Dive Brief:
- Weeks after inking a financing deal with the owners of the Pier 1 brand, Tuesday Morning has replaced its CEO and chief operating officer, according to a securities filing.
- Fred Hand, who joined Tuesday Morning roughly a year and a half ago, is out as chief executive and has resigned from the retailer’s board. Marc Katz, who joined as COO and interim CFO in 2021, and chief merchant Paul Metcalf have also left the company.
- Replacing Hand is Andrew Berger, CEO and executive chair of AutoScope Technologies, a maker of transportation-related technology. Bill Baumann, Tuesday Morning’s chief information officer, has been appointed as COO as interim chief merchant.
Dive Insight:
The departure of Hand, Katz and Metcalf represents the second major executive shakeup at Tuesday Morning since the off-price retailer exited bankruptcy in January 2021.
In Katz and Hand, Tuesday Morning had imported experience from rival Burlington Stores, which, while smaller than off-price megaliths TJX Cos. and Ross Stores, was among its stronger competitors.
Tuesday Morning helped develop the modern off-price concept. The company traces its founding back to 1974, when Lloyd Ross filled a Dallas warehouse with inventory leftover from brands and retailers, and opened it up to the public. This was a few years before the first T.J. Maxx opened.
Since then T.J. Maxx and other players have perfected and scaled the model. The smaller Tuesday Morning struggled to grow its sales and stay profitable, and when the pandemic hit, its lack of an e-commerce channel meant it had nearly nothing in revenue for weeks.
The company has continued to struggle with profitability since emerging from Chapter 11, even after closing a significant chunk of its footprint in bankruptcy. Tuesday Morning’s previous fiscal year, which ended in July, brought both rising sales and an expansion in its operating losses. In its most recent reporting period, comparable sales were down 8% and operating losses widened by 66%.
With its financial struggles continuing, Tuesday Morning, today with just under 490 stores, has reappeared on distress watch lists. This fall, though, it got a lifeline in the form of a convertible loan from Retail Ecommerce Ventures and its investment partner. Along with providing a capital injection, the deal gave the new investors control over a majority of Tuesday Morning’s board.
REV has been on a buying spree over the past couple of years, collecting the brand assets for major retailers in and out of bankruptcy, among them Pier 1, Stein Mart, RadioShack, Dressbarn and others. When the deal with Tuesday Morning was announced, the companies said Tuesday Morning would begin selling online for the first time and would also start carrying Pier 1 products.
With the C-suite shuffling it’s clear that REV aims to reset the table at Tuesday Morning. The question is whether the e-commerce and IP specialist REV can revitalize a retailer that has struggled before, during and since the start of the pandemic.
