Susan Dickenson

Tuesday Morning 3Q net sales down 5.7%; Martha Stewart Omnimedia revenues up 2%, announces marketing program with TurboChef; Havertys reports 1st qtr results
April 29, 2008

Tuesday Morning Corp. today (April 29) reported net sales for the third quarter of fiscal 2008 were $178.4 million compared to $189.2 million for the quarter ended March 31, 2007, a decrease of 5.7%. Comparable store sales decreased 8.2% for the quarter. The decrease in comparable store sales was comprised of a 6.6% decrease in traffic and a 1.6% decrease in average ticket. Net loss for the third quarter ended March 31, 2008 was $4.7 million, compared to net income of $1.0 million last year. Kathleen Mason, President and Chief Executive Officer, said, "We believe the results are indicative of the slump in the home furnishings sector, not a deterioration in the company's execution. The sharp drop in home prices has brought home starts and remodels to a standstill. Record high fuel prices and rising food prices, along with the drop in home values have restricted disposable income, resulting in exceptionally low consumer confidence. The flexibility of our format will enable us to continue generating positive cash flows and long term profitability." For the nine month period ended March 31, 2008, sales were $688.8 million compared to $704.8 million in for the same period ended March 31, 2007 for a decrease of 2.3%. Comparable store sales decreased by 6.1% for the nine month period. The decrease in comparable store sales was comprised of a 5.2% decrease in traffic and a 0.9% decrease in average ticket. For the nine month period ended March 31, 2008, net income was $17.0 million compared to 2007 results of net income of $28.0 million.

Martha Stewart Living Omnimedia, Inc. today (April 29) reported revenue of $67.8 million, an increase of approx. 2% for the first quarter ended March 31, 2008, compared to $66.7 million for the first quarter of 2007. Susan Lyne, President and Chief Executive Officer, said, "We're off to a good start in 2008. Each of MSO's segments posted solid results, and our bottom-line performance improved from the prior-year first quarter as we focus on creating sustainable profitability and cash flow. We're particularly encouraged to note that we continue to see ad growth in the second quarter. With the completion of our acquisition of the Emeril franchise in early April, we have further diversified our brand portfolio and added a high-margin revenue stream that will contribute to MSO's full year results."

Also today, MSO and TurboChef Technologies announced they have entered into a cross-platform marketing agreement for TurboChef’s residential speedcook oven. Emeril Lagasse is endorsing the oven and MSLO will create integrated marketing programs with TurboChef, some of which will feature Martha Stewart.

MSO's operating loss for the first quarter of 2008 was $(4.5) million, compared to $(12.6) million for the first quarter of 2007. Merchandising revenues were $13.1 million for the first quarter compared to $13.6 million in the prior year's first quarter. The company said The Martha Stewart Collection exclusively at Macy's continues to drive customer traffic and is performing well across all product categories. Martha Stewart for 1-800-Flowers.com, a co-branded line of fresh, seasonal flower arrangements and plants, launched in April in time for the spring holidays and Mother's Day.Publishing revenues in the first quarter of 2008 rose slightly to $40.8 million from $40.6 million in the prior year's first quarter, driven primarily by solid advertising revenues as well as book revenue from an agreement with Clarkson Potter. Advertising categories showed continued strength in core areas, including food, beauty and home, with growth in financial and pet supplies. Internet Revenues were $3.4 million in the first quarter of 2008 compared to $3.5 million in the first quarter of 2007, with advertising revenue increasing approximately 31%. Broadcasting revenues in the first quarter of 2008 were $10.6 million, compared to $9.0 million in the first quarter of 2007, an increase of approximately 18%, as a result of higher advertising revenue, as well as domestic and international licensing agreements.

Haverty Furniture Cos. Inc. reported net income for the first quarter of 2008 increased to $1.0 million compared to the first quarter 2007 net income of $0.8 million. As previously reported, net sales for the first quarter of 2008 were $185.2 million, or 3.0% less than the sales in the corresponding quarter in 2007. Comp store sales decreased 6.3% for the quarter.

Clarence H. Smith, Haverty's president and CEO, said, "Our earnings for the first quarter were up 24.2% on a 3.0% sales decline. Gross margins were strong at 52.1% compared to the prior year's quarter of 49.9% and reflect the impact of several of our strategies. We chose to use credit as a stimulant for sales rather than emphasizing price discounting during the first quarter. Slightly more than one third of the gross profit improvement was due to our product mix and better pricing discipline. Heightened diligence over our inventories reduced the levels of damaged and close out merchandise and accounted for a third of the gross margin improvement. Our gross profit is also impacted by the level of sales financed using our in-house long-term no interest credit promotions. During 2008, we shifted more of these promotions to the third-party and the impact of this shift generated approximately another third of the gross margin improvement.

"We are pleased with the progress of the initiatives we undertook last year to lower our SG&A expenses and have seen improvement in most areas. The savings were largely offset by the shift to longer term free interest credit offers provided through the third-party which increased our selling costs approximately $2.8 million for the first quarter of 2008 compared to 2007 when credit promotions had not been emphasized. Higher fuel costs were another offset that led to flat overall SG&A expenses.

"Our inventories are higher than at year-end, due in part to our building stock because of the impact of factory closures around the Chinese New Year. However, they are in line with our budget and well balanced. Accounts receivable continues to decrease as we shift away from in-house financing of long-term promotions. We have experienced some increases in write offs and delinquencies, but due to the reduction in total receivables our allowance account has declined slightly.

"Our industry is still struggling to find the bottom of this cycle. We are encouraged by our performance in certain of our markets but we still see significant weakness in Florida. We began selling on the web last month and have recently begun promoting havertys.com more heavily using banner advertising and enhanced search engine practices. Our approach remains to connect with the customer in ways she chooses to shop and drive customers to our stores pre-disposed to purchase. We believe that we can leverage our existing organization and fixed cost structure with any positive sales momentum.

"Current indications for April sales are that total written business was down approximately 7% to 8% with total delivered sales flat. We will release April sales results next week."

Posted by Susan Dickenson on April 29, 2008 | Comments (0)