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Tuesday Morning Corporation Announces Fourth Quarter Fiscal 2013 Results

Stocks in this article: TUES

DALLAS, Aug. 20, 2013 (GLOBE NEWSWIRE) -- Tuesday Morning Corporation (Nasdaq:TUES), a leading closeout retailer with 828 stores across the United States specializing in selling deeply discounted, upscale decorative home accessories, housewares, seasonal goods and famous-maker gifts, today announced financial results for the fourth quarter and fiscal year ended June 30, 2013. For the fourth quarter, the Company's net sales increased 2.9% to $202.1 million from $196.4 million in the fourth quarter of fiscal 2012. Including the impact of certain non-recurring charges detailed below, the Company reported a net loss for the quarter of $15.6 million, or $0.37 per share, compared to a net loss of $2.0 million of $0.05 per share in the same period last year. Excluding these non-recurring charges, non-GAAP adjusted net loss was $5.4 million or $0.13 per share for the fourth quarter ended June 30, 2013 compared to a non-GAAP adjusted net loss of $0.7 million or $0.02 per share in the same period last year.

Michael Rouleau, Interim Chief Executive Officer, stated, "We have made some good progress on the short-term priorities we laid out for the organization and that is evidenced in visibly cleaner stores, reduction in the level of clearance merchandise and improved flow of fresh merchandise as well as new cash registers being rolled out across the store base. Our sights are now set on the next set of priorities as we further position ourselves to execute the turnaround of Tuesday Morning. We look forward to discussing the details of our plan on the conference call later today."

For the Quarter ended June 30, 2013:

  • Comparable stores sales increased by 4.6% for the fourth quarter of fiscal 2013 and were comprised of a 6.2% increase in customer traffic offset by a 1.6% decrease in average transaction.
  • Gross profit was $66.8 million and gross margin was 33.0% compared to $73.5 million in gross profit and gross margin of 37.4% in the fourth quarter of fiscal 2012. This rate decline was attributable to higher markdowns on clearance inventory and a flow-through of more buying, distribution and freight costs which negatively impacted our gross margin in this quarter.
  • Selling, general and administrative expenses ("SG&A") increased 1.4% to $78.1 million from $77.0 million in the same period last year. As a percent of net sales, SG&A was 38.6% compared to 39.2% in the same period last year. The increase in SG&A was primarily attributable to $1.5 million in non-recurring charges related to legal, consulting, severance, and recruitment expenses as well as store reorganization and clean up costs and charges related to discontinuing our e-commerce operations.
  • Operating loss was $11.3 million as compared to an operating loss of $3.5 million in the fourth quarter of fiscal 2012. The Company's operating results were impacted by non-recurring charges related to legal, consulting, severance, recruitment expenses, store reorganization and clean-up costs, and charges related to discontinuing our e-commerce operations in addition to a decline in gross margin.
  • Net loss was $15.6 million or $0.37 per share compared to a net loss of $2.0 million or $0.05 per share in the fourth quarter of fiscal 2012. The Company's results were impacted by the effects of the items described above, a loss on the disposal of systems of $4.0 million and a reduction of tax benefit due to recording a deferred tax valuation allowance of $5.5 million. Excluding these non-recurring charges, non-GAAP adjusted net loss was $5.4 million or $0.13 per share for the fourth quarter ended June 30, 2013 compared to a non-GAAP adjusted net loss of $0.7 million or $0.02 per share in the same period last year.

For the Twelve Months ended June 30, 2013:

  • Comparable stores sales increased by 3.9% for the twelve months ended June 30, 2013 and were comprised of a 2.5% increase in average ticket and 1.4% increase in traffic.
  • Gross profit was $259.4 million and gross margin was 30.9% compared to $308.9 million in gross profit and gross margin of 38.0% for the fiscal year ended June 30, 2012. The decrease in gross margin related primarily to an inventory valuation charge of $41.8 million. This inventory charge was required to devalue certain inventory based on a strategic decision to accelerate the selloff of such inventory.
  • Selling, general and administrative expenses (SG&A) increased 4.8% to $315.9 million from $301.4 million in the same period last year primarily a result of non-recurring charges of $13.3 million related to store reorganization and clean-up, severance costs, consulting, legal, recruitment expenses and charges related to discontinuing our e-commerce operations. As a percent of net sales, SG&A was 37.7% compared to 37.1% in the same period last year.
  • Operating loss was $56.5 million as compared to operating income of $7.4 million for the fiscal year ended June 30, 2012. The Company's operating results were significantly impacted by a charge of $41.8 million for the write-down of inventory and $15.2 million in charges related to store reorganization and clean-up, severance costs, consulting, legal, recruitment expenses and charges related to discontinuing our e-commerce operations.
  • Net loss was $56.4 million or $1.33 loss per share compared to net income of $3.9 million or $0.09 per share for the twelve months ended June 31, 2012. The Company's results were impacted by the effects of the items described above, a loss on the disposal of systems of $5.6 million and a reduced tax benefit due to recording a deferred tax asset valuation allowance of $16.2 million. Excluding these non-recurring charges, non-GAAP adjusted net loss was $0.8 million or $0.02 per share for the year ended June 30, 2013 compared to non-GAAP adjusted net income of $5.2 million or $0.12 per share in the same period last year.

The Company ended fiscal 2013 with $28.9 million in cash and cash equivalents with no borrowings under its line of credit. Inventories at the end of the fiscal 2013 were $211.9 million compared to $265.6 million at the end of fiscal 2012, down $53.7 million or 20.2%.

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