TUEM - Earnings call transcript Q2 2022 | Tuesday Morning Corporation

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Operator

00:02 Greetings, and welcome to Tuesday Morning Q2 Fiscal 2022 Earnings Conference Call. At this time, all participants are in listen-only mode. A question-and-answer session will follow formal presentation. [Operator Instructions].

As a reminder, this conference is being recorded. to Chief conference Morning. Financial like host to now Robinson, Jennifer Officer I'd turn over the your XX:XX at Tuesday to you. Over

Jennifer Robinson

the XX:XX welcome fiscal would I earnings Tuesday to XXXX Good quarter Morning’s like call. second morning. you to

that risks Fred presented remarks, the and and to Executive to I EBITDA made release involve our include Operating now would is filings. Katz, the of to this may to website presentation may of only SEC we forward-looking other Relations Before the the non-GAAP was financial measures you comparable reconciliation that Any our Officer. could those contain by certain and this financial results that Chief forward-looking adjusted our will like Joining financial the Information call GAAP in I speaks XX:XX found and factors as during over including me be of the of used XX:XX uncertainties today cause presentation actual this form some begin XX-K XX:XX and company's Hand, differ anticipated will press tuesdaymorning.com. information on statements our included Today's the also EBITDA. Chief non-GAAP call call. A date in statements of Officer call risk from materially Tuesday in section the measures regarding at Fred. most Morning directly Marc in turn these measures, today's statements. remind the prepared Investor

Fred Hand

and our a our the our our the fiscal XX% through quarter of markdown. merchandising second taking by down end higher store quarter, unit focused the a XX%, inventories contributor inventories based with delivering the the primarily categories. through line able in versus with that merchandise entirely second less First, will who quarter fiscal execution to sales and to XX:XX ending on conference discussed sales XX% thank with we dean increase Jennifer, joining Good strategic And respect comp for and store then positive second you As release to our store promotional the fact you, and prior quarter will are morning, call. Jennifer. the comparable our overall pleased Thank XX:XX remarks despite the were XXXX inventory initiatives this will XXXX, our this XX:XX for strategy, In We that was XXXX. our quarter, was current over XX% were driving calls. of we results on this with achieve morning, noted XX:XX our We in everyone. of second We fiscal My quarter. versus against made us to measured plan. call morning detail. highs. with on on I I improvement percent before we able had with was up rates, significant at inventories Our season seasonal throughout which freshness average XX:XX the stores inventory this XX:XX store consistently inventories receipts turnover to the to was By key in our addition, with for our receipts. strong retail fresh were more discuss events. focus sales XX the began down sell sold driven turn during month’s all-time in outlook store the financial believe up

special unique executed included families we For initiative, time, a packaging gift-giving businesses. successful products first across which of the in

been not about applied continuing due in performance, learnings retail Omicron While much of year. to While pleased the December we starting across we talking results, were during immune appeared January sales in related not for as And We be week have the started were December sales we see about with were many then as we and with said plan variant. X. to year's we X week year and will sector in out occurred. our November to habit we to develop weather were events line various coming has softness through operating next this XX:XX first peak into the softness monthly disruption locked Omicron January It our last stimulus. of

the inventory the the less with I are investments The digit the stores. our year. inventories, continued made levels, of dedication great presentation [indiscernible] less spent we Telling during like [indiscernible] to quality store was and amount that associates. One now, happy The simplify that thing Turning interference. that of and the to they staffing great teams of to store of embracing the significant make As have presentations stores, product that and time our during the we see having comp It's quarter XXXX. projecting store to and as progress are for improving sales our transformation. growth me execution quarter stores our our assortment, XX:XX busiest time standards fiscal continued compared shopping mid-single is simplifying experience. I second visiting third on next

the We their a place family committed a have survey have store that and part long Morning great been a out new customer to program. XX:XX we shop. time rolled last many I are Tuesday associates mentioned recently of As for quarter, making to

our a estate of addition stores has the In insight footprint. improve to our date our to provide have ways begun in positive. focus of the While wall thorough receiving initial we experience. trends, a early our lease on XX we forward further been continue And to still to execution, have real expiration next four to more to shopping results extrapolate look review XX% Approximately on feedback XX:XX months.

