Tuesday Morning Corporation (NASDAQ: TUEM) (“Tuesday Morning” or
the “Company”), a leading off-price retailer of home goods and
décor, today announced the closing of its strategic transaction
(the "Transaction") to secure $35 million in convertible debt
financing. The Transaction includes a $32 million investment from a
special purpose vehicle (“SPV”) formed by Ayon Capital, LLC
(“Ayon”) and Retail Ecommerce Ventures LLC (“REV”), which is the
owner of a diverse portfolio of consumer brands that includes Pier
1 Imports (“Pier 1”), Linens ‘n Things, Stein Mart and Modell’s
Sporting Goods. The Transaction also includes $3 million provided
by certain members of Tuesday Morning’s management team, including
Chief Executive Officer Fred Hand.
We believe the closing of the Transaction
provides Tuesday Morning with sufficient liquidity to pay down
creditor and supplier obligations and sufficient liquidity to
support operations moving forward.
Tuesday Morning intends to establish a dynamic
online presence and execute a digital strategy for new customer
acquisition to complement the Company’s 487 stores. Tuesday Morning
will now have access to REV’s fulfillment network, systems,
technology and website development capabilities, which will support
the Company’s omni-channel offering and operations. The Company
also plans to leverage a new, exclusive channel licensing agreement
with REV to start selling Pier 1 products and launch Pier 1
outposts in select stores.
REV’s founders, Tai Lopez and Dr. Alex Mehr,
commented:
“There is tremendous long-term opportunity for Tuesday Morning
in the home goods and décor category, particularly as more
homeowners and renters embrace online channels. We believe that
being able to offer a high-touch omni-channel experience will
become a differentiator for Tuesday Morning in the years to come.
As a result of our investment and differentiated technology
capabilities, we intend to help Tuesday Morning establish an
ecommerce presence for the first time and seize ‘white space’ in
the Company’s growing addressable market. Our experienced and
proven team, which has already identified strong synergies with our
Pier 1 brand and its product catalogue, sees a viable path to
unlocking enhanced value for all of the Company’s shareholders. We
look forward to working with management and
pursuing a path towards long-term
profitable growth.”
Sidd Pagidipati, Chairman of Ayon, added:
“Fred and the Tuesday Morning team have excelled
in providing their customers with high-quality off price goods, and
we are very pleased to support their continued efforts to generate
long-term sustainable growth in the home goods category. We look
forward to working with Tai, Alex and the REV team, who have
developed significant experience building and growing ecommerce
brands, to leverage Tuesday Morning’s unique value offering in the
home goods category and drive the Company’s digital evolution.”
Mr. Hand concluded:
"We are very pleased to have completed this
transaction, which strengthens Tuesday Morning’s balance sheet and
positions us to drive deeper connections and engagement with our
customers. We look forward to reenergizing and refocusing our
efforts on our strategic growth initiatives, including DC network
design, new store growth and IT enhancements. We believe that
developing a new digital platform will help us create additional
touch points with our customers, and we look forward to working
with Alex, Tai and Sidd to support a seamless shopping experience
across both ecommerce and brick-and-mortar channels. I would also
like to thank the members of our Board, who have guided the Company
diligently through a challenging period for our industry and
devoted significant time and effort to supporting our team.”
Newly Reconstituted Board of
Directors
As previously announced, the Transaction results
in a change in control of the Company. Tuesday Morning’s
nine-member Board of Directors (the “Board”) will be reconstituted
to be comprised of:
- Tai Lopez and Dr. Alex Mehr, who will serve as Co-Executive
Chairs of the Board;
- Three additional directors
designated by REV and Ayon;
- Three independent directors that
are mutually agreed upon by REV, Ayon and the Board; and
- Chief Executive Officer and current
director Fred Hand.
The Company’s management team is expected to
remain in place.
Advisors
Piper Sandler served as financial advisor and
Haynes and Boone, LLP, Troutman Pepper Hamilton Sanders LLP and
Wachtell, Lipton, Rosen & Katz served as legal advisors to the
Company. Barnett Kirkwood Koche Long & Foster, P.A., Taft
Stettinius & Hollister LLP and Vinson & Elkins LLP served
as legal advisors to the SPV.
About Tuesday MorningTuesday
Morning Corporation is one of the original off-price retailers
specializing in name-brand, high-quality products for the home,
including upscale home textiles, home furnishings, housewares,
gourmet food, toys and seasonal décor, at prices generally below
those found in boutique, specialty and department stores, catalogs
and on-line retailers. Based in Dallas, Texas, the Company opened
its first store in 1974 and currently operates 487 stores in 40
states. More information and a list of store locations may be found
on the Company's website at www.tuesdaymorning.com.
