Tuesday Morning Files Chapter 22

It’s an old line, but it still works: When a company files for bankruptcy for a second time, those who can look at it from afar and aren’t caught up in the destruction, will say it’s a Chapter 22 – Chapter 11 times two – filing.

So it was for Tuesday Morning, which perhaps with some unintended irony, announced it had filed for bankruptcy on…well Tuesday morning. It comes less than three years after the off-pricer filed for the first time in May of 2020 and not even two years since it emerged from that bankruptcy with new financing, a smaller store count and new management.

At least from today’s filing it appears that not much else changed as far as the retailer’s ability to be successful and profitable.

That a bankruptcy filing was imminent was one of the most widespread speculations in the retail world for quite some time, not lessened by some recent financial engineering that saw it taken over by an investment firm and delisted as a public company. Many vendors who had been selling Tuesday had cut them off or moved to a cash-only basis but that didn’t stop a number of home furnishings-centric suppliers from taking some serious six-figure hits. In such cases, whatever fate eventually is in store for the retailer, those debts are usually not paid at anywhere near their face value.

And what exactly will happen? In its statement, Tuesday said it has gotten some new financing, though $51million is pretty much chump change these days. It said it expects to close more stores from its current count of about 450 locations – it was once more than 700 – as well as move to third-party logistics and a whole host of other cost savings measures designed to return it to profitability.

Let’s just say confidence within the trade is not particularly high that things will get better. These are some of the same things it said the last time it filed.

The retailer’s decline comes in the context of the overall strength of the entire off-price channel which has held up better than virtually any other physical-store-based format the past several years. While the pandemic shut down most locations for off-pricers showing their vulnerability with their lack of e-commerce, most have hit the ground running in the two years since. As a group they continue to outperform most other retailers even as they deal with supply chain issues and being so far behind the curve in doing business online.

Tuesday Morning has been selling direct from its website but it’s been a meager offering. A recent scan of its available products showed just two lamps and only three items displayed under the “dinnerware” heading. Like others in the space, it has struggled with managing inventory online when its in-store strategy relies so much on opportunity buys and other limited assortments.

But Tuesday, which sells primarily home merchandise and competes with TJX’s Home Goods banner, as well as more general merchandise stores like Burlington, Ross, Ollies and the other TJX nameplates, was once considered a step above its off-price brethren. Its reputation within the trade – and among many shoppers too – was that it had better product the others didn’t carry and brands generally not available elsewhere within off-price stores. For many years, it was known for having more Ralph Lauren home merchandise than any other retailer within the channel.

Those distinctions have largely disappeared and with generally smaller stores, often dated in their fixturing and product presentations, Tuesday Morning has struggled to stay competitive.

It will now be up the bankruptcy courts, its creditors and its suppliers to decide whether Tuesday Morning will get another shot. Should they agree to do so, then it will be up to one more very important constituent to decide if it works any better this time: its customers.

That’s when we’ll know if there’s a tragic hat trick out there: a Chapter 33 filing.

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