Tuesday Morning Corp. :TUES-US: Earnings Analysis: 2017 By the Numbers : August 28, 2017

Tuesday Morning Corp. reports financial results for the year ended June 30, 2017.

We analyze the earnings along side the following peers of Tuesday Morning Corp. – Williams-Sonoma, Inc., The Container Store Group, Inc., Target Corporation, Dollar Tree, Inc., Don Quijote Holdings Co.Ltd. Unsponsored ADR and Wal-Mart Stores, Inc. (WSM-US, TCS-US, TGT-US, DLTR-US, DQJCY-US and WMT-US) that have also reported for this period.


  • Gross margins narrowed from 35.74% to 33.18% compared to the same period last year, operating (EBITDA) margins now -0.23% from 2.86%.
  • Year-on-year change in operating cash flow of -95.20% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Narrowing of operating margins contributed to decline in earnings.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2017 2016 2015 2014 2013
Relevant Numbers (Annual)
Revenues 966.67 956.4 906.37 864.84 838.31
Revenue Growth (YOY) N/A N/A N/A N/A N/A
Earnings -32.54 3.67 10.29 -10.18 -56.38
Earnings Growth (YOY) -985.98 -64.32 201.15 81.95 -1551.87
Net Margin -3.37 0.38 1.14 -1.18 -6.72
EPS -0.74 0.08 0.24 -0.24 -1.33
Return on Equity -15.27 1.64 4.86 -4.95 -24.11
Return on Assets -9.04 1.05 3.08 -3.11 -15.68

Access our Ratings and Scores for Tuesday Morning Corp.

Earnings Growth Analysis

The company’s year-on-year decline in earnings was influenced by a weakening in gross margins from 35.74% to 33.18%, as well as issues with cost controls. As a result, operating margins (EBITDA margins) went from 2.86% to -0.23% in this time frame. For comparison, gross margins were 35.74% and EBITDA margins were 2.86% in the previous period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

TUES-US‘s decline in gross margins were offset by some improvements on the balance sheet. The management of working capital, for example, shows progress. The company’s working capital days have fallen to 49.82 days from 55.21 days for the same period last year. This leads Capital Cube to conclude that the gross margin decline is not altogether bad.

Gross Margin Versus Working Capital Days

Quadrant label definitions. Hover to know more

Customer Financed, Cash Starved, Supplier Financed, Cash Rich

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

TUES-US‘s change in operating cash flow of -95.20% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings


The company’s decline in earnings has been influenced by the following factors: (1) Decline in operating margins (EBIT margins) from 1.18% to -2.44% and (2) one-time items that contributed to a decrease in pretax margins from 0.42% to -3.35%

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for Tuesday Morning Corp.

Company Profile

Tuesday Morning Corp. engages in the retail of decorative home accessories, housewares and gifts. The company product portfolio includes home decor, furniture, bed and bath, kitchen, toys, crafts, pets and seasonal goods. Its brands include Peacock Alley, Sferra, Lenox, Waterford and Hartmann. The company was founded by Lloyd Ross in 1974 and is headquartered in Dallas, TX.

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