Tuesday Morning Loss Climbs in Q3
DALLAS-Increased expenses and several one-time charges combined to push Tuesday Morning deeper into the red in its fiscal third quarter ending on March 31.
The closeout retailer reported a net loss of $12.4 million in the quarter, compared to a net loss of $4.2 million in last year's third quarter. The one-time charges were for severance costs; legal, consulting, search and recruitment fees; systems impairment; and a deferred tax asset valuation allowance. But taking these out of the equation, Tuesday Morning's net loss still totaled $4.8 million.
Selling, general and administrative expenses grew 8.7 percent in dollars and 224 basis points as a percentage of sales, to 43.7 percent. Gross margin fell back 81 basis points to 37.2 percent, due to the company's move to reduce initial price points "to provide better value to our customer," Tuesday Morning said in a statement.
These factors offset some positive sales momentum for Tuesday Morning in the quarter. Net sales rose 3.1 percent to $178.1 million, including a gain of 2.8 percent in same-store sales. Michael Rouleau, the retailer's interim CEO, said sales improved due to increases in both customer traffic and average sales ticket.
"Although there is still a great deal of work to be done, we have now realigned our entire organization to focus on the company's key priorities with the objective or returning to profitability and providing a great store experience for our customers," Rouleau said.