Dive Brief:

• Apparel retailer Destination Maternity announced Thursday that its CEO, Anthony Romano, has left the company, according to a press release. Taking over the role in the interim is Allen Weinstein, an independent director of the company. In addition, the company said Barry Erdoss, also an independent director has been elected board chair, succeeding Arnaud Ajdler. The changes come shortly after the retailer hired a consulting firm to help with an ongoing cost-cutting and turnaround effort.
• The retailer said the switch would be effective at the end of the day Thursday. The board is now searching for a permanent CEO. In a statement, Romano referenced the recently failed merger with French retail and design company Orchestra-Prémaman and said, "Consequently, my fellow board members and I have reached a mutual decision that now would be a good time to make a change to allow for a fresh look at Destination Maternity."
• Also on Thursday, Destination Maternity reported that its second quarter net sales had fallen 7.7%, to $98.3 million, compared to the prior-year period, and comparable sales had fallen 3.4%. The company also posted a net loss of $2.8 million, compared to a net loss of $2.5 million in Q2 2016.

Dive Insight:

Destination Maternity's c-suite shake up comes just two weeks after news broke that the retailer — which bills itself as the largest designer and retailer of maternity apparel, with more than 1,000 locations — had hired consulting and advisory firm Berkeley Research Group.

A spokesperson for the retailer told Retail Dive in August that BRG "was not hired to explore any in-court or out-of-court restructuring or any strategic alternatives," rather "they are focused on optimizing the expense structure.”

In its earnings release Thursday, Destination Maternity said that it began a turnaround plan in late fiscal 2014 "to improve our business processes, key management personnel and planning resources with a focus on improving inventory management, driving sales productivity, optimizing real estate and controlling cost."

But a tough market for women’s apparel and declining mall traffic has slowed that plan, the company said. For the first half of the fiscal year, Destination Maternity’s sales have fallen more than 11%, to 204.7 million from $231 million in the first six months of last year, and the company has racked up a $3.9 million loss, compared to a $1.5 million profit in the first half of 2016.

The struggling department store sector has not helped things. In its most recent annual report, the retailer said Macy’s has closed 59 locations where Destination Maternity had leased a department. In 2016, Destination maternity ended leasing relationships with Gordmans, which filed for bankruptcy in March, and Sears, which has faced well-publicized financial troubles. The company also stopped producing a line of apparel exclusive to Kohl’s after that retailer decided to phase it out.

David Stern, Destination Maternity’s chief financial officer, said on an analyst call Thursday that the company is working to boost its digital game, and Q2 saw a 30% rise in e-commerce sales, according to a Seeking Alpha transcript of the call. He added that the company is expanding click-to-brick capabilities and store fulfillment of e-commerce sales, as well as adding more and faster shipping options for online customers.

In July, Destination Maternity announced that a merger deal with Orchestra-Prémaman had been terminated because of "challenges of satisfying applicable securities regulations in France and in the U.S," including the French company’s absence from public stock exchanges in the U.S. Stern said Thursday, "While we're disappointed that the merger was not completed, we had planned to operate Destination Maternity separately from Orchestra, so not much has changed in that regard."

Asked by an analyst Thursday about the options Destination Maternity was exploring with BRG, Stern provided no specifics, saying only that the goal was to "improve our profitability."