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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Tuesday Morning Corporation
(Name of Issuer)
Common Stock
(Title of Class of Securities)
72581M305
(CUSIP Number)
Becker Drapkin Management, L.P.
Attn: Steven R. Becker
Attn: Matthew A. Drapkin
300 Crescent Court
Suite 1111
Dallas, Texas 75201
(214) 756-6016
With a copy to:
Richard J. Birns, Esq.
Boies, Schiller & Flexner LLP
575 Lexington Avenue, 7th Floor
New York, NY 10022
(212) 446-2300
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
June 4, 2012
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box: o
Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 240.13d-7 for other parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).
SCHEDULE 13D
CUSIP No. 72581M305 | |||
1 | NAME OF REPORTING PERSON / I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Becker Drapkin Management, L.P. | ||
2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) þ (b) ¨ | ||
3 | SEC USE ONLY | ||
4 | SOURCE OF FUNDS (See Instructions) OO | ||
5 | CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) o | ||
6 | CITIZENSHIP OR PLACE OF ORGANIZATION Texas | ||
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH | 7 | SOLE VOTING POWER 0 | |
8 | SHARED VOTING POWER 2,099,632 | ||
9 | SOLE DISPOSITIVE POWER 0 | ||
10 | SHARED DISPOSITIVE POWER 2,099,632 | ||
11 | AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,099,632 | ||
12 | CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS) o | ||
13 | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.0% | ||
14 | TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) IA, PN |
CUSIP No. 72581M305 | |||
1 | NAME OF REPORTING PERSON / I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Becker Drapkin Partners (QP), L.P. | ||
2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) þ (b) ¨ | ||
3 | SEC USE ONLY | ||
4 | SOURCE OF FUNDS (See Instructions) WC | ||
5 | CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) o | ||
6 | CITIZENSHIP OR PLACE OF ORGANIZATION Texas | ||
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH | 7 | SOLE VOTING POWER 1,299,941 | |
8 | SHARED VOTING POWER 0 | ||
9 | SOLE DISPOSITIVE POWER 1,299,941 | ||
10 | SHARED DISPOSITIVE POWER 0 | ||
11 | AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,299,941 | ||
12 | CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS) o | ||
13 | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 3.1% | ||
14 | TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) PN |
CUSIP No. 72581M305 | |||
1 | NAME OF REPORTING PERSON / I.R.S. IDENTIFICATION NO. OF ABOVE PERSON. Becker Drapkin Partners, L.P. | ||
2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) þ (b) ¨ | ||
3 | SEC USE ONLY | ||
4 | SOURCE OF FUNDS (See Instructions) WC | ||
5 | CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) o | ||
6 | CITIZENSHIP OR PLACE OF ORGANIZATION Texas | ||
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH | 7 | SOLE VOTING POWER 180,470 | |
8 | SHARED VOTING POWER 0 | ||
9 | SOLE DISPOSITIVE POWER 180,470 | ||
10 | SHARED DISPOSITIVE POWER 0 | ||
11 | AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 180,470 | ||
12 | CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS) o | ||
13 | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.4% | ||
14 | TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) PN |
CUSIP No. 781182100 | |||
1 | NAME OF REPORTING PERSON / I.R.S. IDENTIFICATION NO. OF ABOVE PERSON. BD Partners V, L.P. | ||
2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) þ (b) ¨ | ||
3 | SEC USE ONLY | ||
4 | SOURCE OF FUNDS (See Instructions) WC | ||
5 | CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) o | ||
6 | CITIZENSHIP OR PLACE OF ORGANIZATION Texas | ||
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH | 7 | SOLE VOTING POWER 619,221 | |
8 | SHARED VOTING POWER 0 | ||
9 | SOLE DISPOSITIVE POWER 619,221 | ||
