity apparel. Expectant mothers continue to need to replace most of their wardrobe and the current steady rate
`of approximately four million U.S. 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 in the U.S. and are the only nationwide chain
`of r11ate1nity specialty stores. \Ve believe that our brands are the most recognized ir1 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
`of maternity 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 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 (lCp?l1‘lZ[I1C11lflIl(l licensed relationships.
`
`We offer 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 offer the
`widest selection of merch an di se in the maternity apparel business. We also offer product for multiple seasons, as pregnant
`
`4
`
`Source: DESTINATION MATERNITY CORP., 10-K, 12/15/2008 I Powered by Intelligize
`
`DMC Exhibit 2039_O05
`
`Target v. DMC
`|PR2013-00530, 531, 532, 533
`
`

`
`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 approximately 90% of the merchandise we sell. We believe that vertical
`integration enables us to offer the broadest assortment of maternity apparel, to respond quickly to fashion trends and to maximize 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 fnrancial results.
`
`We utilize a rapid inventory replenishment system We 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 "hack-stock" storage. Vs/e coordinate the rapid replenishment of inventory
`for all of our retail locations 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 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 point-of-sale systems,
`our TrendTrackTM 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 11s to reduce product costs and rapidly replenish inventory in o11r retail locations.
`
`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 dedicated in-house real estate
`management and procurement team. We are the only maternity apparel retailer to provide mall operators with the ability to choose from differently
`priced concepts, depending o11 the mall's target demographics. We are also able to provide a rnulti-brand store for malls that want to offer their
`maternity customers a wide range of price alternatives. In addition, in the ease 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 relatinnsh
`We operate 278 leased departments within leading retailers such as Macy's, Bloomingdale's, Babies “R“ Us, Boscov’s and Gordmans. We are also
`the exclusive provider of maternity 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 have a highly experienced management team We have a management team with significant experience i11 all aspects of the retail and apparel
`business. Rebecca Matthias, our President a11d Chief Creative Officer co—founded the Company over 25 years ago and is a leader in maternity
`apparel retailing. Edward (Ed) Krell, our Chief Executive Officer, has served as a senior executive of the
`
`Source: DESTINATION MATERNITY CORP., 10-K, 12/15/2008 I Powered by Intelligize
`
`DMC Exhibit 2039_006
`
`Target v. DMC
`|PR2013-00530, 531, 532, 533
`
`

`
`Company for nearly seven years and has over 20 years of business experience encompassing apparel, retail. finance and overall management.
`
`Merchandise Brands
`
`We believe that our brands are the most recognized brands in the maternity apparel business. After giving effect to our restructuring of our
`merchandise brands, which began in November 2008, we will sell our merchandise under the following three distinct brands:
`
`Brand
`Motherhood
`Maternity
`
`Brand Positioning
`Broad assortment of the latest fashions, offering great
`quality merchandise at everyday low prices
`
`A Pea in the Pod Contemporary, fashion—forward and luxury, offering
`sophisticated career, as well as fun casual merchandise,
`including exclusive designer labels
`
`Apparel
`Price
`Range
`$9
`$60
`
`S16 —
`$425
`
`011 Baby by
`Motherhood
`
`Select assortment of the latest fashions, offering great
`quality merchandise at value price points
`
`S14 —
`$48 (1)
`
`(1)
`
`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.
`
`Zllotherhood Maternity. Our Motherhood Maternity brand serves the value—priced portion of the maternity apparel business, which has the
`greatest number of cnstorners. The 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. The Motherhood
`Maternity brand will not be affected by our merchandise brand restructuring.
`
`A Pea in the Pod Our A Pea in the Pod brand currently serves the luxury—priced portion of the maternity apparel business, while our Mimi
`Maternity brand currently serves the medium-priced portion of the maternity apparel business. After giving effect to our planned merchandise
`brand restructuring, our A Pea i11 the Pod brand will serve both the rnediurn-priced portion and, through our Pea Collection line, the luxury portion
`of the maternity apparel business. The Pea brand will generally be positioned as contemporary, fasl1ion—forward and luxury, with prices ranging
`from affordable rnid-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. The Pea Collection is the distinctive premier matemity luxury line within the Pea brand, featuring a
`selection of extraordinary styles along with exclusive designer labels. In o11r stores which carry the A Pea in the Pod brand nrerchandise, we also
`offer exclusive maternity versions of select styles from well-known 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 11ot
`expecting. with the Pea Collection customer typically shopping at higher-end department stores and luxury designer boutiques when not pregnant.
