Dive Brief:
- Destination Maternity will be delisted from the Nasdaq Stock Market, "effective at the opening of the trading session on November 18, 2019," according to a filing with the Securities and Exchange Commission. Destination Maternity did not appeal the decision, which became final on Oct. 30.
- Nasdaq determined that "the Company no longer qualified for listing on the Exchange pursuant to Listing Rules," in light of its bankruptcy protection filing, according to the SEC document. Destination Maternity declined to comment to Retail Dive regarding the move or its response.
- The retailer filed for bankruptcy Oct. 21 saying it plans to restructure — including closing around half its stores — and sell itself in Chapter 11. An auction for its business is scheduled for Dec. 9 and the company has said its search for a possible buyer has "already yielded indications of interest from several credible bidders."
Dive Insight:
With a high probability of going private after its bankruptcy procedures are concluded (if it manages to find a buyer), there's little reason for Destination Maternity to fight to keep trading its stock.
The company joins several others this year that have seen their share prices tumble to below the requirements on the exchanges. Ascena, Pier 1, Rite Aid, Francesca's and J.C. Penney have all faced such warnings, with Francesca's and Rite Aid instituting reverse stock splits that got them back on track.
The maternity apparel retailer went public in 1992, a decade after its founding, when it had a much smaller footprint, and went on to expand its offering and acquire rivals. But its revenue has fallen by nearly a third in the past five years, and turmoil in its executive ranks, including a proxy fight last year, has complicated its turnaround.
Further challenging its operations is the simple fact that people are having fewer children, according to the team now overseeing its bankruptcy process. Lisa Gavales, chair of the "Office of the CEO" that was created after the latest chief executive departure, recently cited census figures showing the birth rate in the U.S. declined 9.2% between 2008 and 2017, hitting the lowest levels since 1987.
The company has also seen competition rise, from both discounters and luxury players. As it began to run out of cash, Destination Maternity in September launched a process to sell itself while signaling to investors that a Chapter 11 filing might be necessary.
