Why Destination Maternity's CEO stepped down

Destination Maternity Corp., the Mooretown women's apparel retailer whose merger agreement with Orchestra Prémaman SA of Montpellier, France was called off recently, announced that its president and CEO Anthony M. Romano stepped down at the close of business Sept. 7.

Allen Weinstein, an independent director of the company, was named interim chief executive officer. The maternity clothing retailer said the board will launch a search for a permanent CEO.

Destination Maternity reported a loss Thursday of $2.8 million for its fiscal second quarter on revenue of $98.3 million compared with $106.5 million in sales a year earlier. The decline was driven by the closure of underperforming stores, a decrease in comparable sales, and the end of agreements with Sears and Kohl's to sell the company's brands.

"Despite the investment of significant time, effort, and resources into the proposed merger with Orchestra Prémaman, it was ultimately not completed," Romano said in a statement. "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."

The deal with the French children's clothing company was struck Dec. 19, after Orchestra Prémaman had pursed Destination Maternity for more than a year.

In a joint news release July 27, the companies blamed "the challenges of satisfying applicable securities regulations in France and in the U.S. as well as the uncertainty as to whether those regulatory requirements could be satisfied without unreasonable effort and expense." Destination Maternity's shares fell 42 percent after the deal was scrubbed.

Destination Maternity shares closed at $1.14, down 5 cents, Friday on the Nasdaq stock exchange.

The relationship between Orchestra, which recently opened a store at King of Prussia Mall, and Destination Maternity dates to at least October 2015, when Orchestra offered $25 million in cash and shares for Destination in a deal valued at about $17 per share. When the two retailers finally reached an agreement in December, there was no cash for Destination shareholders, and the offer was worth about $7.05 per share, the Inquirer reported.

Destination's management, led by Romano, a former Charming Shoppes executive, were criticized by investors on a conference call announcing the deal.