Rising expenses take toll on Tuesday Morning in Q3

Rising expenses resulted in an increased net loss at Tuesday Morning Corp. during the third quarter of fiscal 2016, despite positive sales results.



Dallas-based Tuesday Morning reported a net loss of $5.24 million, close to double the $2.8 million loss it posted during the third quarter of the previous fiscal year. On the plus side, net sales rose 11% to $211.38 million from $189.73 million. Same-store sales grew 13.4%, largely driven by an increase in customer transactions.



However, the retailer was saddled by rising expenses including the cost of relocating, opening and closing stores, increased supply chain and distribution costs in its Dallas distribution center, increased markdowns in some categories, higher store rent and depreciation costs, employee and recruiting costs, and costs related to a new distribution center being built in Phoenix.



Steve Becker, CEO, said that the company’s current net loss will ultimately result in higher profits down the road.



“During the quarter, we made progress on our core initiatives,” said Becker. “As we have previously stated, this work has significant costs which will burden our income statement in the near term, but ultimately will result in a more profitable business model. Along with refining and improving our product assortment, we have been focused on restructuring our supply chain, accelerating our real estate repositioning efforts and completing the build-out of our senior leadership team.”



Tuesday Morning continues to expect its Phoenix distribution center to be fully operational in the first half of fiscal 2017 and expects a capital spend of approximately $45 million in fiscal 2016.