Tuesday Morning has filed for Chapter 11 bankruptcy for the second time since 2020 in order to help reduce its outstanding liabilities and obtain the necessary capital required to turn the business around. The off-price retailer also has obtained a commitment from Invictus Global Management to provide $51.5 million of debtor-in-possession financing to support ongoing operations during the proceedings.
The restructuring process will enable Tuesday Morning to optimize its store footprint and focus on its “core and heritage markets.” The strategy will involve closing an unspecified number of low-traffic stores and allocating more resourced to high-traffic regions in order to improve cash flow going forward. Additionally, the retailer will pivot to a 3PL model for its remaining stores to transition to a more cost-effective inventory acquisition strategy for remaining stores.
Tuesday Morning has struggled to recover since the pandemic forced it to temporarily shutter all of its stores for several months. The retailer avoided another bankruptcy filing in September 2022 with the help of last-minute cash infusions, but the company has since decided that restructuring will be its best path forward. The company’s revenue has been on a downward trend, with comparable store sales down 10.4% in Q1 2023, which ended Oct. 1, 2022, compared to Q1 2022.
“After considering how best to address Tuesday Morning’s exceedingly burdensome debt, we have determined that the best path to reorganizing and transforming the company begins with a Chapter 11 filing,” said Andrew Berger, CEO and Director of Tuesday Morning in a statement. “Fortunately, we have the support of a committed capital provider in Invictus and a clear vision for transforming into a focused retailer that serves its core, heritage markets in a profitable manner.
“We look forward to taking steps that enable us to emerge as a stronger retailer that draws on a legacy of offering a unique off-price value proposition to our loyal customer base. We appreciate all the support of our employees, customers, creditors and other partners as we seek to sustain commercial operations with minimal disruptions.”