Exhibit 99.1
FOR IMMEDIATE RELEASE
CONTACT: |
| Michael Marchetti |
|
| Acting Chief Financial Officer |
|
| TUESDAY MORNING CORPORATION |
|
| 972/934-7154 |
|
|
|
|
| Laurey Peat |
|
| LAUREY PEAT + ASSOCIATES |
|
| 214/871-8787 |
TUESDAY MORNING CORPORATION
ANNOUNCES SECOND QUARTER FISCAL 2008 RESULTS
DALLAS, TX – January 29, 2008 — Tuesday Morning Corporation (NASDAQ: TUES) today reported that as previously announced, net sales for the second quarter of fiscal 2008 were $308.7 million compared to $321.3 million for the quarter ended December 31, 2006, a decrease of 3.9%. Comparable store sales decreased 7.6% for the quarter compared to the same quarter for the prior year. The decrease in comparable store sales was comprised of a 7.2% decrease in traffic and a 0.4% decrease in average ticket. Net income for the second quarter ended December 31, 2007 was $20.5 million or $0.50 per diluted share, compared to $23.8 million or $0.57 per diluted share during the same quarter last year.
For the six month period ended December 31, 2007, net sales were $510.3 million compared to $515.7 million for the same period ended December 31, 2006 for a decrease of 1.0%. Comparable store sales decreased by 5.3% for the six month period compared to the same period for the prior year. The decrease in comparable store sales was comprised of a 4.7% decrease in customer transactions and a 0.6% decrease in average ticket. For the six month period ended December 31, 2007, net income was $21.7 million or $0.52 per diluted share compared to net income of $27.0 million or $0.65 per diluted share for the same period in the prior year.
Kathleen Mason, President and Chief Executive Officer, stated, “We are aggressively responding to the pressures of the home furnishings macro environment. We believe the flexibility of our format will enable us to continue generating positive cash flows and long term profitability.”
1
Guidance for the fiscal year 2008 ending on June 30, 2008 is as follows:
· net sales are projected to be in the range of $920 million to $940 million;
· comparable store sales are projected to be in the negative low single digits; and
· diluted earnings per share are projected to be in the range of $0.55 to $0.62.
Tuesday Morning management will review second quarter fiscal 2008 financial results in a teleconference call on January 29, 2008 at 10:00 a.m. Eastern Time.
About Tuesday Morning
Tuesday Morning is a leading closeout retailer of upscale, decorative home accessories, housewares and famous-maker gifts in the United States. The Company opened its first store in 1974 and currently operates 831 stores in 47 states. Tuesday Morning is nationally known for bringing its more than 9.0 million loyal customers a unique treasure hunt of high-end, first quality, brand name merchandise...never seconds or irregulars...at prices well below those of department and specialty stores and catalogues.
This press release contains forward-looking statements within the meaning of the federal securities laws and the Private Securities Litigation Reform Act of 1995, which are based on management’s current expectations, estimates and projections. Forward-looking statements typically are identified by the use of terms such as “may,” “will,” “should,” “expect,” “anticipate,” “believe,” “estimate,” “intend” and similar words, although some forward-looking statements are expressed differently. You should carefully consider statements that contain these words because they describe our expectations, plans, strategies and goals and our beliefs concerning future business conditions, our future results of operations, our future financial positions, and our business outlook or state other “forward-looking” information.
Reference is hereby made to “Item 1A. Risk Factors” of the Company’s Transition Report on Form 10-KT for the six month period ended June 30, 2007 and the Company’s Quarterly Report on Form 10-Q for the three month period ended September 30, 2007 for examples of risks, uncertainties and events that could cause our actual results to differ materially from the expectations expressed in our forward-looking statements. These risks, uncertainties and events also include, but are not limited to, the following: uncertainties regarding our ability to open stores in new and existing markets and operate these stores on a profitable basis; conditions affecting consumer spending; inclement weather; changes in our merchandise mix; timing and type of sales events, promotional activities and other advertising; increased or new competition; loss or departure of one or more members of our senior management, as well as experienced buying and management personnel; an increase in the cost or a disruption in the flow of our products; seasonal and quarterly fluctuations; fluctuations in our comparable store results; our ability to operate information systems and implement new technologies effectively; our ability to generate strong cash flows from our operations; our ability to maintain internal control over financial reporting; and our ability to anticipate and respond in a timely manner to changing consumer demands and preferences.�� The forward-looking statements made in this press release relate only to events as of the date on which the statements were made. We undertake no obligations to update our forward-looking statements to reflect events and circumstances after the date on which the statements were made or to reflect the occurrence of unanticipated events.
