Off-price retailer Tuesday Morning Corporation has reported its third quarter results, seeing sales rise but income impacted by expenses and strategic investments.
For its third quarter ended March 31, the company reported net sales of $211.4 million, compared to $189.7 million for the third quarter of fiscal 2015. Comparable store sales increased 13.4% compared to the same period a year ago, with a 12.4% increase in customer transactions and a 0.9% increase in average ticket.
The company reported that operating loss for the third quarter of fiscal 2016 was $5.9 million, compared to an operating loss of $2.1 million in the third quarter of fiscal 2015. The company had a net loss of $5.2 million, or $0.12 per share, in the third quarter of fiscal 2016 compared to a net loss of $2.8 million, or $0.06 per share, in the third quarter of fiscal 2015.
Impacting earnings, the company said it recorded approximately $4 million of incremental expenses during the third quarter of fiscal 2016 to support its strategic initiatives. These costs included $2.4 million of incremental rent expense related to closing stores prior to lease termination, as well as up-front costs for a Phoenix distribution center, and other investments such as recruiting costs for key executive positions, an inventory management project, expenses related to advertising research and investments in store prototype development.
Steve Becker, Tuesday Morning CEO, stated, “We are very pleased with our third quarter sales performance highlighted by the 13.4% comparable store sales increase. Our third quarter performance was driven by the improvements we have made to our real estate portfolio, product assortment and store experience, which together with an increasingly sharp value proposition, is resonating with our customers and is resulting in increased transactions.”
He added, “During the quarter, we made progress on our core initiatives. This work has significant costs, which will burden our income statement in the near term, but ultimately will result in a more profitable business model. Along with refining and improving our product assortment, we have been focused on restructuring our supply chain, accelerating our real estate repositioning efforts and completing the build-out of our senior leadership team. We continue to expect our Phoenix distribution center to be fully operational in the first half of fiscal 2017. We now have leadership in place across key functional areas to support our growth and drive our initiatives.”
During the third quarter, Tuesday Morning said 11 stores were relocated, two stores were opened and 18 stores were closed, for an ending store count of 748.