`We believe the Pea brand is the leading luxury maternity brand i11 the United States. Publicity, including celebrities wearing our clothes, is an
`irnportant part of the rnarketing and positioning of tlie Pea brand.
`
`Oh Baby by Motherhood. Our Oh Baby by Motherhood collection was launched in February 2005 at Kohl's stores throughout the U.S. and on
`Kohls.com. The Oh Baby by Motherhood collection is 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 priced under $40. The collection is available
`
`Source: DESTINATION MATERNITY CORR,
`
`‘lO~K, 12/'15/2038 | Powered by Intelligize
`
`DMC Exhibit 2039_O07
`
`Target v. DMC
`|PR2013-00530, 531, 532, 533
`
`

`
`at all of Kohl's stores. The Oh Baby by Motherhood brand will not be affected by our merchandise brand restructuring.
`
`Retail Nameplates
`
`Alter giving effect to our planned store nameplate rebranding, which began in November 2008, we will sell maternity apparel through the stores,
`leased departments and licensed relationships identified in the table below. However, we anticipate that the storefront sign of certain of our
`existing Mimi stores will not be changed, either in situations where we are unable to obtain the required landlord consents to change the storefront
`sign, or because they are stores which we may close in the relatively near future.
`
` i
`Stores:
`
`Description 0!
`
`Apparel
`Price
`ii EL
`
`Average
`
`Motherhood
`Maternity
`
`Moderate regional malls, strip and power
`centers, and central business districts
`
`Motherhood
`
`A Pea in the Pod
`
`Mid—priced and high-end regional malls. lifestyle
`centers, central business districts and some
`sta11d-alo11e stores ir1 affluent street locations
`
`Pea (including,
`in some cases,
`Pea Collection)
`
`Dcstination
`Matemity
`
`Combo storcs located in mid-priccd regional
`malls and lifestyle centers
`
`Superstores located primarily in outdoor and
`power centers and central business districts
`
`Leased
`Departments:
`
`Macy's
`
`Mid—priced regional malls
`
`Babies “R“ Us
`
`Big box power centers
`
`Motherhood
`Pea (including,
`in some cases,
`Pea Collection)
`
`Motherhood
`Pca
`
`Motherhood
`
`Boscov' s
`
`Mid—priced and moderate regional malls
`
`Motherhood
`
`Gordmans
`
`Big box power centers
`
`Motherhood
`
`$9 —
`$60
`
`$16 —
`$425
`
`$9 —
`$425
`
`$9
`$168
`
`$9 —
`$60
`
`$9 —
`$60
`
`$9 —
`$60
`
`Exclusive Licensed
`Relationship:
`
`Kohl's
`
`Big box power centers
`
`O11 Baby by
`Motherhood
`
`$14 —
`$48 (1)
`
`1,700
`
`1,900
`
`Combo
`stores
`2800
`
`Superstores
`6.700
`
`—
`
`—
`
`—
`
`—
`
`(1)
`
`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 CORR, 10-K, 12715/2038 | Powered by Intelligize
`
`DMC Exhibit 2039_O08
`
`Target v. DMC
`|PR2013-00530, 531, 532, 533
`
`

`
`The following table sets forth our store count by nameplate as of September 30, 2008, both on an actual basis (before giving effect to our planned
`store nameplate rebranding), and on a pro forma basis after giving effect to our planned store nameplate rcbranding.
