Here's where the shoppers were last Christmas
Tuesday Morning's value proposition clearly resonated with shoppers over the holidays as the off-price retailer reported an impressive increase in same-store sales for the second quarter.
The Texas-based retailer said that for the second quarter and six months ended Dec. 31, net sales were $319.9 million for the second quarter, an increase of $18.5 million from the prior year period. Same-store sales increased 8.4%. Operating income for the second quarter was $20.6 million. Diluted income per share was 43 cents.
"We are pleased with the 8.4% comparable store sales increase we achieved in the second quarter," said Steve Becker, CEO. "These results were driven by a strong merchandising effort that demonstrates our ability to provide exceptional value to our customers with a relevant and ever changing assortment of product. We have continued to accelerate our investments in store real estate, the supply chain and our marketing initiatives. Our transition to broad and shallow has accelerated a long overdue restructuring of our supply chain capabilities. While we are moving towards the completion of the Phoenix DC facility, as we have previously discussed, the timeline is longer than originally contemplated when the project was launched over a year ago, resulting in additional IT and consulting costs. In addition, we incurred increased freight and labor costs as a result of the demands on our Dallas facility during the peak Christmas selling season as well as store labor costs associated with handling this increased volume of freight, all of which pressured our operating margins. We expect the completion of the Phoenix facility and continued efforts to create efficiency in our supply chain to help alleviate this operating margin pressure as we move into fiscal 2017.”
During the second quarter seven stores were relocated, eight stores were opened and one store was closed, ending the quarter with a store count of 764. Sales at the 35 stores relocated during the past 12 months increased approximately 54% on average for the second quarter of fiscal 2016 as compared to the prior year quarter and contributed 225 basis points to the comparable store sales increase of 8.4%.
Becker added: “While our investments in these areas are pressuring our operating margins this fiscal year, we believe they are crucial to position Tuesday Morning for sustainable success for years to come. We are very encouraged by the tangible progress we are making on each of our initiatives, including adding management talent in key functional areas, but there remains much work to be done and our entire team feels a sense of urgency as we continue rebuilding the company for long-term success.”
Looking ahead, the company said it continues to expect its new Phoenix distribution center to be operational in the first half of fiscal 2017. In fiscal 2016, the company continues to expect expenses related to the original delays in the Phoenix distribution center to be in the range of $6 million to $8 million, two-thirds of which will be incurred in the second half of the fiscal year.