10 | SHARED DISPOSITIVE POWER 0 | ||
11 | AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 619,221 | ||
12 | CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS) o | ||
13 | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 1.5% | ||
14 | TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) PN |
CUSIP No. 72581M305 | |||
1 | NAME OF REPORTING PERSON / I.R.S. IDENTIFICATION NO. OF ABOVE PERSON BC Advisors, LLC | ||
2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) þ (b) ¨ | ||
3 | SEC USE ONLY | ||
4 | SOURCE OF FUNDS (See Instructions) OO | ||
5 | CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) o | ||
6 | CITIZENSHIP OR PLACE OF ORGANIZATION Texas | ||
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH | 7 | SOLE VOTING POWER 0 | |
8 | SHARED VOTING POWER 2,099,632 | ||
9 | SOLE DISPOSITIVE POWER 0 | ||
10 | SHARED DISPOSITIVE POWER 2,099,632 | ||
11 | AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,099,632 | ||
12 | CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS) o | ||
13 | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.0% | ||
14 | TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) IA, OO |
CUSIP No. 72581M305 | |||
1 | NAME OF REPORTING PERSON / I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Steven R. Becker | ||
2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) þ (b) ¨ | ||
3 | SEC USE ONLY | ||
4 | SOURCE OF FUNDS (See Instructions) OO | ||
5 | CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) o | ||
6 | CITIZENSHIP OR PLACE OF ORGANIZATION United States | ||
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH | 7 | SOLE VOTING POWER 0 | |
8 | SHARED VOTING POWER 2,099,632 | ||
9 | SOLE DISPOSITIVE POWER 0 | ||
10 | SHARED DISPOSITIVE POWER 2,099,632 | ||
11 | AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,099,632 | ||
12 | CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS) o | ||
13 | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.0% | ||
14 | TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) IN |
CUSIP No. 72581M305 | |||
1 | NAME OF REPORTING PERSON / I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Matthew A. Drapkin | ||
2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) þ (b) ¨ | ||
3 | SEC USE ONLY | ||
4 | SOURCE OF FUNDS (See Instructions) OO | ||
5 | CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) o | ||
6 | CITIZENSHIP OR PLACE OF ORGANIZATION United States | ||
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH | 7 | SOLE VOTING POWER 0 | |
8 | SHARED VOTING POWER 2,099,632 | ||
9 | SOLE DISPOSITIVE POWER 0 | ||
10 | SHARED DISPOSITIVE POWER 2,099,632 | ||
11 | AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,099,632 | ||
12 | CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS) o | ||
13 | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.0% | ||
14 | TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) IN |
Name of Reporting Person | Date | Number of Shares Purchased (Sold) | Average Price per Share |
Becker Drapkin QP | 4/9/2012 | 2,372 | $3.7699 |
Becker Drapkin QP | 4/10/2012 | 64,987 | $3.7635 |
Becker Drapkin QP | 4/11/2012 | 24,414 | $3.9237 |
Becker Drapkin QP | 4/12/2012 | 84,747 | $3.9920 |
Becker Drapkin QP | 4/13/2012 | 65,865 | $3.9335 |
Becker Drapkin QP | 4/16/2012 | 43,910 | $3.9900 |
Becker Drapkin QP | 4/17/2012 | 33,987 | $4.0500 |
Becker Drapkin QP | 4/18/2012 | 52,253 | $4.0398 |
Becker Drapkin QP | 4/19/2012 | 60,157 | $4.0366 |
Becker Drapkin QP | 4/20/2012 | 42,242 | $4.0767 |
Becker Drapkin QP | 4/23/2012 | 17,916 | $4.0172 |
Becker Drapkin QP | 4/24/2012 | 18,091 | $3.9840 |
Becker Drapkin QP | 4/25/2012 | 35,480 | $4.0200 |
Becker Drapkin QP | 4/30/2012 | 2,145 | $3.9900 |
Becker Drapkin QP | 4/30/2012 | 91,111 | $4.0385 |
Becker Drapkin QP | 5/1/2012 | 121,844 | $4.0467 |
Becker Drapkin QP | 5/1/2012 | 874 | $3.9900 |
Becker Drapkin QP | 5/14/2012 | 52,698 | $4.1022 |