`
`Motherhood Maternity
`A l’ea in the 1’od
`Destination Maternity
`Combo stores
`Superstores
`Total Destination Maternity stores
`Mimi Maternity
`Single-brand stores
`Multi—bra11d stores
`
`Total Mimi Maternity stores
`Total stores
`
`Store Count as 01 September 30, 2008
`Actual
`Pro Forma 1
`Before giving effect to
`After giving effect to
`store nameplate rebranding
`store nameplate rebranding
`616
`616
`30
`74
`
`—
`19
`19
`
`44
`45
`
`89
`754
`
`45
`19
`64
`
`—
`—
`
`—
`754
`
`(1)
`
`We anticipate that the storefront sign of certain of our existing Mimi stores will not be changed, either in situations where we are unable to
`obtain the required landlord consents to change the storefront sign, or because they are stores which we may close in the relatively near
`future.
`
`Major regional malls with several department stores and a wide range of price points may be able to accommodate a multi-brand 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.
`2008, we had at least two of our store concepts in 21 major regional malls. ()ur preference is. over time and assuming we can obtain a suitable
`location under acceptable financial term s, to operate one larger-sized multi-brand store under the Destination Maternity nameplate in or near these
`malls, rather than two smaller single—brand stores.
`
`Motherhood Maternity Stores. Motherhood Maternity is our largest chain with 616 stores as of September 30, 2008. Motherhood is positioned
`with a broad assortment of quality fashion at everyday low prices. Motherhood stores average approximately 1,700 square feet and are located
`primarily in moderate regional malls, strip and power centers, and central business districts. Motherhood stores include 87 outlet locations that
`carry Motherhood-branded merchandise as well as some closeout merchandise. In fiscal 2008, we opened 22 new Motherhood stores and outlets
`and closed 41 Motherhood stores a11d outlets, with 12 of these store closings related to multi-brand store openings. As of September 30, 2008, we
`operated 36 Motherhood stores in Canada and believe that market opportunities may permit us to open additional stores in Canada in the future.
`The Motherhood Maternity retail nameplate will not be affected by our merchandise brand restructuring.
`
`A Pea in. the PM] Stores. As of September 30, 2008, we had 30 A Pea iii the Pod stores. 011 a pro foiina basis as of September 30, 2008, giving effect
`to our store nameplate rebranding (through which our single—brand Mimi stores will be rebranded as A Pea in the Pod), we would have 74 A Pea in
`the Pod stores averaging approximately 1,900 square feet. However, we anticipate that the storefront sign of certain of our existing Mimi stores will
`not be changed, either i11 situations where we are unable to
`
`Source: DESTINATION MATERNITY CORR,
`
`‘10~K, 12/'15/2008 | Powered by Intelligize
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`DMC Exhibit 2039_O09
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`Target v. DMC
`|PR2013-00530, 531, 532, 533
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`obtain the required landlord consents to change the storefront sign, or because they are stores which we may close in the relatively near filture.
`Certain of the A Pea in the Pod stores will be located in mid-priced regional malls, lifestyle centers and central business districts while others will
`be located in upscale venues, including Beverly Hills, Oak Street, South Coast Plaza, Bal Harbour and .\Iewbury Street. In fiscal 2008, we closed one
`Pea store (in addition to one Pea store converted to a Motherhood store) and closed 13 Mimi single-brand stores, with seven ofthese store
`closings related to multi-brand store openings.
`
`Destination Jllatemity Stores. As of September 30, 2008, we had 19 Destination Maternity stores, consisting entirely of Destination Maternity
`superstores. 011 a pro forma basis giving effect to our store nameplate rehranding (through which our 111ulti-brand Mimi stores will be rehranded as
`Destination Maternity), we would have 64 Destination Maternity stores averaging approximately 4,000 square feet, including 45 Destination
`Maternity combo stores and 19 Destination Maternity superstores. However, we anticipate that the storefront sign of certain of our existing Mimi
`stores will not be changed, either in situations where we are unable to obtain the required landlord consents to change the storefront sign, or
`because they are stores which we may close in the relatively near future.
`
`Des/inalion ll/falerrzity Combo Stores. As of September 30, 2008, 45 of our stores are Mimi multi-brand stores using the Mimi name, which
`we refer to as Mimi combo stores. Pursuant to our store nameplate rebranding, we plan to rebrand our 1nulti-brand Mimi combo stores as
`Destination Maternity stores although, as we noted previously, we anticipate that the storefr