A reprieve has come for off-price retailer Tuesday Morning, as the company enters an agreement to secure $32 million in convertible debt financing from a special purpose vehicle formed by Retail Ecommerce Ventures.
The agreement will allow Retail Ecommerce Ventures (REV)—which owns brands such as Pier 1, Linens ’n Things, Stein Mart, Modell’s Sporting Goods, and Ayon Capital, LLC—to take control of the Tuesday Morning brand. Additionally, members of Tuesday Morning’s management team, including CEO Fred Hand, will provide $3 million in convertible debt financing.
Proceeds from the investment will allow Tuesday Morning—which was rumored to be close to declaring bankruptcy for the second time in as many years after the departure of CFO Jennifer Robinson in July—to strengthen its balance sheet and embark on an omnichannel strategy.
REV is known for taking troubled physical retail brands such as RadioShack and converting them to leaner, e-commerce operations. The deal with Tuesday Morning will bring the home goods retailer online for the first time with an ecommerce platform and allow them to tap into REV’s fulfillment network, infrastructure and technology systems. The deal also includes a licensing agreement that will allow Tuesday Morning to sell Pier 1 products.
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“REV is excited to make this investment as we see tremendous long-term opportunity for Tuesday Morning in the home goods and décor category, especially as more consumers expect an omni-channel experience in the post-pandemic world,” said Tai Lopez and Alex Mehr, co-founders, REV. “We look forward to making our transformation expertise, technology capabilities and the Pier 1 brand available to the company.”
As part of the agreement, Tuesday Morning’s board of directors will be remade with REV and Ayon adding members who will comprise the board’s majority.
Tuesday Morning filed for Chapter 11 bankruptcy in May 2020, closing 230 stores. The company, which currently operates 490 stores, emerged from bankruptcy in January 2021. Earlier this year, Tuesday Morning secured a credit agreement for a $110 million revolver with Wells Fargo, as well as another $10 million in a committed term loan from global advisory and investment firm Gordon Brothers.
During its most recent earnings call, Tuesday Morning reported 4.1 percent quarterly net revenue increase to $159,621 million while net income fell 51.1 percent to a loss of $18.151 million. The company is expected to announce financial results for the fiscal year that ended July 2, 2022, on September 23.
“We believe this milestone transaction will strengthen our financial position and provide sufficient liquidity to execute on our strategic plan, allowing us to maintain strong relationships with our valued partners and elevate offerings for our customers,” Hand said.