Tuesday Morning Considers Bankruptcy Amid Store Closures
Tuesday Morning Considers Bankruptcy Amid Store Closures
(Bloomberg) -- Tuesday Morning Corp., the discount home-goods retailer, is discussing a potential bankruptcy filing after the pandemic shut down its stores, according to people with knowledge of the matter.
No formal decisions have been made, but Tuesday Morning has held initial talks with lenders about a bankruptcy loan that would keep the company running while it works out a recovery plan, the people said. They asked not to be identified discussing a private matter.
A representative for Dallas-based Tuesday Morning declined to comment. A Chapter 11 bankruptcy filing would allow the company to avoid a permanent shutdown, cut its borrowings and close weak stores to minimize costs.
The situation remains fluid and plans could change, with the company still seeking alternative forms of financing, according to the people. The outcome could depend on market conditions and the outlook for when stores could re-open, the people said. This reflects the impact of the coronavirus, with sales suffering because government officials are telling shoppers to stay home and nonessential businesses to stay shut.
Founded in 1974, Tuesday Morning is a national off-price retailer that specializes in home products, textiles, furnishings and other home goods. It has about 700 stores in 39 states, according to its website.
Tuesday Morning temporarily closed its stores in response to the pandemic in March. Like other retailers, the company is bracing for a slump tied to the closures, but it’s especially vulnerable because all of its sales come at its stores; there’s no online outlet. It drew $55 million from its revolving credit facility as a precautionary measure to ride out the pandemic.
Even before the closures, Tuesday Morning was experiencing troubles of its own. Sales at outlets open for at least a year fell 3% during the quarter ended Dec. 31, filings show. Tuesday Morning ended the quarter with $4.9 million in cash, down from $6.1 million a year earlier.
©2020 Bloomberg L.P.