January 27, 2009

Tuesday Morning Corporation Announces Second Quarter Fiscal 2009 Results

DALLAS, Jan. 27, 2009 (GLOBE NEWSWIRE) -- Tuesday Morning Corporation (Nasdaq:TUES) today reported that as previously announced, net sales for the second quarter of fiscal 2009 were $272.7 million compared to $308.7 million for the quarter ended December 31, 2007, a decrease of 11.7%. Comparable store sales decreased 14.9% for the quarter ended December 31, 2008 compared to the same quarter in the prior year. The decrease in comparable store sales was comprised of a 9.6% decrease in traffic and a 5.3% decrease in average ticket. Net income for the second quarter ended December 31, 2008 was $12.7 million or $0.31 per diluted share, compared to $20.5 million or $0.50 per diluted share during the same quarter last year.

For the six month period ended December 31, 2008, net sales were $446.1 million compared to $510.3 million for the same period last year, a decrease of 12.6%. Comparable store sales decreased by 15.8% for the six month period ended December 31, 2008 compared to the same period in the prior year. The decrease in comparable store sales was comprised of an 11.4% decrease in traffic and a 4.4% decrease in average ticket. For the six month period ended December 31, 2008, net income was $8.4 million or $0.20 per diluted share compared to net income of $21.7 million or $0.52 per diluted share for the same period in the prior year. As reported on January 9, 2009, fiscal 2009 sales are projected to be in the range of $800 million to $810 million, diluted earnings per share in the range of $.00 to $.05 and comparable store sales in the negative low double digits.

Kathleen Mason, President and Chief Executive Officer, stated, "The December 2008 quarter was reported as the most difficult retail holiday season on record. While consumers remain cautious, we remain focused on preserving our strong balance sheet, managing inventory levels and generating positive cash flow."

Tuesday Morning management will review second quarter fiscal 2009 financial results in a teleconference call on January 27, 2009 at 10:00 a.m. Eastern Time.

About Tuesday Morning

Tuesday Morning is a leading closeout retailer of upscale, decorative home accessories, housewares and famous-maker gifts in the United States. The Company opened its first store in 1974 and currently operates 860 stores in 45 states. Tuesday Morning is nationally known for bringing its more than 9.0 million loyal customers a unique treasure hunt of high-end, first quality, brand name merchandise...never seconds or irregulars...at prices well below those of department and specialty stores and catalogues.



This press release contains forward-looking statements within the meaning of the federal securities laws and the Private Securities Litigation Reform Act of 1995, which are based on management's current expectations, estimates and projections. Forward-looking statements typically are identified by the use of terms such as "may," "will," "should," "expect," "anticipate," "believe," "estimate," "intend" and similar words, although some forward-looking statements are expressed differently. You should carefully consider statements that contain these words because they describe our expectations, plans, strategies and goals and our beliefs concerning future business conditions, our future results of operations, our future financial positions, and our business outlook or state other "forward-looking" information.

Reference is hereby made to "Item 1A. Risk Factors" of the Company's Annual Report on Form 10-K for the year ended June 30, 2008 and the Company's Quarterly Report on Form 10-Q for the three month period ended September 30, 2008 for examples of risks, uncertainties and events that could cause our actual results to differ materially from the expectations expressed in our forward-looking statements. These risks, uncertainties and events also include, but are not limited to, the following: uncertainties regarding our ability to open stores in new and existing markets and operate these stores on a profitable basis; conditions affecting consumer spending; inclement weather; changes in our merchandise mix; timing and type of sales events, promotional activities and other advertising; increased or new competition; loss or departure of one or more members of our senior management, as well as experienced buying and management personnel; an increase in the cost or a disruption in the flow of our products; seasonal and quarterly fluctuations; fluctuations in our comparable store results; our ability to operate information systems and implement new technologies effectively; our ability to generate strong cash flows from our operations; our ability to maintain internal control over financial reporting; and our ability to anticipate and respond in a timely manner to changing consumer demands and preferences. The forward-looking statements made in this press release relate only to events as of the date on which the statements were made. We undertake no obligations to update our forward-looking statements to reflect events and circumstances after the date on which the statements were made or to reflect the occurrence of unanticipated events.


