Tuesday Morning CEO Ramps Up Turnaround Efforts
DALLAS-Tuesday Morning narrowed its third-quarter net loss from $12.4 million to $8.4 million, and is set to begin what its CEO, Michael Rouleau, termed the final phase of its turnaround.
The retailer's numbers for the quarter, which ended on March 31, improved thanks to increased sales and more effective cost controls. Net sales rose 2.6 percent to $182.8 million, including a 6.4 percent jump in same-store sales.
Selling, general and administrative expenses were down 2.8 percent in dollars and 230 basis points as a percentage of sales, to 41.4 percent. Gross margin gained 11 basis points to finish the quarter at 37.3 percent.
In a conference call to financial analysts, Rouleau outlined the progress Tuesday Morning is making in its efforts to restore profitability. In its first two phases, the company managed to clean up the "very poor condition," in his words, of the stores and its warehouses, and delivered solid results from the holiday season.
Phase three, which the company is in now, will consists of seven initiatives, Rouleau said. These include the updating of its merchandising strategy, which will involve broad and shallower purchases of branded, better-best quality merchandise. Also, Tuesday Morning will transition from the merchandise it is exiting (mainly discontinued apparel) into other products which Rouleau declined to list "for competitive reasons."
The third initiative will be the further reduction of clearance merchandise. Fourth will be the implementation of what Rouleau called "a disciplined seasonal buying process," which has been organized for the fall and for the holidays. Fifth will be the refinement of the company's real-estate strategy, involving the improvement of its non-optimal store locations.
Sixth will be improving the efficiency and effective of Tuesday Morning's supply chain. Seventh will be a transition from multipage circulars to "much smaller, impactful four-page circulars," Rouleau said.
Telling the analysts what to expect from the company going forward, Rouleau said, "Number one, the continued recognition that Tuesday Morning has a great name to build on. Second, we're in the sweet spot of retail off-price. Third, this company is very underdeveloped, and when fixed, has great sales and profit potential."