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Tuesday Morning Upscales Mix

Closeout chain Tuesday Morning, identifying a trend toward more high-end decorative categories vs. utilitarian goods, is stocking its stores with more upscale products as well as more seasonal offerings, said Kathleen Mason, president and ceo, during the first-quarter earnings call last week.

Without offering more detail "for competitive reasons," Mason said the company is working on its total mix "to really pay attention to the performance of the decorative categories … Our average tickets have really maintained, so our total mix continues to be favorably an upscale mix. We're working hard at making sure we keep that upscale image."

The retailer, with 795 stores in 47 states, has aggressive real estate plans. The 2007 initiative calls for 50 net new stores, the expansion of about 25 existing units, and the relocation of 50 stores. That translates to a store-base growth of 6% and a square-footage increase of about 10% for the year.

Mason said, "With the expansion opportunity, the company will be working with high-producing stores to increase the selling square footage."

Tuesday Morning reported flat sales and a wider loss for the first quarter compared to the same period one year ago – but the statement was on target and the outlook was better than anticipated. Sales were up 0.7% to $189.2 million, with a 5.4% drop in comp sales, while net income was down 84% to 1.0 million, or $0.03 per share.

Guidance was for 2007 sales of $975 million to $985 million, comps flat to down 2.0%, and earnings of $0.85 to $0.90 per share.

As for relocation, said Michael Marchetti, evp and coo, "We have already started the process. The expansion side takes a little more negotiation. We did do two during the first quarter. And we do have a lot lined up for this quarter and the back half of the year as well."

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