Shareholders are betting on the return of Destination Maternity

Shareholders at Gullane Capital Partners are betting on a comeback for maternity apparel retailer Destination Maternity.

While it hasn’t been exactly rosy for the company — with sales weighed down by challenges so far, and a slow entry into e-commerce, Trip Miller, managing partner of Gullane Capital Partners, believes that things are looking up.

“There’s just a myriad of opportunities here to generate value,” Trip Miller, managing partner of Gullane Capital Partners told CNBC. His firm owns 3.4 percent of the company’s outstanding shares.

“More importantly, we see a business, over the next year or two, that could rapidly turn around produce profits of a dollar or maybe even $2 per share, again roughly on just under $3 per share base here,” Miller said on “Closing Bell” Wednesday.

Destination Maternity has a market cap of just $43 million, while stock prices have declined 75 percent over three years, or 90 percent since 2011.

“I think that points to the value destruction that’s gone on by the past management and the past board of this company,” Miller said.

Management changes, reduced mall traffic and changes in the retail industry have all contributed to the company’s diminished sales. The maternity apparel company has also been slow to enter the e-commerce market, manage its inventory and sales, general and administrative expenses have been “exceptionally high,” Miller said.

“The biggest thing that went awry was just their strategy on cost-control,” Miller said.

Destination Maternity would not respond to a request for comment.

But Miller said the company’s “online piece is growing very rapidly right now. We see opportunity for them to consolidate three brands.”

The company, which is parent to A Pea in the Pod and Motherhood Maternity, made headlines Wednesday over a proxy battle to determine whether prior board experience should preclude women from obtaining future board seats. In the company’s 25-year history there have been only three female directors.

Shareholders, including Gullane Capital Partners, voted in favor of the female-dominated board. Shares fell 2.5 percent after Wednesday’s vote. But Miller is optimistic.

“This is a company run for women and it needs to be run by women,” he said. “So we’re very excited to see three new female board members.”

“Change was inevitable here, we believe,” Miller said.