Tuesday Morning 2Q sales up 5.6%

DALLAS Tuesday Morning Corp. today reported that as previously announced, net sales for the second quarter of 2007 were $219.4 million compared to $207.7 million in 2006, an increase of $11.7 million or 5.6%. The increase is primarily due to $11.4 million increase in sales from non-comparable stores plus an increase in comparable-store sales of 0.1%. Net income for the second quarter ended June 30 was $2 million or 5 cents per diluted share, compared to $2.9 million or 7 cents per diluted share last year, a decrease of $0.9 million or 2 cents per diluted share.

Kathleen Mason, president and ceo, stated, "During the first half of 2007, we capitalized on the abundance of close-out goods in the market by executing inventory buys on high-quality merchandise. The inventory selection in our stores helped deliver our comparable-store sales improvement in the second quarter. We believe that market conditions will continue to be challenging as the debt and housing markets create additional obstacles for consumers. Moving into fiscal 2008, we will continue to focus on delivering positive operating cash flow and earnings per share, reducing inventory balances through profitable sales and maintaining a strong balance sheet."

For the six month fiscal year ended June 30, sales were $408.5 million compared to $395.4 million in 2006 for an increase of 3.3%. The increase in sales is primarily due to a $22.8 million increase in sales from non-comparable stores offset by a decrease in comp-store sales of 2.5%. The decrease in comp-store sales was comprised of a 1.5% increase in average ticket and a 3.9% decline in traffic. For the six month fiscal year ended June 30, net income was $3.1 million or 7 cents per diluted share compared to 2006 results of net income of $9.4 million or 23 cents per diluted share.

For the fiscal year 2008, the company expects net sales to be in the range of $987 million to $997 million. Comparable-store sales are projected to be flat to positive 1.5%. Diluted earnings per share are expected to be in the range of 85 cents to 90 cents.