Tuesday Morning Corporation (TUES) has reported 55.50 percent plunge in profit for the quarter ended Dec. 31, 2016. The company has earned $8.43 million, or $0.19 a share in the quarter, compared with $18.94 million, or $0.43 a share for the same period last year.
Revenue during the quarter went up marginally by 2.58 percent to $328.14 million from $319.88 million in the previous year period. Gross margin for the quarter contracted 293 basis points over the previous year period to 32.30 percent. Total expenses were 97.33 percent of quarterly revenues, up from 93.57 percent for the same period last year. That has resulted in a contraction of 376 basis points in operating margin to 2.67 percent.
Operating income for the quarter was $8.77 million, compared with $20.57 million in the previous year period.
However, the adjusted EBITDA for the quarter stood at $17.18 million compared with $26.50 million in the prior year period. At the same time, adjusted EBITDA margin contracted 305 basis points in the quarter to 5.24 percent from 8.28 percent in the last year period.
Steve Becker, chief executive officer said, "We delivered a 2.6% increase in sales for the quarter while operating 24 fewer stores. Our comparable sales increased 3.8% despite the significant supply chain challenges we faced in the December quarter. Our relocation stores continue to deliver strong sales results and we are preparing for an active season of real estate activity in the second half of our fiscal year. With the recent changes in our management team, we are confident that we have the right leadership to drive the business. However, there remains significant work to be done to drive process and cost efficiencies throughout our supply chain.”
Outlook
The Company currently expects to invest capital of approximately $38 million to $42 million in fiscal 2017, with a continuing focus on its real estate strategy for new stores, relocations and expansions of existing stores, and IT infrastructure and enhancements.
Operating cash flow improves significantlyTuesday Morning Corporation has generated cash of $18.43 million from operating activities during the first half, up 49.57 percent or $6.11 million, when compared with the last year period. The company has spent $19.93 million cash to meet investing activities during the first six months as against cash outgo of $20.85 million in the last year period. It has incurred net capital expenditure of $19.93 million on net basis during the first six months, down 4.41 percent or $0.92 million from year ago period.
The company has spent $0.02 million cash to carry out financing activities during the first six months as against cash outgo of $0.92 million in the last year period.
Cash and cash equivalents stood at $12.63 million as on Dec. 31, 2016, down 64.25 percent or $22.71 million from $35.34 million on Dec. 31, 2015.
Working capital declines
Tuesday Morning Corporation has witnessed a decline in the working capital over the last year. It stood at $133.80 million as at Dec. 31, 2016, down 14.45 percent or $22.60 million from $156.40 million on Dec. 31, 2015. Current ratio was at 1.98 as on Dec. 31, 2016, down from 2.31 on Dec. 31, 2015.
Days inventory outstanding has decreased to 52 days for the quarter compared with 112 days for the previous year period. At the same time, days payable outstanding was almost stable at 42 days for the quarter, when compared with the previous year period.
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