Tuesday Morning boosts Q2 sales, comps; outlines recovery plans

Home Textiles Today Staff -- Home Textiles Today, 1/23/2013 12:01:47 PM

Dallas - Tuesday Morning has laid out a five-pronged plan aimed at correcting inefficiencies, improving its performance, and ultimately recovering the overall business after languishing for more than a year at the hands of economic impacts and shifts within its own top executive team.

During the 830-plus store's second-quarter earnings call Tuesday afternoon, president and ceo Brady Churches said that in his five months to date in his post, "it's become clear in ways large and small that Tuesday Morning had lost its focus as an off-price retailer."

But, he continued, "Our management team is very focused on the basic blocking and tackling of retail with a real sense of urgency and perspective that we must get back to our roots. This is a company that is very much in a turn-around mode. We've made some solid steps but there is a lot of work to be done to positively change the value proposition.

To "reclaim our identity" Tuesday Morning has put in place
"some very specific steps to improve our operations, from sourcing to warehousing to distribution to marketing to the in-store experience," Churches explained. "Our efforts in this regard are diverse and reflect a scope of the challenge."

They fall into five operational pillars:
1 -- Improved merchandising strategies
2 -- Top to bottom store-level improvements
3 - Improve store productivity
4 - Ongoing effort to instill disciple, efficiency, work ethic and rigorous review of entire cost structure
5 - efficiencies around real estate operations

All of these efforts are multi-faceted, and already underway. But Churches warned that such a "major revitalization is a process and we are a long way from where we need to be."

Still, the company's second quarter showed some encouraging results.

Including the impact of some non-recurring charges, the company reported a net loss for the second 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 quarter, compared to $15.9 million or $0.37 per share in the same period last year.

But better off were the company's net sales, which were up 4.5% to $285.3 million, from $273.1 million a year ago; and comparable stores sales, which increased by 5.6%, comprised of a 5.3% increase in average ticket and a 0.3% increase in traffic.

"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," Churches said.

Year to date net sales totaled $458.1 million, a 3.2% increase from $443.7 million, and comps were up 4.0% comprised of a 4.7% increase in average ticket and a 0.7% decrease in traffic.

Including nonrecurring charges, Tuesday Morning suffered a net loss of $28.4 million, or (68 cents) per share, for the six months. Excluding these non-recurring charges, the company reported non-GAAP adjusted net income of $9.6 million or 23 cents per share for the quarter, compared to $10.2 million or 23 cents per share in the same period last year.