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Tuesday Morning Corporation Announces Third Quarter Fiscal 2013 Results

DALLAS, April 25, 2013 (GLOBE NEWSWIRE) -- Tuesday Morning Corporation (Nasdaq:TUES), a leading closeout retailer with 829 stores across the United States specializing in selling deeply discounted, upscale home furnishings, housewares, gifts and related items, today announced financial results for the third quarter and year-to-date period ended March 31, 2013. For the third quarter, the Company's net sales increased 3.1% to $178.1 million from $172.7 million in the third quarter of fiscal 2012. Including the impact of non-recurring charges detailed below, the Company reported a net loss for the quarter of $12.4 million, or $0.29 per share. Excluding these non-recurring charges, the Company reported a non-GAAP adjusted net loss of $4.8 million or $0.11 per share for the third quarter ended March 31, 2013 compared to a net loss of $4.2 million or $0.10 per share in the same period last year.

Michael Rouleau, Interim Chief Executive Officer, stated, "Tuesday Morning's third quarter results show improvement in the top-line as evidenced by increases in both customer traffic and average ticket. Although there is still a great deal of work to be done, we have now realigned our entire organization to focus on the Company's key priorities with the objective of returning to profitability and providing a great store experience for our customers."

For the Quarter ended March 31, 2013:

  • Comparable stores sales increased by 2.8% compared to the third quarter of fiscal 2012 and were comprised of a 1.4% increase in average ticket and a 1.4% increase in customer traffic.
  • Gross profit was $66.2 million and gross margin was 37.2% compared to $65.6 million in gross profit and gross margin of 38.0% in the third quarter of fiscal 2012. Gross margin rate declined as we lowered our initial price point to provide better value to our customer.
  • Selling, general and administrative expenses ("SG&A") increased 8.7% to $77.9 million from $71.7 million in the same period last year. As a percent of sales, SG&A was 43.7% compared to 41.5% in the same period last year. The increase in SG&A was primarily attributable to $4.8 million in non-recurring charges that related to severance costs and legal, consulting and recruitment expenses.
  • Operating loss was $11.7 million as compared to operating loss of $6.1 million in the third quarter of fiscal 2012. The Company's operating results were impacted by $4.8 million in non-recurring charges related to severance costs and legal, consulting and recruitment expenses.
  • Net loss was $12.4 million or $0.29 per share compared to net loss of $4.2 million or $0.10 per share in the third quarter of fiscal 2012. The Company's results were impacted by the effects of the items described above and a reduced effective tax rate due to recording a deferred tax valuation allowance of $4.4 million.

For the Nine Months ended March 31, 2013:

  • Comparable stores sales increased by 3.7% compared to the nine months ended March 31, 2012 and were comprised of a 3.7% increase in average ticket and flat traffic.
  • Gross profit was $192.7 million and gross margin was 30.3% compared to $235.4 million in gross profit and gross margin of 38.2% for the nine months ended March 31, 2012, related primarily to a non-cash inventory valuation charge of $41.8 million taken during the second fiscal quarter. This inventory charge was required to devalue certain inventory based on a strategic decision to accelerate the selloff of such inventory by the end of the 2013 calendar year.
  • Selling, general and administrative expenses ("SG&A") increased 6.0% to $237.9 million from $224.5 million in the same period last year primarily a result of non-recurring charges of $11.7 million related to store clean-up, severance costs, and consulting, legal and recruitment expenses. As a percent of sales, SG&A was 37.4% compared to 36.4% in the same period last year. 
  • Operating loss was $45.2 million as compared to operating income of $10.9 million for the nine months ended March 31, 2012. The Company's operating results were significantly impacted by a non-cash charge of $41.8 million for the write-down of inventory and $11.7 million in charges related to store clean-up, severance costs, and legal, consulting, search and recruitment expenses.
  • Net loss was $40.8 million or $0.97 loss per share compared to net income of $5.9 million or $0.14 per share for the nine months ended March 31, 2012. The Company's results were impacted by the effects of the items described above and a reduced effective tax rate due to recording a deferred tax asset valuation allowance of $10.8 million.

The Company ended the third quarter of fiscal 2013 with $34.5 million in cash and cash equivalents with no borrowings under its line of credit. Inventories at the end of the third quarter of fiscal 2013 were $236.9 million compared to $261.7 million at the end of the third quarter of fiscal 2012, down $24.9 million or 9.5%.

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