 Tuesday Morning Corporation
 Consolidated Statement of Income
 (In thousands, except per share data)

                            Three Months Ended     Six Months Ended
                                 Dec. 31,               Dec. 31,
                           --------------------  --------------------

                              2008       2007       2008       2007
                           ---------  ---------  ---------  ---------
                                (unaudited)           (unaudited)

 Net sales                 $ 272,650  $ 308,687  $ 446,051  $ 510,344
 Cost of sales               171,755    193,783    281,000    319,731
                           ---------  ---------  ---------  ---------
     Gross profit            100,895    114,904    165,051    190,613

 Selling, general
  and administrative
  expenses                    80,315     80,664    151,227    153,208
                           ---------  ---------  ---------  ---------

     Operating income         20,580     34,240     13,824     37,405

 Other income (expense):
   Interest expense             (717)    (1,420)    (1,127)    (3,106)
   Interest income                --        152          1        153
   Other income
    (expense), net               192        195        271        572
                           --------------------  --------------------
     Other income
      (expense)                 (525)    (1,073)      (855)    (2,381)
                           --------------------  --------------------

 Income before income
  taxes                       20,055     33,167     12,969     35,024

 Income tax expense            7,344     12,633      4,556     13,334
                           ---------  ---------  ---------  ---------


 Net income                $  12,711  $  20,534  $   8,413  $  21,690
                           =========  =========  =========  =========

 Earnings Per Share:
 Net income per common
  share:
     Basic                 $    0.31  $    0.50  $    0.20  $    0.52
     Diluted               $    0.31  $    0.50  $    0.20  $    0.52

 Weighted average number
  of common shares:
     Basic                    41,462     41,441     41,451     41,437
     Diluted                  41,587     41,451     41,597     41,456



 Tuesday Morning Corporation (continued)

 Consolidated Balance Sheets
 (in thousands)
                                       Dec. 31,   Dec. 31,   June 30,
                                         2008       2007       2008
                                      ---------  ---------  ---------
                                     (unaudited)(unaudited)
 Assets
 Current assets:
   Cash and cash equivalents          $   5,839  $  11,993  $   8,630
   Inventories                          260,888    259,299    240,996
   Prepaid expenses and other
    assets                                9,407      6,668     11,292
   Deferred income taxes                  2,080        505         --
                                      ---------  ---------  ---------
     Total current assets               278,214    278,465    260,918

 Property and equipment, net             75,714     80,792     77,315

 Other long-term assets:
   Deferred financing costs               3,551        603        503
   Other assets                           2,562      3,601      3,040
                                      ---------  ---------  ---------

     Total Assets                     $ 360,041  $ 363,461  $ 341,776
                                      =========  =========  =========

 Liabilities and Stockholders'
  Equity
 Current liabilities:
   Accounts payable                   $  73,301  $  59,601  $  63,899
   Accrued liabilities                   32,048     36,223     28,862
   Income taxes payable                   4,296     15,408         27
                                      ---------  ---------  ---------
     Total current liabilities          109,645    111,232     92,788

 Revolving credit facility                2,030      7,000      8,500
 Deferred rent                            4,043      4,390      4,163
 Deferred income taxes                    2,017      1,922      3,414
                                      ---------  ---------  ---------
     Total Liabilities                  117,735    124,544    108,865

 Stockholders' equity                   242,306    238,917    232,911
                                      ---------  ---------  ---------
     Total Liabilities and
      Stockholders' Equity            $ 360,041  $ 363,461  $ 341,776
                                      =========  =========  =========



 Tuesday Morning Corporation (continued)

 Consolidated Statement of Cash Flows
 (in thousands)
                                                   Six Months Ended
                                                       Dec. 31,
                                                 --------------------

                                                    2008       2007
                                                 --------------------
                                                      (unaudited)
 Net cash flows from operating activities:
   Net income                                    $   8,413  $  21,690
   Adjustments to reconcile net income
    to net cash provided by operating
    activities:
   Depreciation and amortization                     8,446      8,854
   Amortization of financing fees                      226        101
   Deferred income taxes                            (3,910)      (851)
   Loss on disposal of fixed assets                    185        236
   Stock compensation expense                        1,140      2,028
   Other non-cash charges                                4         35
   Net change in operating assets and
    liabilities                                     (8,962)    31,498
                                                 ---------  ---------

 Net cash provided by operating activities           5,542     63,591
                                                 ---------  ---------

 Net cash flows from investing activities:
   Capital expenditures                             (7,032)    (6,100)
                                                 ---------  ---------

 Net cash used in investing activities              (7,032)    (6,100)
                                                 ---------  ---------

 Net cash flows from financing activities:
   Repayments-revolving credit facility           (153,941)  (168,000)
   Borrowings-revolving credit facility            147,471    118,500
   Change in cash overdraft                          8,444     (6,297)
   Proceeds from exercise of common stock
    options and stock purchase plan
    purchases                                           --         (4)
   Payment of debt financing costs                  (3,275)        --
                                                 ---------  ---------

 Net cash used in financing activities              (1,301)   (55,801)
                                                 ---------  ---------

 Net decrease in cash and cash equivalents          (2,791)     1,690

 Cash and cash equivalents, beginning of
  period                                             8,630     10,303
                                                 ---------  ---------

 Cash and cash equivalents, end of period        $   5,839  $  11,993
                                                 =========  =========

CONTACT: Tuesday Morning Corporation
Stephanie Bowman, Chief Financial Officer
972/934-7251



Laurey Peat + Associates
Laurey Peat


214/871-8787

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding Tuesday Morning Corporation's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.


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