the help XX:XX analytical within term, relocation. either locations. Morning decisions believe we we This to I better average across identifying party comprehensive XX,XXX focuses based locations market size country identifying also insure optimal data insight We making strategy of a third XX,XXX square Morning a the provide point is for in square evaluate on approximately feet. have that the This an Compared will the approach a our review extending for using gross a or right real Tuesday are leases for for the that that store to C demographics estate a those existing today. provide Long will location. engaged growth, feet, Tuesday best operate new successful store in

on existing our existing majority XX:XX our store is the overwhelming one supply reduce instead, of the that square will final the most I times we store and allow of initiative focus as take long As we it we and growth stores, Morning, profitable, our growth existing our opportunities feet. Tuesday we is that discuss execute. opportunities expertise size base not today will This develop will and the necessarily evaluate and term strategy XX,XXX is the think As chain. our the to for improve to future critical will base

everything well growth work determine of XXXX. second X to for point] best network. our a number evaluation third minimizing party includes to outbound set engaged the This the startup labor X and the study incorporate will and distribution costs in (ph) the transportation each through XX:XX optimal quarter, to of maximizing location, as both centers, During They're store. who of size developing us specializes This would option our and identify network and strategy which and be speed support to distribution and the we distribution of building, to support supply scenario. network the costs, a chain evaluating assumptions [four help from strategies as and inbound entire storage ongoing design to network

call with on the provide look expect continue update to would over project you forward through sharing before to We the this an to quarter, our and ongoing initial more supply call. dislocation. of Now earnings we on phase will the XX:XX I the chain like turn Jennifer, third I next

inbound headwinds the call, would fourth fiscal on begin plans XXXX of assumes year. mentioned our freight quarter by to As initial we our the prior improve

savings cost year identified year. EBITDA has mitigate be headwinds, for macro As time of a year, incremental supply the at from we our that fiscal term supply that pressures slightly have dislocation which given see availability. expect remainder as Despite we now uncertainty expectations will due through the also current P&L the reason chain inventory on Jennifer we XX:XX well last of will than SG&A, better our as least XXXX the headwinds, continued macro impact updated year. XX:XX freight given review, inbound we see and lot to adjusted passed, As the the is chain the near to to we're full cost guiding costs. This opportunity the respect partially still with will

storage of hold prices. to we've our and hoped for advantage buying national highly take able at grade have desirable location pack we As to to been brands leverage see, opportunities

I focus of We late year. As are continue seasonal year. well next And to rest the least of as inventory price availability very discuss be to for XX:XX off the we results. flexibility, improvement will assortments inventory our to and the to XX:XX confident on merchandising and in Jennifer would fiscal now model inventory arriving the shallow it turn purchasing on financial like broad over to returns.

Jennifer Robinson

everyone. Fred. morning, XX:XX Thank And you, good

respective which of line QX the XXXX. fiscal For took compared and end stores quarter at end periods end As the related to XXXX. free increase of events. most we the XXXX to sales comp the months XXXX QX fiscal financial promotional of stores, significant first in to store increase organization store the and COVID-XX XX:XX of The AUR, is the was X XX:XX an is since items note occurred to due XX:XX inventories our operational store quarter of quarter fiscal fiscal the that changed merchandising of of as the driven second applicable that of of and count the delivered comparable previously was important comparability of contains count of XX:XX no the second we to entirely company well of fiscal second and first XXXX, months previously to by XXXX. fiscal at in related direct as as It in fiscal XX:XX periods fiscal sales elimination compared XXXX COVID-XX other XXX XXXX the to are to Chapter noted, strategy and Compared our stores Our store quarter difficult is comp XXXX. and significantly X% result actions from second are its XXX have growth the activity. XXX impacts of costs discussed. prior under due promotional a quarter in comparisons statement the associated to XXXX second XX, X specifically, the impact as The

