Tuesday Morning wakes to profit jump

By Don Hogsett -- Home Textiles Today, 7/26/2004 12:00:00 AM

DALLAS —

Helped by stronger sales, wider margins and a deep cut in interest expense, second-quarter profits shot up 59.1 percent — more than three times as fast as sales — at Tuesday Morning Corp.

Profits at the close-out retailer of upscale home accessories and gifts soared to $10 million from $6.3 million during the same period a year ago.

Aided by continued expansion and strong same-store sales, overall sales jumped 18.8 percent, to $210.7 million from $177.4 million a year ago. The crucial gauge of same-store sales rose 6.6 percent during the quarter, and 4.4 percent for the first six months of the year.

"Our 6.6 comparable-store sales gain for the second quarter marks the tenth consecutive quarter of comp-store gains and the 11th consecutive quarter of double-digit earnings gains," said Kathleen Mason, president and CEO.

Driving the bottom-line growth, in addition to stronger sales, the close-out retailer improved its average gross margin 140 basis points, or 1.4 percentage points, to 36.3 percent from 34.9 percent a year ago, more than offsetting modestly higher costs. Operating costs rose 40 basis points, or four-tenths of a percentage point, to 28.4 percent of sales from 28 percent.

In a big lift to the bottom line, interest costs were slashed 79.5 percent, to $472,000 from $2.2 million last year, generating a cash savings of $1.8 million and accounting for almost half of the earnings gain. In another big savings, the retailer reduced its miscellaneous expenses during the second quarter to $263,000 from $2 million.

Tuesday Morning Corp.