Man, was I wrong. I never should have put so much faith in Mothers Work
During the month, the retailer reported a 5.4% decrease in same-store sales. It couldn't even take advantage of the fact that an extra Saturday was included in the results this year. That one day added approximately 2% to 3% to its performance. And it's not as if this is just one month with disappointing sales. We saw the same thing in May, when comps were down 3.6%. For the quarter, comps fell 8.2% -- much worse than the company's projected 0.5% to 4% drop.
This recent negative trend has forced management to lower its outlook for third-quarter earnings, which are scheduled to be announced later this month. Mothers Work now expects to earn between $0.86 and $0.90 per share, excluding debt redemption charges. That's a far cry from the $1.25 to $1.55 per share it had previously expected. Why has a company that's positioned well in the market with such a seemingly necessary product suffered such lackluster sales? The answer may surprise you.
It turns out maternity wear is quite the fashion trend these days, with nonspecialty stores selling items such as trapeze and baby-doll dresses to the nonpregnant, who like the style, and the newly pregnant, who like the garments for early in their pregnancy. So expectant mothers have not had to go to Mothers Work to purchase traditional maternity wear.
Who would have guessed maternity-style clothing would become fashionable and put a damper on sales of actual maternity clothing?
Despite its obvious struggles, Mothers Work continues to remain cognizant of its fundamental business strategy. It has had to utilize markdowns to maintain manageable inventory levels, but has thus far been able to avoid massive product discounts. The company continues to keep expenses in check and will continue to expand its marketing partnerships.
I expect trends to change as they always do, and maternity clothes will once again become a necessity rather than a fashion statement. Once that happens, I expect expectant mothers to return to Mothers Work in droves. Perhaps I haven't learned after all. It's just so difficult not to see the good in Mothers Work.
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