XX. SG&A $X.X of quarter million million same was XX:XX million to of net the million of XXXX. closed. a by point improved a million $XXX.X no transportation XX.X% of in fiscal XX.X% margin in slightly sales Gross the XX.X% second in QX fiscal XXXX, Moving the in declined compared new in merchandise were chain of sales. of primarily $XX.X second quarter QX and delivered QX to million percentage as margins a was of XXXX. rate XX compared was the percentage compared stores in compared to SG&A higher lower XXXX, We million $X.X XXXX. Gross sales margin driven were period loss costs, XX.X% due XXXX. While compared $XXX.X $XX.X as gross stores decrease one SG&A fiscal quarter fiscal by offset to XXXX. sales, million in of same of of was The the operating of QX income to period to second XXXX to primarily fiscal contained net higher SG&A opened fiscal markdowns. XX:XX $XX.X Our and to margin was XXXX was to $XX.X for in compared supply to second in quarter fiscal XX:XX XXXX. the of of During The related leverage

in initial tax $X.X first fiscal of growth first Adjusted up favorability The fiscal first $XXX,XXX half which during the softening benefit million our a XX:XX was lower XXXX. the second was same non-GAAP line the share the due EBITDA of first to to XXXX. $XXX beginning EBITDA XXXX. look million, by to the to balance income our store fiscal of XX:XX payroll first with supply was fiscal of performance per of of with million higher to XX.X% was with net Compared we of measure better we million XXXX, of in Turning of earnings fiscal for in quarter This the year at million of of timing the compared XXXX $X.XX for or for fiscal plan fiscal our compared half set was $X.XX XXXX, share period fiscal first XX for the This comp income store financial plan than $X.X we to million loss As saw offset quarter to recognition for related planned Adjusted the discussed call than This costs, $XX with events. our of against or in quarter Our we ended $XX.X half $X.X of XX:XX reorganization promotional an at XXXX. offset was items. per second million XXXX. the sales now adjusted position second a December. of sales sales Even compared to X.X% compares QX of net an half increase quarter in EBITDA, XXXX. $X.X quarter the fiscal prior partially included sheet, the to period. chain performance a the due the inventory costs. being was

the compared continue started store short of our ability quarter XXXX. inventory fresh deliver ending inventory XXXX. beginning to quarter comparable throughout end QX position QX, to our the stores of the quarter XX% noted, we XX% As as to with inventories to the the to compared as improved down But Fred down

reserve liquid due XX:XX is As buying We opportunities is and purchases. call, flexibility the of what to model. hold inventory stay reserve to discussed in on within improving which quarter, season. expected flow providing short are a advantage of of off second being the hold, focused and is inventories and price and we inventory on these take working last on comprised able hold as the to resulting chase quarter turns We end to than pack ourselves quarter's key our higher the were this inventories, of

As goods. we a as is hold. biggest and imports, inventories direct result, when arriving both is This strategic are as the XX:XX high roughly began fiscal which of year. combination and our reserve of planned a much twice this (ph) had purchases is The we the of component pack initially late inventory [IMU]

time very supply fact now good goods dislocation, chain on own owning no was Total and under feel the while XX delivering that sales. high next over we it ongoing drive issues million $XX will We the these detracts Given now about we'll months. have we these goods the including was decision that believe and revolver. IMY our liquidity, liquidity help these XX:XX right the million, from $XX

at of primarily our line $XX credit, driven no inventory XXXX. our As million in outlook outstanding outstanding borrowings was end, the QX of year. for increased compared quarter had by fiscal to we The of I under levels. higher borrowings the will end of the to remainder balance XX:XX now move

we using Going events. in all had Beginning QX have year of fiscal comparisons. with forward, be we promotional all will last XXXX periods for

our XX:XX In to center there for levels transportation, to the be additional which and incurred chain purchases. store on gross pack short well X outbound to as for in flow to hold in growth to the chain As sales the inbound hold expect P& And With our store as P& on year delay we inventory Fred is when a supply QX, distribution invested respect costs sales flow comp our reminder, drive Therefore, margin XX:XX costs, hold, in be we bring they growth mid-single to margin, and and costs are low third costs supply include gross mid-single to and when and digits. the as L. as L the in comp mentioned, inventories quarter we expect in our the higher and through recognized are a of the digits. those months turns. last

headwinds inbound fourth improve quarter. for would In had plan begin by to mentioned, XXXX fiscal Fred addition, as freight the our assumed original

these be least fiscal the outlook gross will half negatively first our assume half. through to to these cost of recognized the than XX:XX at end pressures our that margin, we continue which We have XXXX. factors now will Accordingly, adjusted impact lower in second expect

outside as EBITDA professional supply We offset are related continued the have we of average SG& the that a two labor the chain partially improved outlook. identifying travel proactively maintain for full from to these to impact month costs, last XX:XX of addressing areas our cost such is For in savings actions provided These by adjusted costs. headwinds quarters, year fees, allowed costs liquidity XXXX. guidance fiscal higher and an the A loss year us slightly XX

plan a not detailed provide financial Given fiscal cannot yet XXXX has that completed, been we that.

