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Destination Maternity is planning for bankruptcy that may occur in a few weeks



Destination Maternity store

Source: Destination Maternity

Destination Maternity, a leading maternity retailer, is planning a bankruptcy filing as soon as the next few weeks, as it deals with better capitalized competition and a burdensome debt burden, people told who was familiar with CNBC's case.

The company works with advisers at the law firm Kirkland & Ellis and the Berkeley Research Group, said one of the people. It is trying to find a buyer in bankruptcy, but if it is unable, it will probably be forced to liquidate, said that person.

As with all bankruptcies, it is still possible Destination Maternity will strike a deal with a potential buyer or its lenders to avert the filing for legal protection.

Destination Maternity has a market capitalization of nearly $ 5 million and $ 35 million in net debt, according to FactSet. For the fiscal year 201

8, it reported a net loss of $ 14.3 million on sales of $ 383.8 million.

The retailer, which employs just over 1,100 full-time and 2,300 part-time employees, owned 458 US stores as of February, according to regulatory filings. The company has 362 Motherhood Maternity Stores, 26 Pea in Pod stores and 70 Destination Maternity stores. It operates several stores globally and through franchise agreements.

Destination Maternity also operates maternity wards in stores that include Macy's and Bed Bath & Beyond's Baby Purchase Baby.

As the retailer has coped with deteriorating finances and a heavy debt burden, it has faced increased competition from major retailers who have the resources to invest in online businesses. Nationwide, it includes the Gap competition and its old Navy brand, H&M, Target and Walmart.

It also faces increased competition from internet brands, such as Asos, Pink Blush, Zulily and Hatch. Subscription resellers such as Le Tote and Rent the Runway have put on a costume, and used their existing e-commerce infrastructure.

Meanwhile, the most important demographic is declining. The U.S. birth rate dropped to a 32-year low in 2018, according to U.S. Department of Health and Human Services. That shift comes when millennial failures have children later, or not at all. The drop has got company from Huggie's diaper manufacturer Kimberly-Clark to baby oil and Jacuzzi Johnson & Johnson.

The people asked not to be named because the information is confidential. Destination Maternity declined to comment. Kirkland & Ellis and Berkeley Research Group were not immediately available for comment.

Correction: An earlier version of this story mistaken the company's market value. That's almost $ 5 million.


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