# # #
2
Tuesday Morning Corporation
Consolidated Statement of Income
(In thousands, except per share data)
|
| Three Months Ended Dec. 31, |
| Six Months Ended Dec. 31, |
| ||||||||
|
| 2007 |
| 2006 |
| 2007 |
| 2006 |
| ||||
|
| (unaudited) |
| (unaudited) |
| ||||||||
|
|
|
|
|
|
|
|
|
| ||||
Net Sales |
| $ | 308,687 |
| $ | 321,266 |
| $ | 510,344 |
| $ | 515,679 |
|
Cost of sales |
| 193,783 |
| 199,683 |
| 319,731 |
| 321,030 |
| ||||
Gross profit |
| 114,904 |
| 121,583 |
| 190,613 |
| 194,649 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Selling, general and administrative expenses |
| 80,664 |
| 84,327 |
| 153,208 |
| 151,670 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Operating income |
| 34,240 |
| 37,256 |
| 37,405 |
| 42,979 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Other income (expense): |
|
|
|
|
|
|
|
|
| ||||
Interest expense |
| (1,420 | ) | (753 | ) | (3,106 | ) | (1,545 | ) | ||||
Interest income |
| 152 |
| 52 |
| 153 |
| 57 |
| ||||
Other income (expense), net |
| 195 |
| 449 |
| 572 |
| 623 |
| ||||
Other income (expense) |
| (1,073 | ) | (252 | ) | (2,381 | ) | (865 | ) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Income before income taxes |
| 33,167 |
| 37,004 |
| 35,024 |
| 42,114 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Income tax expense |
| 12,633 |
| 13,177 |
| 13,334 |
| 15,124 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net income |
| $ | 20,534 |
| $ | 23,827 |
| $ | 21,690 |
| $ | 26,990 |
|
|
|
|
|
|
|
|
|
|
| ||||
Earnings Per Share: |
|
|
|
|
|
|
|
|
| ||||
Net income per common share: |
|
|
|
|
|
|
|
|
| ||||
Basic |
| $ | 0.50 |
| $ | 0.58 |
| $ | 0.52 |
| $ | 0.65 |
|
Diluted |
| $ | 0.50 |
| $ | 0.57 |
| $ | 0.52 |
| $ | 0.65 |
|
|
|
|
|
|
|
|
|
|
| ||||
Weighted average number of common shares: |
|
|
|
|
|
|
|
|
| ||||
Basic |
| 41,441 |
| 41,416 |
| 41,437 |
| 41,392 |
| ||||
Diluted |
| 41,451 |
| 41,648 |
| 41,456 |
| 41,647 |
|
Tuesday Morning Corporation (continued)
Consolidated Balance Sheets
(in thousands)
|
| Dec. 31, |
| Dec. 31, |
| June 30, |
| |||
|
| 2007 |
| 2006 |
| 2007 |
| |||
|
| (unaudited) |
| (unaudited) |
|
|
| |||
Assets |
|
|
|
|
|
|
| |||
Current assets: |
|
|
|
|
|
|
| |||
Cash and cash equivalents |
| $ | 11,993 |
| $ | 49,633 |
| $ | 10,303 |
|
Inventories |
| 259,299 |
| 242,674 |
| 288,791 |
| |||
Prepaid expenses and other assets |
| 6,668 |
| 5,617 |
| 5,954 |
| |||
Deferred income taxes |
| 505 |
| 3,162 |
| 1,211 |
| |||
Total current assets |
| 278,465 |
| 301,086 |
| 306,259 |
| |||
|
|
|
|
|
|
|
| |||
Property and Equipment, net |
| 80,792 |
| 86,397 |
| 83,776 |
| |||
|
|
|
|
|
|
|
| |||
Other long-term assets: |
|
|
|
|
|
|
| |||
Deferred financing costs |
| 603 |
| 514 |
| 704 |
| |||
Other assets |
| 3,601 |
| 5,137 |
| 3,582 |
| |||
|
|
|
|
|
|
|
| |||
Total Assets |
| $ | 363,461 |