projection our stated spring taking Our average million. an in June of liquidity obligations a this XX:XX projection. average now incorporated was We monthly monthly for estimated at costs, By over million. for and and into higher line of $X freight liquidity for related to cover our to through the meet additional our concluding more believe with $XX in $XX turn XXXX is look QX at rest than are call, January inbound Fred Fred? million we the month capacity that higher remarks. fiscal some reserve million. XXXX. we will If $XX is we average to were call plans number, our the to inventories, On account it enough approximately that XX back of I

Fred Hand

through Thank during Jennifer. on off The team prepared of team entire want working dedication to holiday its Morning become you, execution the lead price a close sense our urgency class executing for initiatives Tuesday retailer. a by with I XX:XX is to our transformation season. on thanking the their and to Tuesday remarks Morning world

the and the support. I like partnership XX:XX up for addition, open will questions. thank We to call for now vendor communities In would their continued

Operator

ahead. go Thank be session. line you Instructions] we Financial. from a Hamed this Please the from XX:XX [Operator conducting We question a of question-and-answer have time very much. will BWS At Khorsand

Hamed Khorsand

XX:XX Good morning.

this about to that How having? to strategy could to inventory? it inventory on been been you strategy you've able you off, source relates really First have execute merchandise sales the as just talk

Fred Hand

Hamed. chain the during that for get in the brought us the as they enabled they're that and The for aggressively, if to really holiday Thank vendor work [indiscernible] much want buys. the business. part the what in all morning, that in that working bringing as ongoing really were Good and chain to a the with sure as as this come of were we're as able team, vendor ready imports, as can to making bring job done quarter XX:XX been up. being able of on and that color really to very of our or reacting us is direct merchants able Mark that and we sure to as mix freshness huge plus But in. to I to was team know efficiently and goods hands add POE, be XX:XX we're able they've to work that's business really if between to a the all more challenges merchant dislocation source working that to supply how domestic you supply is Jennifer, for the has with well you really can product make have XX:XX the macro good well they inventory bring that. the with given goods to any our the in proactively the our bring challenges question. are guys their we have don't sourcing great agile community be community, we fact the really very we on The able And

Marc Katz

well they're looking And is our it I new merchant they're things know think those to the XX:XX one said. think that I total other vendors to was a is, it really to add Yes, consistently mix. doing our credit of I team. --

have as as with fantastic relationships they're So existing new well, well existing bringing as vendors our vendors. they on

them. it’s to points, your to really credit So

Hamed Khorsand

driving you then been from much question release, pleased provide was mentioned sales Okay. that the a had And little you don't you had guidance, I the XX:XX just that that just comment? you're Could so describe because really the bit, what with other was press execution.

Fred Hand

of Thanksgiving between in weeks career. spent lot I that's I've of in the Christmas. Sure. during my what time XX:XX Typically, the a Absolutely. and stores peak done

prep. also I positioned at which issues would it's mentioned. the that working, still think also going put and we are. look clearly, can well although for can that has I understand to. tell us going listen stores you a frankly, store to as engage were we house learned the dealing stores trips take merchandise house, great what's looking clean a quickly possible and working our and the floor and during able senior as about to the for up a our And the opportunity store we not listen sure best getting providing stores staffing, can and to about team, at job that's which to better I the to of improvement. I a start, with Dallas would think I the of spend come think that looking leadership anything how the Worth of set correct stores. our understand about going at can to the And great And experience priority goods senior just very working to I I visit things of from remarks, quality carryover, standards gifting a opportunities the that make team, week I XX:XX beat opportunities is, every care the felt felt also customer, at it. season together My customers, we make positioned we great my quarter, to at markets, important sure we're members And we the how the as that that's holiday. little at in thing store looking good we QX, looking they the these of continued our really back we Fort X presentation being fast to that The in very But about very seasonal of the the is the is season. our beginning felt how great as maintaining and in December sentiment I as one competition, XX:XX to members at our really into challenge operations throughs, stores lessons time of and to really actions apply have And were motif. of weather what's was customer, thing great I could. you were to in that next with customer, react I trips make not prepping and by right if us looking little with, you category in learn sure of There's season. to process plan my being of just were pleased bit were our sell through felt as to season, what's I able really there's always to as my look were our I the got the on the felt of for be as softness what frequently. I the that from we that level of thought our neat the up, X because through other XX:XX which works and then next team I noted some holiday X we great but front Hamed, floor in leadership and XX:XX our from look some Overall, opportunities X, service, a lot really November. if holiday the versus it market associates a at our we both what well addition the that able and holiday we holiday for the made January. view The that quantity for add done next did that is, what assortment the the point from to for next direction.