About Retail Ecommerce
VenturesRetail Ecommerce Ventures (“REV”), which was
founded by Tai Lopez and Dr. Alex Mehr in 2019, owns and operates a
portfolio of beloved consumer brands, including Pier 1 Imports,
Dressbarn and Stein Mart, that generated billions in sales in the
decade prior to our acquisition. With unrivaled experience in
digital marketing, ecommerce and technology, REV focuses on
transforming brick-and-mortar retailers for the 21st century.
For more information, please
visit: https://www.retailecommerceventures.com.
About Ayon CapitalAyon Capital
("Ayon") is a purpose-driven family office that invests across
technology, blockchain, healthcare and consumer verticals. Ayon
partners with leadership teams and operators to create businesses
that focus on delivering exceptional value to consumers in a
technology-enabled future. Ayon investments include Physician
Partners, Brave Software, Zebpay and Nirvana Health. Ayon’s
investments have become industry-leading companies and resulted in
numerous multi-billion-dollar exits. https://www.ayon.com.
CAUTIONARY NOTICE REGARDING
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking
statements, which are based on management’s current expectations,
estimates and projections. Forward-looking statements include
statements regarding the projected benefits of the financing and
related transactions described in this press release, online and
digital strategies, future results of operations and the Company’s
liquidity and capital resources. The forward-looking statements in
this press release are subject to risks and uncertainties that
could cause actual results to differ materially from those
reflected in the forward-looking statements.
These risks and uncertainties include, but are
not limited to, the following: any inability to effectively launch
our proposed ecommerce platform or to realize anticipated benefits
from the proposed Pier 1 licensing arrangement; the effects and
length of the COVID-19 pandemic; changes in economic and political
conditions which may adversely affect consumer spending, including
current inflationary pressures; our ability to identify and respond
to changes in consumer trends and preferences; our ability to
mitigate reductions of customer traffic in shopping centers where
our stores are located; increases in the cost or a disruption in
the flow of our products, including the extent and duration of the
ongoing impacts to domestic and international supply chains from
the COVID-19 pandemic; impacts to general economic conditions and
supply chains from the disruption in Europe; impacts of inflation
and increasing interest rates; our ability to continuously attract
buying opportunities for off-price merchandise and anticipate
consumer demand; our ability to obtain merchandise on varying
payment terms; our ability to successfully manage our inventory
balances profitably; our ability to effectively manage our supply
chain operations; loss of, disruption in operations of, or
increased costs in the operation of our distribution center
facility; our ability to generate sufficient cash flows, maintain
compliance with our debt agreements and continue to access the
capital markets; unplanned loss or departure of one or more members
of our senior management or other key management; increased or new
competition; our ability to maintain and protect our information
technology systems and technologies and related improvements to
support our growth; increases in fuel prices and changes in
transportation industry regulations or conditions; changes in
federal tax policy including tariffs; the success of our marketing,
advertising and promotional efforts; our ability to attract, train
and retain quality employees in appropriate numbers, including key
employees and management; increased variability due to seasonal and
quarterly fluctuations; our ability to protect the security of
information about our business and our customers, suppliers,
business partners and employees; our ability to comply with
existing, changing and new government regulations; our ability to
manage risk to our corporate reputation from our customers,
employees and other third parties; our ability to manage litigation
risks from our customers, employees and other third parties; our
ability to manage risks associated with product liability claims
and product recalls; the impact of adverse local conditions,
natural disasters and other events; our ability to manage the
negative effects of inventory shrinkage; our ability to manage
exposure to unexpected costs related to our insurance programs;
increased costs or exposure to fraud or theft resulting from
payment card industry related risk and regulations; our ability to
meet all applicable requirements for continued listing of our
common stock on The Nasdaq Stock Market, including the minimum bid
requirement of $1.00 per share; our ability to maintain an
effective system of internal controls over financial reporting; and
other risks and uncertainties more fully described in Item 1A Risk
Factors in our Annual Report on Form 10-K for the year ended June
30, 2021 and the Company’s Quarterly Report on Form 10-Q for the
quarter ended April 2, 2022. Except as may be required by law, the
Company disclaims obligations to update any forward-looking
statements to reflect events and circumstances after the date on
which the statements were made or to reflect the occurrence of
unanticipated events.
Contacts
For Tuesday Morning
INVESTOR RELATIONS:
Caitlin Churchill
ICR203-682-8200Caitlin.Churchill@icrinc.com
MEDIA:TuesdayMorning@edelman.com
For Retail Ecommerce Ventures
Longacre Square PartnersGreg Marose / Charlotte Kiaie,
646-386-0091gmarose@longacresquare.com
/ ckiaie@longacresquare.com
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