SecProbe.io

CORRESP
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filename1.htm

456 North Fifth Street,
Philadelphia, PA. 19123

(215) 873-2200 Fax
(215) 625-6924

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY

MOTHERS WORK, INC. PURSUANT TO 17 C.F.R. 200.83.

THIS LETTER OMITS CONFIDENTIAL INFORMATION INCLUDED IN THE

UNREDACTED VERSION THAT HAS BEEN DELIVERED TO THE SECURITIES

AND EXCHANGE COMMISSION – DIVISION OF CORPORATION FINANCE.

ASTERISKS HAVE BEEN USED TO DENOTE SUCH OMISSIONS.

July 22, 2005

Securities and Exchange
Commission

450 Fifth Street, N.W.

Washington, DC 20549-0305

  Attention:

  Michael Moran,
  Accounting Branch Chief

  Mail Stop 3-8

  Re:

  Mothers Work, Inc.

  Form 10-K
  for the year ended September 30, 2004

  Form 10-Q
  for the quarter ended March 31, 2005

  File No. 0-21196

Dear Mr. Moran:

On behalf of Mothers Work, Inc.
(which we refer to as “we”, “us” or “our), this letter is being submitted to
respond to the additional comments given by the Staff of the Division of
Corporation Finance of the Securities and Exchange Commission (the “Commission”)
as set forth in your letter to Dan W. Matthias, Chairman and Chief Executive
Officer of Mothers Work, Inc., dated June 17, 2005, with respect to
the above-referenced filings.

For your convenience, we
set forth each comment in italicized typeface and include each response below
the relevant comment.  All references to page numbers
in our responses reflect paginations in the filings cited.

  Form 10-K for the year ended September 30,
  2004

  Consolidated
  Financial Statements

  Notes
  to Consolidated Financial Statements

  Note 2.
  Summary of Significant Accounting Policies

  General

1.              We
note your response to our comments 1 and 9 from our previous comment letter
dated February 24, 2005 relating to the disclosure of sources of revenues
and the basis for your belief that you have only one operating segment when
complying with the reporting requirements of SFAS 131.  We also note your revised disclosures in Note
11 of Form 10-Q filed last month.
Based on our understanding of your operations from the disclosures in
your current filings on Forms 10-K and 10-Q as well as the
information provided in your last response regarding this matter, we believe
you may have more than one operating segment and would like to receive
additional information relating to your compliance with SFAS 131.  Your response states that revenues from your
internet and 232 leased department locations were less than 10% of total
revenues.  In this regard, we note your
disclosure on page 4 of your Form 10-K that you expect to
expand your presence in Sears from 71 to a total of 645 stores in March 2005.  Your disclosures on page 6 state that,
in addition to the internet and lease department locations, you operate your
other retail stores under four retail concepts, which suggests that the
financial information from those four retail concepts are reviewed by your
Chief Operating Decision Maker.  Please
provide us with the revenues and gross margin for the following aspects of your
operations for YTD fiscal 2005 and the last three fiscal years 2002-2004:
(1) each of your four retail store concepts you discuss on page 6; (2) separately
for your internet and leased department locations; and (3) the stores in
your “new superstore concept” that you began testing during 2004.  In addition, we also understand from your
response that your Chief Operating Decision Maker (CODM) is your Chairman and
CEO.  In order to better understand your
basis for concluding that you have only one operating segment to comply with
the requirements of SFAS 131 and your compliance with the disclosure required
in Item 101(c)(1)(i) of Regulation S-K, please also provide us the
following:

(a)                               Representative
sample of the monthly internal reports provided to your CODM that reports your
operating results.

(b)                               Representative
sample of the financial reports provided to your Board of Directors.

(c)                                Representative
sample of the budget and forecast reports used by the CODM to allocate
resources and to assess operations, if applicable.

(d)                               A
summary of the capital expenditure authority of your management noting the
level of management and the amount of expenditure authority.

(e)                                An
organizational chart detailing your management structure under the CODM as it
relates to managing the operational aspects of your business.

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(f)                                   Explain
to us any variable compensation arrangements that you may use that are tied to
your business performance.  For example,
please address whether bonuses paid to management are based upon product line
sales, margins, store profitability, or any other metric.