Becker Drapkin QP | 5/15/2012 | 35,747 | $4.1494 |
Becker Drapkin QP | 5/17/2012 | 8,783 | $4.0783 |
Becker Drapkin QP | 5/22/2012 | 27,843 | $3.7496 |
Becker Drapkin QP | 5/30/2012 | 44,179 | $4.1110 |
Becker Drapkin QP | 5/31/2012 | 1,142 | $4.1115 |
Becker Drapkin QP | 6/1/2012 | 74,066 | $4.0297 |
Becker Drapkin QP | 6/4/2012 | 14,410 | $4.1158 |
Becker Drapkin, L.P. | 4/9/2012 | 328 | $3.7699 |
Becker Drapkin, L.P. | 4/10/2012 | 9,013 | $3.7635 |
Becker Drapkin, L.P. | 4/11/2012 | 3,386 | $3.9237 |
Becker Drapkin, L.P. | 4/12/2012 | 11,753 | $3.9920 |
Becker Drapkin, L.P. | 4/13/2012 | 9,135 | $3.9335 |
Becker Drapkin, L.P. | 4/16/2012 | 6,090 | $3.9900 |
Becker Drapkin, L.P. | 4/17/2012 | 4,713 | $4.0500 |
Becker Drapkin, L.P. | 4/18/2012 | 7,247 | $4.0398 |
Becker Drapkin, L.P. | 4/19/2012 | 8,343 | $4.0366 |
Becker Drapkin, L.P. | 4/20/2012 | 5,858 | $4.0767 |
Becker Drapkin, L.P. | 4/23/2012 | 2,484 | $4.0172 |
Becker Drapkin, L.P. | 4/24/2012 | 2,509 | $3.9840 |
Becker Drapkin, L.P. | 4/25/2012 | 4,920 | $4.0200 |
Becker Drapkin, L.P. | 4/30/2012 | 298 | $3.9900 |
Becker Drapkin, L.P. | 4/30/2012 | 12,636 | $4.0385 |
Becker Drapkin, L.P. | 5/1/2012 | 16,882 | $4.0467 |
Becker Drapkin, L.P. | 5/1/2012 | 121 | $3.9900 |
Becker Drapkin, L.P. | 5/14/2012 | 7,302 | $4.1022 |
Becker Drapkin, L.P. | 5/15/2012 | 4,953 | $4.1494 |
Becker Drapkin, L.P. | 5/17/2012 | 1,217 | $4.0783 |
Becker Drapkin, L.P. | 5/22/2012 | 3,857 | $3.7496 |
Becker Drapkin, L.P. | 5/30/2012 | 6,121 | $4.1110 |
Becker Drapkin, L.P. | 5/31/2012 | 158 | $4.1115 |
Becker Drapkin, L.P. | 6/1/2012 | 10,234 | $4.0297 |
Becker Drapkin, L.P. | 6/4/2012 | 1,990 | $4.1158 |
BD Partners V | 5/2/2012 | 109,617 | $4.1500 |
BD Partners V | 5/3/2012 | 113,550 | $4.1669 |
BD Partners V | 5/4/2012 | 148,812 | $4.0498 |
BD Partners V | 5/8/2012 | 5,636 | $4.1200 |
BD Partners V | 5/9/2012 | 29,406 | $4.1500 |
BD Partners V | 5/10/2012 | 25,000 | $4.1999 |
BD Partners V | 5/10/2012 | 3,600 | $4.1581 |
BD Partners V | 5/11/2012 | 77,300 | $4.1500 |
BD Partners V | 5/15/2012 | 20,000 | $4.1494 |
BD Partners V | 5/17/2012 | 20,000 | $4.0783 |
BD Partners V | 5/18/2012 | 25,000 | $3.9724 |
BD Partners V | 5/24/2012 | 5,300 | $3.7706 |
BD Partners V | 5/25/2012 | 9,300 | $3.9698 |
BD Partners V | 5/29/2012 | 16,700 | $4.0606 |
BD Partners V | 5/30/2012 | 10,000 | $4.1110 |
(d) No person other than the Reporting Persons has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the shares of Common Stock set forth above. (e) Not applicable. | |
Item 6. | Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer |
On June 6, 2012, the Reporting Persons entered into the Joint Filing Agreement pursuant to which they agreed to the joint filing on behalf of each of them of statements on Schedule 13D with respect to the securities of the Issuer. Such Joint Filing Agreement is attached hereto as Exhibit 2. Except for the matters described herein, no Reporting Person has any contract, arrangement, understanding or relationship with any person with respect to any securities of the Issuer. | |
Item 7. | Material to Be Filed as Exhibits |
Exhibit 1 | Letter, dated June 5, 2012, to Board of Directors of Tuesday Morning Corporation from Becker Drapkin Management, L.P. |
Exhibit 2 | Joint Filing Agreement, dated June 6, 2012, by and among Becker Drapkin Management, L.P.; Becker Drapkin Partners (QP), L.P.; Becker Drapkin Partners, L.P.; BD Partners V, L.P.; BC Advisors, LLC; Steven R. Becker; and Matthew A. Drapkin |
Exhibit 3 | Power of Attorney, dated July 19, 2010, signed by Steven R. Becker |
Exhibit 4 | Power of Attorney, dated March 16, 2010, signed by Matthew A. Drapkin |
SIGNATURES
After reasonable inquiry and to the best of each of the undersigned’s knowledge and belief, each of the undersigned, severally and not jointly, certifies that the information set forth in this statement is true, complete and correct.
