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Tuesday Morning wakes to profit jump

Helped by stronger sales, wider margins and a deep cut in interest expense, second-quarter profits shot up 59.1 percent — more than three times as fast as sales — at Tuesday Morning Corp.

Profits at the close-out retailer of upscale home accessories and gifts soared to $10 million from $6.3 million during the same period a year ago.

Aided by continued expansion and strong same-store sales, overall sales jumped 18.8 percent, to $210.7 million from $177.4 million a year ago. The crucial gauge of same-store sales rose 6.6 percent during the quarter, and 4.4 percent for the first six months of the year.

"Our 6.6 comparable-store sales gain for the second quarter marks the tenth consecutive quarter of comp-store gains and the 11th consecutive quarter of double-digit earnings gains," said Kathleen Mason, president and CEO.

Driving the bottom-line growth, in addition to stronger sales, the close-out retailer improved its average gross margin 140 basis points, or 1.4 percentage points, to 36.3 percent from 34.9 percent a year ago, more than offsetting modestly higher costs. Operating costs rose 40 basis points, or four-tenths of a percentage point, to 28.4 percent of sales from 28 percent.

In a big lift to the bottom line, interest costs were slashed 79.5 percent, to $472,000 from $2.2 million last year, generating a cash savings of $1.8 million and accounting for almost half of the earnings gain. In another big savings, the retailer reduced its miscellaneous expenses during the second quarter to $263,000 from $2 million.

Tuesday Morning Corp.

Qtr. 6/30 (x000) 2004 2003 % chg
Sales $210,697 $177,413 18.8
Oper. income (EBIT) 16,553 12,258 35.0
Net income 10,009a 6,292a 59.1
Per share (diluted) 0.24 0.15 60.0
Average gross margin 36.3% 34.9% --
SG&A expenses 28.4% 28.0% --
6 months 2004 2003 % chg
Sales 379,294 327,767 15.7
Oper. income (EBIT) 30,034 24,315 23.5
Net income 18,198b 12,375b 47.1
Per share (diluted) 0.44 0.30 46.7
Average gross margin 37.5% 36.4% --
SG&A expenses 29.6% 29.0% --
a-Second-quarter results include miscellaneous income of $206,000, down 13 percent from $237,000 last year; and miscellaneous expenses of $263,000, down 87 percent from $2.0 million during the same period a year ago.
b-Six-month results include miscellaneous income of $447,000, down 2 percent form a year ago; and miscellaneous expenses of $429,000, down 90 percent from $4.2 million the preceding year.


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