Tuesday Morning Corporation (NASDAQ: TUES) today announced it will
pursue financial and operational reorganization designed to allow
the Company to reduce its outstanding liabilities and strengthen
its overall financial position. These actions are in response to
the immense strain the COVID-19 pandemic and related store closures
have put on the business.
To pursue this reorganization, Tuesday Morning filed voluntary
petitions for protection under Chapter 11 of the Bankruptcy Code in
the United States Bankruptcy Court for the Northern District of
Texas – Dallas Division. Ultimately, this process will provide
Tuesday Morning with an opportunity to continue navigating the
COVID-19 pandemic and emerge as a stronger company by early fall
2020.
To enable the Company to continue operations during the
reorganization process, the Company has obtained a commitment from
its existing lender group to provide $100 million of
debtor-in-possession (DIP) financing. As required by the DIP
agreement, the Company is required to obtain a commitment for up to
$25 million of additional financing, which the Company is
negotiating.
Following the closure of the entire store portfolio as a result
of COVID-19, Tuesday Morning has re-opened over 80% of its existing
store footprint to date and expects to continue store re-openings
and bringing associates back to work over the coming weeks.
Steve Becker, Chief Executive Officer, stated, “The prolonged
and unexpected closures of our stores in response to COVID-19 has
had severe consequences on our business. Prior to the pandemic, we
were gaining momentum in our merchant organization, growing our
vendor base and improving brands, assortment and value for our
customers, while investing in our technology and corporate
leadership team. However, the complete halt of store operations for
two months put the Company in a financial position that can be
effectively addressed only through a reorganization in Chapter
11.”
Mr. Becker continued, “We plan to emerge from Chapter 11 in a
stronger position as a leading home goods off-price retailer,
providing unmatched value to our customers. The commitment from our
lenders to provide access to significant capital demonstrates faith
in our value-driven business model and iconic brand. Looking ahead,
we’ve been encouraged by very positive performance of the business
as we continue to re-open our doors and welcome back our dedicated
customers.”
Realignment of Store & Distribution
FootprintThe Company expects the reorganization process to
enable the Company to realign its store footprint. Following
a thorough and comprehensive store-by-store analysis with the help
of its financial and restructuring advisors, the Company expects to
close approximately 230 of its 687 stores to focus on
high-performing locations and will do this with a phased approach.
The store closure process will take place over the summer.
The Company has requested bankruptcy court approval to close at
least 132 locations in a first phase and, eventually, the Company’s
distribution center in Phoenix that supports these stores. These
stores were identified as underperforming or are situated in areas
where too many locations are in close proximity.
Tuesday Morning plans to attempt to renegotiate a significant
number of leases during this process. Of the remaining 555 stores,
the Company plans to exit approximately 100 additional locations
leaving a go-forward footprint of approximately 450 stores.
This realignment will allow Tuesday Morning to improve its
product offering by focusing on the highest performing stores in
its most productive markets, provide greater value to customers by
sending the best deals to a smaller number of stores, and enhance
the overall profitability and credit worthiness of the Company with
resources directed at its most profitable stores.
COVID-19 Update The Chapter 11 process is not
expected to impact the Company’s ability to re-open stores closed
due to COVID-19 and it will continue to do so in accordance with
state and local mandates where the Company operates.
Since Tuesday Morning began re-opening its stores on April 24,
2020, comparable store sales for the reopened stores have been
approximately 10% higher than sales during the same period in
fiscal 2019, and over 7,300 associates have returned to
work.
The Company’s highest priority continues to be the health and
safety of its customers and employees. Tuesday Morning has put in
place a number of safety measures at each newly re-opened location,
including the implementation of enhanced cleaning protocols and
social distancing at all times. Additionally, employees have
completed training on safety procedures and are required to wear
masks.
Additional Information Court filings and other
documents related to the court-supervised process are available at
https://dm.epiq11.com/TuesdayMorning, or by calling the
Company’s claims agent, Epiq Corporate Restructuring LLC, at (855)
917-3492 (or +1 (503) 520-4429 for international calls) or by
sending an email to TuesdayMorningInfo@epiqglobal.com.
