Tuesday morning lenders force retailer to hire consultant

Discount home goods retailer Tuesday Morning Corp. is exploring restructuring options, including what could be its second bankruptcy filing in less than two years, according to people with knowledge of the matter. Bloomberg News.

The company receives guidance from Piper Sandler Cos., the people said. Tuesday Morning signed debt deals to give it breathing room, but struggled amid inflation and supply chain bottlenecks. Restructuring talks are in their early stages and could change, the people said.

A representative for Tuesday Morning, based in Dallas, declined to comment. A representative for Piper did not respond to requests for comment.

Some of the company’s lenders agreed to advance a $5 million loan to the company last week instead of November, according to a regulatory filing. Tuesday Morning also entered into a supply agreement with Gordon Brothers Retail Partners, a subsidiary of one of its lenders.

In May, Tuesday Morning replaced an asset-based loan facility maturing December 2023 with a new secured line of credit maturing September 2024. It also repaid $5 million of a term loan and had about 1 million dollars of interest waived. These transactions would provide the company with enough liquidity for at least the next 12 months, Tuesday Morning CEO Fred Hand said in a call in May to discuss quarterly results.

As of April 2, the company had $35 million in cash. Still, Tuesday morning’s outlook is tepid given uncertain consumer spending, inflation and ongoing supply chain issues. The company expects comparable store sales to decline in the fourth quarter from a year earlier and an adjusted loss for the full year due to lower sales and higher markdowns .

Tuesday Morning was among several retailers that filed for Chapter 11 bankruptcy early in the pandemic, unable to survive lockdowns and rapidly changing shopping habits. The company emerged from bankruptcy in January 2021 after reducing debt and permanently closing nearly 200 stores. Tuesday morning’s reorganization ended up paying creditors 100%, and it ended with the rare occurrence of shareholders still holding equity.

The retailer, which was founded in Dallas in 1974, operates 490 stores in 40 states. Its stock has fallen 84% this year to trade around 30 cents per share.

Bloomberg’s Rachel Butt and editor Maria Halkias contributed to this report.

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