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Tuesday Morning Takes Charges To Energize Turnaround

For the second quarter ended December 31, Tuesday Morning Corp., reported a net loss of $21.5 million, or 51 cents per share. Excluding non-recurring charges, non-GAAP adjusted net income was $15.5 million, or 37 cents per share, versus net income of $15.9 million, or 37 cents per share, in the same period a year ago, the retailer announced.

Non-recurring items included a non-cash charge of $41.8 million for the write-down of inventory and $6.7 million in charges related to store cleanup, severance costs, legal, consulting, search and recruitment expenses, and a systems impairment, as well as a deferred tax asset valuation allowance.

Net sales increased 4.5% to $285.3 million versus the prior-year quarter, while comparable stores sales increased by 5.6%.

Brady Churches, Tuesday Morning president and CEO, stated, “We are pleased with our initial sales progress, which was driven by enthusiastic customer response across a range of seasonal merchandise and well-received deals during the second quarter. This does not, however, obscure the challenges ahead, which includes the need for a major revitalization across every facet of our operations. While the company has taken some positive first steps in this regard, including a difficult but necessary inventory write-down, much work remains to restore Tuesday Morning’s core value proposition.”

In a conference call, Churches said the company was immersed in the process of regaining its position as an effective discount retailer by, among other initiatives, employing and enhancing merchandising strategies that would restore Tuesday Morning’s value position. The effort also includes augmenting the shopping experience, expanding the vendor base to improve the company’s presentation of, among other elements, branded and seasonal products, improving store operations by emphasizing manager responsibility, clean store environments and unit productivity,  and establishing more efficient marketing and closeout functions.

Churches also noted that the company had brought in new managers to effect the changes he said are necessary for Tuesday Mornings prospects to advance, including John Rossler, now chief operating officer.

Tuesday Morning operates about 830 stores in 43 of the United States.