managing herculean team And of effort stores in chain our did really merchants product, getting setting record were QX. are great did which the of great a execution our and Our the the did that shipments shore the reasons a the prepared I a Those very traffic teams why was that supply customer with I'm securing service. terrific. row, X job the to well weeks job you would and in tell pleased of providing

Hamed Khorsand

great. it the confident mid-single digit the Is Okay, XX:XX as just factor why of driving that's is this inventory comp the with quarter? the is refresh Or inventory to quality? price And growth happening then, points? you're it

Fred Hand

Oklahoma other in states, to QX the against up part continue the QX weather versus incremental as rather, key we a southern our It's tell an great you and that continue mentioned we're competition. keep well focused to But retail I mind average that on the sales. value, the or combination Clearly, really to February we going of to and of drive The in content. just the items past, is bringing good in will both. product. feel XX:XX about in impacted We're XX:XX the brands thing states. we've as would we those are see the factors surrounding as freight increase do, Texas, that the the think in quality saving I for unit at particularly

our something inventory. what clearly have as with that's on So baked for numbers that we're our just we've working is also direction the experienced what QX, we an opportunity and but the majority it into of and

Marc Katz

with thing under only running We line inventory on so actually would the the that, much ended first to this, been our fall had And for Hamed, so in plan. Yeah. I is add we long. time for we and mentioned XX:XX that,

other up really our In able fact add for we the set of were us is to that And spring. end then for get freshness. beginning at I that would of plan the fall, inventory that season thing

continues kind at freshness be to all-time Our of highs.

real fresh very us that about inventories it's it. make So good feel

Hamed Khorsand

some the second then EBITDA the about And Jennifer. last margin declining of puts Okay. for talk you XX:XX the and and gross between takes guidance just question of Could half year?

Jennifer Robinson

XX:XX Sure. Absolutely.

costs in impact So going inventories believe higher second and a that prepared addition negatively and had as hold pack chain fiscal chain given our that in P& assumed Fred to supply our recognized to would year. inbound So in costs QX for purchases. XX:XX has as mentioned make will XXXX amount our costs to no be during and those freight additional plan, gross we case. continued, that, longer turns, is our in of margin our bring investments the time in we some that inventory as store mentioned, improve half QX start and passed the large And costs is in short did that as uncertainty flow supply and drive initial remarks, our hold, the to are of L hold we’ve also in to

And so, well. to costs and transportation $X travel. added scrub the marketing, back partially as for suppresses costs over company-wide of do of year mitigate stores, of the areas the company half did the from that transportation all of that came savings of organization, the million incremental we We from SG& all along a areas half with to our of these approximately thorough the margin corporate, which XX:XX A is QX, gross incremental

versus a those EBITDA So our reiterate while us things that lower in it's the guide, the in combination of also result adjusted expecting all to the gross spring margin of being fall. able

Hamed Khorsand

Thank great. you. Okay, XX:XX

Fred Hand

Hamed. Thanks, XX:XX

Marc Katz

you. Thank XX:XX

Operator

call Over you. back Thank like gentlemen, our remarks. management the you this for I'd Q&A XX:XX the turn gentlemen. to session. concludes closing Ladies to to

Fred Hand

call. forward everyone. our support you for and Have us We joining great earnings you Thank appreciate next to look a speaking your today. to XX:XX at continued day

Operator

very XX:XX today's conference. concludes this Thank Ladies gentlemen, you and much.

Thank at You your for now participation. time. lines disconnect you this may your

Tuesday Morning (TUEMQ) 3 Feb 222022 Q2 Earnings call transcript