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Another Major Retailer Files Chapter 11, Cites Pandemic as Cause

Tuesday Morning will close 230 stores

Published on Wednesday, May 27, 2020 | 3:59 pm
 
A list of Tuesday Morning stores being closed over the summer includes the Pasadena location at the Hastings Ranch Shopping Center, at 3725 East Foothill Blvd. in Pasadena.

Tuesday Morning, one of the original off-price U.S. retailers specializing in name-brand, high-quality products for the home, has filed for Chapter 11 protection, citing the “immense strain the COVID-19 pandemic and related store closures” have put on the business.

The Dallas, Texas-based company said the bankruptcy declaration will enable a reorganization process that will include closures of 230 of its 687 stores.

A list of the stores being closed over the summer includes the Pasadena location at the Hastings Ranch Shopping Center, at 3725 East Foothill Blvd. in Pasadena.

The first phase of the store closing will include at least 132 locations and Tuesday Morning’s distribution center in Phoenix, Arizona that supports these stores. These stores were identified as under-performing or are situated in areas where too many locations are in close proximity, the company said in a statement.

Steve Becker, Tuesday Morning CEO, said the prolonged and unexpected closures of their stores in response to COVID-19 has had severe consequences on the business.

“Prior to the pandemic, we were gaining momentum in our merchant organization, growing our vendor base and improving brands, assortment and value for our customers, while investing in our technology and corporate leadership team,” Becker said. “However, the complete halt of store operations for two months put the Company in a financial position that can be effectively addressed only through a reorganization in Chapter 11.”

The company said it has obtained a commitment from its existing lender group to provide $100 million of debtor-in-possession (DIP) financing. As required by the DIP agreement, Tuesday Morning is required to obtain a commitment for up to $25 million of additional financing, which the company said it is currently negotiating.

Tuesday Morning said it plans to renegotiate a significant number of leases during the process. Of the remaining 555 stores, the company plans to exit about 100 additional locations, leaving a go-forward footprint of about 450 stores.

The company added the realignment will allow it to improve product offering by focusing on the highest performing stores in its most productive markets,and enhance its overall profitability and credit worthiness, with resources directed at its most profitable stores.

“The commitment from our lenders to provide access to significant capital demonstrates faith in our value-driven business model and iconic brand,” Becker said. “Looking ahead, we’ve been encouraged by very positive performance of the business as we continue to re-open our doors and welcome back our dedicated customers.”

Following the closure of the entire store portfolio as a result of COVID-19, Tuesday Morning said it has been able to re-open over 80 percent of its existing store footprint to date and expects to continue store re-openings and bringing associates back to work over the coming weeks.

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