Tuesday Morning Corporation Announces Fiscal 2022 Results

DALLAS, Sept. 23, 2022 (GLOBE NEWSWIRE) — Tuesday Morning Corporation (NASDAQ: TUEM), a leading off-price retailer of home goods and décor, today announced its results for the fourth quarter and full year fiscal 2022 ended July 2, 2022.

Fred Hand, Chief Executive Officer, stated, “We continue to believe in the long-term opportunities ahead for Tuesday Morning. While the back half of fiscal 2022 presented significant macro-related challenges, I am proud of how our teams remained focused and committed to delivering our customers an improved treasure-hunt experience. That said, the start to fiscal 2023 has also been pressured by the ongoing difficult consumer environment and the disruption in receipt flow as we were finalizing the strategic investment. Looking beyond this softer start, our guidance for the year assumes sequential topline improvement as well as continued disciplined expense management. With the recent support of our new investors, we move forward into fiscal 2023 with a strengthened balance sheet, incremental liquidity and a strategic partner who we believe over time will have a positive influence on driving incremental traffic and sales to our stores.”

Fourth Quarter Fiscal 2022 Results of Operations

  • As of the end of the fourth quarter fiscal 2022, the Company operated 489 stores compared to 490 stores at the end of the fourth quarter fiscal 2021.
  • Comparable store sales decreased 8.0% in the fourth quarter of fiscal 2022 versus the fourth quarter of fiscal 2021, with store inventory ending lower by 8.1% compared to the fourth quarter of fiscal 2021.
  • Net sales were $161.9 million in the fourth quarter of fiscal 2022 as compared to $177.3 million for the fourth quarter of fiscal 2021.
  • Gross margin was $30.3 million and gross margin rate was 18.7% for the fourth quarter of fiscal 2022. Gross margin was $46.7 million and gross margin rate was 26.3% for the fourth quarter of fiscal 2021. This year over year decline in gross margin is primarily due to increased supply chain and transportation costs.
  • SG&A was $57.4 million in the fourth quarter of fiscal 2022. As a percentage of net sales, SG&A was 35.4% for the fourth quarter of fiscal 2022. In the fourth quarter of fiscal 2021, SG&A was $59.6 million, and as a percentage of sales was 33.6%.
  • Operating loss for the fourth quarter of fiscal 2022 was $26.9 million compared to an operating loss of $16.2 million in the fourth quarter of fiscal 2021.
  • The Company reported a net loss of $28.1 million, or ($0.33) per share, for the fourth quarter of fiscal 2022. Net loss for the fourth quarter of fiscal 2021 was $18.9 million, or ($0.22) per share.
  • EBITDA, a non-GAAP measure, was a loss of $23.2 million for the fourth quarter of fiscal 2022 compared to a loss of $14.3 million for the fourth quarter of 2021. Adjusted EBITDA, a non-GAAP measure, was a loss of $22.3 million for the fourth quarter of fiscal 2022. Adjusted EBITDA was a loss of $8.2 million for the fourth quarter of fiscal 2021. A reconciliation of GAAP and non-GAAP measures is provided below.

Fiscal 2022 Results of Operations

  • Net sales were $749.8 million for fiscal 2022 compared to $690.8 million for the prior year.
  • Gross margin was $191.8 million and gross margin rate was 25.6% for fiscal 2022. Gross margin was $206.0 million and gross margin rate was 29.8% for fiscal 2021.
  • SG&A was $240.9 million in fiscal 2022. As a percentage of net sales, SG&A was 32.1% for fiscal 2022. In fiscal 2021, SG&A was $244.2 million, and as a percentage of sales was 35.3%.
  • Operating loss for fiscal 2022 was $51.5 million compared to an operating loss of $49.0 million in fiscal 2021.
  • The Company reported a net loss was $59.0 million, or ($0.70) per share, for fiscal 2022. Net income for fiscal 2021 was $3.0 million, or $0.05 per share.
  • EBITDA, a non-GAAP measure, was a loss of $38.4 million for fiscal 2022 compared to $26.9 million for fiscal 2021. Adjusted EBITDA, a non-GAAP measure, was a loss of $30.5 million for fiscal 2022. Adjusted EBITDA was a loss of $20.3 million for fiscal 2021. A reconciliation of GAAP and non-GAAP measures is provided below.

The Company ended fiscal 2022 with $7.8 million in cash and cash equivalents and $57.2 million outstanding under its line of credit with availability on the line of credit of $10.3 million, compared to $6.5 million in cash and cash equivalents and $12.0 million of outstanding borrowings under its line of credit in the prior year. Inventories at the end of fiscal 2022 were $148.5 million compared to $145.1 million in the prior year.

Outlook
For the first quarter fiscal 2023, the Company expects comparable store sales to decrease 10% to 12% when compared to the first quarter of fiscal 2022, and for Adjusted EBITDA to be in the range of negative $21.0 million and $24.0 million.

For the full year fiscal 2023, the Company expects comparable store sales to be flat to negative 3% when compared to fiscal 2022, and for Adjusted EBITDA to be in the range of negative $18.0 million and $23.0 million.

Marc Katz, Chief Operating Officer and Interim Chief Financial Officer, stated, “Our first quarter fiscal 2023 guidance reflects the softer topline performance to date as well as the impact from the recognition of capitalized supply chain and freight costs driven by the elevated costs encountered in fiscal 2022. As we move through the balance of the year we expect topline performance to improve sequentially, and for the impact related to the elevated supply chain and distribution costs to improve. In addition, from a cash flow point of view, we expect incurred supply chain and transportation costs to be approximately $15 million less than the recognized costs reflected in the annual Adjusted EBITDA guidance.”

Subsequent Events
On September 19, 2022, the Company secured $32 million in convertible debt financing from a special purpose vehicle formed by Retail Ecommerce Ventures LLC, the owner of a diverse portfolio of consumer brands that includes Pier 1 Imports, Linens ‘n Things, Stein Mart, Modell’s Sporting Goods. Additionally, Ayon Capital, LLC and certain members of Tuesday Morning’s management team, including Chief Executive Officer Fred Hand, are providing $3 million in convertible debt financing. The proceeds from the parties’ investments are expected to strengthen Tuesday Morning’s balance sheet and allow it to begin executing an omni-channel strategy, which will now include an ecommerce presence and digital activations to complement the Company’s store footprint over the long-term.

About Tuesday Morning
Tuesday Morning Corporation is one of the original off-price retailers specializing in name-brand, high-quality products for the home, including upscale home textiles, home furnishings, housewares, gourmet food, toys and seasonal décor, at prices generally below those found in boutique, specialty and department stores, catalogs and on-line retailers. Based in Dallas, Texas, the Company opened its first store in 1974 and currently operates 487 stores in 40 states. More information and a list of store locations may be found on the Company’s website at www.tuesdaymorning.com.