August 26, 2008

Tuesday Morning Corporation Announces Fourth Quarter 2008 and Fiscal Year 2008 Results

DALLAS, Aug. 26 /PRNewswire-FirstCall/ -- Tuesday Morning Corporation (Nasdaq: TUES) today reported that as previously announced, net sales for the fourth quarter of fiscal 2008 were $196.5 million compared to $219.4 million for the quarter ended June 30, 2007, a decrease of 10.4%. Comparable store sales decreased 12.7% for the quarter. The decrease in comparable store sales was comprised of an 11.0% decrease in traffic and a 1.7% decrease in average ticket. Net loss for the fourth quarter ended June 30, 2008 was $2.5 million or ($0.06) per diluted share, compared to net income of $2.0 million or $0.05 per diluted share last year.

Kathleen Mason, President and Chief Executive Officer, stated, "Record increases in energy and food prices, coupled with the prolonged housing and credit crisis, sharply restricted our customers' disposable income during the quarter. Despite these pressures, we were able to control inventory and expenses to partially offset the decline in demand. We continue to compete with liquidation sales in a struggling home furnishings sector, but remain focused on achieving annual profits and maintaining our strong balance sheet."

For the fiscal year ended June 30, 2008, sales were $885.3 million compared to $924.2 million for the same period ended June 30, 2007, a decrease of 4.2%. Comparable store sales decreased by 7.6% for the fiscal year. The decrease in comparable store sales was comprised of a 6.6% decrease in traffic and a 1.0% decrease in average ticket. For the fiscal year ended June 30, 2008, net income was $14.5 million or $0.35 per diluted share compared to 2007 results of net income of $30.0 million or $0.72 per diluted share.


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

-- net sales are projected to be in the range of $868 million to $878 million;

-- 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 $0.21 to $0.27.

Tuesday Morning management will review fourth quarter and fiscal year 2008 financial results in a teleconference call on August 26, 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 842 stores in 47 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 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 Transition Report on Form 10-KT for the six month period ended June 30, 2007 and the Company's Quarterly Report on Form 10-Q for the three month period ended March 31, 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 (unaudited)
    (In thousands, except per share data)
                                       Three Months Ended Twelve Months Ended
                                            June 30,            June 30,

                                         2008      2007      2008      2007

    Net Sales                          $196,492  $219,364  $885,281  $924,199
    Cost of sales                       128,401   139,564   562,578   578,881
          Gross profit                   68,091    79,800   322,703   345,318

    Selling, general and
     administrative expenses             73,288    75,672   297,852   296,632

          Operating income (loss)        (5,197)    4,128    24,851    48,686

    Other income (expense):
      Interest expense                     (367)     (924)   (3,928)   (2,703)
      Interest income                         2         2       157       203
      Other income (expense), net           271       153     1,052       979
          Other income (expense)            (94)     (769)   (2,719)   (1,521)

    Income before income taxes           (5,291)    3,359    22,132    47,165

    Income tax expense (benefit)         (2,795)    1,325     7,634    17,094

    Net income (loss)                   $(2,496)   $2,034   $14,498   $30,071

    Earnings (Loss) Per Share:
    Net income per common share:
        Basic                            $(0.06)    $0.05     $0.35     $0.73
        Diluted                          $(0.06)    $0.05     $0.35     $0.72

    Weighted average number of common
        Basic                            41,441    41,440    41,439    41,433
        Diluted                          41,503    41,625    41,494    41,637

    Consolidated Balance Sheets (unaudited)
    (in thousands)                                 June 30,          June 30,
                                                     2008              2007
    Current assets:
      Cash and cash equivalents                      $8,630           $10,303
      Inventories                                   240,996           288,791
      Prepaid expenses and other assets              11,292             5,954
      Deferred income taxes                             -               1,211
          Total current assets                      260,918           306,259

    Property and Equipment, net                      77,315            83,776

    Other long-term assets:
      Deferred financing costs                          503               704
      Other assets                                    3,040             3,582

          Total Assets                             $341,776          $394,321

    Liabilities and Stockholders' Equity
    Current liabilities:
      Current portion of long term debt                $-             $26,500
      Accounts payable                               63,899            82,453
      Accrued liabilities                            28,595            31,223
      Deferred Income Taxes                             267                --
      Income taxes payable                               27               712
          Total current liabilities                  92,788           140,888

    Revolving credit facility, excl. current portion  8,500            30,000
    Deferred rent                                     4,163             4,534
    Deferred income taxes                             3,414             3,459
          Total Liabilities                         108,865           178,881

    Stockholders' equity                            232,911           215,440
          Total Liabilities and
           Stockholders' Equity                    $341,776          $394,321

    Tuesday Morning Corporation (continued)
    Consolidated Statement of Cash Flows (unaudited)
    (in thousands)                             Twelve Months      Six Months
                                               Ended June 30,   Ended June 30,
                                                   2008              2007

    Net cash flows from operating activities:
      Net income                                    $14,498            $3,081
      Adjustments to reconcile net income to net
        cash (used in) operating activities:
      Depreciation and amortization                  17,483             8,858
      Amortization of financing fees                    201                93
      Stock compensation expense                      3,174             2,011
      Loss on disposal of assets                        540               418
      Deferred income taxes                           1,407               762
      Other non-cash charges                             (1)             (232)
      Net change in operating assets and
       liabilities                                   21,774           (70,749)

    Net cash provided by (used) in
     operating activities                            59,076           (55,758)

    Net cash flows from investing activities:
      Capital expenditures                          (11,562)           (6,655)

    Net cash used in investing activities           (11,562)           (6,655)

    Net cash flows from financing activities:
      Borrowings under the revolving
       credit facility                              220,000           185,500
      Repayments under the revolving
       credit facility                             (268,000)         (129,000)
      Change in cash overdraft                       (1,187)                -
      Payment of cash dividend                            -           (33,145)
      Proceeds from exercise of common stock
        options and stock purchase plan purchases         -                10
      Payment of financing fees                           -              (282)

    Net cash provided by (used in) financing act.   (49,187)           23,083

    Net decrease in cash and cash equivalents        (1,673)          (39,330)

    Cash and cash equivalents, beginning of period   10,303            49,633

    Cash and cash equivalents, end of period         $8,630           $10,303

SOURCE Tuesday Morning Corporation

/CONTACT: Stephanie Bowman, Chief Financial Officer of TUESDAY MORNING CORPORATION, +1-972-934-7251; or Laurey Peat of LAUREY PEAT + ASSOCIATES, +1-214-871-8787, for TUESDAY MORNING CORPORATION

/Web site: /

"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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