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Report: Destination Maternity Hires Advisor to Optimize Efficiency

Specialty stores are feeling the ripple effects of the recent department store turmoil.

As the majors continue to shutter doors to “right size” their fleets, they’re further eroding the foot traffic at some malls, changing the complexion of others and crippling some of their brand partners.

One example is Destination Maternity, which operates stores under its namesake brand along with A Pea in the Pod and Motherhood Maternity. The retailer has tapped advisory firm Berkeley Research Group LLC, according to the Wall Street Journal.

And despite the fact that BRG has recently been hired to help Rue21, American Apparel and Wet Seal navigate bankruptcy, the retailer insists that’s not the case here. Destination Maternity told the publication through a statement that the firm will be “providing advice to us on a how to optimize our expense structure,” adding, “We have not engaged BRG to explore any in-court or out-of-court restructuring.”

Unnamed sources have said BRG could be instrumental in assessing the company’s real estate and stores from a cost stand point.

[Read more about how struggling retailers can regain their footing: Turnaround Specialist Michael Appel on the Three Cs: Capital, Culture and a Consumer Focus]

Of Destination Maternity’s 1,157 points of sale, 646 are leased departments within other retailers. With more than half of its stores tied to other retailers, the maternity chain has felt the effects of changing landscape.

In just one year, the company’s deal with Sears ended, halting the Two Hearts collection which had been sold there since 2008; it split with Gordman’s, which had had a leased department; and it was dropped from Kohl’s, which had carried its Oh Baby by Motherhood line since 2005 until it launched its own LC Lauren Conrad Maternity label this year.

In the company’s full year earnings release for 2016, CEO and president Anthony Romano said the company’s “domestic distribution is overly saturated.” He added without the lines at Sears and Kohl’s the company could focus on its own channel and would strengthen the remaining leased departments.

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Since then, Destination Maternity leased spaces have closed in 59 Macy’s stores, 222 Sears stores and 100 Gordman’s stores.

Compounding these issues, the company’s anticipated merger with French maternity and children’s company Orchestra fell through in July due to issues with securities regulations in France and the U.S.

Earlier this month, Destination Maternity reported its second quarter earnings, noting that comp sales were down 3.4% even with e-commerce sales up 30.2%.

The company reportedly has a $70 million revolving line of credit with Wells Fargo and a $32 million term loan which mature in 2021.

Destination Maternity launched in 1982 as Mothers Work.