Tuesday Morning, the off-price home goods and décor chain that entered Chapter 11 bankruptcy protection last month, will be vacating more than half of its stores and offering the leases up for auction.
The auction will put on the block retail locations in Dallas, Houston, Phoenix and Tampa, many of which come with leases that have five years or more remaining on their lease terms.
The retailer announced this week that it has retained A&G Real Estate Partners to put 250 of Tuesday Mornings outlet locations up for auction on a date that has yet to be specified, according to a report in Chain Store Age.
In its bankruptcy filing, Tuesday Morning said it planned to close low-traffic locations to focus its resources on stores in higher-traffic regions. The chain, which currently operates 487 stores in 40 states, received $12.5M in debtor-in-possession (DIP) financing from 1903 Partners and Gordon Brothers, and has commitments for another $15M.
Tuesday Morning also said in its filing that it plans to significantly cut costs across its distribution channels as it pivots to a third-party logistics model and transitions to a more “cost-effective inventory acquisition strategy” for its remaining stores
“Tuesday Morning is committed to optimize its store footprint and focus on its core markets,” Todd Eyler, A&G’s senior managing director said, in a statement.
“The company’s new management team believes this targeted approach to closing unprofitable and underperforming stores, along with a variety of other measures being undertaken to improve operations, will allow it to emerge from Chapter 11 with a profitable store fleet,” Eyler said.
Engler also noted that more store leases may be offered for auction “if acceptable new terms are not reached with landlords,” CSA reported.
The Tuesday Morning store locations involved in the auction range in size from 6K SF to 28K SF; some are free standing and others are located in strip malls.
“In addition to providing liquidity, partnering with Gordon Brothers will allow us to leverage the team’s deep knowledge and experience in the retail sector,” Tuesday Morning CEO Andrew Berger said, in a statement.
The bankruptcy proceeding is the second time in three years that the Dallas-based off-priced home goods retailer has been through the Chapter 11 process.
In last month’s filing, the company listed assets and liabilities of $100M to $500M. In addition to its debt burden, the company has struggled under increased supply chain logistics costs.