DALLAS, Oct. 27, 2009 (GLOBE NEWSWIRE) -- Tuesday Morning Corporation (Nasdaq:TUES) today reported that, as previously announced, net sales for the first quarter of fiscal 2010 were $165.9 million compared to $173.4 million for the quarter ended September 30, 2008, a decrease of 4.3%. Comparable store sales for the quarter ended September 30, 2009 decreased by 5.8% comprised of a 1.7% decrease in traffic and a 4.1% decrease in average ticket. Net loss for the first quarter ended September 30, 2009 was $4.7 million, or $0.11 loss per diluted share, compared to a net loss of $4.3 million, or $0.10 loss per diluted share, for the same period last year.

Kathleen Mason, President and Chief Executive Officer, stated, "We are encouraged by the positive trends we experienced in September. We have effectively managed inventory levels. At September 30, 2009, inventory was down 8.6% from the same period last year. Our revolver balance was $5.3 million at September 30, 2009 versus $36.5 million at the same time in the prior year, an 85% reduction. We had $130.9 million in availability under our credit facility at September 30, 2009."

Financial Results for the First Quarter Ended September 30, 2009

Gross Profit -- Gross profit decreased $0.8 million, or 1.2%, to $63.4 million for the first quarter ended September 30, 2009 compared to the same quarter last year of $64.2 million. As a percentage of net sales, gross profit increased to 38.2% for the quarter compared to 37.0% for the same period in fiscal 2008. This decrease in gross profit dollars is largely the result of lower sales volume. The increase in gross profit percentage was primarily due to a decrease in markdowns resulting from tighter inventory control as well as a decrease in freight expense.

Selling, General and Administrative Expenses ("SG&A") -- SG&A for the quarter was $70.3 million, or 42.4% of net sales, versus $70.9 million, or 40.9% of net sales, in the same period last year. On a per average store basis, SG&A was lower this quarter by 1.7% versus the same period last year.

Interest Expense -- Net interest expense for the quarter ended September 30, 2009 increased to $765,000 versus $331,000 for the same period last year due to higher amortization of financing fees related to our new credit facility.

Balance Sheet

Inventory decreased from $307.1 million at September 30, 2008 to $280.7 million at September 30, 2009, a decrease of 8.6%. On a per average store basis, inventory was 9.3% lower at September 30, 2009 versus September 30, 2008. Net property and equipment was $72.0 million at September 30 2009, a reduction of $4.6 million compared to September 30, 2008. This decrease resulted from capital expenditures for the quarter being less than depreciation.

Accounts payable was lower at September 30, 2009 by $3.9 million, or 3.7%, versus September 30, 2008 due to lower inventory levels. At September 30, 2009, we had $5.3 million outstanding under our revolving credit facility versus $36.5 million outstanding at September 30, 2008. Outstanding letters of credit, primarily for insurance programs, were $12.4 million at September 30, 2009 compared to $10.4 million at the same time last year. At September 30, 2009, we had availability under our credit facility of $130.9 million and we were in compliance with all terms of our credit facility.

Store Activity

We operated 850 stores in 43 states as of September 30, 2009. During the first quarter of fiscal 2010, we opened 10 new stores, closed 17 existing stores and relocated 9 stores. The states experiencing the largest decline in sales continue to be those states most affected by the continued deterioration of the housing market, such as Florida, California, Nevada and Arizona.

Fiscal Year 2010 Guidance

Due to the continued uncertainty in the home furnishings retail environment, our guidance for fiscal 2010 will not change. As a result, we reaffirm our previous guidance for the full fiscal year ending June 30, 2010 as follows:

 Net sales:                           $795 million to $805 million
 Comparable store sales:              negative low single digits
 Diluted (loss) earnings per share:   ($0.02) to $0.02
 Capital expenditures:                $21 million
 Change in store count:               (7)

We plan to continue to relocate and expand stores, which serve to improve the portfolio of stores. The stores we have relocated in the last 8 quarters have shown double digit sales improvements and improved profit margins. As previously stated, we plan to open seven fewer stores than we close for the full fiscal year, allowing us to focus on the existing stores. The increase in capital expenditures projected for fiscal 2010 reflects the Company's plan to remodel stores, improve and enhance systems, as well as further streamline the distribution process.

About Tuesday Morning

Tuesday Morning is a leading closeout retailer of upscale, decorative home accessories, housewares and famous-maker gifts in the United States. The Company opened its first store in 1974 and currently operates 850 stores in 43 states.