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Dallas – The supply chain team at Tuesday Morning is seeking to expand its vendor roster as it pursues its long-term growth strategy.
The off-price retailer, which recently reported its fiscal second quarter results, is keeping a tight rein on in-store inventories to keep pumping through fresh merchandise. While it is chasing opportunistic buys, in late 2021 it also jumped on purchases for pack-and-hold inventory, which it views as a competitive hedge again inflationary-priced merchandise now in the pipeline.
During the second quarter, which ended Dec. 31, 2021, store inventory ended down 26%. The amount of current-month receipt inventory on the floor hit an all-time high. Sell-through on seasonal goods was 91% before markdowns.
“We ended the second quarter with minimal seasonal carryover, and are very pleased with the level and currency of our inventories heading into the third quarter,” said Fred Hand, CEO.
Other takeaways from this morning’s analyst call:
Supply chain disruption: At the beginning of its fiscal year in July 2021, Tuesday Morning expected global supply chain issues would begin to improve by spring 2022. It now expects disruption to pressure costs at least through mid-year.
Omicron impact: The retailer’s Q2 sales started out strong, then began to wane in the second week of December. That softness carried on into January. The company attributed the change to the rising number of Covid-19 cases, as well as poor weather in some trading areas.
Store count: At the end of the quarter, the company operated 492 stores, compared to 490 stores in the prior-year period. In late 2020, it operated 705 stores before shuttering units as part of its reorganization. Roughly 30% of its current stores have leases up for renewal over the coming 12 months. The company is evaluating which of those stores should be relocated within their existing markets, Hand said.
Store strategy: The retailer continues to move forward with its initiative to focus on higher-margin goods in a decluttered environment that clears the way for more enticing merchandise displays.
Second quarter net sales rose 26.6% to $251.4 million. Comp store sales for the 486 stores that were open in the most recent and prior-year Q2 inched up 1.0% — despite being up against 14 promotional events that ran during holiday 2020. Tuesday Morning held no promotional events during the recent quarter.
Operating income was $3.4 million compared to an operating loss of $4.3 million in the previous Q2. Net earnings were $1.9 million, or $0.02 per share. Net earnings for the previous Q2 quarter were $40.3 million, or $0.88 per share, including reorganization gains of $48.1 million.
For the six month period, net sales increased 18.9% to $428.3 million. Comp was up 1.9% for stores that were open in both periods. Average comparable store inventory was down 39% year-over-year.
Operating loss narrowed to $8.2 million compared to an operating loss of $20.8 million in the prior-year period. Net loss was $12.7 million, or $0.15 per share, compared to net earnings of $59.0 million, or $1.29 per share, in the comparable six-month period.
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