Less than a month after securing a credit agreement for a $110 million revolver with Wells Fargo, off-price retailer Tuesday Morning received another $10 million in a committed term loan from global advisory and investment firm Gordon Brothers. The loan will allow the company to pay off debts and increase liquidity.
“Gordon Brothers’ team of experts has been an invaluable resource to us,” said Jennifer Robinson, chief financial officer at Tuesday Morning. “With their support, we have improved our liquidity and were able to repurchase $5 million of our higher interest rate term loan.”
Tuesday Morning, which emerged from Chapter 11 bankruptcy last year, paid another $5 million down on its Wells Fargo loan, increasing liquidity as it focuses on cash-flow strategies, its store footprint, and IT systems.
On its most recent earnings call, Tuesday Morning leadership reported a 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.
“It has really been an interesting year, let me put it that way, but we’ve definitely made headway in progress on the initiatives that we put forth, internally within the four walls of the company,” CEO Fred Hand said during the call.
Gordon Brothers Capital provides both short- and long-term capital to clients undergoing transformation. The firm lends against and invests in brands, real estate, inventory, receivables, machinery, equipment and other assets, both together and individually, to provide clients liquidity solutions. The company also partners with management teams, private equity sponsors, strategic buyers, and asset-based lenders globally to provide expertise and additional capital in special situations.
“Tuesday Morning’s veteran leadership team successfully navigated a pandemic-driven downturn and initiated a recovery plan to support Tuesday Morning’s transformation to a true off-price retailer,” said Kyle C. Shonak, head of lending, North America at Gordon Brothers. “We’re thrilled to deliver the capital needed to achieve continued resiliency for the company.”
Like many companies in retail, the 490-store chain is investing in supply chain strategies. During the May earnings call, CEO Fred Hand laid out the off-price retailer’s plan to create a competitive network close to customers.
“Now that we’ve obtained this additional liquidity, we are laser focused on moving forward on our strategic initiatives,” the CEO said. “Our first major strategic initiative is our DC network design project. On the last call, we mentioned that we had engaged a third party who specializes in developing supply chain network strategies to help us identify an optimal distribution network. This study includes everything from the location, size, and number of distribution centers, to the design of the building, the pool point strategy to support our entire network and evaluation of startup and ongoing costs for each scenario. They are evaluating one and two distribution center networks to determine which would be the best option to support both the growth and storage assumptions through 2028.”
Tuesday Morning also “engaged another third party that focuses on using a comprehensive analytical approach to evaluate store locations” as it looks to optimize real estate costs.
Additional reporting by Jessica Binns.