Haynes and Boone, LLP is serving as legal advisor, Miller
Buckfire, a Stifel company, is serving as financial advisor, and
AlixPartners, LLP is serving as restructuring advisor to Tuesday
Morning.
About Tuesday MorningTuesday Morning
Corporation (NASDAQ: TUES) is one of the original off-price
retailers specializing in name-brand, high-quality products for the
home, including upscale home textiles, home furnishings,
housewares, gourmet food, toys and seasonal décor, at prices
generally below those found in boutique, specialty and department
stores, catalogs and on-line retailers. Based in Dallas,
Texas, the Company opened its first store in 1974 and currently
operates 687 stores in 39 states. More information and a list
of store locations may be found on the Company’s website
at www.tuesdaymorning.com.
Cautionary Statement Regarding Forward-Looking
StatementsThis press release contains forward-looking
statements within the meaning of the federal securities laws, which
are based on management’s current expectations, estimates and
projections. Forward looking statements also include
statements regarding the Company’s plans with respect to the
Chapter 11 proceedings, the Company’s plan to continue its
operations while it works to complete the its proposed
reorganization, the Company’s proposed debtor-in-possession
financing, the Company’s plans to reopen stores, the Company’s
plans for store closures and lease renegotiations, and other
statements regarding the Company’s proposed reorganization,
strategy, future operations, performance and prospects. These
forward-looking statements are subject to risks and uncertainties
that could cause the Company’s actual results to differ materially
from the expectations expressed in the Company’s forward-looking
statements. These risks, uncertainties and events also
include, but are not limited to, the following: the Company’s
ability to obtain timely approval of the Bankruptcy Court with
respect to motions filed in the Chapter 11 proceedings; objections
to the DIP financing or other pleadings filed that could protract
the Chapter 11 proceedings; the Bankruptcy Court’s rulings in the
Chapter 11 proceedings, including the approvals of the terms and
conditions of the DIP financing, and the outcome of the Chapter 11
proceedings generally; the Company’s ability to comply with the
restrictions imposed by the terms and conditions of the DIP
financing, including the Company’s ability to obtain additional
financing secured by the Company’s real estate and the Company’s
ability to obtain a timely sale of all of its assets or approval of
a plan of reorganization; the length of time that the Company will
operate under Chapter 11 protection and the continued availability
of operating capital during the pendency of the Chapter 11
proceedings; the Company’s ability to continue to operate their
business during the pendency of the Chapter 11 proceedings;
employee attrition and the Company’s ability to retain senior
management and other key personnel due to the distractions and
uncertainties; the effectiveness of the overall restructuring
activities pursuant to the Chapter 11 proceedings and any
additional strategies the Company may employ to address its
liquidity and capital resources; the actions and decisions of
creditors and other third parties that have an interest in the
Chapter 11 proceedings; risks associated with third parties seeking
and obtaining authority to terminate or shorten the Company’s
exclusivity period to propose and confirm one or more plans of
reorganization, for the appointment of a Chapter 11 trustee or to
convert the Chapter 11 proceeding to a Chapter 7 proceeding;
increased legal and other professional costs necessary to execute
the Company’s restructuring; the Company’s ability to maintain
relationships with suppliers, customers, employees and other third
parties and regulatory authorities as a result of the Chapter 11
proceedings; the trading price and volatility of the Company’s
common stock and the effects of the expected delisting from The
Nasdaq Stock Market; litigation and other risks inherent in a
bankruptcy process; the effects and length of the novel coronavirus
pandemic; and the other factors listed in the Company’s filings
with the Securities and Exchange Commission. Except as may be
required by law, the Company disclaims any obligation to update any
forward-looking statements to reflect events or circumstances after
the date on which the statements were made or to reflect the
occurrence of unanticipated events.
Media Contacts Allison McLarty
Edelman646-270-6797
Ted McHugh Edelman212-819-4875
TuesdayMorning@edelman.com
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