April 10, 2008 / 6:17 PM / 10 years ago

UPDATE 2-Tuesday Morning Q3 sales fall, sees loss; shares tank

(Recasts; adds details, share movement, analyst comments) April 10 (Reuters) - Home accessories retailer Tuesday Morning Corp (TUES.O) reported a 5.7 percent fall in third-quarter sales citing a drop in home values and slowdown in housing starts, and forecast a loss for the period, wiping as much as a quarter of its market value.

The company also cut its fiscal 2008 profit outlook by 17 cents to a range of 38 cents to 45 cents a share. It lowered its revenue forecast for the period to $895 million to $910 million, from $920 million to $940 million.

Higher gasoline and food prices, resetting mortgage rates, a credit crunch and the U.S. housing decline have hurt all retailers, especially chains that specialize in home goods like Williams-Sonoma Inc (WSM.N) and Bed Bath & Beyond Inc (BBBY.O), as demand for furniture and decor has fallen significantly.

“The company has lowered its FY2008 outlook several times over the past six months, which indicates to us that there is a complete lack of visibility into the current business environment,” Morgan Keegan analyst Laura Champine said.

Champine, who reiterated her “market perform” rating on the stock, said she has lost confidence in the company’s ability to execute in a deteriorating environment.


Third-quarter net sales fell to $178.4 million from $189.2 million a year earlier. Same-store sales decreased 8.2 percent as customer traffic fell 6.6 percent.

Tuesday Morning expects to post a loss of 10 cents to 12 cents a share for the quarter.

Analysts on average were expecting the company to break even on a per-share basis, excluding special items, on revenue of $191.1 million, according to Reuters Estimates.

The Dallas-based company’s shares, which had fallen to a low of $4.11 earlier, pared some losses and were down 10 percent at $4.94 in afternoon trade. The stock was among the biggest losers on Nasdaq.

The stock, which has shed more than 60 percent over the past year, trades at about 8 times forward earnings, lagging the hardlines retailer sector which is at a multiple of 27. (Reporting by Sreerupa Mitra and Anuradha Ramanathan in Bangalore; Editing by Amitha Rajan and Deepak Kannan)

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