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Tuesday Morning ekes out net sales, comp increases

Dallas - While admittedly still on a road to recovery, Tuesday Morning Corporation made some right moves in its third quarter that helped motivate comps and net sales even as it widened its net loss.

Net sales in the quarter, ended March 31, increased 3.1% to $178.1 million from $172.7 million a year ago, and comparable stores sales rose 2.8%, comprised of 1.4% increases in both average ticket and in customer traffic.

However, due to $4.8 million in non-recurring charges related to severance costs and legal, consulting and recruitment expenses, the company suffered a net loss in the quarter of $12.4 million, or $0.29 per share. Excluding these non-recurring charges, the company reported a non-GAAP adjusted net loss of $4.8 million or $0.11 per share, compared to a net loss of $4.2 million or $0.10 per share in the same period last year.

"Tuesday Morning's third quarter results show improvement in the top-line as evidenced by increases in both customer traffic and average ticket," said Michael Rouleau, interim ceo of the 829-unit closeout retailer. "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 of returning to profitability and providing a great store experience for our customers."

Year-to-date results included: a 3.2% increase in net sales to $636.2 million from $616.4 million a year-ago period; a 3.7% gain in comps, comprised of a 3.7% increase in average ticket and flat traffic; and a net loss was $40.8 million or 97 cent loss per share compared to net income of $5.9 million or 14 cents per share.

Regarding the latter, the company explained it was "significantly impacted" in the nine-month period by a non-cash charge of $41.8 million for the write-down of inventory and $11.7 million in charges related to store cleanup, severance costs, and legal, consulting, search and recruitment expenses, as well as a reduced effective tax rate due to recording a deferred tax asset valuation allowance of $10.8 million.

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