Tuesday Morning Sales Gain, Profits Pressured By Investments

Tuesday Morning Corp. posted second quarter net income of $18.9 million, or 43 cents per diluted share, versus $23.7 million, or 54 cents per diluted share, in last-year’s period. Comparable store sales gained 8.4%.

An analyst average estimate from MarketBeat.com called for diluted earnings per share of 55 cents. 

Net sales were $319.9 million, an increase of $18.5 million from the year-ago quarter, while operating income for the second quarter was $20.6 million compared with $34.2 million in the 2014 period. 

Steve Becker, Tuesday Morning CEO, said, “We are pleased with the 8.4% comparable store sales increase we achieved in the second quarter. These results were driven by a strong merchandising effort that demonstrates our ability to provide exceptional value to our customers with a relevant and ever changing assortment of product. We have continued to accelerate our investments in store real estate, the supply chain and our marketing initiatives. Our transition to broad and shallow has accelerated a long overdue restructuring of our supply chain capabilities.”

Becker added, “While we are moving towards the completion of the Phoenix DC facility, as we have previously discussed, the timeline is longer than originally contemplated when the project was launched over a year ago, resulting in additional IT and consulting costs. In addition, we incurred increased freight and labor costs as a result of the demands on our Dallas facility during the peak Christmas selling season as well as store labor costs associated with handling this increased volume of freight, all of which pressured our operating margins.  We expect the completion of the Phoenix facility and continued efforts to create efficiency in our supply chain to help alleviate this operating margin pressure as we move into fiscal 2017. While our investments in these areas are pressuring our operating margins this fiscal year, we believe they are crucial to position Tuesday Morning for sustainable success for years to come.”

Tuesday Morning currently operates 764 stores in 40 states.