Dated: June 6, 2012
BECKER DRAPKIN MANAGEMENT, L.P. | |||||
By: | BC Advisors, LLC, its general partner | ||||
By: | /s/ Andrew S. McLelland | ||||
Name: Andrew S. McLelland | |||||
Title: Attorney-in-Fact | |||||
BECKER DRAPKIN PARTNERS (QP), L.P. | |||||
By: | Becker Drapkin Management, L.P., its general partner | ||||
By: | BC Advisors, LLC, its general partner | ||||
By: | /s/ Andrew S. McLelland | ||||
Name: Andrew S. McLelland | |||||
Title: Attorney-in-Fact | |||||
BECKER DRAPKIN PARTNERS, L.P. | |||||
By: | Becker Drapkin Management, L.P., its general partner | ||||
By: | BC Advisors, LLC, its general partner | ||||
By: | /s/ Andrew S. McLelland | ||||
Name: Andrew S. McLelland | |||||
Title: Attorney-in-Fact | |||||
BD PARTNERS V, L.P. | |||||
By: | Becker Drapkin Management, L.P., its general partner | ||||
By: | BC Advisors, LLC, its general partner | ||||
By: | /s/ Andrew S. McLelland | ||||
Name: Andrew S. McLelland | |||||
Title: Attorney-in-Fact | |||||
BC ADVISORS, LLC | |||||
By: | /s/ Andrew S. McLelland | ||||
Name: Andrew S. McLelland | |||||
Title: Attorney-in-Fact | |||||
STEVEN R. BECKER | |||||
By: | /s/ Andrew S. McLelland | ||||
Name: Andrew S. McLelland | |||||
Title: Attorney-in-Fact | |||||
MATTHEW A. DRAPKIN | |||||
By: | /s/ Andrew S. McLelland | ||||
Name: Andrew S. McLelland | |||||
Title: Attorney-in-Fact | |||||
Exhibit 1
Becker Drapkin Management, L.P.
300 Crescent Court
Suite 1111
Dallas, Texas 75201
(214) 756-6016
June 5, 2012
Via Federal Express
Board of Directors
Tuesday Morning Corporation
6250 Lyndon B. Johnson Freeway
Dallas, Texas, 75240-6321
Attention: Corporate Secretary
Ladies and Gentlemen:
Becker Drapkin Management, L.P. is the investment manager for several funds (collectively, “Becker Drapkin”) that are shareholders of Tuesday Morning Corporation. As reported in our filing with the SEC on Schedule 13D, Becker Drapkin owns 5.02% of the common stock of Tuesday Morning. We write this letter to the Board of Directors of Tuesday Morning to seek Board designation rights, which we believe will instill strong oversight and accountability.
