Discount home-goods retailer Tuesday Morning filed bankruptcy on Wednesday as its in-store sales only business model left it unable to weather the fallout from the coronavirus pandemic.
As USA Today reports, “The company joins a growing list of retailers that have tumbled into Chapter 11 bankruptcy during the pandemic, including J.C. Penney, Neiman Marcus and J. Crew.”
With the pandemic initially forcing the closure of all 705 of Tuesday Morning’s stores, it had no revenue at all for two months in the absence of an e-commerce channel.
“The prolonged and unexpected closures of our stores in response to COVID-19 has had severe consequences on our business,” CEO Steve Becker said in a news release, adding that the shutdown “put the company in a financial position that can be effectively addressed only through a reorganization in Chapter 11.”
Tuesday Morning had until Tuesday to repay about $42 million in loans. Lenders have agreed to provide the company with $100 million in financing to keep it operating during the Chapter 11 process and it plans to close more than a third of its stores.
Better-than-expected sales in stores that have reopened have made Tuesday Morning “cautiously optimistic about the company’s ability to weather the pandemic and emerge from [bankruptcy] well-positioned for continued success,” Barry Folse, the company’s restructuring consultant, said in a court declaration.
Tuesday Morning, which was founded in Dallas in 1974 by Lloyd Ross, sells a wide variety of merchandise including home decor, bath and body goods, crafts, food, and toys.
In the second quarter, its overall sales fell 4.1% to $324.4 million as comparable store sales declined 3% versus the year-ago period. “Tuesday Morning had been struggling when the coronavirus pandemic began and went into a free fall when it was forced to temporarily close its locations due to the crisis,” USA Today said.
According to Folse, the company provides customers with a “unique ‘treasure-hunting’ experience … through its off-price business model, appealing no-frills store environment, and its diverse inventory mix.”
“The impact of COVID-19 … has therefore created unprecedented financial and operational strain” on the company, he said.