Tuesday Morning Loss Widens in Q1
DALLAS-With product margins suffering and a sharply reduced income-tax benefit, Tuesday Morning saw its first-quarter net loss grow from $7 million last year to $12 million this year.
As Jeff Boyer, the retailer's chief financial officer, explained during a conference call to financial analysts yesterday, the loss included the absorption of revenue from discontinued businesses, including footwear and apparel and the shutdown of its Internet sales channel, which took place in last year's fourth quarter. In addition, increasingly sharp and competitive pricing and the acceleration of markdowns resulted in a drop of 303 basis points in gross margin, to 34.5 percent. Tuesday Morning's income-tax benefit fell 82.5 percent as well.
Net sales in the quarter, which ended on Sept. 30, grew 6.3 percent to $183.7 million, including a gain of 9.1 percent in same-store sales. Selling, general and administrative expenses were virtually flat in dollars and fell 254 basis points as a percentage of sales, to 41.3 percent.
During the conference call, Tuesday Morning CEO Michael Rouleau said the company is making progress with its turnaround efforts. In this fiscal year, Rouleau said, "we are establishing the true operating baseline for our company, taking out all the lumps and one-time bumps. I understand that comparisons will be difficult, but this is a difficult turnaround."