Dallas – Promotions are gone, stores are being decluttered and Tuesday Morning is reworking its supply chain network.
Out of bankruptcy since January, the off-pricer is now moving to improve customer service and enhance the in-store treasure hunt experience, CEO Fred Hand told analysts during the company’s first quarter conference call this morning.
Among the takeaways:
- Tuesday Morning is prioritizing housewares and home textiles as key categories because of their higher AURs (average unit retails) and is de-emphasizing craft, paper and food.
- Assortments will be shallow and broad, stocked with multiple national brands and a few items for style.
- Style items will be kept at a minimum, and stores will be replenished with them individually as needed. Pack and hold will concentrate on seasonal deals from national brands.
- Pre-season purchases will be cut to improve liquidity so that merchants can chase stronger-selling lines of business. The company is planning $40 million in liquidity per month.
- Promotions are off the calendar. Instead, the retailer is pursuing an everyday low price model focused on national brands at a great value.
- The company last week began working with a third party specialist to help it optimize its supply chain, a project that Hand expects will run through the Tuesday Morning’s third fiscal quarter of 2022.
- Stores are rolling out wayfaring signage to help shoppers better identify product categories and it is reducing clutter at the front of the store, paring displays down to a few tables.
- At the store level, the retailer is working to improve efficiencies and reduce manual tasks so that associates can devote more time to customer service.
In terms of pricing, the company is less concerned about what other off-pricers are doing, said Hand. “It’s all about establishing a pricing gap between ourselves and department and specialty stores.”
Like all other retailers, Tuesday Morning is grappling with supply chain issues and announced as part of its first quarter report today that it expects those disruptions will result in an adjusted EBITDA loss for the full fiscal year.
“Despite the ongoing global supply chain dislocation, we believe the quality and level of our inventories has us properly positioned as we enter the holiday season,” said Hand.
As of Sept. 30, the conclusion of its Q1, Tuesday Morning operated 489 stores – down one unit compared to last year’s Q1 and 218 fewer locations than at the same period in 2020. The company’s Q1 filing compares results to 2020.
First quarter sales rose 9.5% to $176.9 million compared to the same period in 2020. Hand noted that there were no promotional events during the recent quarter and nine in the Q1 of 2020.
Comps at stores that were open during the recent quarter and Q1 2020 increased 3.2% over 2020, even though inventory was down 42%.
Cost of sales ballooned nearly 15%, Tuesday Morning swung to a net loss of $14.6 million compared to net income of $18.6 million in Q1 2020.