Tuesday Morning Sees Comp, Net Sales Gains in First Quarter
Cecile Corral -- Home Textiles Today, December 11, 2010
DALLAS - Business is looking up at closeout chain Tuesday Morning Corp., which experienced its fourth consecutive period of positive comp sales in the just-ended first quarter thanks to traffic improvements, as well as better net sales with modest increases.
"This top-ine improvement, driven by a steady increase in traffic, demonstrates that Tuesday Morning continues to resonate with both new and existing customers," explained Michael Marchetti, evp, coo, during the quarterly webcast for the 840- unit chain. "Our value proposition is intact."
Net sales for the first quarter, ended Sept. 30, increased by 4.2% to $172.8 million compared to $165.9 million in the year-ago period. And comparable- store sales grew similarly, by 4.3%, comprised of a 6.1% increase in traffic offset by a 1.8% decrease in average ticket.
Net loss for the quarter also showed improvement at $2.6 million, or a 6 cent loss per diluted share, compared to a net loss of $4.7 million, or an 11 cent loss per diluted share, for the same period last year.
Marchetti noted other quarterly gains, such as Tuesday Morning's balance sheet, which "has remained strong. We ended the quarter with $4 million on a revolver versus $5.3 million on Sept. 30, 2009. The first quarter is the only quarter end that we expect to have a balance on our credit facility as we build inventory for the holiday season."
Tuesday Morning had $158.1 million available at the end of the quarter, and the chain will continue to focus on managing inventories "in response to customer demand as well as control expenses to maintain our solid balance sheet position," Marchetti said.
Inventory-wise, Tuesday Morning ended the first quarter with a 9.2% increase to $306.5 million compared with inventory of $280.7 million on Sept. 30, 2009.
"This increase is due to the timing of merchandise receipts for the holiday season," Marchetti explained.
On the real estate front, the retailer expects to build up its store closings, relocations and new store openings to bring the total store count to approximately 870 units by fiscal year-end.
In terms of store locations, the impact on the home furnishings sector from the housing and credit crisis "continues to affect us in certain regions of the country," namely Florida, California, Nevada and Arizona, he continued.
On the flip side, Texas "has been very strong," as has the rest of the Southeast region.
While Florida and California are "nowhere near to back to what they were prior to 2008," Marchetti said, "they are not as weak as they were a couple of years ago. We're seeing some leveling out there."