| $ | 393,134 |
| $ | 394,321 |
|
|
|
|
|
|
|
|
| |||
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
| |||
Current liabilities: |
|
|
|
|
|
|
| |||
Current portion of long-term debt |
| $ | — |
| $ | — |
| $ | 26,500 |
|
Accounts payable |
| 59,601 |
| 88,514 |
| 82,453 |
| |||
Accrued liabilities |
| 36,223 |
| 35,934 |
| 31,223 |
| |||
Deferred income taxes |
| — |
| — |
| — |
| |||
Income taxes payable |
| 15,408 |
| 15,543 |
| 712 |
| |||
Total current liabilities |
| 111,232 |
| 139,991 |
| 140,888 |
| |||
|
|
|
|
|
|
|
| |||
Revolving credit facility, excl. current portion |
| 7,000 |
| — |
| 30,000 |
| |||
Deferred rent |
| 4,390 |
| 4,618 |
| 4,534 |
| |||
Deferred income taxes |
| 1,922 |
| 4,648 |
| 3,459 |
| |||
Total Liabilities |
| 124,544 |
| 149,257 |
| 178,881 |
| |||
|
|
|
|
|
|
|
| |||
Stockholders’ equity |
| 238,917 |
| 243,877 |
| 215,440 |
| |||
Total Liabilities and Stockholders’ Equity |
| $ | 363,461 |
| $ | 393,134 |
| $ | 394,321 |
|
Tuesday Morning Corporation (continued)
Consolidated Statement of Cash Flows
(in thousands)
|
| Six Months Ended Dec. 31, |
| ||||
|
| 2007 |
| 2006 |
| ||
|
| (unaudited) |
| ||||
Net cash flows from operating activities: |
|
|
|
|
| ||
Net income |
| $ | 21,690 |
| $ | 26,990 |
|
Adjustments to reconcile net income to net cash (used in) operating activities: |
|
|
|
|
| ||
Depreciation and amortization |
| 8,854 |
| 8,636 |
| ||
Amortization of deferred compensation on restricted stock |
| 87 |
| — |
| ||
Amortization of financing fees |
| 101 |
| 85 |
| ||
Deferred income taxes |
| (831 | ) | 290 |
| ||
Loss on disposal of fixed assets |
| 236 |
| 120 |
| ||
Stock compensation expense |
| 1,941 |
| 2,411 |
| ||
Other non-cash charges |
| 35 |
| (17 | ) | ||
Net change in operating assets and liabilities |
| 31,498 |
| 34,045 |
| ||
|
|
|
|
|
| ||
Net cash provided by operating activities |
| 63,611 |
| 72,560 |
| ||
|
|
|
|
|
| ||
Net cash flows from investing activities: |
|
|
|
|
| ||
Capital expenditures |
| (6,100 | ) | (8,285 | ) | ||
|
|
|
|
|
| ||
Net cash used in investing activities |
| (6,100 | ) | (8,285 | ) | ||
|
|
|
|
|
| ||
Net cash flows from financing activities: |
|
|
|
|
| ||
Borrowings-revolving credit facility |
| 118,500 |
| 107,500 |
| ||
Repayments-revolving credit facility |
| (168,000 | ) | (128,500 | ) | ||
Change in cash overdraft |
| (6,297 | ) | — |
| ||
Proceeds from exercise of common stock options and stock purchase plan purchases |
| (24 | ) | 529 |
| ||
Other |
| — |
| 63 |
| ||
|
|
|
|
|
| ||
Net cash used in financing activities |
| (55,821 | ) | (20,408 | ) | ||
|
|
|
|
|
| ||
Net decrease in cash and cash equivalents |
| 1,690 |
| 43,867 |
| ||
|
|
|
|
|
| ||
Cash and cash equivalents, beginning of period |
| 10,303 |
| 5,766 |
| ||
|
|
|
|
|
| ||
Cash and cash equivalents, end of period |
| $ | 11,993 |
| $ | 49,633 |
|