(g)                               Explain
to us how you manage your more than 1,500 retail locations, including 877
stores as of March 31, 2005, with an emphasis on how your CODM makes
decisions regarding your operations.

(h)                               Explain
to us the process you utilize and the factors you consider when making
decisions regarding significant capital expenditures.

(i)                                  Explain
to us how you make decisions relating to product selection and product
pricing.  Your response should
specifically address what role, if any, your CODM has in merchandising
decisions.  Please provide us with a
representative sample of reports that senior management uses to assist them in
strategic merchandise decisions.

1.               Attached
to this letter for your supplemental review is revenue and gross margin
information for YTD fiscal 2005 and the last three fiscal years 2002-2004
for: (1) each of our four retail store concepts; (2) separately for
our internet and leased department locations; and (3) the stores in our “new
superstore concept,” i.e., Destination Maternity.  The requested information for Destination
Maternity is included in the information responsive to (1) above.  This information was specifically prepared in
response to your request as we do not otherwise have this information compiled
along these lines, but rather we use combined data and other subtotal data, as
well as individual store-specific data in our operations.  Please see attachment 1(b) which
identifies the type of information that we have available and use for our operations.

In
addition, we have the following attachments and provide further explanation as
follows:

(a)          Attached
for your supplemental review is a representative sample of the monthly internal
reports provided to our CODM that reports our operating results.  As the reports reflect, we examine data in
various forms.  Also, we sell all of our
product brands through our internet operations.

(b)         Attached
for your supplemental review is a representative sample of the financial
reports provided to our Board of Directors.

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(c)          Attached
for your supplemental review is a representative sample of the budget and
forecast reports used by our CODM to allocate resources and to assess
operations.

(d)         Our
capital expenditure process requires senior management approval before the
expenditure is incurred.  The most
significant portion of our capital expenditures relates to real estate.  Our real estate capital expenditure decisions
are based primarily on the expected return on investment of the individual
project (e.g. new store or store relocation), measured by projecting the sales,
profit and cash flow expected to be generated by the project relative to the
capital investment required to complete the project.  The management sign-off for capital
expenditures is by our Chief Executive Officer, Chief Operating Officer, or
Chief Financial Officer.

(e)          Attached
for your supplemental review is an organizational chart detailing our
management structure under our CODM as it relates to managing the operational
aspects of our business.

(f)            [***]

(g)         As
can be seen with our organizational structure, our retail locations are managed
through our store field management team.
These teams ultimately report into our CODM who ultimately makes key
decisions regarding all of our operations.
The senior management of our stores is centralized in our home office.

(h)         Supplementing
1(d) above, our process for making decisions regarding significant capital
expenditures is made in our home office and such decisions are not made based
on any individual component of our business, and are not made by employees of a
specific merchandise brand or store concept.

(i)             [***]

Supplementing the above
information and the attachments to this letter, the following analysis provides
additional explanation on our position that we have only one operating segment.

SFAS No. 131
Analysis.  Pursuant to
SFAS No. 131, a company may be required to report segmented information
about separately identifiable parts of its business, which both (i) meet
the definition of “operating segment” under SFAS No. 131, and (ii) exceed
certain quantitative thresholds established in SFAS No. 131.  Even if separately identifiable operating
segments are identified which exceed the qualitative thresholds, such segments
may be aggregated into a single operating segment and reported in the aggregate
if certain requirements are met (paragraph 17 of SFAS No. 131).

We have determined that
our business is comprised of one operating segment because only our business as
a whole meets the definition of the term “operating segment” under paragraph 10
of SFAS No. 131.  An “operating
segment” is defined as a component of a

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business enterprise which
meets all of the following criteria:  (i) engages
in business activities from which it may earn revenues and incur expenses
(including revenues and expenses relating to transactions with other components
of the same enterprise), (ii) whose operating results are regularly
reviewed by the enterprise’s chief operating decision maker to make decisions
about resources to be allocated to the segment and assess its performance, and (iii) for
which discrete financial information is available.  Our conclusion that we have only one
operating segment is based on the following:

(i)                                     Our business activity entails the design,
manufacture and sale of maternity apparel and related accessories.  While we offer a wide range of products for
sale, the substantial portion of our products are initially distributed through
the same distribution facilities, many of our products are manufactured at
common contract manufacturing production facilities, our products are marketed
through a common marketing department, and these products are sold to a similar
customer base, consisting of expectant mothers.