Becker Drapkin has extensive experience in working constructively with its public company investments, including with retail companies. In 2010, we joined the board of directors of Hot Topic, a publicly-traded retailer with approximately $708.2mm of annual sales (for the year ending April 28, 2012).1 Since that time, Hot Topic has engaged in a number of shareholder initiatives, including replacing senior management, which have created shareholder value. Since 2010, Hot Topic’s business has greatly improved as evidenced by EBITDA, which was approximately $14.6mm for the quarter ending April 28, 2012 versus $6.9mm for the quarter ending May 1, 2010. Moreover, the value of the common equity appreciated from $5.56 per share on the day we joined the Board to $9.52 per share. Including dividends paid over that period of $0.50 per share, the total return to shareholders has been 80%. We believe Tuesday Morning’s current situation in many ways parallels that of Hot Topic several years ago.
Close-out and discount retailers have largely been able to effectively grow same-store sales and improve operating margins despite an extremely difficult economic environment in the United States over the past few years. In contrast, Tuesday Morning’s operating performance has lagged. Amongst its peers in the discount retail and close-out sector (Big Lots, Dollar General, Dollar Tree, Family Dollar Stores, Fred’s, Ross Stores and The TJX Companies):2
· | Tuesday Morning’s stores are the least productive, as measured by Sales per Square Foot and Gross Margin Dollars per Square Foot; |
· | Tuesday Morning’s stores continue to decline in productivity on an absolute and relative basis, as measured by Same-Store Sales; |
· | Tuesday Morning has the lowest Earnings Before Interest and Taxes (EBIT) margins; |
· | Tuesday Morning has the worst one-year return on stock price – approximately (-10.0%) versus a median 37.5% improvement; |
· | Tuesday Morning has the worst two-year return on stock price – approximately (-10.2%) versus a median 70.3% improvement; and |
· | Tuesday Morning has the worst five-year return on stock price – approximately (-70.3%) versus a median 104.0% improvement. |
By our calculation, since Kathleen Mason became Chief Executive Officer in 2000:
· | EBITDA has declined from approximately $74mm (for the twelve-month period ending June 30, 2000) to approximately $24mm (for the twelve-month period ending March 31, 2012) – a 68% decline; |
· | Enterprise value has declined from approximately $708mm (based on the stock price as of July 31, 2000 and net debt as of June 30, 2000) to approximately $133mm (based on the stock price as of June 5, 2012 and net debt as of March 31, 2012) – an 81% decline; and |
· | Equity Market Cap has declined from approximately $476mm (as of July 31, 2000) to approximately $172mm – a 64% decline. |
Put simply, Ms. Mason has led an extraordinary destruction of shareholder value in stark contrast to the success of Tuesday Morning’s peer group.
From its peak in 2005, the share price has declined from $35.37 per share to a price of $4.05 per share – an 89% decline. EBITDA decreased from approximately $114mm to approximately $24mm, EBITDA margins from approximately 12.4% to approximately 3.0% and return on invested capital from approximately 31% to approximately 3.5% (comparing, in each case, the twelve-month period ending June 30, 2005 to the twelve-month period ending March 31, 2012).
We believe that shareholder representation on a board is often necessary to instill accountability and that is certainly the case with Tuesday Morning. As one of your largest shareholders, we do not wish to bring about distractions. Absent significant changes to the Board composition, however, we are concerned that the value destruction experienced by Tuesday Morning will continue. Accordingly, Becker Drapkin intends to discuss with the Board designation rights for Becker Drapkin.
Sincerely,
On behalf of Becker Drapkin Management, L.P.,
/s/ Steven R. Becker /s/ Matthew A. Drapkin
Steven R. Becker Matthew A. Drapkin
1 Financial information (including EBITDA) contained herein is based on SEC filings and other publicly available information, and share prices and related information (e.g., Equity Market Cap) are based on the closing share prices as of June 5, 2012. The financial information contained herein is subject to rounding.
