Dive Brief:
- As part of its ongoing Chapter 11 bankruptcy restructuring, A&G Real Estate Partners is auctioning about 263 Tuesday Morning store leases in around 38 states that the distressed discount retailer wants to back out of, according to a Wednesday press release and information emailed to Retail Dive from the real estate company. Tuesday Morning filed for bankruptcy on Feb. 14.
- Before its first bankruptcy in 2020, the retailer had nearly 700 stores. In its most recent securities filing, the company said it had 487 stores. Shrinking its store footprint to focus on core markets is part of Tuesday Morning’s reorganization strategy for its ongoing Chapter 11.
- Tuesday Morning on Thursday announced it had secured an additional $12.5 million in debtor-in-possession financing from Gordon Brothers. The latest installment of funding gives the company $27 million to maintain its operations, much lower than an earlier $51.5 million commitment from Invictus Global Management. A potential stalking horse financing bid with Invictus recently fell apart, according to a court filing from March 2.
Dive Insight:
This is not the first time Tuesday Morning has worked with A&G through bankruptcy.
New York-based A&G previously worked for the retailer in a similar capacity during its bankruptcy nearly three years ago. At the time, Tuesday Morning closed about 200 stores and an Arizona distribution center. In court documents related to its ongoing Chapter 11, Tuesday Morning said it “has too many stores.”
The retailer also said its creditors’ actions contributed to the company’s unstable financial position. Specifically, Tuesday Morning said that its creditors, led by Wells Fargo, terminated the company’s ability to borrow more money to finance operations earlier this year. The bank also accelerated credit facility obligations.
In addition to handling the ongoing auction, A&G is also advising Tuesday Morning on its overall lease portfolio strategy, it said in an announcement. Closing unprofitable and underperforming stores is one step the retailer is taking “to emerge from Chapter 11 with a profitable store fleet that serves its most engaged and loyal customers,” A&G Senior Managing Director Todd Eyler said in a statement.
The stores up for auction include freestanding and strip center locations. The locations range from 6,000 to 28,000 square feet in size. Many of the locations have five or more years on the lease term and renewal options, A&G said.
The firm said it’s already seeing interest in the real estate in major markets like Dallas, Houston, Phoenix and Tampa, said A&G Senior Managing Director Mike Matlat. However, “the go-forward list is not set in stone,” Malat said in a Friday email to Retail Dive. “The number [of stores ultimately up for auction] depends on negotiations with landlords on potential go-forward stores.”
Tuesday Morning also gave updated details about its debtor-in-possession financing situation.
On Friday, Tuesday Morning CEO Andrew Berger said in a statement that partnering with Gordon Bros. gives the company liquidity and “the best opportunity to save jobs, serve customers and maximize value for the estate.”
Established in 1974, Tuesday Morning’s main merchandise categories include name-brand upscale home furnishings, housewares, bath and body products, toys, and seasonal items. The company has faced other recent challenges. Three members of its executive leadership are new in their roles, and in December, Tuesday Morning voluntarily delisted itself from the Nasdaq, also for the second time.