While there is
limited guidance on what constitutes business activities, we have considered
the following as part of our analysis:

At the November 15,
2001 EITF meeting, the FASB staff addressed inquiries about the application of
paragraph 30 of SFAS No. 142.
Clarification and guidance for whether a component of an operating
segment constitutes a business was provided as follows:

The determination of whether a component constitutes a
business requires judgment based on specific facts and circumstances.  The guidance in EITF Issue No. 98-3,
“Determining Whether a Nonmonetary Transaction Involves Receipt of Productive
Assets or of a Business,” should be considered in determining whether a group
of assets constitutes a business.  That
guidance states that, among other things, “for a transferred set of activities
and assets to be a business, it must contain all of the input and processes
necessary for it to continue to conduct normal operations after the transferred
set is separated from the transferor.”
The fact that operating information (revenues and expenses) exists for a
component of an operating segment does not mean that the component constitutes
a business.  For example,
a component for which operating information is prepared might be a product line
or a brand that is part of a business rather than a business itself (emphasis
added).

In addressing this
question, the FASB staff at the November 15, 2001 EITF meeting has
referred to EITF 98-3, “Determining Whether a Nonmonetary Transaction
Involves Receipt of Productive Assets or of a

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Business,” for
guidance on determining whether a business exists.  Per paragraph 6 of EITF 98-3,

A business is a self-sustaining integrated set of
activities and assets conducted and managed for the purpose of providing a
return to investors.  A business consists
of (a) inputs, (b) processes applied to those inputs, and (c) resulting
outputs that are used to generate revenues.
For a transferred set of activities and assets to
be a business, it must contain all of the inputs and processes necessary for it
to continue to conduct normal operations after the transferred set is separated
from the transferor, which includes the ability to sustain a revenue stream by
providing its outputs to customers (emphasis added).  The elements necessary for a transferred set
to continue to conduct normal operations will vary by industry and by the
operating strategies of the transferred set.
An evaluation of the necessary elements should consider:

Inputs

a.              Long-lived assets, including intangible assets, or
rights to use the long-lived assets

b.              Intellectual property

c.               The ability to obtain access to necessary materials or
rights

d.              Employees

Processes

e.               The existence of systems, standards, protocols,
conventions, and rules that act to define the processes necessary for
normal, self-sustaining operations, such as (i) strategic management
processes, (ii) operational processes, and (iii) resource management
processes.

Outputs

f.                  The ability to obtain access to the customers that
purchase the outputs of the transferred set.

A transferred set of activities
and assets fails the definition of a business if it excludes one or more of the
above items such that it is not possible for the set to continue normal
operations and sustain a revenue stream by providing its products and/or
services to customers.  However, if the excluded item
or items are only minor (based on the degree of difficulty and the level of
investment necessary to obtain access to or to acquire the missing items[s])
then the transferred set is capable of
continuing normal operations and is a business.  The assessment of whether excluded items are
only minor should be made without regard to the attributes of the transferee
and should consider such factors as the uniqueness or scarcity of the missing
element, the time frame, the level of effort, and

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the cost required to obtain the
missing element.  If goodwill is present in a transferred set
of activities and assets, it should be presumed that the excluded items are
minor and that the transferred set is a business. (emphasis added)

The assessment of whether
a transferred set is a business should be made without regard to how the
transferee intends to use the transferred set.
In other words, it is not relevant to the evaluation of whether the
transferred set is a business that the transferee will actually operate the set
on a stand-alone basis or intends to continue using the transferred set in the
same manner as the transferor.

If all but a de minimis
(say, 3 percent) amount of the fair value of the transferred set of activities
and assets is represented by a single tangible or identifiable intangible
asset, the concentration of value in the single asset is an indicator that an
asset rather than a business is being received.

The level of working
capital or the adequacy of financing necessary to conduct normal operations in
the transferred set is not an indicator either way as to