Appendix 1: Competitive Benchmarking |
Exhibit 1.1 : Operating Comparison of Dollar and Close-out Stores |
Fiscal Year (1) | Most Recent Quarter | |||||||||
2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 |
Sales per Square Foot of Selling Space: | ||||||||||
Tuesday Morning (2) | $148 | $136 | $122 | $52 | $109 | $96 | $99 | $98 | $21 | |
Dollar Stores | ||||||||||
Big Lots | $134 | $148 | $161 | $161 | $162 | $162 | $164 | $157 | $39 | |
Dollar General | 153 | 157 | 160 | 165 | 178 | 189 | 194 | 206 | 54 | |
Dollar Tree | 168 | 156 | 161 | 155 | 158 | 167 | 174 | 182 | 52 | |
Family Dollar Stores | 149 | 152 | 147 | 154 | 152 | 158 | 165 | 174 | 48 | |
Fred’s | 170 | 171 | 174 | 171 | 189 | 187 | 193 | 192 | 51 | |
Close-out Stores | ||||||||||
Ross Stores | $297 | $304 | $305 | $301 | $298 | $311 | $324 | $338 | $90 | |
The TJX Companies (Company-wide) | 295 | 294 | 303 | 312 | 309 | 320 | 332 | 345 | 86 | |
The TJX Companies (HomeGoods stores) | 244 | 244 | 263 | 266 | 253 | 282 | 296 | 304 | 81 | |
Gross Margin Dollars per Square Foot of Selling Space: | ||||||||||
Tuesday Morning (2) | $56 | $52 | $46 | $19 | $40 | $36 | $37 | $37 | $8 | |
Dollar Stores | ||||||||||
Big Lots | $55 | $58 | $64 | $64 | $65 | $66 | $67 | $63 | $15 | |
Dollar General | 45 | 45 | 41 | 46 | 52 | 59 | 62 | 65 | 17 | |
Dollar Tree | 55 | 51 | 52 | 51 | 53 | 57 | 60 | 63 | 20 | |
Family Dollar Stores | 50 | 50 | 49 | 51 | 51 | 55 | 58 | 61 | 17 | |
Fred’s | 49 | 49 | 50 | 49 | 54 | 53 | 56 | 56 | 15 | |
Close-out Stores | ||||||||||
Ross Stores | $63 | $63 | $67 | $64 | $68 | $78 | $86 | $91 | $26 | |
The TJX Companies (Company-wide) | 70 | 69 | 73 | 76 | 74 | 84 | 89 | 94 | 24 | |
The TJX Companies (HomeGoods stores) | - | - | - | - | - | - | - | - | - | |
Same-store Sales: | ||||||||||
Tuesday Morning (2) | (1.7%) | (4.0%) | (7.9%) | (2.5%) | (7.6%) | (12.5%) | 2.2% | (1.2%) | (3.2%) | |
Dollar Stores | ||||||||||
Big Lots | 0.0% | 1.8% | 4.6% | 2.0% | 0.5% | 0.7% | 2.5% | 0.1% | (0.8%) | |
Dollar General | 3.2% | 2.2% | 3.3% | - | 9.0% | 9.5% | 4.9% | 6.0% | 6.7% | |
Dollar Tree | 0.5% | (0.8%) | 4.6% | 2.7% | 4.1% | 7.2% | 6.3% | 6.0% | 7.3% | |
Family Dollar Stores | 1.9% | 2.3% | 3.7% | 0.9% | 1.2% | 4.0% | 4.8% | 5.5% | 4.5% | |
Fred’s | 2.2% | 1.2% | 2.4% | 0.3% | 1.8% | 0.4% | 2.2% | 0.5% | (0.4%) | |
Close-out Stores | ||||||||||
Ross Stores | (1.0%) | 6.0% | 4.0% | 1.0% | 2.0% | 6.0% | 5.0% | 5.0% | 9.0% | |
The TJX Companies (TJ Max / Marshall’s Stores) | - | 2.0% | 2.0% | 1.0% | 0.0% | 7.0% | 4.0% | 5.0% | 8.0% | |
The TJX Companies (HomeGoods stores) | 1.0% | 1.0% | 4.0% | 3.0% | (3.0%) | 9.0% | 6.0% | 6.0% | 9.0% | |
Operating Margin: | ||||||||||
Tuesday Morning (2) | 11.6% | 10.4% | 6.4% | 1.4% | 2.8% | 0.3% | 2.4% | 2.2% | (3.5%) | |
Dollar Stores | ||||||||||
Big Lots | 1.7% | 0.6% | 3.5% | 5.1% | 5.5% | 6.6% | 7.2% | 6.6% | 5.3% | |
Dollar General | 7.3% | 6.5% | 2.7% | 3.8% | 5.9% | 8.1% | 9.8% | 10.1% | 9.9% | |
Dollar Tree | 9.4% | 8.4% | 7.8% | 7.8% | 7.9% | 9.8% | 11.2% | 11.8% | 16.7% | |
Family Dollar Stores | 7.6% | 5.8% | 5.7% | 5.7% | 5.2% | 6.2% | 7.3% | 7.5% | 9.0% | |
Fred’s | 2.7% | 2.5% | 2.4% | 1.8% | 2.1% | 2.2% | 2.6% | 2.7% | 3.4% | |
Close-out Stores | ||||||||||
Ross Stores | 7.0% | 6.6% | 7.0% | 7.0% | 7.6% | 10.1% | 11.5% | 12.4% | 14.4% | |
