Tuesday Morning Corporation Announces Second Quarter Fiscal 2013 Results

DALLAS, Jan. 22, 2013 (GLOBE NEWSWIRE) -- Tuesday Morning Corporation (Nasdaq:TUES), a leading closeout retailer with over 830 stores across the United States specializing in selling deeply discounted, upscale home furnishings, housewares, gifts and related items, today announced financial results for the second quarter and year-to-date period ended December 31, 2012. For the second quarter, the Company's net sales increased 4.5% to $285.3 million, from $273.1 million in the second quarter of fiscal 2012. Including the impact of non-recurring charges detailed below, the Company reported a net loss for the quarter of $21.5 million, or $0.51 per share. Excluding these non-recurring charges, the Company reported non-GAAP adjusted net income of $15.5 million or $0.37 per share for the second quarter ended December 31, 2012 compared to net income of $15.9 million or $0.37 per share in the same period last year.

Brady Churches, President and Chief Executive Officer, 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."

For the quarter ended December 31, 2012:
  • Comparable stores sales increased by 5.6% compared to the second quarter of fiscal 2012 and were comprised of a 5.3% increase in average ticket and a 0.3% increase in traffic.
  • Gross profit was $61.6 million and gross margin was 21.6% compared to $104.8 million in gross profit and gross margin of 38.4% in the second quarter of fiscal 2012, related primarily to a non-cash inventory valuation charge of $41.8 million recorded during the second quarter of fiscal 2013. This inventory charge was required to devalue certain inventory based on a strategic decision to accelerate the sell off of such inventory by the end of the 2013 calendar year.
  • Selling, general and administrative expenses (SG&A) increased 6.1% to $84.2 million from $79.3 million in the same period last year. The increase in SG&A was primarily attributable to $5.3 million in non-recurring charges that related to store clean-up, severance costs, and consulting, legal and recruitment expenses.
  • Operating loss was $22.6 million as compared to operating income of $25.5 million in the second quarter of fiscal 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 $6.7 million in charges related to store clean-up, severance costs, legal, consulting, search and recruitment expenses, and a systems impairment.
  • Net loss was $21.5 million or a $0.51 loss per share compared to net income of $15.9 million or $0.37 per share in the second quarter of fiscal 2012. The Company's results were impacted by the effects of the non-recurring items described above and a deferred tax asset valuation allowance.

For the Six Months ended December 31, 2012:
  • Comparable stores sales increased by 4.0% compared to the six months ended December 31, 2011 and were comprised of a 4.7% increase in average ticket and a 0.7% decrease in traffic.
  • Gross profit was $126.5 million and gross margin was 27.6% compared to $169.8 million in gross profit and gross margin of 38.3% for the six months ended December 31, 2011, related primarily to a non-cash inventory valuation charge of $41.8 million. This inventory charge was required to devalue certain inventory based on a strategic decision to accelerate the sell off of such inventory by the end of the 2013 calendar year.
  • Selling, general and administrative expenses (SG&A) increased 4.7% to $160.0 million from $152.8 million in the same period last year primarily as a result of non-recurring charges. The increase is SG&A was primarily attributable to $6.8 million in charges that related primarily to store clean-up, severance costs, and consulting, legal and recruitment expenses.
  • Operating loss was $33.5 million as compared to operating income of $17.0 million for the six months ended December 31, 2011. The Company's operating results were significantly impacted by a non-cash charge of $41.8 million for the write-down of inventory and $8.2 million in charges related to store clean-up, severance costs, legal, consulting, search and recruitment expenses, and a systems impairment.
  • Net loss was $28.4 million or $0.68 loss per share compared to net income of $10.2 million or $0.23 per share for the six months ended December 31, 2011. The Company's results were impacted by the effects of the non-recurring items described above and a deferred tax asset valuation allowance.

The Company ended the second quarter of fiscal 2013 with $48.0 million in cash and cash equivalents with no borrowings under its line of credit. Inventories at the end of the second quarter of fiscal 2013 were $208.3 million compared to $239.2 million at the end of the second quarter of fiscal 2012, down $30.9 million or 12.9%.

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