October 28, 2008

Tuesday Morning Corporation Announces First Quarter Fiscal 2009 Results

DALLAS, Oct 28, 2008 (GlobeNewswire via COMTEX News Network) -- Tuesday Morning Corporation (Nasdaq:TUES) today reported that as previously announced, net sales for the first quarter of fiscal 2009 were $173.4 million compared to $201.7 million for the quarter ended September 30, 2007, a decrease of 14.0%. Comparable store sales decreased 17.3% for the quarter. The decrease in comparable store sales was comprised of a 14.0% decrease in traffic and a 3.3% decrease in average ticket. Net loss for the first quarter ended September 30, 2008 was $4.3 million or ($0.10) per diluted share, compared to net income of $1.2 million or $0.03 per diluted share for the same period last year.

Kathleen Mason, President and Chief Executive Officer, stated, "Disposable income continues to be pressured by tight credit, food and fuel inflation, declining home values, and losses in investment accounts. Consumers are cutting back non-essential purchases. Also, Tuesday Morning stores were impacted by the effects of two hurricanes that reduced sales by approximately $4.2 million and earnings per share by approximately $.02 during the quarter. Despite these pressures, we controlled inventory and expenses to partially offset the decline in demand. We remain focused on achieving annual profits and maintaining our strong balance sheet."

Guidance for the fiscal year ending on June 30, 2009 is as follows:

 * net sales are projected to be in the range of $854 million to $859
 * comparable store sales are projected to be in the negative mid
   single digits; and
 * diluted earnings per share projected to be in the range of $0.19 to

Tuesday Morning management will review first quarter fiscal 2009 financial results in a teleconference call on October 28, 2008 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 851 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 fiscal year ended June 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; our ability to anticipate and respond in a timely manner to changing consumer demands and preferences; and our ability to generate strong holiday season sales. 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 Operations
 (In thousands, except per share data)
                                                    Three Months Ended
                                                         Sept. 30,
                                                      2008      2007

 Net Sales                                          $173,401  $201,656
 Cost of sales                                       109,245   125,947
                                                    --------  --------
   Gross profit                                       64,156    75,709

 Selling, general and administrative expenses         70,910    72,544
                                                    --------  --------

   Operating income (loss)                            (6,754)    3,165

 Other income (expense):
  Interest expense                                      (411)   (1,686)
  Interest income                                         --         1
  Other income (expense), net                             80       377
   Other income (expense)                               (331)   (1,308)

 Income (loss) before income taxes                    (7,085)    1,857

 Income tax expense (benefit)                         (2,788)      701
                                                    --------  --------

 Net income (loss)                                  $ (4,297) $  1,156
                                                    ========  ========

 Earnings Per Share:
 Net income (loss) per common share:
  Basic                                             $  (0.10) $   0.03
  Diluted                                           $  (0.10) $   0.03

 Weighted average number of common shares:
  Basic                                               41,441    41,440
  Diluted                                             41,441    41,585

 Tuesday Morning Corporation (continued)

 Consolidated Balance Sheets
 (in thousands)                      Sept. 30,   Sept. 30,   June 30,
                                       2008        2007        2008
                                    ----------  ----------  ----------
                                    (unaudited) (unaudited)
 Current assets:
  Cash and cash equivalents         $    4,888  $   11,918  $    8,630
  Inventories                          307,081     346,017     240,996
  Prepaid expenses and other assets     11,847       9,991       9,296
  Income tax receivable                  8,952          --       1,996
                                    ----------  ----------  ----------
   Total current assets                332,768     367,926     260,918

 Property and Equipment, net            76,601      82,432      77,315

 Other long-term assets:
  Deferred financing costs                 453         654         503
  Other assets                           2,519       3,679       3,040
                                    ----------  ----------  ----------

   Total Assets                     $  412,341  $  454,691  $  341,776
                                    ==========  ==========  ==========

 Liabilities and Stockholders'
 Current liabilities:
  Current portion of long-term
   debt                             $    6,500  $   74,000  $       --
  Accounts payable                     106,175      90,334      63,899
  Accrued liabilities                   30,821      32,555      28,595
  Deferred income taxes                    267       1,372         267
  Income taxes payable                   1,612         441          27
                                    ----------  ----------  ----------
   Total current liabilities           145,375     198,702      92,788

 Revolving credit facility, excl
  current portion                       30,000      30,000       8,500
 Deferred rent                           4,127       4,542       4,163
 Deferred income taxes                   3,414       3,582       3,414
                                    ----------  ----------  ----------
   Total Liabilities                   182,916     236,826     108,865

 Stockholders' equity                  229,425     217,865     232,911
                                    ----------  ----------  ----------
   Total Liabilities and
    Stockholders' Equity            $  412,341  $  454,691  $  341,776
                                    ==========  ==========  ==========

 Tuesday Morning Corporation (continued)

 Consolidated Statement of Cash Flows
 (in thousands)
                                                    Three Months Ended
                                                         Sept. 30,
                                                      2008      2007
 Net cash flows used in operating activities:
  Net income (loss)                                 $ (4,297) $  1,156
  Adjustments to reconcile net income to net
   cash (used in) operating activities:
  Depreciation and amortization                        4,212     4,442
  Amortization of financing fees                          50        50
  Deferred income taxes                                   --     2,706
  Loss on disposal of fixed assets                       139       169
  Stock compensation expense                             709     1,342
  Other non-cash charges                                 (44)       66
  Net change in operating assets and liabilities     (25,210)  (55,702)
                                                    --------  --------

 Net cash used in operating activities               (24,441)  (45,771)
                                                    --------  --------

 Net cash flows from investing activities:
  Capital expenditures                                (3,637)   (3,267)
  Proceeds from sale of assets                            --        --
                                                    --------  --------

 Net cash used in investing activities                (3,637)   (3,267)
                                                    --------  --------

 Net cash flows from financing activities:
  Borrowings-revolving credit facility                63,000    82,500
  Repayments-revolving credit facility               (35,000)  (35,000)
  Change in cash overdraft                            (3,665)    3,157
  Proceeds from exercise of common stock options
   and stock purchase plan purchases                       1        (4)
                                                    --------  --------

 Net cash provided by financing activities            24,336    50,653
                                                    --------  --------

 Net decrease in cash and cash equivalents            (3,742)    1,615

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

 Cash and cash equivalents, end of period           $  4,888  $ 11,918
                                                    ========  ========

This news release was distributed by GlobeNewswire, www.globenewswire.com

SOURCE: Tuesday Morning Corp

Tuesday Morning Corporation
Stephanie Bowman, Chief Financial Officer

Laurey Peat + Associates
Laurey Peat


"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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