The TJX Companies (Company-wide) | 6.8% | 6.5% | 7.5% | 7.9% | 7.6% | 9.8% | 10.0% | 10.6% | 11.9% | |
The TJX Companies (HomeGoods stores) | 1.8% | 2.4% | 4.5% | 5.1% | 2.7% | 7.7% | 9.5% | 10.4% | 11.7% |
Source: Financial information contained herein is based on SEC filings and other publicly available information. All analysis is prepared by Becker Drapkin and is for discussion purposes only. Figures are in millions. |
(1) Fiscal year end dates vary by company. Figures are for the fiscal year most closely associated with the calendar year end of the same name. |
(2) In 2007, Tuesday Morning changed its fiscal year from December 31st to June 30th, creating a six month stub period for fiscal year 2007. |
Appendix 2: Comparable Companies Analysis & Share Price Performance | ||||||||||||
Exhibit 2.1: Industry Peer Group – Trading Comparable Analysis | ||||||||||||
Sales | EBITDA | EV / Sales | EV / EBITDA | |||||||||
Company | Price (6/4/12) | Market Cap. | Net Debt | Ent. Value | FY12 | FY13 | FY12 | FY13 | FY12 | FY13 | FY12 | FY13 |
Tuesday Morning | $4.05 | $172 | ($39) | $133 | $818 | $801 | $26 | NA | 0.2x | 0.2x | 5.1x | NM |
Dollar Stores | ||||||||||||
Big Lots | $37.66 | $2,476 | ($80) | $2,397 | $5,575 | $5,798 | $452 | $485 | 0.4x | 0.4x | 5.3x | 4.9x |
Dollar General | 47.29 | 15,716 | 2,492 | 18,208 | 16,110 | 17,606 | 1,978 | 2,213 | 1.1x | 1.0x | 9.2x | 8.2x |
Dollar Tree | 101.36 | 11,723 | (117) | 11,606 | 7,466 | 8,080 | 1,103 | 1,216 | 1.6x | 1.4x | 10.5x | 9.5x |
Family Dollar Stores | 67.99 | 7,939 | 374 | 8,311 | 9,333 | 10,273 | 915 | 1,038 | 0.9x | 0.8x | 9.1x | 8.0x |
Fred's | 14.08 | 524 | (1) | 524 | 1,981 | 2,012 | 97 | 105 | 0.3x | 0.3x | 5.4x | 5.0x |
Close-out Stores | ||||||||||||
Ross Stores | $62.18 | $14,085 | ($592) | $13,493 | $9,540 | $9,832 | $1,439 | $1,483 | 1.4x | 1.4x | 9.4x | 9.1x |
The TJX Companies | 41.13 | 30,475 | (952) | 29,524 | 25,221 | 26,694 | 3,491 | 3,735 | 1.2x | 1.1x | 8.5x | 7.9x |
Source: Financial information (including EBITDA) contained herein is based on SEC filings and Bloomberg, and share prices and related information (e.g., Equity Market Cap) are based on the closing share prices as of June 5, 2012. All analysis is prepared by Becker Drapkin and is for discussion purposes only. Figures are in millions except per share data. | ||||||||||||
Note: Projected financials are based on Bloomberg consensus and Becker Drapkin estimates. |
Exhibit 2.2: Industry Peer Group – Stock Price Performance |
1-Year Return Stock Price Return |
2-Year Return Stock Price Return |
5-Year Stock Price Return |
Source: Financial information contained herein is based on Bloomberg, and share prices are based on the closing share prices as of June 5, 2012. All analysis is prepared by Becker Drapkin and is for discussion purposes only. |
Note: Excludes dividends |
Exhibit 2
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(k) under the Securities Exchange Act of 1934, as amended, each of the undersigned hereby agrees to the joint filing on behalf of each of them of a statement on Schedule 13D (including amendments thereto) with respect to the Common Stock of Tuesday Morning Corporation, and that this Agreement be included as an Exhibit to such joint filing.
Each of the undersigned acknowledges that each shall be responsible for the timely filing of any statement (including amendments) on Schedule 13D, and for the completeness and accuracy of the information concerning him or it contained herein, but shall not be responsible for the completeness and accuracy of the information concerning the other persons making such filings, except to the extent that he or it knows or has reason to believe that such information is inaccurate.
Dated: June 6, 2012
[Signature Page Follows]
BECKER DRAPKIN MANAGEMENT, L.P. | |||||
By: | BC Advisors, LLC, its general partner | ||||
By: | /s/ Andrew S. McLelland | ||||
Name: Andrew S. McLelland | |||||
Title: Attorney-in-Fact | |||||
BECKER DRAPKIN PARTNERS (QP), L.P. | |||||
By: | Becker Drapkin Management, L.P., its general partner | ||||
By: | BC Advisors, LLC, its general partner | ||||
By: | /s/ Andrew S. McLelland | ||||
Name: Andrew S. McLelland | |||||
Title: Attorney-in-Fact | |||||
BECKER DRAPKIN PARTNERS, L.P. | |||||
By: | Becker Drapkin Management, L.P., its general partner | ||||
By: | BC Advisors, LLC, its general partner | ||||
By: | /s/ Andrew S. McLelland | ||||
Name: Andrew S. McLelland | |||||
Title: Attorney-in-Fact | |||||
BD PARTNERS V, L.P. | |||||
By: | Becker Drapkin Management, L.P., its general partner | ||||
By: | BC Advisors, LLC, its general partner | ||||
By: | /s/ Andrew S. McLelland | ||||
Name: Andrew S. McLelland | |||||
Title: Attorney-in-Fact | |||||
BC ADVISORS, LLC | |||||
By: | /s/ Andrew S. McLelland | ||||
Name: Andrew S. McLelland | |||||
Title: Attorney-in-Fact | |||||
STEVEN R. BECKER | |||||
By: | /s/ Andrew S. McLelland | ||||
Name: Andrew S. McLelland | |||||
Title: Attorney-in-Fact | |||||
MATTHEW A. DRAPKIN | |||||
By: | /s/ Andrew S. McLelland | ||||
Name: Andrew S. McLelland | |||||
Title: Attorney-in-Fact | |||||
Exhibit 3
Power of Attorney
July 19, 2010
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549
This letter confirms that each and any of Richard J. Birns, Andrew S. McLelland, and Michael S. Grisolia is authorized and designated to sign all securities related filings with the Securities and Exchange Commission, including Forms 3, 4 and 5, on my behalf and on behalf of each entity for which I may sign such filings. This authorization and designation shall be valid until either revoked in writing by the undersigned or until three years from the date of this letter.
Very truly yours,
/s/ Steven R. Becker
Steven R. Becker
Exhibit 4
Power of Attorney
March 16, 2010
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549
This letter confirms that each and any of Richard J. Birns, Andrew S. McLelland, and Michael S. Grisolia is authorized and designated to sign all securities related filings with the Securities and Exchange Commission, including Forms 3, 4 and 5, on my behalf and on behalf of each entity for which I may sign such filings. This authorization and designation shall be valid until either revoked in writing by the undersigned or until three years from the date of this letter.
Very truly yours,
/s/ Matthew A. Drapkin
Matthew A. Drapkin